In a not totally surprising -- yet still kind of striking -- turn of events, Microsoft is reporting that its sales have fallen for the first time in 23 years. You read that right,
23 years. According to numbers that the company has just released, sales fell 6 percent year-over-year, while overall net income dropped a staggering 32 percent. Those numbers are significant, but what's more telling is where those losses are coming from. Namely? Netbooks. Apparently, in the midst of a global downturn consumers really are buying cheaper, especially when it comes to tech, which puts a fairly significant crunch on Redmond's bottom line. A
CNN reports suggests that the presence of Linux on those devices has contributed to the hurt here, but it's more likely that the combo of a market still unwelcoming to Vista and the wide popularity of
XP on the low-power systems has more to do with these dipping profit margins. Oh, and that general, awful market depression. Still, it should serve as some kind of wake up call to Microsoft that just being the biggest doesn't guarantee that the money will keep rolling in the way it has in years past -- clearly the big picture isn't as sharp as it's always been. Hey
Windows 7 -- no pressure, right?
Update: We've tweaked some language in the post that made the situation sound more dire than intended. Don't worry everyone, we know Microsoft isn't going anywhere.
[Via
CNN]
posted April 23rd 2009 9:19PM
First! ...in 23 years.
I don't know whether to down-rank you, or high-rank you for that clever, yet annoying phrase.
Wow, nicely done. That's the first "first" that I've ever rated up.
It's a first time that "First" is actually relevant :)
if M$ didn't make vista so processor intensive or by listening to intel and make it look like that hippos can dance on ice and other screw ups ie RROD... they might have made a profit. better luck with "7"
@xconan
Actually it's more RAM than anything. I've seen it run great on and old P4 with 2GB and crappy on a AMD 64 X2 with 1GB.
And I really think their downturn in sales probably has more to do with businesses being on budget freezes...that combined with new products right around the corner, people are holding out.
wow...
never knew it was possible to be first AND be relevant... +1 to that
Meh.
You're giving this 1st-er too much credit. -_____-
xconan... they made a $3,000,000,000 profit... you suck at reading.
yeah I've done it before. no big deal.
I told you fools, Microsoft needs a windows 7 stimulus plan. (Release it early!)
Steve Ballmer sucks!
GOOD JOB!! Hopefully next time the drop will put them into Bankruptcy!
YESSS! Thank you! Screw Micro$oft...
The tanking economy sucks until Microsoft is affected... Then it's AWESOME, right?
I mean, honestly. Just shut up. I personally didn't say anything when Apple posted their profits. I say good for them.
Sorry, Microsoft. We'll try again next year. You've got Windows 7 coming out soon, so that could explain the loss of profit; people are waiting to buy the next version of Windows because of all the badness perpetuated by the fact that people bashed Vista.
"Microsoft that just being the biggest might not be enough to keep it afloat during the crisis we're in the middle of"
WTF? They did make a profit, only lesser than usual. Read that again you opinionated hacks posing as editors, they still profited. No one's saying anything about going under. Sheesh.
Yes! THANK YOU MICROSOFT for "only" making 3 BILLION dollars in the first quarter. Why would a company making 3 billion dollars get you so excited? Go get laid dude. The excitement you just expressed makes me sad for you.
At best they have to point at a decrease in profits, after more years than many here have been alive, during the worse economy in 70 years, that is still higher than the record quarter from Apple, to get excited about.
Whatever works for them.
If you're happy now, wait till Microsoft has to fire another couple thousand employees - that will be truly AWESOME!
Mmm . . . all those families struggling to make ends meet, just dont get too excited, alright?
@Jon Graft,
I dont usually comment here, but F*** YOU, i work as a Windows Guru and regardless of what you think of the products, its paying the bill atm and i might lose my job because of the current situation.
dick.
Microsoft is the GM of the tech world... making the same product for years while everyone else is innovating
Really now...
I predicted this would happen when engadget wrote about XP's netbook share. The only way they could compete against Linux was to basically give XP away. Netbook makers didn't choose Windows because it's a better platform - they chose it because it cost as little as Linux and customers were familiar with it.
I maintain that things will only get worse for Microsoft. Apple has more room to innovate because hardware changes (e.g multitouch trackpads) are supported by software. PC OEMs can't compete by using Windows, which limits software to a one-size-fits-all approach. They will want to go to a completely customisable OS. It also helps them differentiate their products with custom UI elements and imcreases profit by decreasing cost of sales. They're trying to get away from Windows.
Microsoft kept them this time by giving XP for free. As this article shows, they're going to have to do better in the future or risk losing their OEMs.
The problem isn't necessarily that they're "giving XP away" on netbooks. The issue is that netbooks are cutting into desktop and notebook sales, which are more profitable for Microsoft. Microsoft makes software, not hardware; there are no costs associated with selling an extra unit. That's the reason why Apple won't make netbooks. Not because they're "junky" and they'll ruin their name brand (because there are some really nice UMPCs that use Atom chips) but because they'll cut into their more profitable Macbook sales.
KarlIW:
1. Apparently you haven't read about the number of returns on the netbooks where Linux was installed. Consumers are choosing Windows because it is a better fit for most of them. We have already seen less and less netbooks coming with Linux. That trend will continue. Windows XP (and in the future Windows 7) provides the best solution for the majority of users.
2. Classic comment about Microsoft's approach is a one size fits all while Apple is innovative. Say what? Been to an Apple store lately? There are about 6 products to choose from. The diversity of hardware running Microsoft's OS is an embarrassment of riches. It's basically every consumer computer available that isn't sold at the Apple store. And even then, everyone that I know that runs a Mac runs Bootcamp with Windows.
3. Who is Microsoft going to lose the Netbook OS market to? Android? It's barely feature rich enough to run on my phone. It's a niche product at best at this point. The average consumer doesn't want Linux. As the machines improve their hardware, it's reasonable that consumers will want more functionality that just surfing the web and writing emails. It's going to be either XP now or 7 in the future that will be called upon to handle that chore.
You want the real reason why Microsoft didn't have a great quarter - business' are cutting back. Less hardware means less software. Companies are putting off upgrades to Vista with 7 right around the corner. As the economy turns, Microsoft will be gangbusters again. With Apple, the business economy doesn't make a big difference. The profits are all in iPods (Touch's), iPhones and consumer centric PC's.
Accept for the fact the Microsoft is still profitable in the billions and GM has been loosing profit in the double digit billions, i see how they compare.
Who is innovating in the car field? Strip down a GM and a Honda, and they all look the same on the inside. It's not like Honda, or BMW have a flying car out, while GM is making some Model T-esque car
@Curtis How is XP less profitable? I would think that by now they've recovered their XP R&D, and without even having to put boxes on shelves, every sale is just gravy. I think of it the way the PS2 sales help support PS3 losses, but is that unfair comparison?
@Suburban@sshat
And you sir are the idiot of engadget. That's saying something!
hahaha.... hahahhahahah
Hairy Chinese kid?
Karl Pilkington has a head like a fucking orange
So I had absolutely no idea that Joshua was a somewhat prolific producer, drummer and DJ. Was anyone else aware of this? He produced some !!! and some other shit. That's kind of fucking awesome and you have officially rose a couple rungs of cool on my ladder
Huh? I though Chinese weren't hairy... =b
Oh for fuck's sake, another thread GUARANTEED to start a "this vs that" shitfest. Thanks, Josh; much appriciated.
Whoops! I guess we better stop reporting news that some people might not like!
I think it's not so much about the news as it is the comments that will ensue.
lol, news.
"Reporting", *sigh*... let me know when that actually happens when the title has the word "Microsoft" in it...
Josh - I just really felt like the way this information is reported seems like an anti-MS tirade. It's been slightly tweaked (as posted), so I'm not even sure what it used to say. This site unfortunately is becoming known for its intense firefights in the comment sections because of this. I meant that comment as a joke, but when I re-read it this morning I think I didn't exactly word it as intended.
Mmm, Josh, did you hear about this 'iBabyShaker' game that was released on the App store?
Because it's certainly not anywhere on engadget.
@CJ -- So you're equating an earnings report from Microsoft which shows losses for the first time in 23 years with an iPhone app that some people found offensive? I don't get where you're coming from at all.
@Level 5 -- An "anti-MS tirade"? Are you kidding me? If that's actually how you perceive this post, then the bias is on your side, not mine. And to note, I changed a single sentence.
Josh; don't feed the trolls!
Josh - Since you're an editor here (or journalist, or what have you), thusly you know how the comments in threads like this get. Frankly, I shouldn't had included your name in it, since much of the info came from CNN. So from one man to another, I apologize for that. I just hate seeing a blog that actually has decent posters and content get dragged down by people who bring other brands or products into a thread, when said thread is only about MS, not necessarily it's competition.
take a breath, and watch this... probably the most entertaining flamewar ever http://www.collegehumor.com/video:1907543
Caption contest?
"Invisible boobs."
"And now, young Skywalker... you will die"
Never underestimate the power of the dark side!
"Your pitiful crane technique is no match for my Tiger Style!!!"
.. everyone pay attention, this is how you do that "thriller" dance routine..