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05.14.07

Attack on Linux and FOSS Reveals Microsoft’s Weakness, Fragility

Posted in GNU/Linux, Microsoft, Vista, Windows at 4:33 pm by Dr. Roy Schestowitz

Microsoft. Oh, thy mighty Microsoft! How giants have fallen. An InfoWorld article hits the nail right on the head and claims that, if anything, Microsoft’s latest patent claims hint at internal issues.

Microsoft Corp.’s aim to seek patent royalties from open-source distributors and users may be an attempt to use legal threats to deflect attention from larger questions surrounding its business, including lack of interest in new versions of core products and lackluster profit from new wares.

We would like to present several articles that expose the truth behind public relations. If you are unfamiliar with these, you are urged to read on.

Microsoft’s Record Quarter: Shareholders Paid for Most of the Upside Surprise

“Said another way, Microsoft achieved record breaking earnings during the Vista launch quarter by taking money out of its assets, not through amazing sales of Vista and Office.”

Now taking money of its savings account isn’t necessarily a big deal… However, as a point in contrast, Apple Inc. has been launching a lot of products over the last nine months and has added almost $2 billion to its balance sheet and assets in the same period that Microsoft’s assets dropped $6 billion.

Microsoft Refuses to Reveal Current Vista Sales

Microsoft on Thursday reported a 65 percent jump in third quarter profits, buoyed by sales of its latest operating system, Vista. Exactly how many Microsoft has sold, however, is still a mystery.

[...]

Liddell declined to provide exact numbers on how many units of Vista the company had sold.

Uh-Oh, Vista! PC Sales Levels Are Normal

“Vista hasn’t been a catalyst for PC sales,” he said. “Looking at the weekly data, there really isn’t anything happening with sales that has anything to do with Vista.”

Also see this note on channel stuffing.

“This is a relic of old-line consumer products companies like Philip Morris, or fraudsters like Miniscribe who literally shipped bricks in lieu of disk drives to hit sales targets.

[...]

Channel stuffing is the business practice where a company or a sales force within a company inflates its sales figures by forcing more products through a distribution channel than the channel is capable of selling to the world at large.

[...]

We have a game we play around the office here with Microsoft press releases. The game is, “Find the words that make the headline true.” It’s not always easy.

[...]

Sony, like Microsoft, announces units shipped, not actually sold. This allows both companies to advertise sales numbers based on how many units they can force retailers to accept, not on how many units customers actually buy; both have considerable market power to push excess unsold inventory into the channel.”

Microsoft cuts Windows virtualization features

The company is changing three key features of the hypervisor technology to try to stick to its schedule of releasing the technology within 180 days of completing its Windows Server “Longhorn” operating system, due to be finalized before the end of the year.

More than half of Microsoft Vista needs re-writing

“Up to 60% of the code in the new consumer version of Microsoft new Vista operating system is set to be rewritten…”

Vista: end of a dream

In the long years since XP was launched, Apple have come out with five major upgrades to OS X, upgrades which (dare I say it?) install with about as much effort as it takes to brush your teeth in the morning. No nightmare calls to tech-support, no sudden hardware incompatibilities, no hassle. Why hasn’t Microsoft kept up? Unmaintainable

Right now, Microsoft has nowhere to run, and nowhere to hide. After all the hype surrounding Vista, the Emperor has finally been revealed in all his naked glory. Some folks have been predicting the demise of Microsoft. I wouldn’t go that far, but I am wondering how we’re ever going to take Microsoft seriously again?

Microsoft admits Vista screwed – report

Vista SP1 is code named “Fiji”, presumably after a pretty looking island which is paralysed by coups.

In a statement regarding the service pack Microsoft admits that Vista has “high impact” problems.

MS Insider: The Office Crew Isn’t Smart Enough to Supplant Real Windows Developers

“With Alchin retiring, MarkL and MarkZ, two of the most talented architects in MS already having left, the picture gets really ugly for the Windows division,” my friend claimed, and the BV’s core team members, Ian McDonald, Jack Mayo, Todd Wanke, Clyde Rodriguez and others are starting to connect the dots.

[...]

He concluded ominously. “A trainwreck of biblical proportions looms. Pick a good seat on the sidelines, trainwrecks this large take awhile to complete. Vista may be the last MS OS for some time to come, especially if Cutler decides to play hardball.”

Software Notebook: Microsoft’s cash pile isn’t what it used to be

But Microsoft has taken a series of steps to reduce its cash balance. Specifically, by Microsoft’s count, the company has paid out nearly $100 billion through dividends and repurchasing its own stock in the past five years.

Loot: Redmond, We Have a Problem, Or, What’s Wrong With the Xbox 360

At this point, Former becomes impassioned. That’s not fair, he says; we always saw this as a long-term venture. To which we reply that we were talking about the original Xbox, and while other divisions of the company throw off more profits in a single quarter than the entire $5 billion or so lost in the home and entertainment division to date, the fact remains that, as we take-our-word-for-it predicted, the Xbox group has been spectacularly unprofitable for Microsoft. Hence, our heretofore unpublished Vietnam analogy. The rest of the night is a blur, but we digress.

How Much is Too Much?

Microsoft says it will stick with Xbox. But with years of heavy losses behind it, the pressure’s on for the gaming division to make good

Microsoft stoic despite massive losses

If you were to judge by the PR rhetoric, you’d think the 360 was an unstoppable commercial juggernaut. As usual though, PR lies.

Microsoft Hides Its Mobile and Business Apps Divisions

The company is folding its two worst-performing divisions — Microsoft Business Solutions (its business applications unit) and its Mobile and Embedded units — into the Microsoft Business Division and Microsoft Home and Entertainment units, respectively.

A Dozen Stocks For ’07

Millen also thinks $36 billion in planned share buybacks will help the stock.

Microsoft counts on Vista to recharge stagnant stock

There was a time in the 1990s when shares of Microsoft stock seemed to double every couple of years. 1996: college for the kids. 1998: a place on Whidbey. 1999: early retirement.

Times have changed.

Commentary: Microsoft needs more than just buybacks to lift its shares

Microsoft shares, which have been dormant for the last few years, have been looking up over the last couple months. The Dow industrials component has gained about 20% since hitting a 4-year low of $21.46 o June 13.

To help move things along, Microsoft not only launched a $40 billion stock repurchase program that lasts through 2011, the company also said its previously announced 4-year, $30 billion stock buyback program was completed in just 2 years.

We hope that citations speak for themselves. Microsoft’s own problems led it to an attacking strategy. It’s not a rational move, but an emotional one perhaps.

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7 Comments

  1. Yuhong Bao said,

    February 18, 2008 at 5:37 pm

    Gravatar

    HD-DVD advocates once buyed (not just channel stuffed) HD-DVD movies in large amounts to inflate sales numbers and create the impression that it is more popular than Blu-Ray:
    http://gizmodo.com/gadgets/home-entertainment/synchronized-hd+dvd-purchase-by-fanboys-spike-amazon-rank-blu+ray-fanboys-set-to-retaliate-253131.php

  2. Roy Schestowitz said,

    February 18, 2008 at 6:12 pm

    Gravatar

    it’s the same story with XBox360 (and Zune, Vista and Office 2007). I have references to prove this.

    It’s funny that you mention this now because just under a week ago Microsoft faked shortages, having fallen to the bottom rank in its own back yard (US sales dominated by the Japanese console makers). From stuffing to shortages? Surely they jested. Poor excuses.

  3. Yuhong Bao said,

    February 19, 2008 at 12:12 am

    Gravatar

    My point is that MS isn’t the only one doing this, in fact the article mentions other examples of companies doing this off the bat. On the matters of Vista, I am kind of neutral here, I recommend Vista (or for that matter, the latest version of a distribution of Linux) on new computers simply because it support new hardware better than XP (or older distributions of Linux, for that matter). But on pre-2005 hardware, I would not recommend Vista because it requires more powerful hardware than XP did.

  4. Roy Schestowitz said,

    February 19, 2008 at 1:01 am

    Gravatar

    Are you aware of the technical vocation of Windows Vista? Some analysts would rightly tell you that it turns out to be a dead end with very slow progress (blame the unmaintainable codebase). Mac OS X is a good platform if you put your cards on moving to the forefront. If freedom and standards are important to you (which they probably are), GNU/Linux is a safe route. Unlike company-dependent products, development does not cease.

  5. Yuhong Bao said,

    February 19, 2008 at 1:14 am

    Gravatar

    >Are you aware of the technical vocation of Windows Vista?
    Yep, they do have a point, which is why I would recommend it mostly on newer computers, for example, I am overall neutral however because Vista of course have advantages as well.
    >Some analysts would rightly tell you that it turns out to be a dead end with very slow progress (blame the unmaintainable codebase).
    I would not go that far. In fact to verify the claim you would have to have access to the source code. Shared Source can be used to do this, even if it is limited.
    >If freedom and standards are important to you (which they probably are), GNU/Linux is a safe route.
    Yes, freedom from one vendor is the best advantage of Linux, in fact even with Unix it is the best advantage, because despite the Unix variants, they all share enough in common that portability is not a problem. In fact many programs written in the days of V7 Unix will run with minor changes on current versions of Linux. Programs written in the 1980s, well, little bit worse because of for example BSD vs SysV but most code in this era will run on both. I have it running in a VM and once I dual-booted Vista with Linux.
    >Mac OS X is a good platform if you put your cards on moving to the forefront.
    Of course that is a good platform as well with some of it open source with Darwin.

  6. Yuhong Bao said,

    February 19, 2008 at 1:15 am

    Gravatar

    BTW, Office have plenty of legacy as well. For example, VBA.

  7. Roy Schestowitz said,

    February 19, 2008 at 1:27 am

    Gravatar

    Yes. In addition, I recently read in ITWire and/or The Register about the barrier to interoperability which is posed even in Microsoft Office for Mac OS. VBA was part of this, IIRC.

    It’s important to continue to stress that OOXML is not just Microsoft Office. OOXML is just Microsoft Office on top of Microsoft Windows. This is an important distinction. They are trying to pass their whole platform or stack as a standard. See the headline in Pamela’s latest article.

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