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Microsoft Posts First Quarterly Loss Ever
HangingChad writes "Microsoft's announcement of a late October release date for Windows 8 was eclipsed by its earnings report, in which the computer giant posted its first-ever quarterly loss since going public in 1986. The loss stems from Microsoft's continued struggles with the online services division."
We waited for this for too long!
The loss stems from a giant write down of a purchase gone bust ($6.2billion) from 2007. Otherwise it would have been a great quarter for "M$".
But don't let that stop the speculation about how "M$" is about to die.
No, Microsoft did not bring in less money than it spent. It has decided to wash its hands off of some of the investments it made. It wrote down the value of some of the stuff it owns, and that is shown as a loss.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
No, but in a distant corner of the galaxy, Gronek II, Emperor of the Seventh Moon of Choil, after a tasty breakfast of fried duzelwip, lightly salted wurp jelly and a hot steaming cup of rinok-sphoo, opens up his paper to find out that his most beloved child, the fruit of his loins, the offspring of his brief but tumultuous marriage to Princess Nerb the Six-breasted; Steve Ballmer, has ceased to throw chairs, fuck over Netscape and perform all those other ceremonies one would expect of a scion of the proud house of Choil, and in his greater anger has spat out an orifice-full of hot rinok-sphoo. Before the Sixth Moon of Choil has done its second transit, the invasion fleet will be in place, and Steve Ballmer, once proud Prince of Choil will have to answer for his actions.
The world's burning. Moped Jesus spotted on I50. Details at 11.
In addition to its $6.2 billion disaster of a purchase, Microsoft made another critical mistake in 2007: It failed to recognize the debut of Apple's iPhone as the game-changer it turned out to be and missed the launch of the touchscreen revolution. Its partnership with troubled Finnish cell phone company Nokia notwithstanding, Windows phones barely have a toehold in the iOS-Android duopoly.
It is par for the course for Microsoft to phoo phoo anything new (Remember "640K memory is enough for everyone", "You mean companies are going to print their URLs in their advertisements?" ) and then play catch up. Usually that strategy worked out for Microsoft because corporate computers formed 90% or more of the computing platforms in the world, and it had a stranglehold on that market.
Two things stymied Microsoft in the cell phone arena. First was obvious: It lacked market dominance for ram through bad but barely adequate competitor and swamp out the competition.
But there was a second player, that we slashdotter would loathe to give credit to. The much maligned evil phone companies. They are used to getting hefty margins peddling corded and cordless plain old telephone equipment. They saw what happened to the manufacturers of the ubiquitous beige boxes. They were reducing competing purely on price, the brutal price war changed the landscape. In the 1990s the hardware accounted for 95% of the cost of the computer and the software was hardly 5%. While software prices remained stable and went up (MS-Office retailed for $550 when the PCs had fallen below 500$ mark). The telcos were determined to not to let that happen to them. Being incompatible with Microsoft, and not giving it any toehold was the common strategy.
So even if someone in Microsoft saw the threat of iPhone that company is too big to move nimbly, too bogged down in earlier mode of competing, it had made too many enemies, it has stabbed the back of too many partners and it has scared off too many partners.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
No, its not.
A $6.2 billion write-off against a $6.3 billion dollar purchase of an online advertising firm in 2007 that was intended to be a main engine of profit for their online services division. When you purchase a business for $6.3 billion to reinforce a particular part of your company, and five years later recognize that its only worth $100 million (or less than 1/60th of what you paid for it), its pretty fair to describe as that part of the company as struggling.
Microsoft themselves, in the write-down, is recognizing that $6.2 billion that they spent on their online services division might as well have been piled up as cash and made into the world's largest currency bonfire.
Bleeding in worthless acquisitions is still bleeding. Some might attempt to distinguish losses from acquisition write-downs from losses from other operations, but with Microsoft -- and many other large firms -- acquisitions are a key and regular part of their operations. If their acquisition strategy is bad and bleeding money, they are bleeding money just as much as if they were losing it from other operations.
They would actually be more valuable broken up. Windows could still do their thing. Office could support whatever platform they wanted to. Imagine a version of Office for Mac with a comparable version of Excel and Access. SQL Server on Linux boxes.
Also, I would say there is a difference between decline and not being in your high growth phase and abnormally dominant phase.
Except for ending slavery, the Nazis, communism, & securing American independence, war has never solved anything.
It seems to me the cash cows they can milk by raising the prices, but Ballmer can't create NEW cash-cows internally in MS, not only that, this tells me he can't even BUY new cash cows from outside.
You can make light of this, but this is spent money, and yet it took him 5 years to realize he'd wasted it???? The man is an idiot, a shouty salesman whose biggest sales job is to keep himself in power.
He's losing the Windows market, this is what gets me the most, you can see it all unfolding in slow motion as people switch away from Windows and he's making it worse by splitting Windows into two competing versions! It reminds me of IBM making PCs and also selling cloned PCs in competition with itself. It made IBM clearly inferior because even they didn't believe their PCs were worth it.
Now we have MS, launching 2 tablets, one that is more compatible than the other, but not fully compatible, and one that has a better battery life but not as good as the competition. Two half products in a market that's getting away from them.
And nobody dares sack shouty salesman for fear of chairs flying???
50 million Windows 7 licenses/quarter.
76 million Android activations/ quarter
46 million iOS devices, 50 million is you add the Mac sales / quarter.
See for yourself, they're market share is down to less than 30%, soon Apple will be selling more iOs devices than Microsoft sells Windows.
Windows might be losing market share to OSX. God only knows whether it's gaining or losing market share compared to desktop Linux this week/month/year, and it doesn't particularly matter because any change is below the margin of error anyway. Windows is not, however, losing market share to Android Phones or iPhones.
In America, at least, 99.9% of the people who own an Android phone or iPhone own at least one desktop PC, laptop, or both IN ADDITION to their phone.
Microsoft lost most of their mobile market share almost OVERNIGHT when they stupidly announced that the HTC HD2 would never run Windows Phone because "it had too many buttons", and just about everyone who owned a phone running Windows Mobile ran straight to Android without passing "Go". THAT is Microsoft's lost market share. Nearly every Android phone and iPhone sold since that time represents a PDA phone sold to somebody who formerly owned a phone that was a half step better than a Jitterbug. People who own an Android phone or iPhone today and do NOT own a PC or laptop probably didn't own a PC or desktop 4 years ago, either. People who owned a desktop PC and a laptop 4 years ago mostly still own a desktop PC, a laptop, and have recently added a tablet (Android or iPad) to the pile, and probably have a best of breed Android phone or iPhone filling the role of "pocket laptop with wireless internet access", just like they did 4 years ago.
If you REALLY want to see lost market share, do your census a month after Windows 8 comes out, and count anybody who yawned and stayed with Windows 7 (or reverted to Windows 7 after being unimpressed by Windows 8) because Windows 8 is ugly, looks like Unity on a bad day, and took away Aero Glass because Microsoft apparently wanted to make extra sure the reaction of everybody with a high end PC would be "yuck, Windows 8 is fugly".
If it's not obvious, I do think that Microsoft has gone batshit crazy and suicidal in its old age. If you look at just about every business and strategic decision they've made since ~2008, they've dropped the ball and bent over backwards to snatch defeat from the jaws of victory at every possible opportunity. They've become irrelevant to everyone who used to own a Windows Mobile phone, they've completely pissed off two entire generations of Windows Phone buyers by screwing them out of upgrades and saddling them with a phone that was obsolete roughly 3 months after it came out, they locked them down for reasons nobody can figure out (since they don't actually have any real software that anybody will pay for to generate royalties for Microsoft), they've completely dropped the ball on trying to run an ad network like Google, and now it looks like they've spent the past 3 years brainstorming ways to give people who own Windows 7 a reason to stick with it for the next 10 years.
And it makes me sad. As fashionable as it is around here to bash Microsoft, they've generally been a force for good. If nothing else, they gave us mice with scroll wheels. But lately... (shakes head)... well, the only word I can really think of to describe it is "Schadenfreude". It's almost heresy to say, but they really DO need Bill Gates to come back and save Microsoft from the zombie it's become. Microsoft's current management is like Apple under Scully.
I'll point something else out here: Microsoft has a lot of products, a LOT, and most of them are small income products. The one thing they have in common is THEY ARE BUILT FOR THE WINDOWS ECOSYSTEM.
If they lose the OS market, they lose everything. Because Ballmer's pride won't ever let him port all those apps to whatever is selling, he'll follow Windows market share down to zero.
I know it's popular to say "well IBM are still doing well", but they're not doing well in the PC market place. They were lucky to find a lot of government contracts and services saved them, but they lost the PC market to others. Will MS find a market to run to if they lose Windows??? If so what market??
Is it Schadenfreude to simply spell out the truth here?? They've ALREADY lost the OS market, they're LOSING the apps market. The apps market trails the OS market, because of the legacy sales. Those XP users are potential customers too, even if they're not sales in this quarter. But Ballmer is so stuck in the past, he thinks he can force XP users to upgrade to Windows 8, but they (I include me in this) will go to Android or iOS. I'm switching to Android tablet after this, already have an Asus infinity on order.
I think you're kidding yourself. People who use Facetime are not using Skype, people who surf on an iPad are not surfing on a PC, people who play games on the tablets are not playing games on Windows. For me my PC was mainly stock trading and email/messaging, that's now mainly on an Android tablet.
You can claim that somehow Windows market is special, for 'real-work', but I use a Galaxy Note for most of my 'real work' and the PC is used only for its large screen when I happen to be in my office. When I've switched to an Infinity Pad, it won't even be the largest screen computer I have, at that point the charts will shown on the Android tablet and the PC will remain off.
Oh, and I plan on buying a MTH (?) cable for the note so I can plug it into my TV and watch streaming TV in HD. I never bought a Windows Media PC, and now never will.
Ballmer thinks he can grow Windows to take over the tablets, and Apple/Google believe they can grow tablets to take over Windows, two of those companies grew market share enormously quickly and one lost market share.
You said this:
"In America, at least, 99.9% of the people who own an Android phone or iPhone own at least one desktop PC, laptop, or both IN ADDITION to their phone."
You can pretend the iPad is a complement to the PC, but they are both just general purpose computing devices that overlap. I bet they bought the iPad despite owning a PC. Not the PC despite owning an iPad.