5 ms·

How would you feel if you were a Windows pc maker right now? MSFT commoditized your business and sucked all the profits out of your eco-system until your net m

How would you feel if you were a Windows pc maker right now? MSFT commoditized your business and sucked all the profits out of your eco-system until your net margins were 2%, forcing you to cut R&D, Design, etc, and compete in a brutal price war without much hope of unique differentiating features or value. Now MSFT is directly competing with you by so lavishly spending on design that they are years away from making money on their Surface line.

belltaco 10y ago
>they are years away from making money on their Surface line Source? AFAIK they made over $10 billion in revenue on Surface.
- microtherion 10y ago
  Outside of the startup world, "making money" generally is understood to mean PROFITS not "revenue".
  - belltaco 10y ago
    Sure, so do you or the GP have any profit numbers or even analysis to back up the claim "they're years from making any money on the Surface line" ?
    - valuearb 10y ago
      We have the history of the XBox, which took ten years to make any money, and is likely still in the red. Currently, the Surface lines volumes are too small to give MSFT the economies of scale to make gem profitable.
mikeash 10y ago
Do we care how they feel? Does MSFT care?
Joeri 10y ago
It wasn't microsoft that killed the margins, it was amazon. Back in the DOS, windows 3.x and even windows 9x era the OS was just as commoditized, yet people willingly paid high margins. They did this because they wanted the service of their local PC store and therefore were willing to pay their margins. With the boom of online stores and easy exchanges/returns the brick and mortar stores went away and with them went the cushy margins. The thing that really doomed the PC market was not that the easy margins went away, it's that OEM's responded by making their products worse. They cut hardware quality, they bundled crapware. The PC experience got worse year after year. Truthfully, windows 8 did not help, but I still think that if the OEM's had just bundled touch screens across the board it would not have been such an outright disaster. The reduced quality forced people off the platform, to macs at the high end, and to chromebooks at the low end. Granted, mobile would have always caused PC sales to decline, but not as much as they did. It is only recently that the OEM's have started investing again in quality hardware with a pure windows experience, and unsurprisingly last quarter PC sales went up YoY for the first time in five years.
- valuearb 10y ago
  Apple has to deal with all these forces and it's maintained healthy margins in Macs. It can do this because it offers a unique product, windows PC makers can't differentiate themselves because they rely on MSFT for R&D. When Apple started kicking butt in laptops by using sealed batteries with substantially more capacity, PC makers were locked out from doing same for years because it required battery conditioning software drivers, which MSFT didn't provide. Commoditization took time, early PC market didn't have the direct model. And the race to the bottom in PCs isn't the fault of the manufacturers. It's an effect of the business model, and customer decisions. If a large segment paid up for better PCs and local support that model would still work, instead they predominantly choose to save a few bucks on the purchase price by buying the cheapest ones with crapware.
- 72deluxe 10y ago
  And on top of this it is still possible to buy laptops with a 1366x768 screen resolution. In 2017. It's insane.
goatherders 10y ago
Make better hardware and it's not a problem

belltaco 10y ago

>they are years away from making money on their Surface line Source? AFAIK they made over $10 billion in revenue on Surface.

microtherion 10y ago
Outside of the startup world, "making money" generally is understood to mean PROFITS not "revenue".
- belltaco 10y ago
  Sure, so do you or the GP have any profit numbers or even analysis to back up the claim "they're years from making any money on the Surface line" ?
  - valuearb 10y ago
    We have the history of the XBox, which took ten years to make any money, and is likely still in the red. Currently, the Surface lines volumes are too small to give MSFT the economies of scale to make gem profitable.

mikeash 10y ago

Do we care how they feel? Does MSFT care?

Joeri 10y ago

It wasn't microsoft that killed the margins, it was amazon. Back in the DOS, windows 3.x and even windows 9x era the OS was just as commoditized, yet people willingly paid high margins. They did this because they wanted the service of their local PC store and therefore were willing to pay their margins. With the boom of online stores and easy exchanges/returns the brick and mortar stores went away and with them went the cushy margins. The thing that really doomed the PC market was not that the easy margins went away, it's that OEM's responded by making their products worse. They cut hardware quality, they bundled crapware. The PC experience got worse year after year. Truthfully, windows 8 did not help, but I still think that if the OEM's had just bundled touch screens across the board it would not have been such an outright disaster. The reduced quality forced people off the platform, to macs at the high end, and to chromebooks at the low end. Granted, mobile would have always caused PC sales to decline, but not as much as they did. It is only recently that the OEM's have started investing again in quality hardware with a pure windows experience, and unsurprisingly last quarter PC sales went up YoY for the first time in five years.

valuearb 10y ago
Apple has to deal with all these forces and it's maintained healthy margins in Macs. It can do this because it offers a unique product, windows PC makers can't differentiate themselves because they rely on MSFT for R&D. When Apple started kicking butt in laptops by using sealed batteries with substantially more capacity, PC makers were locked out from doing same for years because it required battery conditioning software drivers, which MSFT didn't provide. Commoditization took time, early PC market didn't have the direct model. And the race to the bottom in PCs isn't the fault of the manufacturers. It's an effect of the business model, and customer decisions. If a large segment paid up for better PCs and local support that model would still work, instead they predominantly choose to save a few bucks on the purchase price by buying the cheapest ones with crapware.
72deluxe 10y ago
And on top of this it is still possible to buy laptops with a 1366x768 screen resolution. In 2017. It's insane.

goatherders 10y ago

Make better hardware and it's not a problem