Microsoft revenue dips, Apple gaining ground
It doesn’t look like Microsoft is having a good time right now; their last quarterly financial results show a shortfall of about $1 compared to projections and a year-over-year decline of 17%! Before you start to write the MS obituary, remember that they are still a highly profitable company with a lot of cash tucked away in the bank and a huge user base. However, Redmond has never experienced year-over-year declines like this before, so what’s going on?
As you’d expect, executives are blaming the economy: home users are short of cash and companies are sticking with what they’ve got; after all, it works! Given the current climate it would be easy to accept that answer, however…Google is doing well , albeit after a few dips in share price, as is Apple. In fact, Apples share of the high end computer market is growing which means the money to buy high spec computers is out there but it’s not being channelled in the Microsoft directions! This point becomes even more interesting when you realise that although Apple sells to the mid to high end market, historically, they have never held the majority stake.
Windows is at the core of everything Microsoft does that makes money. They sell Windows, then they sell software that runs on Windows. As Windows goes, so goes Microsoft, and right now Windows is heading south.
The Windows OS seems to be losing ground at a rapid pace. Now, many will say ’so what?’ but the key here is that Microsoft builds applications that work on MS platfroms i.e Windows XP - lose the platform and you lose the installation base for your apps!
Many analysts are citing Vista as one of the main sources of Microsoft’s woes: expensive bloatware that needs a pretty high spec just to run (then there was the whole shambles around Vista certified hardware only being able to run Home Basic!). How many Windows users have you met that absolutely love Vista? Sure, Windows 7 looks good and runs well on moderately spec’d hardware but it may be a case of too little too late.
Then there’s Google. The announcement of the Google Chrome OS may, or may not, have sent shivers throught Redmond. Personally, I think that MS aren’t too bothered about Googles OS - at the end of the day Chrome will probably be designed around gathering even more information about your browsing habits so that the big G can send you even more relevant ads! Equally, Google are probably eyeing the announcement of the MS/Yahoo deal with an interested eye. The effective merger makes MicroHoo the second biggest search engine with about 28% of the market.
As I seee it, the major problem for Microsoft is diversification - too much, too soon. The release of the Vista memory hog didn’t help either. Right now, it’s time to get back to basics and deliver something that works, and works well. Once you re-capture the majority share you start to spred the tendrils.
Then again, I could be wrong. Microsoft may not have any plans for the future release of OSes - after all, they seem to be putting a lot of money into SaaS (just like Google). It’s food for thought….
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