Posted by: Onuora Amobi
Apple, Earnings, Financials, Google, Microsoft, Windows 8
Companies have started reporting their financials for the 4th quarter of 2012 and it looks good for BOTH Apple and Microsoft.
The company posted a record $13.1b profit on a record $54.5b in revenue, compared to last year’s record of $13.06b profit on $46.33b in revenue.
Google reported earnings for Q4 on January 22. The company’s stock rose 5% after market as the company reported consolidated revenues of $14.4 billion, up approximately 36% year-over-year.
Microsoft just came out with their earnings for Q4 and were surprisingly strong.
Microsoft’s overall revenue for the quarter stood at $21.46 billion, with a net profit of $6.38 billion.
I have been asked what these numbers mean for Microsoft and Windows 8. Well, there are several things I would take away from the stated financials of Apple and Google.
First of all:
Apple and Google mobile devices represent a very clear and present threat to the PC.
Apple (and Google) mobile devices are eating into all types of PC and MacBook sales.
During Apple’s conference call, Tim Cook stated the following:
On iPad in particular, we have the mother of all opportunities here, because the Windows market is much, much larger than the Mac market is, and I think it is clear that it’s already cannibalizing some, and I think there’s a tremendous amount of opportunity there. I’ve said for three years now that I believe the tablet market would be larger than the PC market at some point, and I still believe that. You can see by the growth in tablets and the pressure on PCs that those lines are beginning to converge.
Microsoft and OEM’s are in real trouble here unless they can turn the Windows 8 narrative around. The threats from Apple and Google mobile devices will only continue to grow and Microsoft have to come to the table with a counterpunch
The Microsoft Windows 8 Surface Pro has to be a hit
Based on the tepid response the market has given to Windows RT and the Surface RT, the Surface Pro running Windows 8 has to be a winner. Microsoft have to do everything possible to guarantee that this device
- Has serious mindshare
Iphone and Android sales are still a huge problem.
iPhone sales were a record 47.8m compared to 37.04m iPhones a year ago and 26.9m iPhones last quarter.
No matter what the papparazzi say about the iPhone 5 being stale and the relative lack of innovation, the device is being gobbled up in HUGE numbers.
In addition, Samsung have made it their mission in life to sell beautiful and powerful Android phones.
Microsoft, HTC, Nokia and all other Windows Phone 8 partners are going to need to do something different to stop the bleeding. If things continue at this pace, Microsoft will continue to struglle and lag behind all the rest of the vendors.
China will be a mobile battlefield.
Apple have stepped up their sales game in China and they are starting to see the fruits of their labor.
According to Tim Cook:
We increased 70 percent from the year-ago quarter. In terms of geographic distribution we saw our highest growth in China. I would characterize it as we’re extremely pleased.
It’s critical that Microsoft find ways to do the same in that territory. There are too many consumers coming online in Asia to be ignored and if an Apple/Google culture takes root, that would be a disaster.
Windows 8 will be too expensive for consumers – Microsoft need to reconsider
Microsoft’s promotional Windows 8 is coming to an end soon and consumers aren’t happy.
I took a poll on my site to see whether people would be willing to pay triple digit upgrade pricing for Windows 8 and the answers are pretty overwhelming.
As of Thursday 1/24/2013, the poll results are:
Would you upgrade to Windows 8 for for $129.99 or $199.99?
- Yes – Great Value – 5%
- Yes – Reluctantly – 8%
- Hell No – Are you nuts? – 25%
- No – Too expensive – 51%
- No – I was never going to upgrade anyway – 8%
84% of poll respondents have said at that price they wouldn’t upgrade ( 8% wouldn’t upgrade for any price). The bottom line is, the software is too expensive and unnecessarily so.
We will have to see what happens in the next couple of quarters but I am pretty sure that 2 quarters from now, Microsoft will reflect a sharp dip in licenses purchased by consumers.
This seems to be a predictable disaster coming but Redmond seem convinced for now that raising the price of Windows 8 makes sense.
To be continued…
Microsoft need to preempt Apple’s attempts to re-invent TV
Here we go again. We know Apple are working on some new way to make watching television a more pleasant experience. Steve Jobs said he thought he had it licked and now Tim Cook is being secretive.
Microsoft need to get to the end zone first for once.
It would be nice just this once to see Redmond do something large and revolutionary that had changed the way the entire world did something. I can dream can’t I?
Having said all that, it’s important to remember that Microsoft is still in the game.
Microsoft’s numbers out today are a good, stiff reminder that the company is still a very rock solid and profitable company. They make a ton of money, they have the Enterprise solidly behind them (for now) and still make very good products (Windows Server 2012, Azure etc).
The competition is really stiff and the pressure is really on for the next 24 months.
I believe that Microsoft have a couple of years left to fight the solid fight with Apple and Google in the mobile space.
If Google and Apple continue to expand at the rate they are and Microsoft is unable to make SUBSTANTIAL gains with Windows 8, Surface or OEM hardware, it becomes difficult to see success in the cards.
It doesn’t mean Microsoft goes away or folds up. It just means the company slowly becomes a niche player and less relevant.
That would be a dark day indeed.
What do you all think? Is Microsoft in trouble despite the solid financials they put up?
Let me know in the comments below.