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Microsoft Corp. Chief Executive Steve Ballmer defended the software company's expansion beyond its Windows and office software businesses, saying Web services and consumer devices are key to the company's future.
Speaking on Thursday at an annual meeting with financial analysts, Ballmer acknowledged he had been "hammered" by investors who argued Microsoft should focus on its core desktop and server software business and forget businesses like digital music players and video games.
Microsoft's CEO, Ballmer, Defends Expansion Beyond Desktop [uk.reuters.com]
Microsoft has always been a one-horse show, despite all previous attempts at diversification, and even that bald statement exaggerates their importance. Their only moneymaking products are Windows and Office, and both were foisted on an inadequately-paranoid market over better products by illegal bundling (with DOS and Windows monopolies respectively). DOS itself was made by IBM's contract, not by any particular merit in the code (which in any case didn't even come from Microsoft.)
The real money for MS (originally) was in getting better contracts from all the "me too" PC clone makers.
But that's all beside the point now. Ballmer is right, and the investors criticizing the attempt at expansion are being shortsighted. Sure, MS is taking a bath on all the other stuff right now, but they are wise to try and diversify while they have all the excess revenue coming in from Windows and Office. I think the boardroom brigade at MS see the writing on the wall when it comes to these products. Open source projects like Linux and Open Office are starting to gain traction. The success of the Ubuntu/Dell deal is just the fine point of the tip of the iceberg.
MS has to find new revenue streams, or they're going to be in trouble. Not now, but they're going to start seeing market share on the desktop begin to erode within 5 years. 10 years down the road, the desktop is going to be a multiple OS free for all. MS will probably still dominate, but it will dominate with a 50% market share, not a 95% market share.
With Mac selling laptops as fast as they can crank them off the assembly line, Dell shipping consumer desktops and Laptops with Ubuntu, and Canonical hinting at a few more "big distributor" deals in the works for Ubuntu, Microsoft's move into console games, a stronger online presence, and multimedia devices, is starting to look prescient.
They just need to manage the projects better. Look at Slate. Slate under the MS banner was a perennial money loser. After being bought up by the Washington Post, Slate has had a renaissance and is now a solid money maker.
If MS could come up with 50 Slate sized projects, and hold onto them long enough for the projects to start turning a profit, then it will go a long way towards hedging their bets against future market share degradation in their core business.
"...investors who argued Microsoft should focus on its core desktop and server software business and forget businesses like digital music players and video games"
If Media Player 11 and it's hooks which "URGE" you to use their media services are any indication of how well MS will do, the investors are right.
"But Windows Media Player 11 isn't any old beta release; it's essentially a system upgrade, one that can be removed only with XP's System Restore tool. Nobody should install this kind of preview software lightly."
- Rob Pegoraro, Wahington Post
How many "average users" can figure out why their PC is running slow, trace it back to an "update to Media Player", and do it all before the restore point is meaningless?
IMO - MS shoots itself in foot, (again).