Microsoft tops forecasts on Office sales, but weak Windows PC sales hurt

Discussion in 'Apple, Inc and Tech Industry' started by *LTD*, Jul 21, 2011.

  1. *LTD*, Jul 21, 2011
    Last edited: Jul 21, 2011

    *LTD* macrumors G4

    *LTD*

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    #1
    http://www.cnbc.com/id/43842210

    http://www.nytimes.com/2011/07/22/technology/microsoft-posts-mixed-results-in-4th-quarter.html

    Microsoft tops forecasts on Office sales, but weak Windows PC sales hurt

    SAN FRANCISCO — Sales of Microsoft’s core Windows computer operating system continued to erode for the second consecutive quarter as consumers shifted away from PCs to tablets.

    The Kinect game controller, which users operate by using their entire body, helped lift sales in Microsoft's entertainment division.

    The software giant’s mixed financial results, reported Thursday, showed a company struggling with the muted demand for computers while winning strong sales for Xbox 360 and products for business customers.

    “We felt like it was a very solid close to a very solid fiscal year,” Peter Klein, Microsoft’s chief financial officer, said in an interview.

    Microsoft reported that its net income in the fiscal fourth quarter, which ended in June, rose 30 percent to $5.87 billion, or 69 cents a share, from $4.52 billion, or 51 cents, in the year-ago quarter.

    The company said revenue climbed 8.5 percent, to $17.37 billion from $16 billion.

    The net income was above the expectations of Wall Street analysts. They had expected 58 cents a share and revenue of $17.25 billion, according to a survey of analysts by Thomson Reuters.

    The focus, however, is inevitably on Windows, Microsoft’s flagship product.

    Revenue from the unit that sells the Windows operating system software fell 1 percent, to $4.74 billion. It is the second consecutive quarter that Microsoft’s Windows revenue has fallen, a trend that Microsoft executives expect to continue because of the weakness in PC sales. The division’s fortunes are closely tied to PC sales, which worldwide grew 2.6 percent in the quarter, according to IDC, the market research firm.

    The shifting demand toward tablets is worrisome to Microsoft because most tablets run on Apple’s operating system or on Google’s Android software.

    Tablet manufacturers have shown little interest in adopting Windows, leaving Microsoft out of what some of its executives had thought was a niche product. Sales of tablets are expected to triple to 43.6 million units in 2011 from a year earlier, according to eMarketer, a market research firm.

    Microsoft attributed some of the decline in Windows revenue to a greater mix of PCs shipped to emerging markets, where prices were lower. A tough economy and a 41 percent drop in the sales of netbooks also contributed.

    Brendan Barnicle, an analyst with Pacific Crest Securities, said that Microsoft was trying to make inroads in tablets with an updated version of Windows, to be available in 2012. If it turns out to be “interesting, but not game-changing, then this deterioration will continue,” he said.

    Mr. Klein said Microsoft would have more to say about its plans for tablets at its developer conference in September.

    Microsoft is also struggling with getting its Windows Phone 7 operating system on smartphones. Earlier this year, Nokia agreed to make phones that used Windows, but the partners have yet to introduce any devices.

    In an ominous sign, Nokia said on Thursday that its smartphone sales fell 32 percent in the quarter. The decline shows eroding demand for Nokia’s products and the difficulty Microsoft faces in competing against Apple and Google.

    The company still has strengths. Revenue from its Office software, which includes Word, grew 7 percent, to $5.78 billion. The company has said that the latest version, Office 2010, is being deployed at a rate five times faster than its predecessor. An 8 percent decline in revenue from Office to consumers was offset by a 12 percent gain with business customers. Microsoft attributed the weak consumer results, as it did with its operating system, to sales in emerging markets. Revenue from servers and tools, a division that caters to corporate customers, grew 12 percent to $4.64 billion.

    A particular bright spot in Microsoft’s portfolio was its entertainment products and devices like the Xbox 360 video game console and the Kinect game controller, which lets users move their bodies to control characters in video games. Sales by the division grew 30 percent, to $1.49 billion.

    Microsoft’s shipments of Xbox 360 game consoles increased 13 percent to 1.7 million, underscoring its popularity among gamers. “They are continuing their amazing momentum this year,” Mr. Klein said.

    Revenue from Microsoft’s online properties, like the MSN portal and Bing search engine, rose 17 percent, to $622 million. The unit posted $728 million in operating loss, continuing a streak of red ink.

    Microsoft took over Yahoo’s search engine in an effort to better compete with Google. But so far, the partnership has failed to raise online advertising revenue as much as executives originally told investors. Both companies are working on the problem, Mr. Klein said, but it will not be resolved until the end of the year.

    Shares of Microsoft fell less than half a percent to $26.99 in after-hours trading. In regular trading, they closed nearly flat at $27.10.

    -------------------------------------------------------

    Now MS is $11 billion in the rearview mirror. Totally unprepared for Post-PC realities.

    Come on folks, let's all buy a couple of netbooks to support good (?) old MS. They gotta be dirt-cheap by now. Or buy a second copy of Office. Boxed, of course. None of this new-fangled digital stuff. That should do it! I'll hold off on that though, but you folks are more than welcome. I got a uh . . . thing to go to, or something.

    Apropos, an interesting dose of reality:

    Apple is to the post-PC era what Microsoft and Intel combined were for the PC era. They control the dominant software platform and reap the majority of the profits from hardware. When people argue that Apple has somehow already grown as big as it can get, they’re not seeing the size of the opportunity that remains ahead. Imagine how big a combined Microsoft and Intel would have been 20 years ago. Then consider that the post-PC/mobile market is going to be bigger than the PC market.
    - http://daringfireball.net/

    Let's hope Ballmer's as eager to read about what's around the corner as those in the know are to post about it.
     
  2. KingCrimson macrumors 65816

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    #2
    Concern trolling post. Microsoft is very aware and ready for the so-called Post-PC era with Windows 8 on everything(desktops, tablets, netbooks, whatever).
     
  3. *LTD* thread starter macrumors G4

    *LTD*

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    #3
    Where are they?
     
  4. KingCrimson macrumors 65816

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    #4
    Windows 8 will be out by April 2012, or do you not bother reading technical articles about anything but your beloved Apple?
     
  5. *LTD* thread starter macrumors G4

    *LTD*

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    #5
    Exactly.
     
  6. Eidorian macrumors Penryn

    Eidorian

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    #6
    *LTD* tends to avoid technical discussions in my experience.
     
  7. KingCrimson macrumors 65816

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    #7
    What is your point? OTher then ZOMG Apple rulez!
     
  8. *LTD* thread starter macrumors G4

    *LTD*

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    #8
    They tend to distract from the big picture.

    Too little, too late.
     
  9. Eidorian macrumors Penryn

    Eidorian

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    #9
    Yeah, step into a discussion about Sandy Bridge-EN. Now that is what I call fun.
     
  10. vvswarup macrumors 6502a

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    #10
    Actually, Ballmer went ahead and hinted that Windows 8 would be out in 2012 but Microsoft later released a statement saying that they have yet to announce a name or release date for a new version of Windows. So officially, we have no idea when Windows 8 will be out.

    As far as I'm concerned, Windows 8 is nothing more than vaporware. We have yet to see it demoed on person. All we have seen is a graphical overlay of Windows 8.
     
  11. Rodimus Prime macrumors G4

    Rodimus Prime

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    #11
    Umm it was demoed at all things digital I believe. They showed it running with both a tablet mode that could drop into full desktop mode.

    It was demoed a while ago and they were showing how it worked. There are a lot of videos on the web showing it in use.
    Over all I find this thread to be a typical trolling thread and when the real facts get in you get the canned responses from LTD trying to get away from the facts that completely destroy his bashing of non-Apple.
     
  12. AppleScruff1 macrumors G3

    AppleScruff1

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    #12
    So you don't think that there will be a new version of Windows?
     
  13. KingCrimson macrumors 65816

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    #13
    I remember around August 2010 the same trolls were saying WP7 was vaporware. They aren't looking so smart now?
     
  14. vvswarup macrumors 6502a

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    #14
    Put a release date on it, and I will say I'm wrong. I treat the "vaporware" label like the "beta" label. It's up to the developer to make a "beta" into a "full" version.
     
  15. vvswarup macrumors 6502a

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    #15
    There will be a new version of Windows. But officially, we don't know when.
     
  16. thejadedmonkey macrumors 604

    thejadedmonkey

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    #16
    By your logic, Lion was vaporware until yesterday.

    Back on topic, I'm not really sure what *LTD* is trying to say here. Microsoft lost 1% of their sales, year over year? And somehow this culminates in the demise of Microsoft?
     
  17. vvswarup macrumors 6502a

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    #17
    What I mean by demoing it in person is to bring a physical device to the stage and demonstrate it. That was not done at AllThingsD. And I'm not trying to be a troll. I'm merely saying that I'm not going to pay much attention to Windows 8 until I get more information.

    Officially, Windows 8 doesn't exist. Google it. Microsoft issued a statement after Ballmer's remarks about tablets that the company has yet to announce a date or even decide on a new name for a new version of Windows. In my book, Windows 8 meets all the criteria to be classed as vaporware. It's not a stamp. It's just a categorization that can change. Once there's more official information, e.g. a release timeline like "Will be out in Summer 2012" or something like that, I'll stop calling Windows 8 vaporware.

    It just seems very fishy to me for a company to show graphical overlays of something at a major tech conference, then said company's CEO heavily talks it up only to have the same company release a statement categorically denying the existence of the product.
     
  18. roadbloc macrumors G3

    roadbloc

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    #18
    I was pretty much thinking the same thing. If that is the biggest damage this apparent 'post-PC' era can do, then I'd say Microsoft are pretty much guaranteed to survive it when Windows 8 is released.
     
  19. *LTD* thread starter macrumors G4

    *LTD*

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    #19
    If they plan on shoving an unoptomized OS onto each device that isn't designed for that device they might as well pack up and get out. What we actually saw of their Windows 8 plans for tablets was painful.

    The market is already handing the tablet segment to Apple in part due to this woeful strategy.


    Not, yet. But it's quite telling. Just like they're in Apple's rearview. Very, very telling. And who would have thought that possible a few years ago.
     
  20. Steve121178 macrumors 68040

    Steve121178

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    #20
    He isn't capable of technical discussion.
     
  21. Steve121178 macrumors 68040

    Steve121178

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    #21
    I've been running a Milestone 3 release for about 4 weeks now (as a VM). Just look on torrent sites & ensure you download the latest leaked builds.

    Windows 8 will be released sometime between June-October 2012 & a public Beta will begin around October 2011.
     
  22. *LTD* thread starter macrumors G4

    *LTD*

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    #22
    That's a little late to enter a tablet market that Apple is already running away with.

    This is beginning to resemble their WP7/Zune strategy. Will anyone really care when they finally get to where they should have been months (years?) ago?

    All these "we promise, you'll see!" plans from MS - that's all we really see these days, instead of proactive, first-mover initiative.
     
  23. Steve121178 macrumors 68040

    Steve121178

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    #23
    Millions upon millions of businesses who have a Wintel infrastructure & consumers.
     
  24. Hellhammer Moderator

    Hellhammer

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    #24
    So have you actually used Windows 8 to know that it's unoptimized for tablets? iOS was designed for iPhone which means it was not optimized for iPad, yet you praise it post after post. It's not like Apple is the only company that can optimize a single OS for multiple devices.
     
  25. *LTD*, Jul 22, 2011
    Last edited: Jul 22, 2011

    *LTD* thread starter macrumors G4

    *LTD*

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    #25
    Except when it comes to Zunes, WP7, and any and every MS-branded tablet that has been sold since the iPad's introduction.

    Consumers don't have "infrastructure" that can't be switched to something else. And as far as MS' Post-PC gains in the enterprise (tablets, phones, etc.) . . . there aren't any.



    We've seen the predictable results of MS' thinking: Excel on tablets. And it wasn't pretty.
    iOS is designed to run on the devices it runs on. This is obvious. This is why it's succeeding beyond wildest expectations. There's a reason it's the highest iteration of a mobile OS.
    Of course. Who wouldn't?
    It sure looks like that.
     

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