Microsoft profit jumps 51 percent with record Q1 revenue
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blog.seattlepi.com
The culture may be suffering a malaise right now, but they have a lot of money, and a lot of talented people. And they seem to be making many violent changes as we move away from the Windows/Office hegemony years, which is clearly the right strategy.
They may never have the robot-cars culture of Google, but they will always have a great-software culture.
I sold my stock a while back and this current rally seems like a swan song.
I think quite the opposite. They're pushing the envelope nearly everywhere. But you don't make money by pushing the envelope. It's by finding what customers want to spend money on. The iPod wasn't pushing the envelope. But it was sexy.
Courier was sexy, but not realistic. I say Kinect is their most exciting product.
Why buy other set top boxes if I can get all of their functionality plus amazing games at the same time?
I joined Yahoo in the Mobile division soon after the Flickr and Delicious acquisitions, when it looked like Yahoo had grasped the importance of including social elements and user-generated content into its experiences.
Fundamentally Yahoo is an advertising company that failed to understand the value of self-serve, long-tail advertising. It preferred the high-margin, high-touch sales approach with big media customers that had kept them alive through the first dot-com crash. Fair play to them: clinging hard to those media dollars was absolutely the right move for survival. But they missed the boat and, critically, failed to acquire Google for $1bn -- something that Semel seriously discussed with Page and Brin sometime around 2002.
The next-best thing after failing to buy Google is create their own. They did this by buying Overture and Inktomi, which together became the core of the post-Google Yahoo Search (remember, search on Yahoo was powered by Google until 2004). In terms of search accuracy, Yahoo had roughly matched Google by around 2006, but on the monetization side their algorithmic yield-optimization for keyword ads was awful compared to Google, and despite massive engineering investment remained so until they got out of the game by selling to Microsoft in 2009/10 (not that Microsoft is much better at that, I hear).
If you accepted that they had missed the boat on self-serve keyword advertising (which internally nobody ever did), the next-best thing they could do was massively increase page impressions by creating a blockbuster, high-page-view, sticky product. This would maximize the value of their still-excellent display ad business. By 2003/4, it was clear that social networks, like Friendster and relative newcomer MySpace, were exactly that kind of product. Here again, an acquisition would have been smart (though less obviously smart than Google).
Instead Yahoo tried to get into the game with Yahoo 360, a home-grown social network. This was at least the right strategy, but here again they simply failed on execution. 360 was buggy, ugly, confusing and lacked activity streams, which turned out to be a key feature of Facebook's subsequent success. No bones about it here: they had a gigantic number of users they could drive to 360 from the front page. If 360 had been at all compelling, they could have dominated social networking overnight.
So, four major failures behind them, in 2008 they saw the huge success of Facebook and tried to turn social: thus came YOS, the Yahoo Open Strategy. This included new Yahoo Profiles (a second attempt at social networking), and YAP, the Yahoo Application Platform, the last product I worked on before leaving. YAP was supposed to be a sort of cross between Google App Engine and Facebook Apps, where we would simultaneously distribute your app via our social streams and scale it on our infrastructure. This was a brilliant idea, I still think.
But the execution was a clusterfuck from start to finish, the gory details of which I'll skip. The final product was nothing like the original idea, and ended up a half-assed knockoff of Facebook Apps, but without any kind of traction. And in the meantime, it turned out Facebook Apps were a flash in the pan and Facebook had pivoted to Facebook Connect.
So that's my four years at Yahoo: missing one big opportunity after the other, despite multiple swings of the bat. It's not that we couldn't see what needed to be done. We just couldn't, organizationally, move fast enough and bravely enough to get anything good out the door before somebody else ate our lunch. And I didn't see that changing any time soon, so I left.
Which is a shame, because I really love Yahoo. It's a good-hearted, fun company, good to its employees, and full of people who genuinely care about our users and building great things that improve people's lives and make money at the same time. But sclerotic management and organization seems to have doomed it permanently to mediocrity. It's not going to die, but it will continue to lose relevance.
[To my fellow Yahoos who read HN: I hope you don't think this is too harsh. I love you guys!]
http://www.paulgraham.com/yahoo.html
Seems that the aphorism: "don't explain concepts to someone whose salary depends on his not understanding them" applies.
With regards to this particular topic, then, I would concur with the popular opinion that Microsoft's Windows and Office cash cows are too valuable to be offered as sacrificial lambs at the altar of cloud/mobile computing.
I'd say they've already started to successfully turn the ship around.
Big companies can be changed.
Of course, it's not to late to recover: they've got huge assets, and Windows and Office have a few more years to run. But so far the progress hasn't been anywhere near what's needed ...
Installed MS Office for someone on their Mac, then said yes to checking for updates. The updater ran, downloaded 2 updates and then told me it to please quite the following programmes before it could continue. List of programmes was everything running at that time, including the updater itself.
It takes more than money and good people to avoid "death".
Looking at Microsoft’s recent annual report, filed on June 30, 2010, Microsoft generated 83% of its revenues and 98% of its profits from the following three divisions: Windows & Windows Live, Microsoft Business Division, and Server and Tools. While these divisions include a collection of products and services (e.g., Azure), it appears that most of the revenues and almost all the profits of these divisions is driven by Windows (desktop and server) and Microsoft Office.
Its remaining two divisions – Online Services and Entertainment & Devices – encompass all of the company’s consumer products outside of Windows and Office, such as the Xbox 360, Bing, Windows Mobile, and Zune. In 2010, these two divisions accounted for the remaining 17% of Microsoft’s revenues, and had a collective operating loss of $1.676b. In fact, between 2008 and 2010, these two consumer-focused divisions generated an aggregate of $3.353b in operating losses.
Looking across its five divisions, we can conclude that Microsoft generates a majority of its revenues and nearly all of its profits from Windows and Office. And while Microsoft has found some success with other enterprise products (e.g., SharePoint, Microsoft SQL Server, and services), its consumer strategy, outside of Windows and Office, is struggling.
From my vantage point, the two key questions for Microsoft are:
1. In what timeframe will Microsoft face downward pressure on its Windows and Office revenues and profitability, given the transition from desktop computing to thin devices and cloud services?
2. Can Microsoft develop and execute a corporate strategy in the consumer or enterprise markets, outside its stronghold of desktop computing? And will this strategy substantially compensate for any disruption in its core market of desktop computing?
My sense is that the transition from desktops to cloud services and thin devices is accelerating due to rapid innovation and growing competition among Amazon, Apple, Facebook, Google, Netflix, Salesforce.com and others. Further, Microsoft has thus far underperformed in cloud services and thin devices, from search (Bing) to smart phones (Windows Mobile). In view of Microsoft’s dependency on Windows and Office, and its inability to gain significant share in newer growth markets, I am concerned about its long-term prospects in computing.
The biggest argument for this that I can see is their online services division -- i.e. Bing -- which lost more than half a billion dollars in one quarter (they lost a similarly gigantic amount in Q1 2009), and hasn't had a profitable quarter since 2005 [see http://www.businessinsider.com/chart-of-the-day-microsofts-o... ].
Even Microsoft publicly acknowledges that succeeding in online services is key for future growth, but they show no sign of being able to even begin approaching profitability in that space -- instead, they are losing more and more every year.
1. One future state is that most people transition from desktop computers to smartphones, tablets, etc. We then dock these devices for doing intensive work.
2. Another possibility is that we have smartphones and tablets, but transition from desktops and laptops to thinner laptops (e.g., netbooks, new Macbook Air, etc).
The issue for Microsoft and others is then - what operating system and office software becomes the standard in this future computing environment: Windows and Office, Android/Chrome and Google Docs, Apple's iOS and iWork, or some other solution (e.g., OpenOffice)?
I'm not seeing how this can happen. Love my iPhone for Email reading / Skype chatting / quick browsing, but that's pretty much all the productive work I can do with it.
My wife is also asking me repeatedly how the hell can I browse the web on that small screen.
With my laptop I can also stay in bed AND type with the lights closed and without much effort. That's not something I can say about devices like the iPad.
IMHO ... in the future devices will simply vanish from sight and get replaced by interfaces based on holograms projected from your furniture.
iOS and Android don't look like Windows killers today, and they aren't. But they are harbingers of things to come. In 1975 the MITS Altair didn't look like a mainframe / mini-computer killer, and it wasn't. In a mere 10 years since the Altair (a toy computer) hit the shelves the entire industry had been overturned, and mainframes/mini-computers were dying out while micro-computers came to the fore. Micro-computers grew up a lot in that time frame, but the essential elements of their superiority were there from the beginning (simpler, cheaper, more mass-production friendly, performance tied to components not overall construction, faster/cheaper innovation loop, etc.)
The same is true for mobile OSes and for web-apps. They have a lot of growing up still to do to compete with Windows everywhere, but the core is still there, and they have far less to grow than the Altair did. In another 10 years how much more sophisticated will be the iPad, iOS, android tablets and phones, and their native apps etc? In another 10 years how much more sophisticated will be webapps? In 10 years a VPS (or equivalent "cloud" instance) with hundreds of gigs of RAM and a terabyte of SSD storage and the CPU power to match will probably cost the equivalent of $20 a month in today's dollars. Add to that powerful new technologies like web sockets and all the other html5 technologies, along with new things we haven't even imagined yet. In 10 years gmail will be nearly 3x as old as it is today, imagine the innovations that will happen in that time.
And I'm supposed to imagine that somehow there's no chance that Windows will lose its footing amidst all this innovation? Perhaps it won't, but I can't predict the future, and from what I see it looks like there are huge very real risks to Microsoft's cash cow.
The computing environment is not a zero-sum game. Mainframes were not replaced by microcomputers, except at the edges. Mostly microcomputers filled a space that hadn't been there before, and came to be a larger market, but a new market.
Mobile computing is the same deal. It's a whole new class of device that will end up being much, much bigger than desktop computing ever was. There will never, ever be "a computer on every desktop". The people who never bought desktops will buy mobile devices. This isn't blue-sky thinking -- they're buying iPads, right now.
In 10 years time hundreds of millions of people will still use desktop computers everyday, and I would be entirely unsurprised if their software was provided by Microsoft. Desktop computing is what Microsoft are good at. But billions of people will be using mobile computing devices provided by a bunch of manufacturers and running on, possibly, Android.
Desktop computing won't go away and Microsoft won't die. We'll just forget why it ever seemed important that Microsoft had a monopoly, just like nobody cares that IBM has a monopoly on mainframes now.
Microsoft isn't going to go away. Desktop computing isn't going to go away. However, the desktop computing could become 15-20% of what it is today, and that 15-20% will be for one of two reasons: the user is in a field that requires the resources (coding, graphic design, etc) or the enterprise has a huge investment in custom software (which kept the mainframes around).
The people who won't be there are (IMO) are the business people who are the people that provide most of the dollars that make up the Windows and Office revenues. And that will significantly hurt MS.
Micro-computers enabled the GUI, they enabled personal computers on every work desk and home office. They put into everyone's hands capabilities and tools that were previously the purview of a select few. There are a great many more experts in typography today because of the power of the PC. The same goes for movie makers, photographers, etc.
Mobile computing isn't just about smartphones or computing on a handset, it's a platform and a paradigm. It's the appstore + sandbox model. It's more intuitive interfaces (e.g. multi-touch). Etc.
If you look at the iPhone or the iPad and say to yourself "these won't replace Windows" you will be fooling yourself. This is not a static industry, indeed it's one of the most dynamic, falling back to static conceptions of the world is a recipe for being left behind. You need to imagine what the possibilities are for the future of these paradigms. iOS has been in users' hands for less than 4 years, the appstore has only been around for 2 years. What will iOS and the application landscape look like after it's evolved for 4x or 5x that time? What will android and its applications look like? And Chrome OS? And WebOS? And whatever anyone else comes up with?
Apple knows what's up, they're morphing the OS X experience to be more like iOS, they can see a future where the experience of using a Macbook is more like that of using the iPhone, where installing applications over the internet is the rule rather than the exception.
Here's a simple hypothetical. Imagine the iPad all grown up, it's faster, it has terabytes of internal solid state storage, it has a larger screen. Plug it into a docking station on a desk and it becomes a monitor with a keyboard and mouse attached and connected to a wired network. It runs all of the grown up office applications anyone ever uses anymore, installed via the corporate intranet app portal or preloaded in the base install. Disconnect it and take it home or to lunch or to a meeting, it has 4G/wifi connectivity and connects to the corporate VPN and internet facing secure services (corporate email and web-based collaboration software) seamlessly. Could such a beast compete with a Windows based system? Certainly. And the real devices of this sort from 2015 and 2020 will blow this simple hypothetical out of the water.
"Desktop computing" won't go away, but it may well be redefined and subsumed by new platforms that come along. Indeed, I think it's far more likely that desktop computing in 2020 will share more in common with iOS and android than it will with Windows as we know it today.
The issue for Microsoft is that PCs follow mainframes and midrange computers, and are disrupted by some next generation technology; the next generation technology appears to be a combination of thin devices and cloud services. PCs will persist, but could become a comparatively small niche market over time. As the PC market shrinks in size, the traditional Windows and Office products will yield declining revenues and profits for Microsoft. In order to sustain its revenues and profits over time, Microsoft will need to transition to the next technology (thin devices and cloud services) or to another set of markets (e.g., services). This is difficult, but feasible, as shown by the IBM example.
Look at how much of the rest of IBM's revenues come from services related to mainframes. A significant part of IBM's service and support revenue is tied directly to IBM's mainframes -- a bit like Microsoft's Office, which isn't a core product, but it's tied to Windows, and it's part of what makes Windows profitable.
What differentiates IBM's mainframes from the few remaining competitors (there are only something like 10 companies in the world in that space) are advantages that Windows has no analog for -- Windows' biggest advantage right now is, comically, Windows (i.e. market share).
Everyone I know who has the latest xbox thinks it's a pretty awesome device and it seems to have turned the corner in terms of profitability. It's already in millions and millions of living rooms, has topped the other consoles in sales for the first time and now with integration into WP7 and things like Netflix it is turning into a pretty compelling offering. I think there's every chance we could see the consumer segment of MS's business blossom over the next few years.
I don't think soliciting votes is necessary around here.
We're massively ramping up as we get closer to our 2011 Q1 RTW ship dates, and the product is way more polished and functionally relevant than our competitors. Heck, I even think our marketing team has bought some massive advertising on money.cnn.com
We're very excited.
Try this: mouse-over "TRY IT TODAY" and then try to click on "GET STARTED".
The natural instinct is to linearly move the mouse to "GET STARTED", but in doing so you trigger the "REAL-TIME INSIGHT" mouse-over action.
Thanks so much!
So, relatively speaking, those people on Slashdot may have had somewhat of a point. As others have pointed out, IBM still makes billions, but are no longer the leading force in computing. Microsoft appears more and more destined to a similar role.
Microsoft might be a little behind, but they are definitely serious about "cloud". Plus, Windows Phone 7 does not look too bad. It might not be as complete as its competitors in features, but it is definitely a strong ground work.
Let's just sit and watch how those folks in Redmond will monetize better from the cloud.
- Apple: May be in less than five years a cheap generic chinese mobile clone will have all the iPhone capabilities.
- Google: Search irrelevant, a lot of competition in the advertising arena.
- Facebook: P2P or other kind of social networking.
- Twitter: P2P too.
Apple now makes something like 60% of its revenue from products that didn't exist 5 years ago. I'm sure they realize this and will continue. When they stop they wont be center stage anymore and they probably know this.
Google has been trying almost everything there is to try. It's been almost exclusively failure but their pockets are deep enough that they'll probably get a hit eventually. I guess in that sense they are the closest to Microsoft's current position but they haven't built up nearly the same amount of bad blood yet.
Facebook I have much less faith in. Everyone I know who uses it only does so because they can't find a good alternative. That's a bad situation to be in if you're going for the long term
I don't know enough about Twitter to make a comment.
It was obvious to some over 10 years ago that this was a movement that Microsoft had to embrace to stay relevant and yet they have completely failed to get it. It is obvious to anybody who enjoys coding that the great developers prefer free and open source software. There isn't a single category of product that isn't built using this methodology now. The worlds fastest supercomputers wouldn't dream of using Microsoft's operating software. Why is that? If Microsoft makes such great software, why can't they power the world's fastest and sexiest computers?
Microsoft is obsolete to many until they address this core issue. You can say all you want about them not making this or that online play but their core business as you point out is operating systems and office tools. Free and open source operating systems and office tools will one day break into that cash cow and when it does Microsoft had better be ready. I can't put it any more plainly than that.
You may now return to your scheduled programming :)
Why am I being down-voted? Others on this page have stated that Microsoft shall not be as profitable going forward for reason X or Y or Z. I have stated why I think this is the case. I can't of course _prove_ it which is why I said that I have a bias up front. But if you look to the mobile phone landscape you have a situation where Android and Symbian are free software. It took a long time to happen and it took two technology giant neither of whose core business was operating systems and office tools per se. Don't you think that this is significant? Let's repeat this, nobody had any success competing with Microsoft at its core competencies until open source competition came along and even then the market that Microsoft "owns" is still firmly within their grasp. Somebody else on this very page expressed their opinion that the technology disruptor would be thin clients/cloud computing and didn't get down-voted for it. But I do. Please do not down-vote me if you disagree with my opinion, express yourself and tell me why you think I merit down-voting. Thanks.
Probably because your post would have a hard time being further from reality. If this were back in the open source heyday it might not seem so out of place but at the end of 2010?
For some people open source was some sort of religion but the form it actually took was nothing more than loss leader. You can't break into the OS market because MS is too embedded? Then give your stuff away and make it up on the back end. This is what you're seeing, not some "power of open source" nonsense. Google doesn't care about open source, they care about getting an OS they can leverage on as many phones as possible so they can't be locked out on advertising. Unix vendors used to give their OS away because it was the hardware they made their money on.
Today the tides are changing. Now you can use micro-payments via the various application stores out there so developers no longer need to try and make some free source app in the hope of landing a job through it. Now they can take their shot at the market place and hopefully become self sufficient. Personally I'd rather become financially independent than land a "great job" working for someone else. I don't see how open source can offer me this.
You make it seem like open source has had its day. It appears to me from looking at the software landscape that open source is becoming more and more pervasive all the time. If you are a software developer I would imagine that it is nigh on impossible to do your work by only using proprietary tools. This was always the case. Everyone agrees that the mobile market is the growth sector and the operating systems that are starting to dominate the sector are open source ones and the tools used to create the apps that go to the application stores you talk about are open source tools such as Eclipse and large parts of Xcode and the Symbian QT dev tools.
I did say I was biased. Granted. But it is not blind faith. That's unfair and unkind on your part to equate what I feel as pretty rational beliefs with religious thinking. Look at the valuation* of Redhat (the champion free software company) vs Microsoft (the champion proprietary company over the last two years for instance ... What does that stock movement tell you? You can't say that Redhat are making a better fist of the console market or a better cloud play or thin client play because Redhat outcompetes Microsoft on their own turf (server software and support) and this is all due to open source software.
I have no problem if you make your living selling closed source apps and for some verticals (games is an oft-cited instance) it might even make sense but I think in the long run everybody wins through the benefit of network effects and the reduced potential of lock-in when the free and open source software methodology is used. It seems to me that all the big IT companies get this - HP gets it, IBM get it, Oracle now get it through SUN, Yahoo gets it, Google definitely get it ... Microsoft are conspicuous by their absence to the party. And it is my thesis that this is going to begin hurting their bottom line despite the good results posted here.
* http://finance.yahoo.com/echarts?s=RHT+Interactive#chart1:sy...
I think your post was downvoted for being dogmatic (e.g. "Open source is the way, the truth and the light!"), not for being wrong. On a side note, don't fret getting down voted so much. Who cares. Once you get 200 karma you can downvote people but other than that I don't know of anything that more karma buys.
>It appears to me from looking at the software landscape that open source is becoming more and more pervasive all the time.
This is because you're seeing it as some kind of ideology. It isn't. It's a loss leader. You see people doing loss leader all over the place (e.g. milk sold below cost, gaming consoles, television for free but with commercials, etc., etc.), do you think there is a growing trend of people who want to pay you for using their product? Of course not, it's part of a larger strategy. Just like open source.
>That's unfair and unkind on your part to equate what I feel as pretty rational beliefs with religious thinking.
When you see the same thing as everyone else but ascribe it to some "higher power" when there is no evidence of such what should I call it?
>Look at the valuation* of Redhat (the champion free software company) vs Microsoft (the champion proprietary company over the last two years for instance ... What does that stock movement tell you?
And bizarre examples like this further point to irrational thinking on your part. Microsoft dwarfs Redhat in every meaningful way. Are you comparing stock prices between the two [1]? And if you want to talk about the champion of proprietary software I think Apple has a better stake on that claim. They just recently blew past Microsoft in market cap (the metric you should be looking at if you're trying to judge valuation of a company).
>You can't say that Redhat are making a better fist of the console market or a better cloud play or thin client play because Redhat outcompetes Microsoft on their own turf (server software and support) and this is all due to open source software.
Redhat isn't remotely relevant to Microsoft. MS is worried about Google and Apple. I wouldn't be surprised if Ballmer didn't even know Redhat was still around as a company.
>It seems to me that all the big IT companies get this - HP gets it, IBM get it, Oracle now get it through SUN, Yahoo gets it, Google definitely get it ... Microsoft are conspicuous by their absence to the party.
No idea what you're talking about here. Frankly this sentence sounds absolutely delusional. Oracle "gets it" via Sun? Do you read the news? Every single one of those companies you mentioned rely on proprietary software. Sure, they use free software. Some even do some loss leader with it (e.g. Google). So what? Microsoft also gives away software btw. Out of that list it is beyond bizarre that you would give Oracle a pass but single out Microsoft. I feel like I'm having a conversation on slashdot in the late '90s.
[1] http://www.thevarguy.com/2009/10/22/red-hat-vs-microsoft-the...
>This is because you're seeing it as some kind of ideology. It isn't. It's a loss leader. You see people doing loss leader all over the place (e.g. milk sold below cost, gaming consoles, television for free but with commercials, etc., etc.), do you think there is a growing trend of people who want to pay you for using their product? Of course not, it's part of a larger strategy. Just like open source.
Because with open source software you get unhindered access to the source code and because sending bits over the internet is very cheap it is seen as pointless to charge for the media. But open source software charge and make a very fine business from support. Your example of milk is odd because farming is subsidized, something that a lot of people find unfair but that is necessary so that you don't become agriculturally subservient to someone who suddenly becomes your enemy. And what does milk lead to? Cheese? Gaming consoles, yes. But apparently Nintendo never has. Television programming uses the business model of advertising just like a whole bunch of websites do. This does not mean that your television programs are loss leaders because what do they lead to? Consoles lead to games. Programs lead to more programs which the advertisers like cuz they like eyeballs. With advertising you are the product, the advertisers are the customer. This is why probably you get better programming from subscription channels because they are not as beholden to their customers (the advertisers) but this is all beside the point. The example that is kind of true reinforces my point about software being exorbitantly priced.
>Microsoft dwarfs Redhat in every meaningful way. Are you comparing stock prices between the two [1]? And if you want to talk about the champion of proprietary software I think Apple has a better stake on that claim. They just recently blew past Microsoft in market cap (the metric you should be looking at if you're trying to judge valuation of a company).
It's not about size. It is about your return on your stock investment in terms of the share price going up and not down, and the dividends on the shares. The data I gave you showed that Redhat's shares have outperformed Microsoft's shares over the last 5 years even though Microsoft is phenomenally profitable. What does that tell you? I don't know about dividends, I haven't looked that up. Your talk about Apple is beside the point because I am not talking about market cap. Sure market cap gives you one evaluation of a company but so do lots of other things such as stock movement, volume of trading, price to earnings ratio and a whole bunch of other things. Judging things by just how "big" they are is not a great way to go about educating yourself.
>Redhat isn't remotely relevant to Microsoft. MS is worried about Google and Apple. I wouldn't be surprised if Ballmer didn't even know Redhat was still around as a company.
You are joking aren't? What is Microsft's main source of revenue. It was spelled out in this article. Windows and Office. Has been for years. Redhat competes with Windows in the enterprise. They are a direct competitor of Microsoft's cash cow. Apple is too but only kind of because Macos is not a general purpose OS and always comes wrapped in shiny hardware and so doesn't compete directly with Microsoft. It's more the other way, as Microsoft expands beyond its cash cows it enters the turf of others, into music devices or web search for instance. And Apple kind of proves my point cuz Darwin and LLVM are open source projects that Apple heavily invests in so gives them a competitive advantage. Check out http://www.apple.com/opensource/ "As the first major computer company to make Open Source development a key part of its ongoing software strategy, Apple remains committed to the Open Source development model. Major components of Mac OS X, including the UNIX core, are made available under Apple’s Open Source license"
And what about this community? HN is powered by Arc which you can get the source from here: http://arclanguage.org/install and the OS is FreeBSD according to Netcraft: http://toolbar.netcraft.com/site_report?url=http://news.ycom...
Sure thing, that's what this site is about, no? :)
>Lets put aside ideology for a moment and talk about facts.
I'm not talking ideology, I would claim you are. Personally I care about what works. I care about what should work but I can't make it so and I refuse to imagine it to be so when it isn't.
>Because with open source software you get unhindered access to the source code and because sending bits over the internet is very cheap it is seen as pointless to charge for the media.
Seen by who? Just off the hip, I suspect that most software that's on computing devices today is paid for. I cite the massive profits MS makes on enterprise software and iPhone apps. What are you citing to backup your nonintuitive claim?
>But open source software charge and make a very fine business from support.
? This kind of thing is what really gives me the "back to the past" feeling about your posts. Giving away software and charging for support is a horrendous business model (at least if that's all you have. Places like IBM do make money doing this is an extra to their expensive software). I can't think of anyone besides Redhat to have a a lot of success with it. Everyone else has moved to advertising, freemium or some other technique to make it work.
Have you ever worked in support? Personally I can't think of a worse job in computer science. Listening to unreasonable assholes who feel they can demand anything because they're paying you. If the free software movement wants to tell me that my only option as a software developer (they don't but just to address this idea of making money via support) is to give away my code and be paid to support it, they can go to hell. I would learn another trade before I'd stoop to working in support again. And I love developing.
>Your example of milk is odd because farming is subsidized, something that a lot of people find unfair but that is necessary so that you don't become agriculturally subservient to someone who suddenly becomes your enemy.
Uhm, what does farming subsidy have to do with anything? Places like Walmart pay farmers more for the milk then what they charge themselves. I.e. they seel it at a loss. It isn't Walmart who gets these subsidies but the farmers.
>And what does milk lead to?
Are you serious? You don't know anything about this stuff? I chose the "milk as a loss leader" example because it should be familiar to most people.
Just to educate you on this; go into a Walmart. Do you know where the milk is? It's in the very back of the store. So you have to walk by all their other high-margin offerings to get it. Milk is something you have to get often so it makes a good lure to get people in the store so you can start advertising to them.
>Gaming consoles, yes. But apparently Nintendo never has.
I don't believe this is the case. They may have never sold the wii at a loss but Nintendo is one of the original console players. The wrote the blue print for this stuff, it's hard to believe that they never sold consoles at a loss.
>This does not mean that your television programs are loss leaders because what do they lead to?
They are loss leaders. The product is the viewers, the customers are the advertisers. The programs are the product they produce and then give away to get their high margin product (viewers) in the door.
>The example that is kind of true reinforces my point about software being exorbitantly priced.
Software is more difficult to price because it costs so much up front but costs nothing more to produce once made. I think the market is doing ok at finding the price for it though.
Why do you say "exorbitantly priced"? Have you ever produced anything substantial and found it was really cheap to do? Do you simply think everything should cost less than it does or are you picking on software only (e.g. if you think a BMW should cost so much but software shouldn't then why?)?
>It's not about size. It is about your return on your stock investment in terms of the share price going up and not down, and the dividends on the shares.
You're trying to change the game here. The reason people use market cap as the metric is because it's the best indicator we have. You've found some metric that shows what you want the result to be and chosen that. Do a little more research and I bet you could find a penny stock that beats MS and Redhat.
>Judging things by just how "big" they are is not a great way to go about educating yourself.
It is if you want to know who is more successful. Are you seriously trying to claim that Redhat is out-performing Microsoft? Seriously? That is just utter delusion talking. You were trying to call me out on ideology? I'd like to see MS go down as much as the next MS hater, but I won't lie to myself.
>You are joking aren't?
Are you? Who cares about Redhat?
>Redhat competes with Windows in the enterprise.
Along with a lot of other players. Of all the ones to worry about, Redhat would be the last on my list (if it made the list at all). They're just a support organization, big deal. I'd be much more worried about e.g. Oracle coming in and locking out my platform.
>They are a direct competitor of Microsoft's cash cow.
They have no offering that competes with MS. Be honest with yourself. Redhat Linux usually replaces the other Unix vendors that were there, not even Windows servers. And the desktop? Not in our lifetimes. OpenOffice can't take MS office on head to head and almost certainly never will. I'm sure Office will go down one day (maybe even in less than 10 years) but not to Redhat, come on.
>Apple is too but only kind of because Macos is not a general purpose OS and always comes wrapped in shiny hardware and so doesn't compete directly with Microsoft.
Do you have any idea what's going on in the wild? The landscape has changed over the last 2 years, you seem to have missed it. OSX is very much a general purpose OS. I've replaced all my windows machines with OSX ones in a way I would never have been able to with Linux. OSX is continuing to gain market on the desk and they're crushing on appliances. They're already in any enterprise that does graphics and they're making headway on regular corporate. I don't see them really trying too hard with corporate right now but they have a presence and a leverage point to exploit if they wanted in (IOS). Redhat has nothing to leverage because they have nothing compelling. They're just offering support on a cheap Unix variant, so companies replace their existing Unix vendor with Redhat and forget about them.
>It's more the other way, as Microsoft expands beyond its cash cows it enters the turf of others, into music devices or web search for instance.
That's worked great for them so far...
>And Apple kind of proves my point cuz Darwin and LLVM are open source projects that Apple heavily invests in so gives them a competitive advantage.
Darwin just helps them compete against apt/RPM/etc. so people want a Unix desktop can chose them over Linux. Another loss leader. LLVM is a better example though, but it's mainly competing against GCC.
>"As the first major computer company to make Open Source development a key part of its ongoing software strategy, Apple remains committed to the Open Source development model. Major components of Mac OS X, including the UNIX core, are made available under Apple’s Open Source license"
Sure, they play nice with open source developers for the same reason phone App developers develop for iPhone and Android. Android sells maybe 50% what you can do on iPhone but that's still 50% on the table, no reason to ignore it if you can afford to produce for two platforms.
>And what about this community? HN is powered by Arc which you can get the source from here: http://arclanguage.org/install and the OS is FreeBSD according to Netcraft: http://toolbar.netcraft.com/site_report?url=http://news.ycom....
Open source isn't dead. I release open source code myself (and I would release more if I wasn't busy making a living). But your original post claimed the reason MS is floundering is because they don't embrace open source! That has no relevance what so ever. Just playing nice with open source doesn't make you suddenly have a viable business. Ask Sun.
How many more years does Microsoft need to get increasing revenue from those two before that will stop? Or will they just keep saying it, year after year, until it's true. You could have said "people are going to start cancelling their landline phone service" every year since 1950 and you would have gotten to be correct eventually right? Just hang in there.
Looking at Google's recent annual report, filed on October 28, 2010, Google generated 96% of its revenues and 99% of its profits from the following one division: advertising. While this divisions includes a collection of products and services (e.g., mobile), it appears that most of the revenues and almost all the profits of these divisions is driven by AdWords.
http://www.appleinsider.com/articles/10/10/28/apple_beats_mi...
Microsoft is still more profitable, for the moment.