4 ms·

People have been predicting Microsoft's decline for years, but they just posted record revenues last quarter. They have a much more diverse set of profitable b

by kvb 13y ago

People have been predicting Microsoft's decline for years, but they just posted record revenues last quarter. They have a much more diverse set of profitable businesses than Apple, Amazon, or Google do - Office, Windows, SQL Server, Xbox, Visual Studio, SharePoint, Dynamics XRM, ... They have over a dozen different businesses bringing in more than $1B of revenue a year. That's not to say that everything's rosy, of course, but people have lost perspective on what an impressive money-making machine Microsoft really is.

technoslut 13y ago
Just because MS has their fingers in a lot of pots doesn't meant everything they do has value. Office and Windows is still their bread and butter while Office continually takes up a larger piece of the pie. MS is at a crossroads. If they push subscriptions like Adobe has, they could see a mass exodus of consumers away from Office. The future isn't bleak for MS. What the climate has been showing is that MS is at its best when it comes to business.
mtgx 13y ago
Yes, but then Google and Apple didn't gain hundreds of millions of new users every year with completely different operating systems than Microsoft's. Also "record financial record" thing can be very misleading for a company. It's not a predictor of success for the next few years. Competitiveness in the current environment is. RIM fell for the same fallacy for years. RIM actually had a "record quarter" in 2009, and they were still growing into 2010. The problem is they only tried to change when things started getting worse - around late 2010 or early 2011. They really should've started changing course in 2007, or 2008 at most, after the iPhone came out. But they didn't. Because they also thought their financials are improving, "so they might be doing something right". But all they needed to do to see if they are or aren't doing something right is look if their phones are competitive with the iPhone (and later the Android phones). And they clearly weren't. Microsoft's biggest problem, as with all companies getting disrupted, is that the new disruptive technology arrives at a significantly lower price. Sure you can buy Windows machines for $300-$400 bucks, but the are nowhere near as good as the Android/iOS ones in terms of performance and what you get for the money in terms of hardware. And the price point is only getting lower.
- kvb 13y ago
  Sure, Windows is in a precarious position. However, that's why it's to Microsoft's credit that they have diversified their portfolio of applications and services so heavily. I can imagine a future where Microsoft isn't prominently on consumers' minds, but I can't fathom one where businesses aren't using a variety of its products heavily.
- maigret 13y ago
  > Also "record financial record" thing can be very misleading for a company. Benjamin Graham supported the opposite. It may be, in some minority cases, but generally it is not. Companies who consistently delivered generally keep delivering in the equivalent future timeframe.
  - nostrademons 13y ago
    Benjamin Graham didn't invest in tech, nor does anyone following his investment thesis.
    - maigret 13y ago
      Like Warren Buffett? Please note that Jason Zweig actually put tech in relation to Graham rules. Very interesting. EDIT It would be nice for you to give some data to support your point.
RivieraKid 13y ago
And they were right, because MS is on the decline – it's loosing its strategic position. 10 years ago, they were much stronger. Since then, Apple and Google surpassed them in market capitalization.
- kvb 13y ago
  Apple and Google may have surpassed them, but Microsoft's market cap has been pretty stable since 2002 or so. They are no longer a rapidly growing company, but they haven't been in decline.
nostrademons 13y ago
Almost all of those are in industries that are actively being disrupted by new innovations: Office => Google Docs; SQL Server => MySQL, PostGresQL, NoSQL; Visual Studio => Eclipse, SharePoint => The Google suite of tools, etc. If you read The Innovator's Dilemma, one of the hallmarks of disrupted businesses is that everything's fine until they go out of business. They keep moving up-market, into market segments with higher revenues and higher margins, until they're a mainstay of all giant enterprises. And then those enterprises realize that there's a competitor out there whose product wasn't suitable a couple years ago, but has just barely been able to do the job they need it to do, and switch en-masse. And then the big company, having run out of market segments to expand into, dies rapidly. Happened to IBM in the early 90s, Sun in the early 2000s...and Microsoft is next.
- daeken 13y ago
  > And then the big company, having run out of market segments to expand into, dies rapidly. Happened to IBM in the early 90s [...] Um. IBM has a $230B market cap. Apple is at $400B, Google is at $300B. Is that really the example you want to give for a "disrupted" dead company?
  - nostrademons 13y ago
    Read "Who Says Elephants Can't Dance", Lou Gerstner's firsthand account of IBM's historic turnaround. IBM was 3 months away from running out of cash when he got there in 1993. It survived largely because he bet the company on a pivot out of tech entirely (the IBM of today is a professional services company) and into a new market where they're not subject to the same Innovator's Dilemma forces. The same thing could happen at Microsoft, but it's unlikely with Ballmer (or any insider) still at the helm.
- kvb 13y ago
  All of those examples pose threats, but none of them is guaranteed to overtake the corresponding Microsoft product. Microsoft isn't sitting still, it's rapidly adding features to each of its products (e.g. Office 365 and the Office web apps, adding things like StreamInsight and Hekaton to SQL Server, etc.) Eclipse has been around for a long time and hasn't hurt Visual Studio yet. It's definitely possible that some Microsoft products will be disrupted, but they haven't put all of their eggs in one basket. Besides, Microsoft created enough successful new businesses over the last 10 years that I wouldn't bet against them doing the same in the next 10.

by kvb 13y ago

technoslut 13y ago

Just because MS has their fingers in a lot of pots doesn't meant everything they do has value. Office and Windows is still their bread and butter while Office continually takes up a larger piece of the pie. MS is at a crossroads. If they push subscriptions like Adobe has, they could see a mass exodus of consumers away from Office. The future isn't bleak for MS. What the climate has been showing is that MS is at its best when it comes to business.

mtgx 13y ago

Yes, but then Google and Apple didn't gain hundreds of millions of new users every year with completely different operating systems than Microsoft's. Also "record financial record" thing can be very misleading for a company. It's not a predictor of success for the next few years. Competitiveness in the current environment is. RIM fell for the same fallacy for years. RIM actually had a "record quarter" in 2009, and they were still growing into 2010. The problem is they only tried to change when things started getting worse - around late 2010 or early 2011. They really should've started changing course in 2007, or 2008 at most, after the iPhone came out. But they didn't. Because they also thought their financials are improving, "so they might be doing something right". But all they needed to do to see if they are or aren't doing something right is look if their phones are competitive with the iPhone (and later the Android phones). And they clearly weren't. Microsoft's biggest problem, as with all companies getting disrupted, is that the new disruptive technology arrives at a significantly lower price. Sure you can buy Windows machines for $300-$400 bucks, but the are nowhere near as good as the Android/iOS ones in terms of performance and what you get for the money in terms of hardware. And the price point is only getting lower.

kvb 13y ago
Sure, Windows is in a precarious position. However, that's why it's to Microsoft's credit that they have diversified their portfolio of applications and services so heavily. I can imagine a future where Microsoft isn't prominently on consumers' minds, but I can't fathom one where businesses aren't using a variety of its products heavily.
maigret 13y ago
> Also "record financial record" thing can be very misleading for a company. Benjamin Graham supported the opposite. It may be, in some minority cases, but generally it is not. Companies who consistently delivered generally keep delivering in the equivalent future timeframe.
- nostrademons 13y ago
  Benjamin Graham didn't invest in tech, nor does anyone following his investment thesis.
  - maigret 13y ago
    Like Warren Buffett? Please note that Jason Zweig actually put tech in relation to Graham rules. Very interesting. EDIT It would be nice for you to give some data to support your point.

RivieraKid 13y ago

And they were right, because MS is on the decline – it's loosing its strategic position. 10 years ago, they were much stronger. Since then, Apple and Google surpassed them in market capitalization.

kvb 13y ago
Apple and Google may have surpassed them, but Microsoft's market cap has been pretty stable since 2002 or so. They are no longer a rapidly growing company, but they haven't been in decline.

nostrademons 13y ago

Almost all of those are in industries that are actively being disrupted by new innovations: Office => Google Docs; SQL Server => MySQL, PostGresQL, NoSQL; Visual Studio => Eclipse, SharePoint => The Google suite of tools, etc. If you read The Innovator's Dilemma, one of the hallmarks of disrupted businesses is that everything's fine until they go out of business. They keep moving up-market, into market segments with higher revenues and higher margins, until they're a mainstay of all giant enterprises. And then those enterprises realize that there's a competitor out there whose product wasn't suitable a couple years ago, but has just barely been able to do the job they need it to do, and switch en-masse. And then the big company, having run out of market segments to expand into, dies rapidly. Happened to IBM in the early 90s, Sun in the early 2000s...and Microsoft is next.

daeken 13y ago
> And then the big company, having run out of market segments to expand into, dies rapidly. Happened to IBM in the early 90s [...] Um. IBM has a $230B market cap. Apple is at $400B, Google is at $300B. Is that really the example you want to give for a "disrupted" dead company?
- nostrademons 13y ago
  Read "Who Says Elephants Can't Dance", Lou Gerstner's firsthand account of IBM's historic turnaround. IBM was 3 months away from running out of cash when he got there in 1993. It survived largely because he bet the company on a pivot out of tech entirely (the IBM of today is a professional services company) and into a new market where they're not subject to the same Innovator's Dilemma forces. The same thing could happen at Microsoft, but it's unlikely with Ballmer (or any insider) still at the helm.
kvb 13y ago
All of those examples pose threats, but none of them is guaranteed to overtake the corresponding Microsoft product. Microsoft isn't sitting still, it's rapidly adding features to each of its products (e.g. Office 365 and the Office web apps, adding things like StreamInsight and Hekaton to SQL Server, etc.) Eclipse has been around for a long time and hasn't hurt Visual Studio yet. It's definitely possible that some Microsoft products will be disrupted, but they haven't put all of their eggs in one basket. Besides, Microsoft created enough successful new businesses over the last 10 years that I wouldn't bet against them doing the same in the next 10.