Microsoft profit slips as Windows PCs fizzle

“Microsoft Corp’s quarterly profit fell a greater-than-expected 22 percent, as sales of computers running its Windows operating system dipped and some revenue was deferred ahead of upcoming releases of its core Windows and Office products,” Bill Rigby reports for Reuters.

“The sharp decline surprised investors, who had underestimated the effect of weak personal computer sales, sending Microsoft’s shares down 1.3 percent in after-hours trading,” Rigby reports. “‘To us it seems like the macro conditions certainly deteriorated and no tech company will be immune to it,’ said Trip Chowdhry, analyst at Global Equities Research. Earlier on Thursday Google Inc reported sharply lower profit amid slowing advertising, following downbeat reports from Intel Corp and International Business Machines Corp this week.”

MacDailyNews Take: To us, it seems like the Windows economy certainly has deteriorated and no Windows leech will be immune to it. Meanwhile, crowds and lines abound for Apple products and they’re selling every single iPhone 5 that Foxconn can manage to assemble.

Rigby reports, “Sales of PCs are expected to fall this year for the first time since 2001, according to research firm IHS, due to the weak economy and inability of the latest crop of lightweight laptops to compete with Apple Inc’s iPad.”

MacDailyNews Take: Ah, finally, the lede.

Rigby reports, “‘I don’t control the macro-environment, but there’s a huge opportunity in the explosion of devices,’ Microsoft Chief Financial Officer Peter Klein said in an interview. ‘There’s demand for compelling devices and a connected set of cloud experiences. That’s what Windows 8 is all about.'”

MacDailyNews Take: Oh, really, artiste o’ equine excrement? There certainly is demand for compelling devices, Apple iPhones, iPads, and Macs (which have outgrown sales of Windows PCs for 25 consecutive quarters now) and a connected set of cloud experiences, aka Apple’s iCloud®.

Here’s what devices shackled to Windows 8/RT and Windows 8 itself are actually all about:
• Infoworld reviews Windows 8 review: Yes, it’s that bad – August 15, 2012
• Microsoft forced to kill off ‘Metro’ name due to trademark infringement – August 3, 2012
• Gartner’s one-word review of Windows 8 on the desktop: ‘Bad’ – July 23, 2012
• Ballmer: Uh, yeah, ‘Surface is just a design point,’ you know – July 10, 2012
• Microsoft’s Buffoon, er… Ballmer throws down gauntlet against Apple – July 10, 2012
• Microsoft reportedly dumps ‘VaporMg’ chassis, will use ‘VaporMg’ only as ‘surface treatment’ – July 9, 2012
• Microsoft’s downfall: Inside the executive e-mails and cannibalistic culture that fueled Microsoft’s lost decade – July 7, 2012
• HP said to dump Microsoft over Surface; to cozy up to Google Android for tablet efforts – July 2, 2012
• Bad news for Microsoft’s iPad killer? – July 2, 2012
• Dear Microsoft, Steve Balmer and Bill Gates: What is up with your obsession with keyboards? – June 28, 2012
• Jason Schwarz: Top 10 reasons why Microsoft’s Surface is DOA – June 22, 2012
• Why I love Microsoft’s vaporware Surface tablet – June 22, 2012
• Microsoft’s Surface tablet said to be Wi-Fi only at launch; no 4G, no 3G, no 2G, not even 1G – June 22, 2012
• Microsoft outsources Surface assembly to Pegatron; prices above $799 for Windows 8, above $599 for Windows RT expected – June 21, 2012
• Acer founder: Microsoft will quit making tablets soon – June 21, 2012
• Devastating video shows Microsoft’s Surface event aping Steve Jobs’ iPad unveiling (with video) – June 20, 2012
• Thanks to Apple, Microsoft is doomed in the era of mobile computing – June 20, 2012
• Why wouldn’t Microsoft let anyone touch its Surface tablets’ keyboard cover? – June 20, 2012
• The cost of Microsoft’s Surface tablets – June 20, 2012
• Apple’s revolutionary iPad vs. Microsoft’s anti-tablet ‘Surface’ – June 20, 2012
• Microsoft’s Surface tablets provokes ‘sense of betrayal’ among Windows PC assemblers – June 20, 2012
• Fox News: Copier Microsoft is doomed to fail with Surface tablet – June 19, 2012
• Microsoft’s Surface tablet destined to be as successful as the Zune – June 19, 2012
• Surface: Why Microsoft’s big mystery turns out to be a big mistake – June 19, 2012
• Microsoft’s Suicide, er… ‘Surface’ – June 19, 2012
• ZDNet Sr. Tech Editor Perlow: Microsoft’s Surface has catastrophe written all over it – June 19, 2012
• Microsoft previews own ‘Surface’ tablet – June 18, 2012
• Microsoft touts ‘major’ June 18 event said to showcase Windows RT tablets – June 15, 2012
• ZDNet’s Kingsley-Hughes: Microsoft’s Windows 8 is an awful, horrible, painful design disaster – June 8, 2012
• Analyst meets with big computer maker, finds ‘general lack of enthusiasm’ for Windows 8 – June 8, 2012
• Dvorak: Windows 8 an unmitigated disaster; unusable and annoying; it makes your teeth itch – June 3, 2012
• The Guardian: Microsoft’s Windows 8 is confusing as hell; an appalling user experience – March 5, 2012
• More good news for Apple: Microsoft previews Windows 8 (with video) – June 1, 2011

Deceitful, tripping, and stupid is no way to go through a conference call, son.

Rigby reports, “Microsoft, the world’s largest software company, said fiscal first quarter profit fell to $4.47 billion, or 53 cents per share, from $5.74 billion, or 68 cents per share, in the year-ago quarter. Wall Street had expected earnings of 56 cents per share, according to Thomson Reuters I/B/E/S. Sales fell 8 percent to $16.01 billion, largely caused by the dip in demand for personal computers running Windows, as consumers held off new purchases in the tight economy or opted to buy tablet devices instead.”

MacDailyNews Take: iPad, not “tablet devices.” Versus iPad, hardly anybody is buying “tablet devices.”

Rigby reports, “The revenue decline was exaggerated by Microsoft’s deferral of some $1.36 billion in revenue, chiefly from its Windows unit, which it will regain next quarter after Windows 8 is launched.”

MacDailyNews Take: Which it hopes it will regain next quarter. See bulleted articles above.

Rigby reports, “Its perennially money-losing online services unit – containing the Bing search engine and MSN portal – narrowed its quarterly operating loss by 29 percent to $364 million, as it increased its share of the search advertising market and cut costs.”

Read more in the full article here.

MacDailyNews Take: Some people either fail to recognize or are deluding themselves about how steep a slippery slope Microsoft is perched upon today.

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


  1. To be fair guys, Microsoft products (Surface, Windows Phone 8, Kinect) are pretty innovative and a result of thinking out of the box. Certainly more than the Android gang

    1. To be pragmatic SicMX, pie in the sky- good ideas abound. Even Microsofts “courier” tablet was a “cool idea”
      The real work is the care and attention to detail required in making something work and work well.
      Some good ideas just can’t be made workable, some can. But the “good idea” is about 10% of the total scope of bringing a game changing product to life.

      With it’s “it’s good enough” attitude MS has consistently failed at making good ideas into great products and the “surface” and windows 8 are no different. Yes they are cool ideas. They might could have been made into killer products, but they aren’t, they are half baked, carelessly constructed nuggets of poo.
      I don’t (at this point) think MS is even capable of developing a great product from a good idea.

      1. Google only has one source of revenue… ads. And they are fast losing “eye balls” as people abandon their mapping solution and search, which drives down the cost of ads. Furthermore, the activation numbers they tout aren’t translating into usage numbers (those activations don’t mean a damned thing if those users aren’t using Google’s services).

        Furthermore, Google bought a sinking ship in Motorola, which loses money every quarter. You watch, by this time next year, Google will have to start favoring its own hardware over others’ with each new OS release. Giving Motorola devices several months of exclusivity, before broadly being released to other OEMs.

      2. The Google decline could be attributed to Siri and to people like me who have switched there browser search to a competitor. (I’ve switched to yahoo because I don’t want to support MS either.)

  2. MacDailyNews Take: Some people either fail to recognize or are deluding themselves about how steep a slippery slope Microsoft is perched upon today.

    Kinda like Custer and Reno on the slopes above the Little Big Horn.

  3. M$ only make a half way decent os every other time. Win7 is okay but win8 will flop.
    Their revenue will slowly dwindle. Profit will drop faster since they launch so many failures.

  4. Count me in as a permanent convert to the llight side. The dark side, the side where Darth Ballmer inhabits, I found was too messy an OS – inelegant – which interfered with productivity.

    With the Mac, I am 200% more productive than when I was on Windows. I used to laugh at Macheads but having switched I can understand the devotion to Apple/Macs. Everything is tied together elegantly with simplicity as its foremost objective.

    I think there are millions like me who have abandoned Windows for the light side. Add together people who are abandoning their Windows PC trucks for iPad cars, you get a cumulative effect of Windows being increasingly marginalized.

      1. I have been duped by Microsoft too many times to believe whatever it is they have to sell will live up to the hype they try to create around the product. When I was on the dark side, I used to buy MS products willy nilly on the promise that they would work as advertised: Office, Windows, keyboard, mouse, Visio, etc. And then the reality struck – that MS gives very poor after sales support for their products and they’re incredibly convoluted to use, not to mention feel flimsy and plasticky under hand.

        So I would take any offers for Minka Kelly with Windows RT with a pinch of salt. If MS ever offered Minka Kelly with Windows RT, she’ll turn out to be Steve Ballmer in a skirt.

  5. New rule: if Microsoft (a hardware and software company) is still referred to in the media as “Microsoft, the world’s largest software company”, Apple must now be referred to as “Apple, the world’s largest computer company, and phone manufacturer, and OS company, and music company — oh right, and the world’s largest publicly traded company”.

  6. isn’t there always a PC sales pull-back when MS rolls out a new OS revision?

    actually, one should be surprised there wasn’t a rush for corporations to grab the last Windows 7 licenses before Win8 bloatware hit the street. We all know that corporations rejected Vista, and their XP machines are overdue for replacement — and we all know that IT departments will never buy Apple hardware because it’s too durable and user-friendly, eliminating the need for the Windows support staff.

    1. You are correct sir! I’m surprised the article didn’t point out the halt in PC buying due to the impending perpetration of W8.

      What’s going to be amusing is that all the people who have not yet witnessed the W8 betas are going to blow chow when they get a load of Metro.

      IOW: Despite the hold on purchases before W8, I seriously doubt purchases are going to tick upwards again specifically because W8 is that bad. It’s gonna be the Vista sales phenomenon all over again, but worse. I can hardly wait. 😀

      1. The IT types around here do not think much of Eight. They would rather continue to support Vista and Seven. It was only last year they finally let XP slide silently into the water.

  7. This is just Microsoft gaming the system as best they can. They are shifting everything they can to make Windows 8 seem successful. They wrote down billions of dollars earlier this year for bad purchases [which surprised people, doing it so soon after the purchases], and now deferring all Windows 7 sales so they can be counted as Windows 8 purchases later, once Win8 actually ships.

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