Microsoft’s Windows earnings slide due in part to Apple’s Mac OS X surge?

“Microsoft’s client revenue–Vista and XP came in below expectations–and the company cited three primary reasons: A tough comparison from year ago levels, OEM inventory build and piracy. But the elephant on the conference call may have been Apple and its Mac,” Larry Dignan writes for ZDNet.

“Microsoft’s three reasons for the client malaise are all legitimate. What’s curious is that piracy–always a big deal for Microsoft–was mentioned 12 times on the conference call by CFO Christopher Liddell and analysts, who were following the software giant’s lead. The takeaway: Microsoft is facing tough growth comparisons and any blip in piracy levels can be the difference between Vista and XP hitting Wall Street targets. If Microsoft didn’t need that extra percent of growth or two it’s unlikely we’d get a conference call where piracy chatter was dominant,” Dignan writes.

Dignan writes, “But let’s dig deeper: Could it be that the real elephant in the room was Apple?”

“It remains to be seen whether Apple can be a real enterprise player, but it doesn’t have to do much to be a thorn in Microsoft’s side. All Apple has to do is nibble and it will be harder for Microsoft to hit its client revenue growth targets–especially against tough comparisons,” Dignan writes.

Full article here.

46 Comments

  1. to flappo:

    Did you do a clean install of Leopard? Like a lot of folks, I used the archive and install default when I first used Leopard. I was a little disappointed with it. Then, yet again, I faced the obvious and did a clean install.

    What a difference!!!

    Just a thought for you.

  2. Yes that is why M$ slips. If you believe that…the sun came up because I opened my eyes this morning to see it.

    M$ is suffering its own death by a thousand cuts. This is happening with or without the existance of OS X. This is because the public finally figured out that the last 4 releases of WIndows were big so what’s.

    Just my $0.02

  3. “I’m not one of those that says that Microsoft has to disappear. I just want them to have to *compete*.” – twilightmoon

    This comment of yours proves you’re not a blinded Apple Fanboy. Bravo!!!

    “They [MS] need to reinvent themselves in order to succeed in the future….” – Ferf Muckmeyer

    Not necessarily. As long as we stay in the same configuration, they’re here to stay. They don’t even have to bother changing anything. However, if a really new innovation appears and change the lanscape of computing, that thing could play the same role as the iceberg to the Titanic.

    It could be something as simple as the focus moving from the desktop to wireless portable devices such as laptops, and all kinds of handeld and mini devices. Or some new piece of software, integrated to a web browser that will make any software run on any OS… if the later happens, Linux will dump Windows OS because why bother paying???

  4. Mac+
    The only problem with your initial statement is that things, that is all things are not permanent. Nothing, and I mean nothing lasts for ever. Things that where once grand and incredibly large and powerful will always inadvertently wither and die.

    What can you honestly say would be one advantage to Windows over any of the alternative solutions around today? If the list is long, then you are correct. But if it’s actually pretty short, then why would you think Microsoft is here for ever.

    I think the alternatives are in place and all Microsoft has going for it is inertia, once it runs out of it, it’s over. Or at least in the sense of them being the monopolistic power that they used to be in the late 90′.

    Juts look at what happened with HD-DVD. No even big monopolistic 90% market share all powerful ruthless Microsoft could do anything to save it. Boy they tried.

    Also look at Play for Sure. Are they not pulling the plug also on it this coming summer.

    Don’t you see a pattern of failed initiatives and half baked ideas that simply don’t don’t get any traction.

    On one thing I do concur, it will not be fast in it’s decline, but you better believe, the decline has all ready started.

  5. Hey smug MAC sheep I have news for you: Apple had nothing to do with it. Microsoft clearly has a better mousetrap and law-abiding consumers are snapping up fabulous Vista.

    It’s piracy, pure and simple. If it wasn’t for a pesky few bad customers Microsoft would surely top their projections. The music studios know all too well what havoc and disruption piracy brings to a user-centric business model. Now it’s happening to the honorable folks at Microsoft. It’s tragic.

    Your potential. Our passion.™

  6. Humpf! Humpf! Can’t hold from laughing! Hey! Vista is supposed to be sooooooo secure… how can it ever be pirated.
    Ok! Ok! Nobody want’s to pay for it. This is normal… But do so many want to put this garbage into her or his computer?!?
    …Well, we’re living in a silly world… maybe they are some who would “pirate” that piratry called “vista” and still poor it into a computer…

  7. I was saying this at least five years ago, and it was true then, but there is a thing called inertia.

    Microsoft has pissed too many people off.

    Or as MS themselves would present in their EULA:
    MICROSOFT HAS PISSED TOO MANY PEOPLE OFF.

    It used to be that lemmings just went for MS despite all the shit but then they thought MS was the only game in town so they relinquished. Now the lemmings have acquired some vision albeit shortsighted but it is better than none. They can see the cliff edge a few paces ahead, they pause for thought, the queue behind stalls.

    Maybe there will be a landslide.

    Mega, mega kudos to Steve Jobs. A great game, well played. No I am not a fanboy, just an accomplished observer.

    To Steve the overriding message is, “live long and prosper”.

  8. @Mac+,


    This comment of yours proves you’re not a blinded Apple Fanboy. Bravo!!!”

    being called an Apple Fanboy by a Windows Troll is kind of like a being called a drug addict by someone with a severe drinking problem.

  9. Hmmmm…is Apple even vaguely responsible for MSFT’s woes? On the face of it, it seems unlikely; whilst Apple sold 2.289 million CPUs in the last quarter, that’s only 1.5 million more CPUs than it did in Q2 ’01. Seriously, even if annualised out to around 7.5 million CPUs, that represents less than $700 million – which is a worst case scenario – in annual OEM sales of XP or Vista licences.

    For a company that booked over $50 billion in income to the end of its last financial year (30/06/07), that represents just 1.4% of income.

    However there are some structural changes in Apple’s Macintosh business that should worry MSFT and it’s shareholders in the years to come and here are some examples…

    1) At the end of Q2 ’04, the rolling 36-month total for Macintosh sales was 9.468 million and the sales for the previous 12 months (i.e. Q3 ’03 to Q2 ’04) were 3.136 million. Which means that around 33% were 12-months old or less.

    The figures as of the end of March ’08 were 19.38 million (rolling 36-months) and 8.536 million for the period April ’07 to March ’08: which is 44.05%.

    How can those stats be interpreted?

    Well, either people are now replacing their Macintosh systems more quickly. Or they’re purchasing multiple Macintosh systems. Or – and here’s the most likely – more new people are coming into the Macintosh fold.

    2) Let’s just run part of that by everyone once again: Apple’s rolling 36-month CPU shipments to the end of March were 19.38 million. A figure which is over 24.5% greater than the figure at the end of March ’07.

    Worryingly – for Apple’s competition at least – that figure is steadily rising at a rate of knots: the annual growth was under 20% only a year ago and – as recently as Q1 ’05 (FY) – the figure was as low as 2.48%.

    In other words, there is a substantial long-term rolling trend where people are buying more Macintosh systems – either as ‘switchers’ or existing customers and that trend is approaching a tipping point.

    Once the growth in 36-month sales goes over 30% – highly likely in the next 18 months – we will start to see annual CPU shipments in excess of 12 million units by the end of FY2010 (30/09/10).

    3) Parallels has recently announced that it has sold its one millionth copy of Parallels for Macintosh. Good for them: although their support could be better (especially in the UK), it’s a good product that deserves to succeed.

    The problem with that figure is that it means that only around one million out of a potential 13-15 million or so Macintosh users have decided to install Windows as a virtual environment. Even if that figure were trebled to include VMWare customers and Boot Camp users, less than 1 in five of current Macintosh users feel the need to have anything to do with Windows.

    Less than one in five is not a good figure for Microsoft: it means that simply cutting Mac users adrift by threatening to cancel Office is unlikely to be a positive move. But if Apple’s next release of iWork is deemed to be an easier (& cheaper) move than from Office 2004 to Office 2008, Microsoft might find itself on the receiving end of a triple whammy – no Windows OEM licences, no retail Windows licences and no Office licences.

  10. I work in IT in the Intel Community, 22 Years and counting all with Macs, fight the good fight!!! (Remember the Qudra 950?) We are moving from windoz 2003 servers to Mac OS 10.4 servers as fast as possible. We have Mac Pros (Mac OS 10.4) on almost ever desk. We have to use Office to collaborate with others but thats it for MS software. Apple please FIX Leopard lots of issues still to be fixed. We still need to log into SMB shares!! Not working on Net Appliance Big Boxes!!!! What happen to the domain window in the Log-in dialog BOX?????

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