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Comment by wglb | Hacker News Reader

So while the article notes several times that "Microsoft is not making items that customers want", it seems that this is addressing the consumer customer. But isn't Microsoft addressing what the enterprise customer wants? And isn't this a serious chunk of where their income is coming from.

While I am not seeing flaws in the argument here, I am slightly skeptical, as for multiple decades I have witnessed many people underestimating Bill Gates, and now I wonder if that continues.

(I remember a time where Intel was skeptical of compilers produced by tiny companies such as Microsoft--they got no respect whatsoever.)

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"While I am not seeing flaws in the argument here, I am slightly skeptical, as for multiple decades I have witnessed many people underestimating Bill Gates, and now I wonder if that continues."

I would certainly rate Microsoft's chances much higher, if Bill Gates still held an active role in the company.

Agreed.

I don't understand how a CEO (Ballmer) can last so long at a company with share price effectively flat between $20 and $30 since 2002 (1). Especially in the tech industry -- unless shareholders think the results would be worse without him. MSFT has dividends which maybe offset the flat share price in the investors mind, but oracle (2) and ibm (3) pay dividends and they have had good share price growth since 2002.

(1) MSFT: http://goo.gl/He849 (2) ORCL: http://goo.gl/iNWs1 (3) IBM: http://goo.gl/0W6Kz

Personally I think expecting stock price to always increase is horrible these days.

I agree somewhat with that. I can't place my finger on it, but there's something I don't like about growth needing to be the norm... but that's a whole new topic.

Regardless, the opportunity for profit is why people purchase public shares of a company. Profit can only be made by an increase in share price (assuming no splits) or dividend payout (i think).

EDIT: realized there are many other ways to make money (sell short, derivatives based on price volatility, etc) but i think my point is still valid that the shareholders of a company want growth in share price or they'll invest their money elsewhere.

The reason you always expect growth is because as a company retains earnings its total assets grow. You expect that given more money you should earn more money. If you get to a point where you're earning the same amount but require more assets to do so, you are going to get a lower multiple on your earnings. The other option is to payout all your earnings as dividends but the problem there is double taxation(if you live in a country that taxes dividends) which lowers the value of those earnings to the investor.

Your discomfiture is well placed:

  http://www.youtube.com/watch?v=F-QA2rkpBSY

The world is mostly logistic curves, but the ponzi needs us to all believe in exponential curves.

TY for the link. Another example of a great lecturer being able to make up for a dry subject matter.

Just a clarification for those (like me) who didn't get it:

A logistic curve is basically an S-shaped curve, also known as a sigmoid.

Including dividends, MSFT has returned about -44% since Steve Ballmer assumed the CEO position in January 2000. By comparison during the same period the NASDAQ-100 index returned -37%, IBM returned +66%, and ORCL returned +20%.

The problem is that Gates likes him for some reason. The two of them own an a very significant portion of the company and essentially control the board of directors. So Balmer's going to be in charge so long as both he and Gates wants him to.

More fundamentally, the OP assumes that the rise of smartphones (and, it assumes, tablets, but I think that remains to be proven) constitutes a shift away from the desktop platform.

There's no reason to believe that this is true, at least for most of MS's customers.

EDIT: after a bit more reflection, I think that while I can imagine a future in which everything runs off mobile devices, that is not possible with the mobile platforms that we have today. Further evolution of the platform would be necessary -- and that could well involve a shift away from today's current leaders (Apple, Google) toward the providers who already know how to provide the computing horsepower that business users and other tasks (PhotoShop, etc.) require.

Consumers can react to market changes much faster than enterprises. We are seeing a rapid migration away from Microsoft's product in the consumer space. That must worry MS as this phenomenon seeps into their enterprise business over time.

Microsoft needs a new strategy that keeps it competitive in Consumer, Education, Small Business, AND Enterprise. Retreating to being JUST and Enterprise software company would be a very weak competitive position.

We are seeing a rapid migration away from Microsoft's product in the consumer space.

Are we? They have the fastest selling consumer electronics product in history, the Kinect. Windows 7 is selling faster than any version of Windows to date. Office 2010 is selling better than any version of Office.

Consumers never used MS phones. Consumers never used MS MP3 players. Consumers never bought MS tablets.

What we're really seeing is that as certain market segments move to the consumer space, MS hasn't been adopted. So there's no migration away from MS. Rather MS isn't finding as many new markets in the consumer space. But they haven't really lost ground in the consumer space.

Additionally, the predictions about people using a netbook as their only computer seem to have been mostly wrong. This is good for MS, as Windows' licensing fee was too large for a $300 computer. (MS helped this along by refusing to sell cheap Windows for netbooks that were actually capable.)

I don't follow MS closely but I thought bill gates was no longer involved. Is he guiding MS with enough influence that (betting against MS == betting against gates)?

He's still the Chairman. I don't have any real information, but, from what we know publicly, no, betting against MS isn't betting against Bill since his involvement doesn't seem significant at this point.

Maybe they'll pivot like IBM did, from consumer stuff to business consulting / enterprise products?

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