Microsoft Could Lose More Than Consumer Market To Tablets

  • Posted: 08 April 2011 02:05 PM #16

    chiefthinker - 08 April 2011 04:34 PM

    I have been wondering for a long time as to why MS does not “port” their Surface computer OS to a smaller form factor.

    Is it because it only runs on Intel based machines? Can anyone shed some light on this?

    Sorry if this seems off topic. grin

    I don’t think that’s off topic. Very much on topic.

    What I think well see is many of the code bits that drive Surface in Windows 8, but I’m going to guess that we havent seen a full port is that surface is mostly an interface with very little OS.

    What Microsoft will have problems doing is stripping Windows down the way the Apple stripped OSX down. It’s why they are having to rebuild Windows again so soon after 7. Apples been tweaking for 10 years.

         
  • Posted: 08 April 2011 02:32 PM #17

    @Ross Edwards, thank you for your great rebuttal. As you surmised, my post was generalized and speculative at best. I ignored some “inconvenient facts” so that I could paint with a broad bush and help to identify some possible trends. I’m not so much predicting the future as I am pointing out a possible future.

    FalKirk: Based on what Microsoft has been saying, it doesn’t matter anyway. If the upcoming Microsoft tablet is truly an attempt the put a desktop operating system on a tablet then the Microsoft Tablet is D.O.A. no matter when it ships.

    Ross Edwards - 08 April 2011 04:18 PM

    Slates running Windows already exist, and have for a decade.  My local Honda dealership, to name just one business, uses Windows tablets for everything.  They’re no iPads, but for a complex app that has to be seamless between the desktop and tablet, they work okay.  Of course, that’s not to say Apple can’t far surpass that as they continue to develop iOS.

    Microsoft tried and failed for over a decade to make these types of Slate devices a viable category. Now that Apple has shown us the way with the touch interface, there’s no going back.

    FalKirk: 3) Over 90% of Microsoft’s revenues come from two products: Windows and Office.

    Ross Edwards - 08 April 2011 04:18 PM

    I suspect this nugget of information no longer holds the weight it once did.  What I mean is: (1) it might be outdated—the “not making money” phase of the Xbox is long since over, and (2) even if it were still literally true, the other 10% of infinity dollars in revenue is still a whole lot of money.

    Last quarter, Microsoft had income of 3.325 billion from Windows, 3.965 from Office, 1.776 from Servers, 679 million from Entertainment and lost 543 million from online services. The Windows numbers are a little deceiving because they were reduced by the effects of a $1.7 billion deferral initiated in the year-ago quarter. No matter how you slice it, Windows and Office make up the bulk of Microsofts’ income.

    http://www.betanews.com/joewilcox/article/Microsoft-Q2-2011-by-the-numbers-Record-1995B-revenue-77-cents-EPS/1296163383

    FalKirk: If that day comes, MICROSOFT WILL HAVE NOTHING. They have no phone presence, they no tablet presence and if the Robe of “compatibility” is taken away, everyone will suddenly realize that the emperor is naked.

    Ross Edwards - 08 April 2011 04:18 PM

    ...and still raking in insane dough from Xbox 360 hardware, software, subscriptions, accessories, licensing, etc.  And that’s with no announcement of any kind on the horizon for a next-gen console from any provider.  They’re all in profit-taking time on the console life-cycle calendar.

    Microsoft is certainly not going to go away, but Microsoft as we know it might. Microsoft, like IBM before it, might continue to thrive but no longer be relevant in the personal computing space.

    FalKirk: If people could ditch Microsoft products would they? In a heartbeat. Microsoft makes miserable products that make people miserable. They have virtually no customer loyalty. If people think they can escape from the Microsoft trap they will jump to an alternative product just as fast as they can.

    Ross Edwards - 08 April 2011 04:18 PM

    You’d think that, right?  I know!  But inertia is a powerful force.  I just had this very argument with my mother-in-law last weekend (she is a CPA and runs a warehousing business).  It was like listening to myself back before I made the switch to Apple.  In her mind, and that of many Windows adherents, Apple makes toys for fun, not tools for productivity.  Most people don’t know or think about the Dieter Rams design philosophies or understand how Mac development sculpts the machines around what its users actually want and enjoy doing.  The concepts just don’t exist in their minds.  A computer is just a terminal for performing tasks.  They revel in the time they get to spend away from it.  WE revel in the time we get to spend ON our Macs, iPads, etc.

    I concede your point. I tried to allude to this in my suggestions that if the “Robe” of compatibility were ripped away that people would discover that the Emperor had no clothes. What I meant by that was that Microsoft is seen as invulnerable, as everlasting, as the “Emperor of the Enterprise”. What I’m wondering out loud is if there could be a tipping point, a sea change, an event that transformed how people perceived Microsoft.

    I think that event is Mac market share. That Apple lost the PC wars to Microsoft and that Apple’s computer’s are a mere niche product is a given, a fact, the unquestioned gospel preached from the pulpit if IT-dom. But if the unthinkable were every to happen - if Mac share were ever to break a psychological barrier -  say 10%? 15%? 20%? - then would the walls of Microsoft’s unquestioned necessity fall about them like the fabled walls of Jericho?

         
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    Posted: 08 April 2011 03:02 PM #18

    FalKirk - 08 April 2011 05:32 PM

    But if the unthinkable were every to happen - if Mac share were ever to break a psychological barrier -  say 10%? 15%? 20%? - then would the walls of Microsoft’s unquestioned necessity fall about them like the fabled walls of Jericho?

    This may be a little off topic, but I administer my tennis clubs website.  It’s a small enterprise (~200k in annual sales, 1200 members).  We have an online store with a backend function that logs IPs and UserAgents of visitors.  I’ve been shocked this year to see the number of OSX Intel Mac users.  I’m sure it’s over 50% of our customer base. 

    Now this is admittedly a small sample, in a upper middle class Toronto neighbourhood, but it is a huge change from even a year ago.  I’d say that the majority of these households work in insurance, finance, or other enterprises that live on Windows, so I think it’s a massive shift in consumer attitudes that will eventually put pressure on the workplace IT departments. 

    Even if you look at our general traffic outside of the store it’s still a pretty sizeable Mac user base.

         
  • Posted: 08 April 2011 03:13 PM #19

    jimlongo - 08 April 2011 06:02 PM
    FalKirk - 08 April 2011 05:32 PM

    But if the unthinkable were every to happen - if Mac share were ever to break a psychological barrier -  say 10%? 15%? 20%? - then would the walls of Microsoft’s unquestioned necessity fall about them like the fabled walls of Jericho?

    This may be a little off topic, but I administer my tennis clubs website.  It’s a small enterprise (~200k in annual sales, 1200 members).  We have an online store with a backend function that logs IPs and UserAgents of visitors.  I’ve been shocked this year to see the number of OSX Intel Mac users.  I’m sure it’s over 50% of our customer base.

    Great real world example.

    There is all sorts of anecdotal evidence that high school kids and college kids and reporters have switched en masse to Macs. And if you count iPads as computers, Apple has already become one of the biggest manufacturers of computers in the world. (This is one of the reasons why the Microsoft crowd will fight to the death to keep the iPad from being classified as a computer.) My underlining question is this: What does it take? What is the tipping point that changes how the majority of people perceive (for perception is far more important than reality) Microsoft and Apple in the personal computing world?

         
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    Posted: 08 April 2011 04:30 PM #20

    FalKirk - 08 April 2011 06:13 PM

    What is the tipping point that changes how the majority of people perceive (for perception is far more important than reality) Microsoft and Apple in the personal computing world?

    I don’t mean to be argumentative, but why is “perception far more important than reality”? The perception is that “Apple lost the PC wars to Microsoft”. The reality is Apple’s market cap roughly equals Microsoft & Intel combined. The reality is Apple continues to sell more and more computers each year. And that’s not counting the post-PC computing devices, which are perceived as non-computers.

    Perception is that Apple will lose the mobile OS war. Reality is iOS has an installed base of over 200 million devices and is growing rapidly. Reality is Apple will make billions in profit from iOS devices. Reality is Google will make no profit from Android. (they may profit from AdMob, but nothing like Apple’s profits)

    As an Apple investor I’m very happy with reality. Others can perceive what they choose. It won’t change reality.

         
  • Posted: 08 April 2011 05:04 PM #21

    Drew Bear - 08 April 2011 07:30 PM
    FalKirk - 08 April 2011 06:13 PM

    What is the tipping point that changes how the majority of people perceive (for perception is far more important than reality) Microsoft and Apple in the personal computing world?

    I don’t mean to be argumentative, but why is “perception far more important than reality”? The perception is that “Apple lost the PC wars to Microsoft”. The reality is Apple’s market cap roughly equals Microsoft & Intel combined. The reality is Apple continues to sell more and more computers each year. And that’s not counting the post-PC computing devices, which are perceived as non-computers.

    Perception is that Apple will lose the mobile OS war. Reality is iOS has an installed base of over 200 million devices and is growing rapidly. Reality is Apple will make billions in profit from iOS devices. Reality is Google will make no profit from Android. (they may profit from AdMob, but nothing like Apple’s profits)

    As an Apple investor I’m very happy with reality. Others can perceive what they choose. It won’t change reality.

    Let me put this back in context:

    Ross Edwards - 08 April 2011 12:18 PM
    You?d think that, right?  I know!  But inertia is a powerful force.  I just had this very argument with my mother-in-law last weekend (she is a CPA and runs a warehousing business).  It was like listening to myself back before I made the switch to Apple.  In her mind, and that of many Windows adherents, Apple makes toys for fun, not tools for productivity.

    Microsoft is clearly losing share to Apple in the PC space. But many people don’t notice or care. In thier eyes, Microsoft is still viewed as the operating system for “real” computers that do “real” work. Macs are viewed as expensive toys.

    Drew Bear - 08 April 2011 07:30 PM

    As an Apple investor I’m very happy with reality. Others can perceive what they choose. It won’t change reality.

    I vehemently disagree with the latter part of this statement. Perception often changes reality. In fact, there’s no better example of this than Apple’s stock price. Does the stock price reflect reality or people’s distorted interpretation of reality?

         
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    Posted: 08 April 2011 11:27 PM #22

    FalKirk - 08 April 2011 08:04 PM
    Drew Bear - 08 April 2011 07:30 PM

    As an Apple investor I’m very happy with reality. Others can perceive what they choose. It won’t change reality.

    I vehemently disagree with the latter part of this statement. Perception often changes reality. In fact, there’s no better example of this than Apple’s stock price. Does the stock price reflect reality or people’s distorted interpretation of reality?

    Stock market reality encompasses more than just Apple’s financials or the market’s perception of Apple. External factors like worldwide conflict, natural disasters & things like the sub-prime mess affect the stock market while they may not necessarily affect Apple’s revenue or earnings. There was no logical reason for AAPL to fall below $100 in 2008-2009.

    I think it’s unrealistic to expect the market to view AAPL only on its merits. “Life isn’t fair.” comes to mind. The stock market does not follow empirically rational rules. There is obviously no single method of stock valuation. Does FUD affect AAPL? Of course. But I think its effects are not as significant as some believe. FUD is much less influential than either fundamentals or those external factors I mentioned.

    AAPL has done very well. It’s just that the factual, financial, quantifiable reality is so fantastic, the market can’t get its collective head around it. Since Apple is likely to continue on its breakneck pace for at least another 2 yrs., I don’t know when the market will catch up. To a certain extent it doesn’t matter. Keep the insanely low valuation ratios: PE, PEG, P/S, whatever. Apple’s growth will ensure healthy stock returns for AAPL investors. Any increase in those ratios is gravy.

    Is Apple’s stock price a distorted interpretation of reality? Sure, you can say that if you want. But so is Amazon’s or Netflix’s or any number of other stocks. Which stocks do you consider fairly priced so that their “reality” is not distorted? Microsoft still rakes in more profit than Apple, yet its valuation is significantly less than Apple’s.

    The reality is that the stock market is not rational. A stock is worth what someone in the market is willing to pay for it at a given second. It makes absolutely no sense to me that AMZN has a PE ratio in the 70s, just as it made no sense to me 10 yrs. ago that it was worth billions even though it had not made a penny of profit. If distorted reality is the norm, then can we still call it distorted? It’s just plain reality.

         
  • Posted: 09 April 2011 05:33 AM #23

    Few companies have ever achieved the customer loyalty of Apple. The average customer on the street forgoes some other purchases to get an iPad. The per share price of Apple prevents these same customers from buying the stock. Like it or not, there is a perception of ” Look how much it’s gone up, I missed the run.”  o r ” I want my money to grow, double or triple in 5 years, that can’t happen with a $350 stock.”

    The computer for the rest of us isn’t the investment for the rest of us.

    A 10 for one split would get many individuals invested financially as they already are emotionally.

    [ Edited: 09 April 2011 05:50 AM by danthemason ]      
  • Posted: 09 April 2011 10:07 AM #24

    FalKirk - 08 April 2011 05:32 PM

    Last quarter, Microsoft had income of 3.325 billion from Windows, 3.965 from Office, 1.776 from Servers, 679 million from Entertainment and lost 543 million from online services. The Windows numbers are a little deceiving because they were reduced by the effects of a $1.7 billion deferral initiated in the year-ago quarter. No matter how you slice it, Windows and Office make up the bulk of Microsofts’ income.

    Another weird (to me) thing about Microsoft’s accounting is that they split the business into these headings, but then every quarter push a billion dollars of “negative income” into a central “corporate level activity” division. I’ve always thought this was mainly a way to bring loss making divisions into positive income (i.e. I think in truth Entertainment and devices still makes a loss). At corporate level, is MS bribing customers to take product from the failing divisions, by means of cross promotions, “marketing support” etc?

         
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    Posted: 09 April 2011 05:47 PM #25

    sleepygeek - 09 April 2011 01:07 PM

    Another weird (to me) thing about Microsoft’s accounting is that they split the business into these headings, but then every quarter push a billion dollars of “negative income” into a central “corporate level activity” division. I’ve always thought this was mainly a way to bring loss making divisions into positive income (i.e. I think in truth Entertainment and devices still makes a loss). At corporate level, is MS bribing customers to take product from the failing divisions, by means of cross promotions, “marketing support” etc?

    eye-brow raising.

    There’s a major story percolating in there.