September 19, 2013 7:37 AM
Posted by: Ron Miller
Microsoft’s attempt to buy Apple products in exchange for Windows mobile ones smacks of desperation.
Microsoft’s latest gambit to get people to buy their tablets and smartphones is to pay Apple customers to give theirs up. Good luck with that.
In fact, just a week after offering a $200 gift card to Apple owners, ZDNet’s Mary Jo Foley reports that they’ve upped the ante to $350. It’s worth noting that’s what a new Surface RT costs, so they would be making exactly zero dollars on this deal. Do I hear $400?
I love the smell of desperation in the morning.
I can just see the Microsoft brain trust sitting around spitballing ideas about how to jump-start their mobile business. Ballmer enters a room surrounded by Microsoft’s sharpest marketing minds. A large white board and several magic markets sit at the wait in the front of the room. Ballmer sets the stage.
So far, every attempt by Microsoft to capture mobile marketshare has been stifled. They tried making their own tablets and it’s gone so poorly, Microsoft had to resort to giving them away to schools. The phone business remains mired in the single digits in the US and is not doing terribly well outside of a few pockets of popularity in the rest of the world.
The mission, Ballmer tells his marketing minions, is to find a way to get that market fired up. He opens the floor to suggestions. One particularly sharp young woman suggests they build better devices that people actually want. Ballmer pulls a Tim Armstrong and fires her on the spot.
This stifles the conversation for a bit, but after a few minutes somebody cautiously raises their hand and suggests paying iPad and iPhone owners to sell their equipment to Microsoft in exchange for a Windows phone or tablet. The room goes silent. Ballmer stares at the employee, then raises his eyebrows and triumphantly declares the idea brilliant!
OK. That never happened, but just how did such an idea actually see the light of day and why would they think it would work? Ideally any product lives on its own merits and doesn’t require gimmicks to make people buy it. That Microsoft believes it needs to pay its competitor’s customers to give up their devices to use Microsoft’s smacks of the worst kind of desperation.
And seriously, how many devices are they going to sell with this stunt? I’m guessing not very many. The thing is if Apple owners wanted a Windows device, chances are they would have bought one. It’s not as though the market is teetering towards Microsoft’s favor, and with just a little push, Apple owners are going to go running to Microsoft. That’s not going to happen.
One thing is clear from this attempt, Microsoft has a serious problem with their mobile device market and it’s letting the whole world know about it. Look, Microsoft probably made a smart move buying Nokia’s handset division, but they need to come up with a better approach than paying for customers. Even if they were able to buy marketshare, which is highly unlikely, they wouldn’t make any money doing it. No, Microsoft has to go back to the drawing board and earn marketshare the old-fashioned way.
They have to earn it.
Photo Credit: (c) Can Stock Photo
September 11, 2013 12:04 PM
Posted by: Ron Miller
Like the Stones, Apple has to find a way to capture the magic every time out.
Yesterday Apple announced a couple of new phones, one a lower priced one, one a typical high end one. As I peruse social media, I get the sense the masses were not impressed.
Much like the Rolling Stones, Apple has to get up on stage again and again and figure out a way to blow the audience away –and it’s not always easy.
The question is what exactly were the people looking for. Putting aside the 5C for a bit because it’s basically the iPhone 5 with a new colorful cover, let’s look at the newer model, the 5S.
The phone itself is nothing special or new if that’s what you were hoping for. The phone is, well an iPhone. It hasn’t changed much except now we have silver, gold and “space” grey for color choices. Other than that it looks pretty much the same as an iPhone has looked for a while now.
Perhaps people were looking for something new. I’m wondering if a new shape would have placated them? A bigger screen? What? Perhaps they wanted an HP-like complex list SKUs to choose from?
If I could stick a knife in my heart
Suicide right on stage
Would it be enough for your teenage lust
Would it help to ease the pain?
~Rolling Stones, It’s Only Rock and Roll
Once you get past the cover though, there is quite a bit to like under the hood inside the iPhone case, starting with the world’s first 64-bit A7 processor. Nobody else has done that. You won’t find it in a Samsung, Nokia or HTC. You won’t find it anywhere and it’s fast, at least if you believe Apple. Stephen Shankland writing on CNet points out there was a fair bit of hyperbole in Apple’s presentation yesterday, shocking as they may be, but he says it’s the future and Apple was smart to go there first –even if we don’t see the speed benefits Apple claims immediately.
If I could dig down deep in my heart
Feelings would flood on the page
Would it satisfy ya, would it slide on by ya
Would ya think the boy’s insane?
Apple didn’t introduce a wearable device yesterday, but it might have laid the foundation for one with the the new M7 chip, which is a motion tracking device. For folks into exercise and tracking their progress (or lack thereof), the new chip does all the heavy lifting, taking pressure off the A7 and, according to Gizmodo, collecting a continuous stream of data about your movements without having a huge impact on battery life.
Then of course there was iOS 7 and the fingerprint scanner. Sure some of the bloom was off the rose from these announcements because Apple announced iOS7 in June at WWDC and information about the fingerprint scanner leaked weeks before yesterday’s announcement. What might have had a little more oomph, lost a lot of luster when it was basically…oh, we’ve heard this stuff.
The fact is we want to be excited by these announcements, but as James Kendrick pointed out on ZDNet, the thrill is definitely gone from iPhone announcements, and let’s face it from just about all mobile announcements.
In the 2007-2010 timeframe, these events meant something because we were seeing something we hadn’t seen before ever, or we were seeing improvements we had been clamoring for. Sure, a faster processor and a fingerprint sensor appeal to my inner geek, but they sure don’t get the masses all hot and bothered like they once did.
Like the Rolling Stones complained in It’s Only Rock and Roll, what exactly does Apple have to do to get your attention now, suicide right on the stage? It’s a phone, folks. It’s never going to dazzle us like it once did.
It might not have excited us as it did back in the day. I’m not sure it ever could, but it was probably close enough for rock and roll. Whether that’s enough to satisfy our technology lust, only time will tell.
Photo Credit: michael conen on Flickr. Used under CC 2.0 license.
Ed.: For further perspective, check out Ron on Slashdot TV. More of a sports fan than a music fan? Maybe you’d prefer to read how Apple is like the New England Patriots.
September 3, 2013 9:58 AM
Posted by: Ron Miller
The Microsoft-Nokia deal is not a slam dunk by any means.
I was all set to write an entirely different post this morning when Microsoft pulled a fast one and bought Nokia’s handset division overnight. There’s a lot of talk about the beauty of the hardware-software combination with this deal, but I for one think it won’t work for either company.
I agree it’s a deal that makes sense on paper, just like the Red Sox signing Carl Crawford and trading for Adrian Gonzalez once sounded so good on paper, Josh Beckett was quoted in Spring Training, 2011 as saying, he was looking forward to playing for a 100-win team. On paper that team looked great. In reality, the team crashed and burned in a September swoon for the ages because it couldn’t play together.
And there could be a lesson for Microsoft and Nokia in that collapse.
The conventional wisdom goes that Apple is the primary business model to emulate because Apple has always controlled the hardware and the software, and as we know has had a pretty good run doing that. The thinking goes if you want to make money, you have to control the entire equation.
It worked for Apple because that’s what Apple has always done. They do it really well, but just because it works for Apple doesn’t mean it’s going to work for Google or Microsoft. In Google’s case, they went out and bought Motorola for $12.5 billion to make Google-branded, Android smartphones.
I’ve always argued that Google makes money when Google services run on the maximum number of devices possible. That’s what makes the Android strategy so brilliant in the first place. They give away a phone OS. It explodes and becomes the most popular OS on the planet by far and Google wins. If OEMs believe Google is giving its own Android phone division an unfair advantage in this game, it’s going to upset the balance of the ecosystem it worked so hard to create.
I see a similar dilemma for Microsoft with Nokia, and for Microsoft the problem is a bit more pronounced. Android has been so successful, Google can afford to piss off some of the players in their partnership and still get away with it. Microsoft with single-digit marketshare does not have that luxury.
So while of course, Microsoft will continue to allow other phone makers to manufacture Windows phones, you have to wonder how much motivation these companies are going to have to continue doing that when they aren’t selling well, and now Microsoft owns the market leader.
One of the reasons Microsoft was successful with Windows and Office was because they worked on any PC. The more machines that ran Windows and Office, the better off Microsoft was. That’s probably the primary reason we never saw a Microsoft-branded PC. Now, they want to move away from that model and they want to control the hardware and software and be Apple. But just because you own the pieces of a system, doesn’t mean you’re going to be successful.
If you want an example of Microsoft buying a good service and doing very little with it look at Skype, for which it paid $8.5 billion a couple of years ago. As Om Malik points out, Microsoft has failed to take advantage of owning what was one of the more disruptive products of the last decade. As he put it:
“Skype as we know is slowly losing its identity. It is merely a pale imitation of its former rebellious self, a Microsoft product that is there just to further Microsoft’s vague and unclear ambitions about unified communications.”
Those who think that Nokia is the missing link for Microsoft would be wise to remember that. As Bob Egan, who is founder and CEO of Sepharim Group tweeted this morning, “Msft buys Nokia – cheap. Msft good at the A, not so good at the M in M&A. Microsoft’s purchase of Nokia is a fate determining moment.”
That it is and Microsoft had better be ready to take advantage this moment and merge Nokia smoothly into the family because in spite of its vast cash hoard, it needs to succeed in mobile or be left behind for good, a once vibrant company that simply didn’t have the ability to evolve with a changing market.
And one other thing, there’s this chart on the Guardian this morning that shows that maybe Nokia’s not doing so great selling Windows phones after all.
What I see is not a perfect match, but two struggling companies searching desperately for an answer that will somehow prevent them from becoming the next Blackberry. And even though the deal looks solid on paper, and is very likely one both companies had to make, it doesn’t mean it was a good one or that it will work.
If you doubt that, see the 2011 Red Sox. They couldn’t miss either.
(c) Can Stock Photo
August 23, 2013 1:32 PM
Posted by: Ron Miller
It’s not hyperbole to say apps changed everything.
It’s not hyperbole to say that when Apple decided to let third party developers create apps for the iPhone, it changed the whole mobile dynamic and it altered expectations in the enterprise too.
After that, Android came along and took it a step further, providing an open mobile platform to build apps. Whatever direction you’ve taken from that 2008-2009 timeframe a whole economy of sorts has built up around apps and billions of them have been downloaded since.
We’ve come to love our apps and they have actually changed our expectations in terms of how we assume software should operate. Apps at their best are simple, only doing a few things. They are easy to use. You download one, you open it and with little or no instruction you can use it.
After years of dealing with highly complex tools like Office or enterprise tools like content management, CRM and ERP; people were all but giddy to find apps they could provision themselves and use without training. And while in an app store, you’re going to find your share of “crapplications” (as my friend Brian Katz calls them), a good many of them are highly focused and extremely useful from both a consumer and employee perspective.
What’s even better is you don’t need IT to help you choose them or install them. They are mostly free or very cheap and if you try one, and find it doesn’t meet your needs, no harm, no foul.
Compare that with the applications we had been using prior to that and you can understand why end users saw apps as a huge breath of fresh air, and when they saw simple, highly defined apps, they began to question why the applications they were using at work were complex and often difficult (or even impossible) to use.
Let’s face it, employees just want to find a way to get their job done without wrestling the tool to the ground to do it. We’ve seen this ease of use extended in many cases to cloud applications too. They might do more than a typical mobile app, but the user interface has been designed for ease of use and that’s an important distinction.
Recently, The Enterprise Efficiency blog reported on how WGBH in Boston, a public television station that produces lots of original content for PBS, made the the transition from traditional on-premise applications to cloud applications.
One of the reasons they made the switch was because management was finding tremendously low adoption on the traditional enterprise applications. They found by switching to the cloud and making access available on mobile devices, adoption went up dramatically. There were some that weren’t popular, but they found that when an application wasn’t popular, it was invariably due to poor interface design.
All of this shows just how much interface design matters and app developers went a long way toward showing us just how important ease of use and elegant design is. Now we won’t accept anything less and IT needs to deal with that.
Photo Credit: (c) Can Stock Photo
August 22, 2013 8:07 AM
Posted by: Ron Miller
As small companies grow, it may make sense to open their own data centers.
The theory goes that today it’s easier to launch a startup than ever before. You don’t need a building. You don’t need software. You don’t need infrastructure at all. The cloud gives you everything you need and as you grow it scales to meet your needs.
It makes perfect sense, but is it true?
It actually is mostly true. Many businesses have been able to launch and grow because of the power of cloud computing. But a recent Wired article suggests that there is a point where it becomes less cost-effective to continue using cloud services than it is to open your own datacenters.
We have seen this with data-intensive businesses like Netflix and Zynga. When you reach a certain size, it makes less sense to use the cloud exclusively. “Within IT departments, public clouds do tend to get more expensive over time, especially when you reach a certain scale,” VMware engineer Kit Colbert told Wired.
Of course, it’s worth keeping in mind when companies take it in-house and build a network with virtual resources, VMware is often the big winner, so it’s in their best interest to suggest that private cloud might be a better option as you grow and pull these companies that have until recently been entirely in the public cloud, back into the private side of the business where companies like VMware can profit.
But like anything else, there is also an element of truth to that assertion. As you use more and more public cloud resources, the more expensive it’s likely to get and when that happens, you have to explore your options. If you’re spending x amount of dollars on cloud services and it costs a certain amount of money to build out your own data center, and you’re expected to continue your growth trajectory, at some point you have a decision to make.
And some companies are seeing that it’s just too expensive to continue in the public cloud when the business reaches a certain level.
That tipping point is probably going to be different for every business. For some it’s not going to happen because their business might not be so data-intensive, but for others, when the numbers reach a certain level, the decision almost makes itself.
Which is not to say that the cloud isn’t giving many small businesses an opportunity to launch in a fairly inexpensive manner. They can build their business in the cloud and as they do prove the viability of the idea. If it’s growing and things are going well, then the company is going to catch the attention of funders, and if they don’t, at least they have a compelling pitch to make when it comes time raise that capital required to build a private data center.
The data center probably won’t be your father’s data center either. It will be leaner. It will use virtualizaton and it will very likely make much more efficient use of resources. It will offer internal users a variety of services, which will feel very familiar because they will be the same types of services that they are used to seeing from their Infrastructure as a Service and Platform as a Service providers.
And these companies probably won’t abandon the cloud completely. They will very likely continue to buy commodity services like email in the cloud, but when it comes to running their core business, they may reach a point where hosting it in the cloud ceases to make sense.
And when that happens, they will build their own –and that’s fine. There’s room for both models.
Photo Credit: (c) Can Stock Photo
August 16, 2013 11:55 AM
Posted by: Ron Miller
Could someone be working on the next great mobile device inside a Silicon Valley garage?
This morning, Horace Dediu wrote his farewell to BlackBerry on LinkedIn pointing out the odd volatility of the mobile industry. At one point, BlackBerry against all odds ruled the mobile roost until Apple and Google came along and overturned that dominance.
Could that volatility some day work against Apple and Google as well? It’s entirely possible that that somewhere out there, a small group of individuals is working on a mobile problem the rest of the industry hasn’t considered yet.
In the beginning mobile was about phone portability and nothing more. If you could make phone calls on the go, you were happy. Then BlackBerry changed all that when they came out with their smart phones that allowed you to get email on the run. As Dediu pointed out, this small Canadian company was able to capture a market and control it for 5 years in spite of the fact it was usually competing against Microsoft and its Exchange servers.
Even though Microsoft had the clear advantage of having the internal email infrastructure in place, BlackBerry was able to win the market and control it for a number of years.
Then it all changed again. Instead of simply wanting just calls or email, now users wanted a computer in their pockets and for this job, it was a computer company, Apple that was first out of the gate with a phone that gave users just that.
Android followed a couple of years later and we have these two players battling it out for dominance across the mobile world. Meanwhile early successful players like BlackBerry, Nokia and Motorola are struggling to get marketshare.
This goes to show that tastes and needs change and as they do so does the market. While the mobile space in general continues to thrive, the most successful players seem to be swapped out every several years. Apple has been at it 6 years now. Google 4.5 or so. Could their time be coming?
For now, both companies seem safe of course. There is no obvious mobile need as there was in the first few industry shifts, but just because we can’t see it, doesn’t mean it isn’t out there and at some point, someone will create a device that changes everything that came before.
In his book, The Digital Wars: Apple, Google, Microsoft and the Battle for the Internet; Guardian reporter Charles Arthur writes about a New Yorker interview with Bill Gates back in 1998 in which Gates was asked which company he feared most of his competition. Gates wasn’t afraid of his current crop of competitors Sun or Oracle or anyone else. What scared him most, he told the New Yorker was a company that didn’t exist yet or that was just forming in the mind of some kids in in the proverbial Silicon Valley garage.
Gates was smart to fear the unknown. Just around the corner, some of those smart kids were coming up with the seeds of the ideas that would be Google and Facebook.
And the same fear should hang in the minds of the leaders at Apple and Google today because just as Nokia and Motorola did for phones and BlackBerry did for email, and the two market leaders did for smartphones; somewhere out there, someone could be forming the seed of an idea that will undo them as well.
And if you scoff at that notion, remember how dominant Gates’ company was in the 90s. Nobody stays on top forever. Disruption is the natural of order of things and sooner or later what goes up is very likely to come tumbling back down. Google and Apple would be wise to remember this.
BlackBerry is today’s big loser, but all companies must deal with disruption or suffer the same fate BlackBerry is experiencing now.
Photo by jurvetson on Flickr. Used under CC 2.0 Share Alike/Attribution License.
August 12, 2013 9:09 AM
Posted by: Ron Miller
Blackberry is broken beyond repair.
On December 17th, I made my mobile predictions for the coming year. The first one was predicting the demise of RIM. Today, the company reportedly suspended shares and formed a special committee to administer the Last Rites.
The actual purpose of the committee is to find a buyer or find some way to keep the company afloat, but at this point, it seems highly unlikely that is going to happen. As I wrote last year, Blackberry 10 was the company’s last stand, and even though it created a nice phone and developers reportedly liked the BB10 development program, it was too much, too little, too late.
It wasn’t as though the prediction was a huge gamble on my part. As I wrote at the time, “After losing market share for years, and having lost consumers along with it, the handset business will be cut off and drowned in Lake Ontario. No body will be found. I’m sure somebody will buy the other pieces like their patents and perhaps their server business, but Blackberries will go back to being fruit and the handsets will be a footnote in mobile history.”
In fact, you might find this hard to believe, but as recently as June, 2008, RIM gained almost 10 points of marketshare to settle in at 44.5 percent. That would be the watershed moment for the company. A year later, Android would begin to take hold and between Android and iPhone, consumerization and BYOD along with a lack of vision on the part of the company, Blackberry would begin its long descent from being to nothingness.
Lest you think I take glee in this company’s demise, I don’t. I hate to see it leave the smartphone market stage, partly because it was the pioneer in the market and for a long time produced good phones that did the job solidly and well, and partly because it’s one less competitor for Google and Apple –and that’s bad for all of us. But like so many disrupted companies, Blackberry, a once great company, simply couldn’t adapt quickly enough to a changing market. By the time, it came out with classy Z10 and the retro Q10, the game was already over. The company just didn’t know it yet.
Blackberry is trying to put its best face on what is clearly the beginning of the end by forming this committee as one last effort to keep the company going. According to a statement released by the company this morning, the committee is charged with finding strategic alternatives. “These alternatives could include, among others, possible joint ventures, strategic partnerships or alliances, a sale of the Company or other possible transactions.” What they don’t say of course, but what is between the lines, is that it is exploring alternatives to packing it in and going home. That would seem unseemly to shareholders though, wouldn’t it?
But make no mistake, this day and this committee marks the end game for Blackberry, at least as we’ve known it, as an independent company. There’s a bunch of assets and cash on the books, so they can hang on for some time, but the company that was once the gold standard of smartphones has begun its death march– and it’s sad day for us all.
Photo Credit: miggslives on Flickr. Used on CC 2.0 license.
July 26, 2013 7:30 AM
Posted by: Ron Miller
When it comes to smartphones, we’ve settled in and the one we have is probably good enough.
The latest trend for mobile carriers is upgrade plans. They want to give us a way to have the latest and greatest phone when it appears we no longer really want that.
The phones we own are good enough.
GigaOm reported last week that two of the four major US carriers have instituted upgrade plans that enable you to upgrade faster than under the old two year cycle. I would expect the others will soon follow suit because really if you think it about it, why would the carriers care if you upgrade sooner than later.
But there appears to be an underlying problem here that the upgrade plans could be trying to address. People are holding onto their cell phones longer than we used to. We no longer are compelled to get the newest Apple, Android, Windows or Blackberry because we just don’t care that much anymore.
The changes have become so incremental that we are not compelled to get rid of that perfectly good phone we have in our pockets today. I can tell you that personally, my iPhone 4 is almost 3 years old. I let the 4s and the 5 pass without upgrading. Siri is fun, but it’s not enough to make me upgrade.
I keep my phone in good condition. It’s got a high-quality screen protector and I store it in a flip case. If you take it out of the case and spray a little cleaner on it, it’s in pristine condition. Sure, I wouldn’t mind better battery life or updated antenna technology, but none of that has convinced me to give it up yet and replace it with a new iPhone or even another brand.
Let’s face it, we used to wait with baited breath for each new phone. The launches were events and soon after the announcement we were lined up at our carriers getting the newest model. I just don’t have the sense that people care enough about mobile devices anymore.
Sure, the manufacturers still try to make them into events, and we still pay attention (at least a little), but we don’t get excited like we used to. A smartphone is not that big a deal anymore, and you can only add so many bells and whistles. The differentiators aren’t big enough to compel us to switch.
Then there are tablets. I’ve got an old (old) iPad 1 from way back in 2010 when it first was released. Now that was an event. Tablets were new and nobody knew what to expect. Those were exciting times.
Today, Android tablets are a dime a dozen and while the iPad mini is nice and the retina display on the bigger iPad is lovely, I have a device. It works fine for me and it does what I want it to do. I’ve considered buying a Kindle or a Nexus 7, but when it comes time to do it, I wonder what can they do that my trusty ancient iPad can’t do? Once again, it’s good enough.
Mobile has reached that point like many long-term relationships. It doesn’t have the unbridled passion it had at the beginning, and that makes sense because it’s hard to maintain that level forever. At some point, you settle in. You still enjoy your smartphone, but just as you don’t get excited by the latest television and run and buy a new one every 18 months, you don’t wait for the latest smartphone anymore, not when the one you have works perfectly fine.
Photo Credit: (c) Can Stock Photo
July 23, 2013 11:31 AM
Posted by: Ron Miller
As PC sales decline, so has Microsoft’s market dominance.
Did you ever consider that maybe Windows and Office was all Microsoft ever really had. They were the quintessential one-trick pony, only the pony was so lucrative the company could stumble on for years even after those two products increasingly became less relevant.
That could be the period in we are now.
By now you’ve probably all heard about the Microsoft reorganization and its less than stellar quarterly earnings report. There were lots of takes on this, but however you looked at it, it was the company’s first quarterly loss ever and didn’t bode well. Some people saw it as the beginning of the end of Windows, while others said it wasn’t so bad because the loss wasn’t as big as the so-called experts on Wall Street thought it would be.
But I saw a couple of posts this week that really got me thinking that perhaps Microsoft is in bigger trouble than even this quarter’s numbers might suggest. The first was Benedict Evans’s post The Irrelevancy of Microsoft in which he makes a case that Microsoft’s dominance peaked in 1995 with the release of Windows 1995.
Since then it has been all downhill. Meanwhile PC sales since 2007, when the first iPhone hit the market have remained almost flat with a decline starting at the end of last year. In contrast, iOS and Android devices have been on a steady growth path since the middle of June 2009.
You can click through to the story and see all of his graphs, and the bottom line is it shows that the decline of Microsoft is not just a perception thing, it’s a reality supported by numbers over long periods of time.
Microsoft obviously recognized this trend as well as anyone, or at least they should have, and that could account for its attempts to turn the company toward the cloud, develop Windows 8 as an all-purpose multi-platform OS, release Windows Phone 8 and develop its own tablets.
But as we’ve pointed out before in this space, so far these attempts have been futile. The Surface RT was a disaster resulting in a $900 million write down. Windows phones, mostly due to the success of Nokia, have passed Blackberry, but that doesn’t mean much when both companies combined marketshare doesn’t equal 10 percent of total share.
Microsoft’s share of the tablet market is negligible at this point and Windows 8 sales have been slow to develop, probably due in large part to the decline of PC sales and the desire for many companies to stay put with Windows XP or Windows 7.
Office 365 is starting to gain some traction with $1.5 billion in annual revenue, but if Office/desktop starts to decline as would make sense over the long term as PC sales decline, it’s not clear that Microsoft can make up the lost revenue online where the competition is much steeper than on the desktop.
This all harkens back to an even earlier era when Microsoft recognized it needed to shift to the internet in the 1990s, and while it it did it, it never made much money from its online divisions. Even today when you consider so many people are accessing services online, Microsoft reported that while the online division grew a respectable 9 percent for the quarter, it only accounted for $804 million in revenue, pittance when you consider the company total revenue of more than $19 billion.
It’s not easy to say that a company that makes that kind of money is in decline, but more than half that was from Windows at $4.411 billion and the Business Division, which prior to the reorganization included Office and Office 365, accounted for $7.213 billion. It’s worth noting another $5 billion or so came from the enterprise division, which you could argue developed specifically because of Windows dominance in the enterprise. If that were to decline, then it would make sense the reliance on Microsoft enterprise products would decline with it.
But as PC sales continue to drop, the revenue from those two cash cows, Windows and Office, are going to drop as well. And as employees increasingly choose their own devices, they are foregoing Microsoft and choosing other platforms. Microsoft’s one-trick pony will no doubt continue to trot along for years, but unless it learns another trick or two quickly that generates significant revenue it can’t go on forever like this, and sooner or later the reality of the numbers will catch up with it.
Which is not to say that Microsoft or the PC is going away tomorrow. Both will survive for a very long time yet, but if PC sales continue to decline, and every indication is that that they will, there is strong reason to believe Microsoft’s dominance will as well.
Photo Credit: Dell’s Official Flickr Page.