Sign of the times: Microsoft sales drop?
How bad is the tech slump?
Even sales at Microsoft appear to be headed downward. If projections hold, Microsoft on Thursday will report a year-over-year drop in quarterly revenue, a first for the software maker.
The company has come close to flat-lining before, most notably in mid-2000 as the dot-com boom came to an end. Even then, though, it managed to post a slight increase in revenue.
Microsoft is forecast to report quarterly revenue of $14.15 billion for its fiscal third quarter, according to Reuters Estimates, down from $14.45 billion in the same quarter a year earlier. Per-share earnings are pegged to come in at 39 cents, down from 47 cents a year ago.
In addition to paying attention to Microsoft's overall numbers, folks will be closely watching what Microsoft has to say about the PC market. While Intel surprised some last week by suggesting the PC market had hit bottom, AMD's chief executive said Tuesday that such a prediction is premature.
"I don't know how anybody can say we've hit bottom, considering the macroeconomic outlook," CEO Dirk Meyer said during the AMD earnings conference call Tuesday afternoon.
Even when the economy does bottom out, Microsoft has said it is not expecting sales will quickly return to where they were in recent years. CEO Steve Ballmer has repeatedly characterized the current woes as a "reset" of the economy, rather than a temporary dip. When things do pick up, Microsoft said in January, expect slow growth.
There will be other items to watch for during Microsoft's earnings report.
Some think Microsoft might also finally bite the bullet and admit that it is trying to get Windows 7 out this year, as opposed to just by January. The software maker has had a largely positive response to the beta version and is expected to come out with a near-final "release candidate" version in the coming weeks.
In general, new operating systems aren't necessarily the biggest driver of new PC sales, but computer makers are holding out some hope that an early release of Windows 7, combined with continued good reviews, could help the holiday season perhaps be somewhat better than it might otherwise have been. For Microsoft, the release of Windows 7 offers the opportunity to move past Windows Vista, a product that has had a decidedly mixed reputation in the marketplace.
The earnings call will also provide an opportunity to hear not just what Microsoft says about its quarterly results, but also a chance to learn if it is seeing any signs of weakness among customers renewing long-term corporate licensing deals.
Also of note will be what, if anything, Microsoft says about discussions with Yahoo on a search deal. The two sides have reportedly been having some face-to-face talks in recent days and weeks. However, the two sides have done plenty of talking without reaching an accord.
On Yahoo's earnings conference call on Tuesday, CEO Carol Bartz also pointed to search as an important core area for Yahoo, but she wouldn't rule out the possibility of relying on another company's search technology plugged into Yahoo's infrastructure. Microsoft, meanwhile, has been testing the next version of its search product, code-named Kumo.
Further job cuts are also a possibility. One analyst said this week that he anticipates Microsoft will go beyond its previously announced cuts. However, I'd note that Microsoft's January plans called for up to 5,000 jobs to be cut over an 18-month period and it made only about a third of those cuts right away.
During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina. 
They stopped selling a product that worked.
They are trying to sell a product that did not.
They are promising a working product in the future.
There should be no mystery at all as to why sales are down.
you are certainly wrong to think that a software company's sales are not tied to the software sales.
I would add that the morons at Lenovo and Dell have been producing crap products and offering horrible tech support, which has been turning many PC buyers away too.
Microsoft should tell Dell to get its act together and pull all Microsoft product from Lenovo's shelves. Lenovo is doing Microsoft a major disservice with their ThinkVantage crapware and cracking plastic hardware. Just look how many people are screaming bloody murder on Lenovo's forums. You do not find that abuse at any other manufacturer's forum.
To increase sales, Microsoft should annex Lenovo.
Apple is doing good because of the iphone and the ipod. Not because of Macs.
Microsoft main business is software, so when PC sales goes down, their revenue goes down. XBOX and Zune may contribute for the "bottom line", but it is less significant than the software contribution.
http://news.cnet.com/8301-13579_3-10225194-37.html?tag=newsEditorsPicksArea.0
thats true,
also PC sales are down, 7+ percent
But we don't like to talk about that on CNET.
*iPhones run OSX too, campers - and yes, lump in Windows Mobile with Windows, and the numbers will likely still show a loss for the Microsoft column (though the numbers aren't out yet) ;)
Now, mbenedict's defensive cherry-picking aside, overall the PC industry overall has sunk as well, and by a far larger factor than Macs did. Sure, HP grew nicely in (only) the US market over the past year, but that's very small consolation to Microsoft, who still stands to eat a loss this quarter if the numbers come in as projected.
Sorry fanboys, but them's the facts. You simply can't spin your way out of it as far as Microsoft is concerned.
"MS reported...quarterly revenue of $14.15 billion..."
MS is surly going to close there offices tomorrow...
You can't expect from a company to keep growing endlessly, especially when the economy isn't at a good shape.
Apple surely grew, and they have great products, but you can't compare the numbers. PC are selling millions of units world wide, so the impact of the "credit crunch" on the PC business is a world wide phenomena, and much serious than for Apple.
People around the world buy much more PCs than Apple products combined, so the PC business is more affected from the economic situation. Lets not forget that Apple products are more of a premium product, and the people that are able to buy them are probably less affected by the economy. I'm aware of the generalization...
1) nobody said Microsoft would die tomorrow (or even this year, or even in five years).
2) given their relative sizes, Microsoft should drop by a smaller proportional (to the industry) percentage than Apple in growth (at least among operating systems), or else it will become clear that Microsoft is actually losing marketshare, so yes, you can compare the two, so long as you restrict the comparison to operating systems and against the industry as a whole (even then, this is being charitable to Microsoft in the counting, since enterprise-naked and linux-preload sales are not being counted, but are in rough counting being handed in assumption as Microsoft sales). It's not about raw numbers, but about comparative percentages of each to the whole.
As for your last paragraph, it is too much of a generalization to actually work - higher-income people tend to have bigger bills, and are just as likely to be forced into frugality in bad times as lower-income people are (in many aspects even moreso, since the risks of failure and loss are larger).
http://marketshare.hitslink.com/operating-system-market-share.aspx?qprid=10
We need something like Firefox vs. IE on the operating system front!
http://marketshare.hitslink.com/browser-market-share.aspx?qprid=2
untill then its Windows, lets see how Win7 does. oh and thx to Apple, Microsoft might just improve their stuff.
To think... If they only tweaked and polished XP keeping all of it's functionality intact... they would have doubled their billions easily. Instead they continue to think lofty things about themselves and having their heads in the clouds they have come to lose sight of the real people...THE CUSTOMERS.
By the way speaking of clouds, you have heard it from me first, that the Cloud (as to they way they are thinking it) will FAIL!!! No one likes total control and that is all that their Cloud represents. PERIOD!
I just think that people heard that Vista isn't good, and they keep repeating this "mantra". Vista works great on a new PC. No, it won't work good on an old systems. Microsoft's fault was that the minimum specs were too low (probably to earn some more bucks, although it seems that actually Intel asked them to do so...), and people installed Vista on incapable machines. I think that you can't expect from new software to run on a 10 year old PC.
I think that MS used to think that they can do whatever they want, but today I think things are changing. Win 7 actually is a response to costumer's complaints about Vista, and people that tried the OS say it is great (I didn't try it myself, so I'll judge it in the future).
As for "the cloud", MS, Google and other companies are going into it. Is due to hype? Probably, but it seems that if you're not "in the cloud" business, you're old school. If people put personal files "in the cloud", they should be aware of the consequences, if any.
Correction, you can't expect new software from MS to run on a 10 year old PC. I'm running Ubuntu 9.04 on a P-4 machine running at 1.87 GHz and 1 GB of RAM with Compiz running beautifully.
Prior to installing Ubuntu, I checked with the MS upgrade utility tool for Vista and it said my machine was Vista-capable. I didn't hold it against them really. I even tried out Vista on someone elses machine.
I was looking at a photo slideshow in Vista, it lost the photos 3 times. Sure it looks pretty but so does Ubuntu 9.04 and the differences are amazing.
A good response from MS would be to drop the act, get to business and learn how to do what Linux has been doing, run well on older machines and run even better on newer ones. I shouldn't have to buy new hardware, I should want to.
I agree, as I wrote, that MS should have been much clearer regarding which system is Vista capable. As I've mentioned, I didn't have problems with Vista, and I'm happy with it. On my machine I had only Vista installed so I can't compare the performance to XP on this machine.
My attitude to your comment regrading Linux is mixed. I agree that you shouldn't need to upgrade your system every time that a new OS comes out.
But, to me it sounds logic that with the years software will become more demanding, and that you'll need a more powerful PC. Be it for the OS, games, internet, etc. You can't expect from a new version of Autocad (for example), which as more futures, 3D, etc. to work with an old PC. It just can do much more, thus needs more resources.
The difference between Linux and Windows is that Windows needs to support a large variety of hardware and software, old and new PCs, drivers, etc. No one will want to upgrade to a new OS when they can't use their old software. So, and I'm not sure that this is the cause, Vista is going to be more demanding. Could they've done it better? Sure, just look and Win 7.
Have you ever danced with the devil in the pale moonlight?
(thought since your response was a poor jack nicholson impersonation, mine should be too)
As an addition, I fully expect Microsoft to try to hide (or even outright refuse to disclose) their specific sales numbers (and income figures) for Windows, Zune, and XBox.
No idea what you refer to with the "Paris Hilton Collection", but if you;re trolling, you may want to try something snide that actually has some relation to the product you're trying to insult, eh? Otherwise your comment comes off as too obtuse and abstract to have any effectiveness. ;)
BogusBasin, you may work in IT, but cleaning out the MIS department after hours is not considered being in the field.
Didn't they preach that to us in school join a career you love doing?
And anyone can say they're an IT but with your uneducated posts you blew that cover a long time ago my friend.
Please never change. The very thought that you might have an open mind or even a positive thought about anything related to Microsoft would surely cause the end of the universe to occur and nobody wants that to happen. All of our lives are in your hands, and such capable and reliable ones they are too.
You have lived up to your reputation gloriously. Well done, sir!
If Microsoft made a product that people actually wanted to buy, they'd be selling a lot more of it. For example, what if Vista had made older computers run much faster than under Windows XP? What if it offered some kind of amazing new functionality that businesses found they couldn't live without? Businesses would be upgrading all of their XP installations in droves and the company would be raking in a fortune.
But to say that this performance is to be expected because Windows sales are tied to PCs is really another way of saying that nobody wants a *new* Microsoft OS unless they're forced to take it.
Hell MS could come with a tool that monitored productivity and determined proper pay and someone would come out and say this is useless for business.
Even if they make history in seeing a sales drop, they'll still be fine.
All of you Apple and Linux fanboys (hey, I like Linux, too!) can just calm down. Microsoft isn't going anywhere anytime soon, even if they DO see a sales drop...which is very possible.
Microsoft WILL prevail...whether you like it or not. :)
as Zune to OSX
While I agree that yes, Microsoft can survive (even with no profit) for quite a few years, the thing is, their entire structure relies on having a monopoly (or even a near-monopoly) in two things: operating systems, and MS Office. Lose one, and the other might fail. Lose both, and it all will fail.
Microsoft cannot afford to lose for too long, else its customer base will begin to dismiss the notion that only Microsoft's products can get the job done - and if it gets too bad, that the customer thinks en-masse that they actually require Microsoft products to get things done.
"...right, 'anticipation,' lol"
I believe it's a valid point. Just look at Apple's iPhone sales which are down now from last year. And why is that? Could it be perhaps because the industry believes there will be a new model in June and anyone wanting to buy an iPhone is waiting until then before making that purchase?
Seems like the very same thing applies to Windows 7.
Care to comment on that, AppleRocks1963? I would be curious to hear your thoughts elaborated upon.
Maybe third time will be a charm for Microsoft... maybe not...
- by rgersmrk April 23, 2009 1:39 PM PDT
- Right now most companies are having a tough time with the economy. I think MS will bounce back with Win 7 and the popularity of netbooks.
- Like this Reply to this comment
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(52 Comments)Apple was in the grave back in 97 and MS provided them some much needed cash influx and helped them get back on their feet. Look at them now. Making solid products and a great OS.
I've never really got the MS/Apple fanboy hatefest. The computer industry has benefited greatly from both of these companies.
I personally want both companies to succeed and to do great. I also want to see Linux flourish too. Gives the consum