8 ms·

This is a very bad point for Microsoft. They have a tremendous stable of researchers, tremendous market dominance, fairly solid software, and they seem to be u

by pnathan 15y ago

This is a very bad point for Microsoft. They have a tremendous stable of researchers, tremendous market dominance, fairly solid software, and they seem to be unable to capitalize on that.

stcredzero 15y ago
They have a tremendous stable of researchers, tremendous market dominance, fairly solid software, and they seem to be unable to capitalize on that. Two interesting questions: Are there big tech companies that you wouldn't say that about? Why doesn't it matter for those companies?
- Duff 15y ago
  The difference between other tech companies and Microsoft is that Microsoft is no longer a growth company. That isn't necessarily bad. IMO, it's reasonable to have a slow-growth company in a mature market that pays a nice dividend (Microsoft's should be higher though). The danger is that Microsoft's utter dominance is getting chipped at from the margins. Are small companies or individuals buying Office like they once did? Is Apple's growth in the tablet space eventually going to put a bullet in the traditional PC?
  - hugh3 15y ago
    Microsoft is no longer a growth company Ah, but it could be. There are plenty of other markets left to dominate under Microsoft's general heading of "we make software for stuff", especially if they don't mind making hardware too (see Zune, Xbox). If they're worried about the tablet market, why not create their own tablet? Why did they make one attempt at the iPod market and then give up? Why aren't they pushing their Windows Mobile harder? Why aren't they doing more to go toe-to-toe with Apple? They have fifty billion dollars in cash, why not do something with it?
    - stcredzero 15y ago
      There are plenty of other markets left to dominate under Microsoft's general heading of "we make software for stuff", especially if they don't mind making hardware too. There are tons of connectivity issues they can solve, or help solve through 3rd parties. This is also what Near Field comms are about.
    - lukeschlather 15y ago
      Microsoft does a good job of making an easy to manage server/desktop ecosystem for any sized business (assuming they have at least some IT.) They do it better than anyone. Trying to break into other markets is if anything a mark that the management doesn't recognize their core competencies and is trying to overreach. What they should be working on is next generation CRM tools, directly competing with Oracle, IBM, and the businesses that rely on their overpriced stacks.
    - Duff 15y ago
      We could have had the same discussion about IBM in 1986. Think about it. Microsoft is handcuffed by their success, because anything that threatens the holy trinity of OEM Windows Licensing, Office and corporate EAs is not going to be successful. The impact to short-term bottom line is too much... Look at 1986 IBM again as the example. Do you want to be the 1986 IBM salesmen who sells some PC-based application system for $500k to a bank... a bank who may replace the IBM PCs with Compaqs in 1988? Or do you want to be the guy who sells a $10M mainframe/software package with multi-year service agreements?
      - hugh3 15y ago
        Your point about IBM confuses me. Are you saying that Microsoft is going to be like IBM (a slow decline for another decades, followed by a huge boom ten years later)? Or that Microsoft should follow IBM's example by giving up on the consumer market? There's many ways to make a buck -- Apple has chosen one, IBM another, and neither is obviously better than the other.
  - Splines 15y ago
    Is Apple's growth in the tablet space eventually going to put a bullet in the traditional PC? Call me naive, but I have a really hard time seeing the traditional PC going away. Tablets just aren't cheap or versatile enough to replace PCs.
    - stcredzero 15y ago
      The desktop and the laptop are really good embodiments of a workstation form factor. The growth of tablets isn't at the expense of the workstation. It's more the realization that there are other niches. There are other work patterns that are better served by other form factors. Think about it. How many work patterns actually amount to writing down information, then going to a workstation and transferring the data? Lots.
    - deleted 15y ago
      [deleted]
    - evangineer 15y ago
      Tablets already seem to be hurting home PC sales if recent numbers from the likes of HP is any indication.
    - Duff 15y ago
      You're not looking at the big picture. The PC is dead -- it's a commodity now. I work in a big enterprise IT shop with tens of thousands of PCs. We have management software that meters application utilization. 85% of application runtime on PCs is devoted to: Microsoft Word, Outlook and IE. Most of the other 15% are in-house apps, with a long tail of various tools that people use. Yet the per-seat cost of a desktop is over $100/year for basic licensing, $75/year for Office and about $250/year for hardware, assuming a 4-year refresh cycle. For 10,000 people, that's $4.25M of annual cash flow just to provide clients to workers -- no infrastructure costs, no operational staff costs. (Those costs are easily $50-100/seat, depending on the org) That's a ridiculous amount of money. So there's a huge opportunity to offer a solution that improves productivity by hacking away at that cost. Compare the management features of an iPad/iPhone/BlackBerry to ChromeOS -- they are nearly identical. Lower labor costs plus less licensing means enterprise adoption. Technically, the solution just needs to be "good enough".
  - eager_neither 15y ago
    IBM is not really a growth company any more either.
  - rbanffy 15y ago
    > Microsoft is no longer a growth company Because they failed to gain a foothold on any growing market. Or even find them before they exploded. And the few they did (mobile - they took Palm's crown in the early 2000s) they fumbled completely.
tybris 15y ago
What do you mean unable to capitalize? They have a 32% profit margin (for comparison, Apple has 22%) and their dividends are considerably higher than the interest on your savings account. Why should they care about their stock price? It's not like they're in dire need of a stock emission. They have a cool $20 billion in annual profit flowing in. Their employees won't mind that much either, since a low stock price means they get more shares and with a P/E ratio of under 10 they're likely to go up eventually.
- hugh3 15y ago
  Why should they care about their stock price? Ultimately, they should care about the stock price because raising the stock price (or, more directly, the value of the company) is what we (the shareholders) pay them (the management) for. "Here you go" say the shareholders (via the board) to the management. "Here's a freaking huge salary. Now go find ways to make my company bigger." That doesn't mean they should care about day-to-day fluctuations in the share price, but certainly ensuring long-term growth in the share price is exactly what we're paying 'em to do. (And I don't know why I used "we" all through there, because I'm not actually a MSFT shareholder.)
  - code_duck 15y ago
    Microsoft pays dividends, at least.
    - hugh3 15y ago
      True, but only 2.65%, which isn't enough to justify zero growth. Actually I'm looking at the historical MSFT price right now, and it's interesting. Of course they had huge growth in the 90s, hitting twice its present value at the end of '99, before rapidly crashing back down to its present value by 2001. It's been flat ever since. In 2003 the company said "Screw it, we might as well pay dividends" and they've been putting out a slowly-increasing dividend ever since. Other than that, the lack of change over the last decade has been remarkable. Interestingly, 2000 was also the year that Ballmer replaced Gates as CEO. Maybe what Microsoft really needs is a CEO with some vision.

by pnathan 15y ago

This is a very bad point for Microsoft. They have a tremendous stable of researchers, tremendous market dominance, fairly solid software, and they seem to be unable to capitalize on that.

stcredzero 15y ago

They have a tremendous stable of researchers, tremendous market dominance, fairly solid software, and they seem to be unable to capitalize on that. Two interesting questions: Are there big tech companies that you wouldn't say that about? Why doesn't it matter for those companies?

Duff 15y ago
The difference between other tech companies and Microsoft is that Microsoft is no longer a growth company. That isn't necessarily bad. IMO, it's reasonable to have a slow-growth company in a mature market that pays a nice dividend (Microsoft's should be higher though). The danger is that Microsoft's utter dominance is getting chipped at from the margins. Are small companies or individuals buying Office like they once did? Is Apple's growth in the tablet space eventually going to put a bullet in the traditional PC?
- hugh3 15y ago
  Microsoft is no longer a growth company Ah, but it could be. There are plenty of other markets left to dominate under Microsoft's general heading of "we make software for stuff", especially if they don't mind making hardware too (see Zune, Xbox). If they're worried about the tablet market, why not create their own tablet? Why did they make one attempt at the iPod market and then give up? Why aren't they pushing their Windows Mobile harder? Why aren't they doing more to go toe-to-toe with Apple? They have fifty billion dollars in cash, why not do something with it?
  - stcredzero 15y ago
    There are plenty of other markets left to dominate under Microsoft's general heading of "we make software for stuff", especially if they don't mind making hardware too. There are tons of connectivity issues they can solve, or help solve through 3rd parties. This is also what Near Field comms are about.
  - lukeschlather 15y ago
    Microsoft does a good job of making an easy to manage server/desktop ecosystem for any sized business (assuming they have at least some IT.) They do it better than anyone. Trying to break into other markets is if anything a mark that the management doesn't recognize their core competencies and is trying to overreach. What they should be working on is next generation CRM tools, directly competing with Oracle, IBM, and the businesses that rely on their overpriced stacks.
  - Duff 15y ago
    We could have had the same discussion about IBM in 1986. Think about it. Microsoft is handcuffed by their success, because anything that threatens the holy trinity of OEM Windows Licensing, Office and corporate EAs is not going to be successful. The impact to short-term bottom line is too much... Look at 1986 IBM again as the example. Do you want to be the 1986 IBM salesmen who sells some PC-based application system for $500k to a bank... a bank who may replace the IBM PCs with Compaqs in 1988? Or do you want to be the guy who sells a $10M mainframe/software package with multi-year service agreements?
    - hugh3 15y ago
      Your point about IBM confuses me. Are you saying that Microsoft is going to be like IBM (a slow decline for another decades, followed by a huge boom ten years later)? Or that Microsoft should follow IBM's example by giving up on the consumer market? There's many ways to make a buck -- Apple has chosen one, IBM another, and neither is obviously better than the other.
- Splines 15y ago
  Is Apple's growth in the tablet space eventually going to put a bullet in the traditional PC? Call me naive, but I have a really hard time seeing the traditional PC going away. Tablets just aren't cheap or versatile enough to replace PCs.
  - stcredzero 15y ago
    The desktop and the laptop are really good embodiments of a workstation form factor. The growth of tablets isn't at the expense of the workstation. It's more the realization that there are other niches. There are other work patterns that are better served by other form factors. Think about it. How many work patterns actually amount to writing down information, then going to a workstation and transferring the data? Lots.
  - deleted 15y ago
    [deleted]
  - evangineer 15y ago
    Tablets already seem to be hurting home PC sales if recent numbers from the likes of HP is any indication.
  - Duff 15y ago
    You're not looking at the big picture. The PC is dead -- it's a commodity now. I work in a big enterprise IT shop with tens of thousands of PCs. We have management software that meters application utilization. 85% of application runtime on PCs is devoted to: Microsoft Word, Outlook and IE. Most of the other 15% are in-house apps, with a long tail of various tools that people use. Yet the per-seat cost of a desktop is over $100/year for basic licensing, $75/year for Office and about $250/year for hardware, assuming a 4-year refresh cycle. For 10,000 people, that's $4.25M of annual cash flow just to provide clients to workers -- no infrastructure costs, no operational staff costs. (Those costs are easily $50-100/seat, depending on the org) That's a ridiculous amount of money. So there's a huge opportunity to offer a solution that improves productivity by hacking away at that cost. Compare the management features of an iPad/iPhone/BlackBerry to ChromeOS -- they are nearly identical. Lower labor costs plus less licensing means enterprise adoption. Technically, the solution just needs to be "good enough".
- eager_neither 15y ago
  IBM is not really a growth company any more either.
- rbanffy 15y ago
  > Microsoft is no longer a growth company Because they failed to gain a foothold on any growing market. Or even find them before they exploded. And the few they did (mobile - they took Palm's crown in the early 2000s) they fumbled completely.

tybris 15y ago

What do you mean unable to capitalize? They have a 32% profit margin (for comparison, Apple has 22%) and their dividends are considerably higher than the interest on your savings account. Why should they care about their stock price? It's not like they're in dire need of a stock emission. They have a cool $20 billion in annual profit flowing in. Their employees won't mind that much either, since a low stock price means they get more shares and with a P/E ratio of under 10 they're likely to go up eventually.

hugh3 15y ago
Why should they care about their stock price? Ultimately, they should care about the stock price because raising the stock price (or, more directly, the value of the company) is what we (the shareholders) pay them (the management) for. "Here you go" say the shareholders (via the board) to the management. "Here's a freaking huge salary. Now go find ways to make my company bigger." That doesn't mean they should care about day-to-day fluctuations in the share price, but certainly ensuring long-term growth in the share price is exactly what we're paying 'em to do. (And I don't know why I used "we" all through there, because I'm not actually a MSFT shareholder.)
- code_duck 15y ago
  Microsoft pays dividends, at least.
  - hugh3 15y ago
    True, but only 2.65%, which isn't enough to justify zero growth. Actually I'm looking at the historical MSFT price right now, and it's interesting. Of course they had huge growth in the 90s, hitting twice its present value at the end of '99, before rapidly crashing back down to its present value by 2001. It's been flat ever since. In 2003 the company said "Screw it, we might as well pay dividends" and they've been putting out a slowly-increasing dividend ever since. Other than that, the lack of change over the last decade has been remarkable. Interestingly, 2000 was also the year that Ballmer replaced Gates as CEO. Maybe what Microsoft really needs is a CEO with some vision.