Microsoft “is betting heavily on the consumer electronics business for future growth, and late last year it introduced a digital media player, Zune, which competes with Apple’s iPod. But Microsoft’s consumer entertainment and devices unit has contributeds no profits yet, losing $289 million in the quarter,” Steve Lohr reports for The New York Times.
Full article here.
The Associated Press reports, “Microsoft Corp. said Thursday its fiscal second-quarter profit fell 28 per cent, as delays from the launch of its new version of Windows cut into holiday-quarter revenue. For the three months ended Dec. 31, earnings fell to $2.63 billion from $3.65 billion… Revenue rose to $12.54 billion from $11.84 billion in the year-ago quarter.”
Full article here.
[Thanks to MacDailyNews Reader “Tom S.” for the heads up.]
[UPDATE: 9:42am EST: Updated headline.]
The figures for Apple’s last quarter: revenue of $7.1 billion and net quarterly profit of $1.0 billion vs. Microsoft’s much larger figures of $12.54 billion and $2.63 billion, respectively. Windows and Office are licenses to print money, it seems, regardless of how such licenses were obtained. Apple generated revenue of $4.061 billion on iPod, iTunes Store sales, iPod services, and iPod accessories vs. Microsoft’s $289 million loss on Zune and CE devices. That’s a differential of $4.350 billion.
Related articles:
The Motley Fool: Apple makes Microsoft’s Zune a paperweight – January 10, 2007
Zune: Apple cannot lose. Microsoft cannot win. – July 26, 2006
Losing money is the new “thin” it seems. Microsoft loses money on the Zune; Microsoft loses money on X-Box. They need one more thing to lose money on and then they can claim the dubious distinction of being a triple-crown loser.
Love the picture
Microsoft is betting heavily on the consumer electronics business for future growth
It should stop chasing its losses!
Yeah, I really wanted a new version of vista for xmas;) Software companies should not count on xmas for software, I have never seen any type of software given except for games.
I didn’t realize Microsoft has become a not-for-profit organization.
It is my sincerest hope that their consumer products continue to lose money. I won’t wish ill on a person, but on a business machine such as theirs, I have no qualms.
Oh, oh, who will save us from ourselves?
It just occurred to me why the Zune will not be able to replicate the X-Box’s 2nd generation success.
It’s all to do with Apple’s secrecy. When Apple finally produce a new product, it can be years ahead of the competition.
I can’t see Microsoft competing with the 6G wide touchscreen iPod. Based on what they did with the Zune…. They’ll probably just take a Windows-mobile PDA and add a media player interface on top of that.
To be fair, MDN clearly doesn’t understand accounting, and in this case has posted a very misleading and biased headline.
Apple did not “make” $4 billion on iPods. That implies $4 billion in profit. They had sales of $4 billion for iPods.
More importantly, the $289 million loss was for their entertainment division that, along with the Zune, also happens to sell the Xbox. So you really have no way of knowing what the numbers were for the Zune.
While this is obviously a Mac centric site, it’s a bit disappointing that MDN actually doesn’t want to rely on facts and will put up a headline like this that has no basis in reality.
So… If I read this correctly Apple, in terms of revenues, earnings and the like, is about 1/2 the size of Microsoft? I wouldn’t have thought the difference between the two was that small, given MS seems to be the behemoth industry leader (dinosaur) and Apple the “small” “niche” up-comer…
If this is so, this really is good news.
Oh, and if Critic’s critique of MDN’s headline is right, let’s get it corrected MDN – no need to confuse or distort – the straight news is plenty good.
Where is ZuneTang ?
Inquirer, that’s the thing, Apple may have a smaller market share in terms of Computers so might appear to be smaller than Microsoft, but because they make the hardware and software the difference isn’t always as huge as you might first think.
Inquirer,
In terms of revenues, yes. Earnings, no.
This past quarter was an aberration, with lower revenues from software than usual as people held off waiting for vista and new Office.
In a typical quarter they post much larger gross margins and generate a lot more free cash flows than Apple. This is why they have $40 billion in short-term assets AND pay dividends. This is what makes MS more valuable in terms of market cap.
In any case, it’s difficult to make a direct comparison between the two, since they actually are in different businesses. MS is pretty much a straightforward software company (despite Xboox and Zune), while Apple’s business is still driven by hardware (computers and iPods), which makes for completely different economics in running the business.
“critic” — Ouch. I think MDN better correct their headline, or end up looking foolish.
Still, it’s amazing how much money Microsoft loses on every single division except Windows and Office. When the inevitable happens, and revenue growth in these areas begin to slow to a stop, Microsoft’s stock will collapse.
As heard on the show FastMoney on CNBC last night: (paraphrased)
Zune stands for, “Zero Users, No Excuses”.
TFF
MW= southern, as in Zune profits are headed in a southern direction.
I’m a Mac/iPod fan but I completely agree with critic.
How can you spend so much time posting stories about FUD, inaccuracies and lies from biased and/or uninformed anti-Apple writers and then commit the exact same errors yourself?
Sure, we know the iPod is great and Apple is hitting on all cylinders but that doesn’t excuse any blatantly inaccurate or miseleading posts.
At the end of the day, MS makes a $12B+ annual after-tax profit. At that rate, they will be able to continue doing what they have done for 20 years….sell inferior products under the guise of massive marketing efforts.
How about you just stick to correcting misleading reports about Apple products?
Zune Tang is still trying to find someone to socialize with……..
Apple’s market cap is a much larger percentage of Microsoft’s than it was not so long ago. And while Apple continues to diversify and create new markets (iPhone and AppleTV), MS is left regurgitating variations of the same old crap. Before long it will implode.
Oh don’t worry, money is not a problem for Microsoft.
Ford lost $12 billion in 2006. Apple didn´t. Neither did Microsoft or Sony or Pepsi-Cola.
Why is comparing one company to another important?
———-
And Apple did not make $4 billion in profit off iPod. And the lose of money by Microsoft is not solely from Zune.
MDN, you guys need to reach beyond that high school education.
———–
MDN: “The figures for Apple’s last quarter: revenue of $7.1 billion and net quarterly profit of $1.0 billion vs. Microsoft’s much larger figures of $12.54 billion and $2.63 billion”
So Microsoft made 21% profit on sales vs. 14% for Apple. Apple you have to do better.
So if Apple made 14% profit on each item sold divided by how many items Apple sold last quarter…
Apple surely has the highest profit on the iPod line up….wonder how much they lose on each computer they sell….
Does Apple break out profit per division like it appears Microsoft is doing?
jscan:
Whilst I understand your point re: MDN, just wanted to make it clear that MS made a $2.5B profit on revenues of $12.5B – they didn’t make $12B profit.
Considering Apple is a much smaller company, I think their profit of $1B on $7B revenues is especially good next to Microsoft, who made roughly double the profit on roughly double revenue – so both companies appear to be just as profitable, only Apple doesn’t have the same exposure in every industry sector that Microsoft does, do it’s pretty impressive IMO.
Sacha
England
Connor MacBook: “MS is left regurgitating variations of the same old crap.”
Xbox, Zune: those are new. And Xbox is quite successful. Zune it is too early to tell if it will be a success.
Wait another year or so.
And wait for the synergy between Xbox and Zune to develop. Download movies, music etc on Xbox, watch on Zune!
Instead of being critical of Microsoft, people should demand more of Apple. The MacWorld iFone only thing was lame. Where are all the new computers, now OSX. And did you know that sales of Apple desktops are dying – sales were about 20% under what was forecast.
Wasn´t Leopard supposed to hit the streets before Vista?
“Xbox, Zune: those are new.”
Zune is sort of new – it’s really a re-turded version of someone else’s player.
Welcome to the social.
Xbox is successful if your measure is marketshare, but on a fiscal measure like PROFITABILITY it’s a loser.
Zune is just a loser.
Microsoft only make money on Windows and Office, every other division and product loses them money.