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Microsoft The Almighty Buck

Microsoft Posts Record Earnings 528

Posted by michael
from the paying-your-Bill dept.
sriram_2001 writes "Microsoft has just had a record quarter where their profits have doubled from the previous quarter. Total sales are at $10 billion, exceeding both internal and external expectations. Microsoft has attributed the rise in earnings to increased server sales (where *nix-based systems are supposed to be doing well) and more XBox units being sold. For a company that most Slashdotters would say is on the decline, Microsoft sure has weird financial results!" To put it in perspective, Microsoft's income is about the same as New York State receives in taxes - below California, and well above the other 48 states.
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Microsoft Posts Record Earnings

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  • by AtariAmarok (451306) on Friday January 28, 2005 @09:53AM (#11502616)
    I thought the Gates Borg icon had a larger smile this morning. Now I know why.
  • First Post? (Score:4, Funny)

    by neilb78 (557698) on Friday January 28, 2005 @09:54AM (#11502617)
    I know vulnerability in their software probably generated these incorrect numbers.
    • Re:First Post? (Score:5, Insightful)

      by millahtime (710421) on Friday January 28, 2005 @09:59AM (#11502674) Homepage Journal
      I bet these numbers are real and they should show us something.....

      That many people still see that you have to use Microsoft Products or that alternatives aren't out there for certain products that are easy for your average joe 6 pack to use.

      Alternatives are targeted at the tech savvy and are not marketed well enough. M$ is a marketing machine. Most of our folks have trouble programming a VCR clock. I bet it's very true.
      • Re:First Post? (Score:5, Informative)

        by fymidos (512362) on Friday January 28, 2005 @10:30AM (#11503001) Journal
        The numbers are real alright but they do say something else:

        I can't find the actual data of this quarter, but here are the data [nasdaq.com] for the last four quarters. Notice that the quarter ending 12/31/2003 is the one used for comparison by the article.

        -quarter ending 12/31/2003:
        revenue $10,153,000, net income $1,549,000

        -quarter ending 9/30/2004:
        revenue $9,189,000, net income $2,528,000.

        How can they have a billion less in revenue and a billion more in income?
        The answer is also there: they spent $1.4 BILLION *less* in Research and Development.

        Microsoft is of course still in a dominant position, and their software still sells like no other piece of software ever did, but the real advancement from last year is a +6% in revenue (which is propably *less* than the overall market growth).
      • by Anonymous Coward
        You are right, this is largely a marketing problem. Given M$ marketing budget relative to Linux/GNU this isn't going to change soon.

        However, the server component does indicate that
        the lock-in aspect is incredibly important. This indicates that even for supposedly "Tech-savy" users, M$ produces a product that many view as good enough.

        For those who believe that M$ profits need to begin to shrink to enhance world freedom, what this means is that 1) Linux has to get relatively much better at a technical lev
      • Maybe the numbers show that crime does pay.

        Maybe the numbers show that there is no competition and that MS is indeed a monopoly that should be broken up.

        Maybe the numbers show that MS is cutting R&D like crazy.

        Maybe the numbers show that accountants need to have fun too.
      • I bet these numbers are real and they should show us something.....
        Unless they're reported in a currency equal to the square root of -$1, you're probably right.
  • by Anonymous Coward on Friday January 28, 2005 @09:54AM (#11502620)
    everyone knows 2005 is the year of Linux. I don't care what their "profits" show, but we've got M$ exactly where we want them
  • by enoraM (749327) * on Friday January 28, 2005 @09:54AM (#11502621)
    Server Sales 18% up - thats quite a share :-). Especially if you regard how hardware sales of servers developed in the end of last year:

    Hewlett-Packard: +21%
    Dell: +28%
    IBM: +36%
    (Gartner quote)
    http://www.itfacts.biz/index.php?id=P243 [itfacts.biz]
    There have to be quite a couple of linux- and other boxes, if Microsoft ist just +18%.
    Anybody got more precise infos on actual sales of iron?
    btw: Profits are also significantly up because of the cut in personell.

    Details on different aspects of server sales: http://www.itfacts.biz/index.php?id=C0_5_1 [itfacts.biz]
    • More servers are needed when using an MS server product to handle the load that another OS could handle with fewer (or, say, 1).

      • Who modded that funny? It is exactly what MS recommends - that you probably should have a server per each running server process. It's not at all funny when MSSQL or IIS take _all_ the RAM at opportunity and dump everything else to swap. Or CPU hogging for that matter.
    • Yes, I would say so too. We bought 5 servers in the past 6 months and 3 of them were for our customers, not for us. And we're a small company. So it appears that the demand for servers is up recently.
    • Hopefully this is a good sign for the IT industry. Medium range and high end products are being sold at higher levels. That means more people are needed to support them. Unless you work for my company which has been ordering new Dell Windows 2003 servers and then expecting their lone MCSE certified loser (me) to support them all...
    • by tgd (2822) on Friday January 28, 2005 @10:34AM (#11503042)
      Thats not a safe assumption to make. A lot of organizations have site licenses for the software, so its easy for server sales to outpace OS sales.

      While there may be an increase in Linux deployments, you can't infer that from any of this information.

      This morning on Bloomberg News they specifically called out Halo 2 as being a very large contributor to the suprising jump in sales, as a large number of people (myself included) bought an X-Box specifically for Halo.

      The dual facts that the XBox is the first modern console I've ever bought and that I've since bought ten other games is icing on the cake for them. There are a lot of people being pulled into modern consoles who were never tempted before by them.

    • Even Apple is catching this wave:

      Xserve sales up 119% in third 1/4 '04 [macworld.com], trend likely to continue.
  • by Private Taco (808864) on Friday January 28, 2005 @09:55AM (#11502626)
    fools and their money are still being parted...
  • Server sales (Score:5, Insightful)

    by mirko (198274) on Friday January 28, 2005 @09:55AM (#11502630) Journal
    Microsoft has attributed the rise in earnings to increased server sales (where *nix-based systems are supposed to be doing well)

    Maybe it's because more servers (both MS and !MS) have been sold this year so both were profitable...
  • Ironic. (Score:3, Interesting)

    by Atrax (249401) on Friday January 28, 2005 @09:55AM (#11502635) Homepage Journal
    about two minutes ago I got sent this [msboycott.com]
    • LOL!

      How cute and funny this may be I still think business should make a business decision .. as for consumers, well.. aw go ahead and boycott the buggers!

    • I can't believe they still have my IRIX review linked their front page. Yes, i'm embarassed to admit that I wrote that, and about 3 or 4 few years ago as well.

      A technical review of something has never been much of a strength of mine - I think its time they pulled it :\
  • Wow (Score:5, Funny)

    by gnoos (828264) on Friday January 28, 2005 @09:56AM (#11502639)
    1. Profit
  • Good for them (Score:2, Insightful)

    by Anonymous Coward
    I'm glad they're doing so well. And I'm glad Mac OSX and Linux are doing well too.

    This is probably one reason why Microsoft is increasing office space (a good hint at increased hiring if they're making room for thousands of extra workers).

    When will people stop wishing for the failure of others and start wishing for the success of their choosing?
    • Good Point!
      There is pleanty of room for profit all around. Success in one area doesn't need hurt the other. If you look at the current year 2005 and some simple math you see it has been 5 years sience the year 2000 and many of these server were last upgraded 1999 for Windows 2000. So these servers were getting old and needed to be replace. Sure some went to Linux and other Went to Apple but most of them just upgraded to another windows server. Market share is the percentage of the piece of the pie. Prof
  • by popo (107611) on Friday January 28, 2005 @09:57AM (#11502656) Homepage
    Not to be Mr. Sour Grapes, but 8% growth (while very healthy) isn't historically that wonderful for MSFT. While its certainly safe to say that MSFT is doing well, I'd say its also safe to say that the days of explosive growth (as in early to mid 90's) are behind them.
  • by Anonymous Coward
    That's surprising, considering how much money I have donated to New York State in speeding tickets
  • by Fr05t (69968)
    "To put it in perspective, Microsoft's income is about the same as New York State receives in taxes" QUIET! You might give Bill ideas on how to double next years income!
  • That's nice... (Score:5, Interesting)

    by PoprocksCk (756380) <poprocks@gmail.org> on Friday January 28, 2005 @09:58AM (#11502668) Homepage Journal
    But how do we know that this growth isn't just because we happen to be in a fairly prosperous time for the tech-market in general right now? These rates could take a turn for the worse in the next couple years. So this could all just be circumstantial.

    What I'd like to see is a comparison of growth rates of major software companies. Even if Microsoft still comes out on top, at least the comparison would be relative to _something_.
    • But how do we know that this growth isn't just because we happen to be in a fairly prosperous time for the tech-market in general right now?

      The increase in server sales is probably sustainable because servers are being deployed in environments where they used not to exist. For example, small businesses used to shut down all the PCs for the nigth. Now they run their own web servers or email and file servers for remote access. I guess it is the broadband Internet connections that make the difference. You fi

  • licence fees (Score:3, Insightful)

    by CdXiminez (807199) on Friday January 28, 2005 @09:59AM (#11502676)
    I guess they are becoming ever more skillful at squeezing money out of contracts.
    • I think there may be some truth in what you say. We have a site license here at the university where I work. I was very opposed to the license at the time and continue to believe it was a very Bad Thing.

      Basically the license let us be "clean" on licensing in the event of an audit. The blanket license keeps us from ever having to prove that every piece of software is properly licensed. The overwhelming majority of the software on university-owned machines IS above-board, but finding the paperwork to pro
  • Well that does not mean they have gained new customers. 2005 has seen lots of companies finally migrating from Windows NT, or upgrading from Windows 2000 to Windows 2003.
  • by johnpaul191 (240105) on Friday January 28, 2005 @10:01AM (#11502701) Homepage
    the day after MacWorld, Apple reported its best quarter ever.
    http://www.apple.com/pr/library/2005/jan/12results .html/ [apple.com]
  • Is MS a blackhole or a supernova about to blow up?
    • Re:Predictions? (Score:3, Insightful)

      by popo (107611)

      I think its just a "star". The reason we're talking about it is because it was a "small moon" 20 years ago, so its growth has been stunning.

      But now its another company. Its earnings are good, but not wonderful. Its products are good, but not wonderful. Its growth is good, but not wonderful. (So the black-hole / supernova thing probably doesn't apply). What it does have insane amounts of is cash. So its also not a star that's going to run out of fuel any time soon.

  • They obviously saved a load of cash by getting rid of that expensive code debugging department.
  • One Time Boost (Score:5, Insightful)

    by popo (107611) on Friday January 28, 2005 @10:01AM (#11502706) Homepage

    It should also be said, that there's no Halo next quarter.

    MSFT would love to make the claim that this is largely due to server software... but its Halo II... and that ain't happening again any time soon.
    • Re:One Time Boost (Score:4, Interesting)

      by stupidfoo (836212) on Friday January 28, 2005 @10:11AM (#11502802)
      Well, only some of that can be attributed to Halo 2.

      It's probably sold close to 7 million copies now. Add in an average of $10 worth of accessories to each sale (some people buy a new controller or two, but most buy nothing else).

      So, you have (Halo 2 ($50) + $10 accessories) * 7 million = $420 million, roughly $300 million of which is profit. Plus all the new Xbox live account, which is probably pulling in a couple million in profit per month.

      Nice bump from Halo 2, but it's clearly not enough to double their profit from the previous quarter.

      Also, sales of new xboxes don't count, since this is profit, not revenue.
    • Re:One Time Boost (Score:5, Insightful)

      by cgenman (325138) on Friday January 28, 2005 @10:28AM (#11502982) Homepage
      Just to put these numbers into perspective...

      Halo 2 has sold 6 million units at 50 dollars each. If you count wholesale againt "total sales" figures, that adds 180 million dollars. Considering Microsoft reaps publisher, producer, and licencing margins on each one sold, Halo 2 accounts for *all* 90 million in profit the Microsoft games division made last quarter.

      Still, that's nothing compared to the 2.5 billion in profit from their desktop division.
  • Unix migrations (Score:4, Insightful)

    by gilesjuk (604902) <[giles.jones] [at] [zen.co.uk]> on Friday January 28, 2005 @10:01AM (#11502710)
    Many Unix systems are being migrated to either Windows or Linux. This is why both Linux and Windows sales can rise even though they're competitors.
  • by Xpilot (117961) on Friday January 28, 2005 @10:01AM (#11502711) Homepage
    I once attended a technical presentation about OSS, and I recalled some interesting facts.

    Even during the most difficult of economic times, Microsoft has made billions.

    Even when tech companies are in a slump, and businesses fold left and right, MS continues to rake in the dough.

    So where does this money come from?

    "IT CAME FROM YOU!" said the presenter.

    Yes, while your companies are struggling to make a penny or two, MS just leeches off of you with their Windows licenses and forced upgrades. Face it, you get little in return for every new version of Windows you buy. Win2K->WinXP was just a hideous facelift.

    Yet people still pay through the nose for Windows. It's inexplicable.

    • Yet people still pay through the nose for Windows. It's inexplicable.

      It's not inexplicable... Microsoft started out by squashing competition in every arena they could until they were above and beyond the most dominant force in the computer industry.

      They received a slap on the wrist from the Government and continue to dominate...

      The reason that people continue to go with upgrades and new versions of software like Office is because they don't have a choice. If you want to interoperate in the business wo
      • >If you want to interoperate in the business world today you do it via Microsoft products.

        There are many good replacements for MS business products today. (not home products) Not all of them are free/OpenSourced but they are non-MS.

        Its really at a point today that if you are locked in to MS, its because you made the decision, not because of illegal activity by MS.
        • by killmenow (184444) on Friday January 28, 2005 @11:07AM (#11503408)
          ...its because you made the decision...
          Yes, the desicion to be in business. Most companies I work with still consider Microsoft (I'm quoting verbatim words I've heard from CEOs, CFOs, CIOs and the like) "the cost of doing business."

          Regardless of the existence of acceptable replacements, there is still a belief by senior management that Microsoft is like the government: you avoid giving them as much money as you can get away with but sooner or later you have to pay them. It's literally factored in as part of the rules if you want to be in the game.

          Now, the good news is the times, they are a changin'...
    • Face it, you get little in return for every new version of Windows you buy. Win2K->WinXP was just a hideous facelift.

      Stop propagating that meme. [microsoft.com]

      I'm no MS fanboy [openvms.org], but repeating misinformation won't get you anywhere. Besides, someone who is actually in IT will tell you that most of the OS money is spent on server licenses and CALs, and the difference between 2000 Server and 2003 Server is even bigger than that between the desktop versions. A fancy UI doesn't get you far on a server (and it's turned

  • "Microsoft has attributed the rise in earnings to... more XBox units being sold." Wow! Is this credible?
    • by RailGunner (554645) on Friday January 28, 2005 @11:03AM (#11503369) Journal
      Certainly. And if you look at my comment history, where I argued against people who thought "If you buy an XBox, MS loses money" - where I told them if they wanted to hurt MS then they just shouldn't buy one period - well, you'll see I was right.

      Most console hardware is only a loss leader at launch - eventually, they will get cheaper to produce, as the price of components goes down. Look at the cost of processors - you can get a Pentium 3 800 Mhz at Fry's for what, $20, if even that now? Look at Hard Drive prices - can you even find an 8 GB Hard drive on a shelf? Even if you could, what would you pay for it?

      And you have to figure that MS is buying bulk, and is getting an even cheaper price. So, yes, I would image right now XBox hardware sales are giving MS profit.

      And as far as Halo 2 goes... even if it comes out for the PC, I won't be buying it. Nor will I buy Age of Empires 3. (No, I will not pirate them either - I'm just not interested in owning or playing any Microsoft product.)

      Besides - Burnout 3 is also a helluva lot of fun on my PS2.

  • "Microsoft's income is about the same as New York State receives in taxes - below California, and well above the other 48 states."

    I stopped paying the microsoft tax last year when I bought my first Mac.
    • I stopped paying the microsoft tax last year when I bought my first Mac.

      And you started paying the Apple Tax.

      What you just said is like this: "I stopped paying NY state taxes last year when I moved to NJ."
  • Growth Rate (Score:3, Interesting)

    by webword (82711) on Friday January 28, 2005 @10:04AM (#11502735) Homepage
    "We have to discern the enthusiasm over 7 percent growth versus 30 to 50 percent growth we had seen 10 years ago..."

    You have to keep in mind that it really will get harder and harder to maintain high growth rates. Multi-million dollar markets are not big enough for M$ now. They will only enter larger (billion dollar) markets. Furthermore, without market and sales growth, their stock price simply cannot grow at a high rate. Think "mature company" not "young, fast, growing company" from here going forward.
  • To put it in perspective, Microsoft's income is about the same as New York State receives in taxes - below California, and well above the other 48 states.

    And in the news today, Bill Gates says:

    "Come join our friendly community, we promise to tax you less then California, but in our wonderful community you get great programs to."

    Microsoft has decided to cede from the union and create their own country.
  • by lurvdrum (456070) on Friday January 28, 2005 @10:09AM (#11502786)
    ...that 1.5 billion of the increase in profit is due to a 1.5 billion reduction in R&D. Wonder what long term effect halving the R&D budget will have on future MS technology?
  • ...that apart from the occasional piece of MS-branded hardware, like mice or keyboards, none of their profits came from my hard-earned cash.
  • by npistentis (694431) on Friday January 28, 2005 @10:14AM (#11502845)
    The increase in earnings is a result of lower compensation per share- instead of offering a 2-to-1 split or dividends to their investors, Microsoft kept the cash on hand. At the same time, demand for Windows and Office products dropped.
  • Sure, you can say profits have doubled, if last quarter was unusually bad, or you took some large charges last quarter, or if there was some non-recurring windfall this quarter. And IIRC they were losing money on xbox hardware, how can they make that up on volume? Hmmmm... { I recall talking to a TI salesman, in the glory days ( Sept 15-17, 1983 ) of the TI-99 computer. He managed to keep a straight face, admitting they lost money on each one, but would make it up on volume. }
  • They cook the books. (Score:5, Interesting)

    by Anonymous Coward on Friday January 28, 2005 @10:16AM (#11502863)
    I used to temp for MS from 1998-2000, I was a bus rider and the traffic was so bad from Redmond to Seattle that some employees would cruise the bus stops asking for a third person to qualify for the car pool lane. If you didn't take the HOV lane, it would add 45 to 90 minutes to your commute.

    One time I got a ride with someone from accounting. The conversation must have been started about how they posted record profits that day and he was all giddy about it. He went on about how they withhold money back in some financial quarts in order to show off record results in another. I'm sure this has become familiar with many people over the 90s that once or twice a year MS would post record profits. The sole purpose would be to drive up the price of the stock. I laughed and asked him if it were legal, he said that not only was it legal, but very common in the industry. What he was doing wasn't any different from what other companies did during the dot com explosion.

    I haven't temped there in a while, im not sure how things are in the labs or meeting rooms. Everyone benefits from a higher stock price, but im thinking this may be to keep their talent from jumping ship. Back in the mid to late 90s, a program manger or developer could be expected to work there for 7 years, then cash in all their stock options and retire at the ripe old age of 30. Its obviously not like that now because the stock price is lower and has been like that for several years. Investors really aren't that worried about the stock price, they are in it for the long term investment. But not the workers! Oh no, they want to work that 7 years and get the hell out of dodge and its the stock options that really keeps a MS employee working there. I've heard it from a few developers that if it wasn't for the stock options, they would quit their jobs in a heartbeat.
    • by truthsearch (249536) on Friday January 28, 2005 @10:40AM (#11503117) Homepage Journal
      From MS Versus [msversus.org]:
      "According to an ABC News 1/22/99 article by Michael Martinez, Microsoft's own internal auditor, a respected 30 year veteran and former partner of Deloitte and Touche, was fired in 1996 after informing management that their earnings manipulations were illegal and violations of the SEC and FASB laws. He was given the option to resign or be fired and later settled for $4 million after suing under the Federal Whistle Blowers Act."

      "The single most lucrative product Microsoft sells is its own stock. Microsoft receives almost as much cash inflow from the stock market as it does by selling goods and services... Basically, Microsoft receives cash by issuing employee stock options, after which the company then receives billions of dollars in tax deductions from the IRS for doing so. Add in the warrants it sells on its own stock, and the company made over $5 billion off the stock market [for the] fiscal year end[ing] July 1999, tax-free. For comparison, its after-tax net income was only $7.8 billion. Microsoft may not be much in the programming department, but its accountants are impressive." (Landley, Rob. "Why Microsoft's Stock Options Scare Me." The Motley Fool 17 Feb 2000)
  • I wonder how much of those record profits were due to laying off American workers to hire cheap foreign labor...
  • I go to the local coffeeshop and there are cute girls and middle-aged women using notebooks running Windows. 4-10 people at any given time, maybe 1-2 of which have iBooks or PowerBooks. Most of the others have notebooks from Dell. I go to the local college campus and *everyone* has a notebook PC. About 25% of these are Macs, the vast majority of the rest are Dells.

    PCs and their operating systems are ubiquitous these days. They're not geek toys, they're tools for everyone. And except for the smallest
    • Be aware that FireFox won't harm Microsoft's profits, so long as those people are running Firefox on Windows. In a way, perhaps Firefox for Windows is harming Linux. Get those users onto Linux & Firefox, and then there is something to be joyous over.
    • This doesn't mean they're attempting to ditch every product Microsoft makes, not by a long shot.

      The average, non-technical person uses Windows because that is what came installed on their machine, along with some version of MS Office. If you look at the whole landscape, you'll notice that most people are really not dependent on MS for anything other than Windows and Office. In fact, you could even say that they are only dependent on Windows *because* of Office.

      Beating MS has absolutely nothing to do wi
  • Nah, not them. If they feel things slipping they will just buy more markets..

    They wont be declining/going away for at least another 20 years..

    After that.. who knows..
  • ... Accounting Firm to do Math!
  • Glad to hear it. But as an investor I would like to see their stock price tick up a bit with this news. Since their last stock split a few YEARS ago, the price has stayed in the $22-$28 range. Pretty flat performance.
  • by dtfinch (661405) * on Friday January 28, 2005 @10:45AM (#11503170) Journal
    It could just be the US $ inflating their sales. But even if these are real figures, their sales actually haven't increased much. Most of the profit is due to cutting costs. Taking inflation and exchange rates into account, we could turn this story around and say that their sales have decreased, and they've scaled back to compensate for this and expected future decreases.
  • by jimfrost (58153) * <jimf@frostbytes.com> on Friday January 28, 2005 @11:04AM (#11503376) Homepage
    Increased sales can actually be indicative of a failing market. Consider two examples, DEC and Sun.

    In DEC's case, the influx of workstation-class machinery caused a weakening of the mini market. This weakening killed off all but the strongest mini maker (DEC). Customers fleeing from failing makers split themselves between DEC and the new workstation vendors, thus causing a boost in DEC's sales right before the crash of the whole mini market -- DEC peaked amongst the carnage of their market, then crashed spectacularly.

    Sun's case was a repeat of the behavior. Sun's market had migrated from workstations to servers from the late 80s through the mid 90s. By the mid 90s, however, we were already seeing a market shift towards PCs acting as servers. As the server vendors' market weakened (still prior to the Internet boom) we saw diminishing workstation/server sales for many companies in that sector (e.g. HP, SGI). Meanwhile Sun's sales skyrocketed, again attributable to a split in the market where some of the people leaving failing vendors went to Sun.

    Sun would have had a crash in the 1999 timeframe if it weren't for the internet boom, which dramatically increased demand for large servers. When the boom ended, however, so did Sun's fortunes -- very fast. You can see in Dell's sales where the market went.

    Microsoft has been benefitting from the failing of the server vendors, same as Sun. (Though, really, the biggest winner in this is Dell.) If this were a normal hardware-only migration Microsoft would rapidly capture upwards of 80% of he market and be dominant until the next hardware shift. But it's not normal because this is the first transition where the software is decoupled from the hardware.

    Microsoft should have won by default, with customers shifting from server-class systems to PCs as customers went with the default option of Windows servers. And, in fact, Microsoft did extremely well for the first several years of the transition when there really wasn't much competition in the PC space.

    Linux has thrown a huge wrench in the works. It's maturing very nicely and offers the huge win over Windows in that it's both cheaper for licenses and especially for migration.

    If there's any one thing we can count on in this industry it's that the cheapest thing that gets the job done wins (which I've been saying so long now I call it Jim's Law). Until Linux came along the cheapest thing was Windows servers. Now it's not. The market impact of that is going to be phenomenal.

    In a typical market transition you can expect more or less equal boosting of the various competitors in the market as people flee dying companies. But in a typical market transition there is not much price difference between the competitors -- usually within 10%, as everyone attempts to maximize the market opportunity.

    Linux turns that on its head by offering a scale of prices starting at zero (no support) through prices that are more or less competitive with Microsoft's offerings (full support). That gives Linux a significant market advantage.

    I expect we'll see a major market move towards mid-priced systems (some support, not "enterprise class" support, call it the $500 price point). Microsoft is trying hard to push for higher prices in that market just as Linux is depressing them.

    If things continue the way they are going I would expect Microsoft to peak in the next one to three years at perhaps 65% of the market (by units) as the migration from server-class systems to PCs-as-servers completes, and then fall over the following five years to about 30% of the market as people migrate to more cost-effective Linux solutions.

    But Microsoft won't take this laying down, they'll start reducing prices to match those of the midrange Linux products (more on that in a minute), to whatever degree they can afford. As such I think we're going to see the products come very close to price parity and we'll see Windows stabilize at 40-45% market share with

    • [..] we'll see Windows stabilize at 40-45% market share [..]

      I agree with most of your analysis, but not with the above.

      Windows marketshare will not stabilize at any percentage lower than 80% [of the PC-centric market (=x86 and AMD64), not the whole computing market] because Windows needs domination to be viable. The Linux community can write most drivers for hardware, Microsoft is dependent on hardware vendors to write drivers for Windows, they just can't do it themselves.

      Similar effects with software

  • by rnd() (118781) on Friday January 28, 2005 @11:11AM (#11503441) Homepage
    It's odd to compare Microsoft's revenue to tax revenue... but consider the following:

    Everyone who paid Microsoft a dime did so voluntarily, while people who paid the state of New York did so to stay out of jail.
  • by bADlOGIN (133391) on Friday January 28, 2005 @12:11PM (#11504099) Homepage
    For a company that most Slashdotters would say is on the decline, Microsoft sure has weird financial results!

    Yeah. People were laughing at Alan Greenspan for a number of few years before that bubble burst too. I guess some of us silly Slashdotters just don't "get" the new Microsoft economy. It's ok though, you just go ahead now and keep putting your money there. After all, what could be wrong with Microsoft's accounting practices [billparish.com]?

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