Microsoft reports lower quarterly profit than Apple for first time since 1990 as consumers shift to iPad

“Microsoft Corp., the world’s largest software maker, reported third-quarter profit that met analysts’ predictions as consumers shunned Windows personal computers in favor of tablets such as Apple Inc.’s iPad,” Dina Bass reports for Bloomberg.

“Net income in the fiscal period that ended in March rose to $5.23 billion, or 61 cents a share, from $4.01 billion, or 45 cents, Redmond, Washington-based Microsoft said in a statement today,” Bass reports. “Excluding a 5-cent per-share tax benefit, earnings matched the 56-cent average of estimates compiled by Bloomberg. Sales rose to $16.4 billion, compared with the $16.2 billion average projection.”

Bass reports, “Personal computer shipments unexpectedly fell 3.2 percent in the quarter as businesses and consumers held off purchases and shifted to tablet computers, IDC said.”

MacDailyNews Take: “Unexpectedly” only if you haven’t been paying attention.

Bass reports, “Microsoft’s multi- year contracts with corporations weren’t enough to make up for businesses that are holding onto machines for longer periods and consumers who are choosing iPads over a new laptop with Windows.”

Read more in the full article here.

MacDailyNews Take: In Apple’s fiscal 2011 second quarter ended March 26, 2011, the company posted record second quarter revenue of $24.67 billion and record second quarter net profit of $5.99 billion, or $6.40 per diluted share. The last time Apple produced more profit in a year than Microsoft was 1990, so if you felt a disturbance in the force today, now you know why.

Welcome to the rearview mirror, Microsoft!

Now, please excuse us while we bathe in luxurious schadenfreude.

[Thanks to MacDailyNews Reader “jetpuck04” for the heads up.]

Related article:
Analyst: Apple on target for its first $100 billion revenue year – March 30, 2011

77 Comments

  1. I’m amazed they actually saw growth.

    There is nothing driving new hardware on the consumer side with Windows.

    Some companies are just now moving from Windows XP (mine being one of them) and that is driving some hardware sales on the corporate side.

    I’m running Windows 7 on a three year old dual Xeon rig. Its screaming fast and the OS runs smooth as butter. Why would I upgrade this machine?

    Unless Windows 8 is just some massive improvement over Windows 7 I’d expect sales on the consumer side to go flat as time goes on.

    I think the iPad is def having some effect too, esp on Notebook sales. I’ve got laptops, but I don’t plan on buying new ones this year. I will very likely buy an iPad in the next few months however. Not because it does more or less than any of my laptops but because its freakin’ awesome and my son happens to be on the Autistic spectrum. He really clicks with touch interfaces. There are also some great apps for children on the iPad.

    Yeah dad will play with it ioo (dad being ME) 😉

    1. OMG, to think there are still corporations out there still using XP is shocking.

      Those companies are probably siphoning off profits for their executives instead of putting it back into the company’s infrastructure.

      1. Why is it shocking? XP is still supported by MS.

        The company I work for is big. Upgrading or replacing 200,000+ workstations takes time, planning and a big chunk of freakin’ money! lol.

        Some of our mission critical stuff is going to stay on XP until 2014 which is when MS said they’ll cut us off from security patches and updates of any kind.

        We do not just do windows either. We have linux / AIX and Macs on desktops, Black Berries, a few iphones in some departments and we are doing a pilot with the iPad right now.

        Our server side is a mix of a bit of everything from 1U Blades running Windows 2003/2008 server, still have some Sun hardware all the way to old IBM mainframes that no one wants to touch for fear the company will grind to a halt if they stop working. We may have to pull some guys out of retirement when it comes time to update those beasts.

        1. In same boat here.
          And I 100% understand why they don’t upgrade, I just wish they would… And go apple 😉
          Hell, win7 isn’t *that* bad… But please don’t make me use vista lol.

        2. Why is it shocking? I think your own words explain it well enough for others not to have to answer it. A company that is pulling people out of retirement to keep mainframes running in fear that the company might collapse is hardly going to threaten enlightened businesses with a more enlightened attitude to progress in the years to come. Its similar thinking that has left the heart of British industry on the scrap heap when it thought it was invincible.

          1. Well I think that technology is meant to serve business and not the other way around.

            Lets see we have systems in place that balance the books, process payroll and ensure that inventory is accurate and our supply chain is running smoothly at all times.

            Previous forays into upgrading technology just to ‘feel’ like we are ahead of the game or ‘nimble’ is what has enlightened us to the point of a simple realization, that being that if the system if maintainable, fills the business requirements, is cost efficient and stable then why f*ck with it?

            Seriously I can see no business case at this point in time to mess with our mainframe systems. They are rock solid reliable, the code has been debugged to the point of perfection for years and they just flat out get the job done day in and day out.

            I didn’t say we need to pull people out of retirement to ‘maintain’ this stuff. I said we may need to pull a few out when it comes time to transition from it fully, and really that is more of an inside joke to the fellow IT people on this site. We can handle it and have already planned for it, but if one of our old time gurus is kicking around I’m not going to pass up the chance to at least have lunch with the old guy and grill his brain over some food to ensure we have all our bases covered!

            We steal business every day when one of the latest 6 month old ‘enlightened’ companies out there can’t serve their customers because their latest and greatest technology upgrade blew up in their face and they can’t conduct business!

        3. I don’t care! Obviously, there is no point in upgrading to newer and better machines, much less new software, if XP fulfills your company’s needs.

          And don’t give us any crap about how expensive it would be to upgrade 200k machines. Your CEO position earns an average of 700 percent more than you now, than he did twenty-years ago. In the last ten years, instead of your executives giving themselves big fat raises, they could have save $150,000,000 and replaced all of your machines.

          If you’ve been waiting to upgrade/replace 200k+ machines since XP SP1/2/3 shipped, then your CFO is an idiot.

          As I said, there aren’t many companies who haven’t been rewarding their executives with handsome bonuses and pay raises over the last ten years.

          1. Spare us the marxist anti-corporate crap. It gets boring.

            You obviously have no clue how to run a company or an IT operation. If you did, someone might be willing to pay you 700% more than what you make now.

            1. Only if you spare us your crypto-fascist crap. It is HARDLY Marxist or anti-capitalist to call out US businesses for “rewarding” their execs for failure, and compensating them at rates that are wildly out of step with other industrialized nations.
              Nitwit.

            2. 22 years ago, execs were being paid 4000% more than the average worker. The point is that number is now 28000%. I think some people took “Wall Street” too literally when Gekko said “greed is good”.

      2. To think that companies would be forcing employees to use that godawful Vista/7 interface is even more shocking. At least XP is still close enough to the Mac to be usable.

        1. Hmmmm ….. Apple is certainly on a good run and I am sure mobile devices are nipping at Windows but I see no evidence that people are “shunning” Windows as you put it.

            1. Paul, I am sure many young people tote around Apple products just as I do. However, Windows sales even if slightly lower this quarter speak for themselves. Windows is not going away anytime soon.

      3. Not Shocking at All!

        Last time I checked in at the 4 Seasons Biltmore in Santa Barbara, what was the Check In Desk was using?

        Windows 2000!

        Whoa now. No hacking there…

      4. I work for a major US Government agency. We still use XP Pro. The amount of work that is entailed in testing legacy operations to ensure compatibility is amazing. A number of old legacy stuff has had to be upgraded or replaced.

        These things take time and money, which even for the government isn’t there all the time, and we have to plan these things out to fit the budget. Thus, a multi-year effort, which will culminate in a multi-year program to replace all of our 20,000 plus XP boxes so as not to break the bank or overwhelm the IT folks on top of all the normal stuff we do.

        It isn’t all about money, but time effort and planning.

    2. > Unless Windows 8 is just some massive improvement over Windows 7 I’d expect sales on the consumer side to go flat as time goes on.

      That’s not really the problem. Microsoft gets most of its Windows revenue from license fees on new hardware sold by PC makers, NOT on upgrades sold directly to users of existing hardware.

      If the PC makers just kept selling to existing Windows users (to replace aging hardware), it would not be as bad for Microsoft. The status quo would be maintained. But the REAL problem for Microsoft is consumers buying Apple hardware INSTEAD OF Windows hardware. As you said, there are still plenty of old Windows XP machines out there, and Apple is using that pool of potential “switchers” to fuel its Mac and iPad growth. Apple’s competitors do not have people lining up to be FIRST TIME customers. Microsoft will continue to have revenue and profit, but no growth.

      1. I’m in total agreement with you.

        As I said unless Windows 8 is some massive improvement what is the incentive to upgrade? I don’t mean just to Windows 8, I mean why buy a new machine if your old one is working just fine and suits your needs?

        That is my issue. I cannot find a good reason to buy a new Windows machine. My existing ones are running great, and even with XP being old, man its still the most compatible and supported operating system on the planet in terms of applications available and supports the most hardware out there.

        Now if Windows 8 had some compelling features I just might get interested in a new laptop or possibly desktop to run it. If not I’ll likely stick with what I got.

        I’m far more likely to buy a new Mini and def getting an iPad before I see myself shelling out more for a new PC.

        I also agree that there is a threat of Apple taking more business from them. I mean why buy just another PC when you can actually make computing fun again by making the leap to the Apple side?

        1. IF Windows 8 happens to have some feature you want to use, you can buy a stand-alone license and install it on your (future) Mac mini to boot directly using Apple’s Boot Camp, or run under virtualization with VMware Fusion or Parallels Desktop. Microsoft get to sell you a full individual Windows license, so they would be happy too.

          FYI – VMware Fusion (maybe Parallels Desktop too) has a feature that lets you import an existing Windows installation. I used it to import my old Windows installation that came with Connectix (later Microsoft) Virtual PC. So Microsoft does not necessarily get more money from a Mac user who runs Windows under virtualization. (I like it because I get to mess around with Ubuntu Linux too.)

  2. > consumers shunned Windows personal computers in favor of tablets such as Apple Inc.’s iPad

    “Such as”? What else is there that consumers are “in favor of”? iPad IS the tablet computer segment.

  3. I’m sure there’s a rational explanation as to why this information is wrong or irrelevant, so let’s not be too smug until we hear from Zune Tang.

  4. Motorola (MMI) reported earnings after the close today and their numbers weren’t too bad. They claim they shipped over 250 thousand Xoom tablets. Meanwhile, Research in Motion (RIMM) lowered their guidance for the current quarter due to lower handset sales. Stock is down 10% in after hours trading.

  5. Actually Microsoft did better than Apple…
    Microsoft had 5.65 billion profit on 17 billion sales, whereas Apple had 6 billion profit on 24 billion. At the end of the day what matters most is profit!!!

    1. Shipping the same copy of Windows & Office over and over again doesn’t cost much.
      Once software is developed, it sells itself with minimum cost.

      Producing actual hardware products however, never gets cheap and revenue eats a lot of your actual profits.

      I’m surprised Microsoft actually had 10bn to blow on something, most likely most of it went into the dead hardware projects (zune, kin, bigass table, whatever…)

    2. “At the end of the day what matters most is profit!!!”
      Yeah, and Apple had a BIGGER profit than MS. In case you can’t do math, 6 is MORE than 5.65.
      Yes, I know the 2nd number LOOKS bigger. But it isn’t.

    3. Yes profit DOES count most and in actual gross profit Apple STILL had more than MS. You can spin it any way you like, but 5.99 billion is larger than 5.23 billion. PERIOD!

      Gotta love watching people move the goalposts. What’s the next criteria? It’s like watching moron birthers never satisfied with any explanation or evidence.

    4. I think Barbie said it best.

      Math is hard!

      Right Marco? If profit is what maters most, 6 Billion is bigger than 5.65 Billion.

      Barbie also said, fractions are even harder.

      Poor Marco.

  6. Pretty soon, MS will deplete its cookie-jar reserves of earnings management slush, and it will no longer be able to hide the evisceration it is undergoing. No one wants MS products anymore, especially its bread-and-butter OSes.

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