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
They spend more time selling PC's and fighting Apple than improving their Software
The tide has turned.
I hope they don't have to lay anyone else off. Honestly, I don't think Microsoft is too worried. They've got an Obama in their hand and it's inevitable launch is just only about six months away.
Honestly, when Microsoft doesn't make money, it's truly charitable. They are doing such a service to the public when no profit is made from Zune, Xbox, Vista, XP , etc....
NOW, we truly know the reason behind the new aggressive marketing campaign against Apple. Microsoft is hurting and they need as much as the market share as they can get. They can't lash out at Linux based system, so they picked Apple.
I think MS should kill XP for good when Win 7 arrives before XP kills Win 7. Windows users aren't open to new stuff because they have been using the same OS for seven years, and it still works (at least for them) and Vista is too different and expensive and it doesn't work at all.
I don't think Win 7 will be the success MS is hoping for (at least in the first few months or years). They've been hyping it a lot and talking about the performance and stuff, but it's very different from XP and works differently. I don't think the XP crowd will like that. That's why MS is supporting downgrades to XP.
Unfortunately XP is most people's favorite Operating System and they are not willing to change it. At least for now.
I like XP. Apple is very ok. But Vista and i7 looks like Apple and that give me a headache.
Wait, it's not a loss, it's just less profit.
Weasel words.
I just want to see Ballmer fired. I think he's to blame for all mishaps starting from "Vista Capable" to any other downfall. Ballmer at the helm is what's messing things up at MS.
I sure do love my mac. YEEEEAAA FOR APPLE!!!!!!
The first step Microsoft needs to take is to lose Balmer already.
Profits down, Viruses up .
isnt apples stocks and profits rising? maybe if pcs didnt crash and suck this wouldnt happen. my macbook pro NEVER crashes yet when i use vista or xp on friends computers i see them freezing or crashing pretty often. just going by experiences i see
I find it interesting how Microsoft seems to be slipping as a technology leader. Google seems to be the new tech leader, and the rising generation will make Apple an even greater force to reckon with. Hopefully Windows 7 will get them on track with a sensible OS (although they should only have one version). Microsoft does all this great research, but seems to fail at executing it (Vista, Zune, Office, etc). I like them now more that they are one of many contributors to a diverse tech industry.
Damn, Apple is really catching up. 1.21b vs 3b profit? Pretty incredible for having a significantly smaller market share.
7 better get off it's ass or I'm just going never going to use windows again; I actually used vista for several months and just got fed up. Haven't used bootcamp at all since except to check out W7 beta, which was already waay better than vista as far as workflow goes.
I'm all for MS really catching up to OS X for this release, it'll get a fire back under Apple's ass hopefully.
I wouldn't cheerlead tooo quickly.
Mac sales dropped 3% last quarter and their overall profitability declined 1.1%.
Mac marketshare decined for the third quarter from 9.8% to 7.4%.
Apple has a bit of cushion against recessions or downturns in Macs because of their small, but very loyal customer base, but in phones and music players (which admittedly was where they made most of their profits), it's easier to get people to jump ship.
But comparing Microsoft and Apple is a bit dangerious. Microsoft primarily is a software/service company and their fortunes are dependent on other companies selling their hardware. Since most of those systems tend to be commodity systems, a downturn hits Microsoft faster and harder.
But it's equally true that in an upturn, Microsoft recovers more quickly... and Win7, which is already looking like a hit, arrives at the end of the year - around the time the recession should be starting to turn around - the outlook for Microsoft is quite good.
Damn, another Microsoft article? Isn't there anything else to talk about? Like craptastic gadgets or something more interesting?
And it does have to be pointed out that even with all that downside - they *still* made $2.2B in the last quarter. It also has to be pointed out that the entire market contracted 15% and it hit a lot of companies including Dell and Apple.
The only winner seems to have been Acer, who grew by 23% - guess who makes the most popular netbook? :)
There is a big difference between a drop in sales and a drop in profit. It is misleading to use them interchangeably...
Reduce the price of Vista and people will buy it, plain and friggin' simple. This imaginary plague that Vista supposedly is, can't beat a good price cut. People are fickle like that. At $200-300, they "hear" it's not that great, is slow, doesn't run as good as xp, etc. etc. etc. At $120 or so dollars, they'll try it for themselves regardless of what they hear. Money is money but $120 is way more appealing than double that.
MS really shot themselves in the foot with the Vista Capable bullshit. Idiots went out and bought computers designed and really only fit for XP and Vista Basic and when Premium didn't run well on them (aka no DX10 or Aero/Performance & Resources monitor slowed things down considerably), they told their families, friends and strangers that Vista sucked. After all, new hardware should run a new OS perfectly....notwithstanding that their cheap ass purchased new 2 year old hardware. That Apple marketing campaign (genius, /bow) that slams Vista over and over didn't help either, so much so it managed to brainwash quite the majority of sheep out there against Vista....and MS waited so freaking long to respond to said ads that, well - the damage was done. I've had many a friend and family use my computer and compliment me on how blazing quick it is. I tell them it's Vista and they're either in awe or utter stuff like "mine doesn't run like that!", to which I ask how much RAM they have and the answer is always the same, 1 or 2GB.
And what's with this stuff about netbooks? People choosing netbooks over laptops/notebooks? That can't be right. The majority of people that I know personally who have bought netbooks already own a computer or laptop or both. Noone uses these things as main computers. They use them purely for portability and as toys. Take it to Ruby Tuesdays to mess around while you're drinking a beer or having dinner (yes, I've seen this). Take it with you to the bookstore, Starbucks, Jamba Juice, etc. - take it on the road. Take it into your bed and surf till you feel sleepy, etc. But mainly, you use your computer or laptop ultimately at home or your laptop or notebook if you're doing serious business on the road. Who the hell can sit there for any amount of time staring at an 8.9 or even 10 inch screen? (I suppose if you can look at a 3 inch screen for a feature length movie, then YOU can). Your eyes will be seeing doubles in NO time if you use a netbook as your main machine.
Furthermore, it's not like they're dirt cheap. Some are - but the majority after the Acer Ones are $400-600. I just got myself a Gateway MD2614u for $499...so this argument that they're more appealing because of this slump is not 100%. If someone was really looking for a laptop, they could find MUCH better deals than a netbook. I think the cheapest of laptops with Vista Basic sells for $385 or so.
Windows 7 will be 'better than Vista has been' for 1 simple reason. It will run perfectly on any Vista "Capable" machine...meaning obviously that it will run on even machines designed for XP, as long as they have 1GB or more of Ram installed.
If MS would cut their shit and make it more affordable, I bet there'd be a huge hit on their hands even.
Vista Home Premuim is available for ~ $100.
No wonder they started that ad campain to sell cheap computers!
I guess not only Apple did a better job this quarter despite the crisis but it appears that they were right about the Netbooks!!!!
The beginning of the end of the Microsoft Domination of the IT world!
Bill Gates is a very smart man, he saw the writing on the wall and got out while Microsoft was exploiting its dominate position.
BTW to all the Microsoft fanboys, don't be too upset Microsoft isn't going anywhere it will continue to be a major player but its days of dictating terms to the rest of the industry are over..
Real competition and real innovation are a much better alternative
How unfortunate for Balmer - I know its not his necessarily his fault but his first year will be remembered as the first year Microsoft's profit shrunk....