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07.19.09

Another Microsoft Product Dies as the Company Prepares for Horrible Financial Results

Posted in Finance, GNU/Linux, Microsoft at 5:01 am by Dr. Roy Schestowitz

GNU and Linux

Summary: GNU/Linux is still destroying Microsoft by eliminating its profit margins

MICROSOFT has been killing many products recently. In the past 9 months alone, Microsoft put to end to almost 20 (maybe more, but it is difficult to keep count). We estimated that Microsoft kills, on average, about 2 products per month. So indeed, it’s time for another death knell. This one used to be a rumour. It is about Popfly, which is GNU/Linux hostile [1, 2] (also mentioned very briefly in [1, 2]).

Fortunately, given the anti-competitive nature of Popfly, this product is now officially dead.

Microsoft is shutting down its Popfly mashup tool, company officials are confirming.

Microsoft may have no choice but to shut down many more services and products. Based on this new report from the Wall Street Journal, we might see a recurrence of last quarter's results with Microsoft profits falling another 30% or more (in reality it may be a lot worse), to a great degree due to GNU/Linux which eroded Microsoft’s margins (dumping and kickbacks take their toll).

Microsoft Seen Posting Sharp Profit Decline For Fiscal 4Q

Microsoft Corp. (MSFT) is expected to post declines in profit and sales for its fiscal fourth-quarter next Thursday, as the software giant contends with flagging sales of personal computers bundled with its technology.

Microsoft will surely try to blame the economy, but Google and IBM have both just reported a rise in profit (both companies use GNU/Linux); Red Hat did too not so long ago and it is part of a trend.

Our reader Goblin wrote about the meaning of Microsoft’s expected sharp decline in profit.

It is being reported that Microsoft’s figures for Q4 that are due to be posted next Thursday are expected to be down, again.

One key reason for this is GNU/Linux, as it was confirmed by the press before (Microsoft has underperformed for a long time, but it bought back shares). Ars Technica wrote : “Client software felt the slump in PC sales, and was further harmed by the shift to netbooks; many of these run Linux, which helps Microsoft not at all.” CRN wrote: “Microsoft, like much of the IT industry, was caught off-guard by the rapid rise of the netbook category, but moved quickly to offer a netbook-specific version of XP Home to stem the tide of Linux on netbooks. When one considers that getting some revenue is better than getting none, that was a wise move.”

Another reader of ours reminds people that ARM-based sub-notebooks are going to cause another major headache to Microsoft because Vista 7 won’t run on them. Our reader writes:

We’ll see if AlwaysInnovating.com can ship this month as claimed.

I’ve wanted a solid-state ARM-based netbook since around 2001. ARM-based tablets have been around since Zaurus and in 2007 started to kick ass with OpenMoko and the Nokia N810. The software has started to catch up. Now netbook-oriented distros are being ported to ARM and industry has planned six to ten ARM-based netbooks for 2009.

It looks like the first one is about ready.

If it gets 10 hours of battery, even die hard Bill fans will find a way to upgrade to Linux even if only on the netbook.

As noted last week, ARM-based sub-notebooks are expected to grab 55 percent of this market. This can’t be good for Microsoft.

“Microsoft, the world’s most valuable company, declared a profit of $4.5 billion in 1998; when the cost of options awarded that year, plus the change in the value of outstanding options, is deducted, the firm made a loss of $18 billion, according to Smithers.”

The Economist, 1999

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15 Comments

  1. Andrew Macabe said,

    July 19, 2009 at 6:54 am

    Gravatar

    The netbook phenomena has been heavily discussed in our local groups for a while now. Some disagree with us saying it’s a passing phase. OTOH we say it’s a game changer or else why would microsoft continues to endeavor to kill not only its inception (OLPC) but the current offerings available from major OEM copycats. Most of our client userbase (poor and well to do) keep asking us for netbooks.

    Microsoft’s dumping of a 8 year old application (XP) masquerading as an OS on the netbook is seen as brilliant by some established bloggers, journalists and analysts, we see that as an act of desperation. OEM strangulation and blackmail by microsoft can be readily seen by how the convicted Redmond monopolist defines what a netbook should be. Shouldn’t that be left up to the OEMs decide?

    David Gerard Reply:

    Netbooks are a game changer. Our MSI Wind is my preferred main laptop.

    I live in the cloud. Even at home, my data lives on the household file server. The most inconvenient thing about switching machines is making sure the local install of Gimp has images I was working on.

  2. David Gerard said,

    July 19, 2009 at 8:28 am

    Gravatar

    No, no! The press spin is that Windows 7 not supporting ARM is bad for *ARM*, not bad for *Microsoft*. Get with the cool kids!

    Roy Schestowitz Reply:

    Yes, it is hard to ignore that bit, is it not? See the opening of this article.

    Nice spin.

    Roy Schestowitz Reply:

    Wait… this is precious. “[A] blow to the British firm’s hopes of becoming a big player in the sector. [...] No one at ARM was immediately available for comment.

    So Microsoft told them that it’s a blow to ARM, but they didn’t even confirm this with ARM.

    This is just bad reporting. ARM was happy with Linux all along.

    Andrew Macabe Reply:

    Not really; microsoft is waiting for

    EU_AntiTrust_Conviction v2.0

    Jonathan Wong Reply:

    For what it’s worth, I do think that Windows 7 should support ARM processors.

    However, I’m guessing that the engineering effort to adopt an x86-based OS like Windows to support ARM may be quite substantial.

    IMO, this would be a great opportunity for Google Chrome OS, if and when it does come out next year.

    David Gerard Reply:

    An ARM netbook that can run plain Debian ARM would be a perfectly lovely netbook for pretty much anything I do. Flash is the main proprietary sticking point, with no good free implementation. (Every patent-encumbered codec I can think of that people actually use has a good free software implementation in FFmpeg or gstreamer-plugins-bad/ugly.)

    At any given speed of processing, ARM/MIPS will outdo x86. Every x86 these days is essentially a RISC processor with an x86 instruction decoder on the front, but that instruction decoder is still crippling for power and speed compared to purer RISC. Though Atom is doing very well for lower power at usable performance.

    Roy Schestowitz Reply:

    Jonathan Wong, please disclose that you are a Microsoft employee (TE).

  3. Mikko said,

    July 19, 2009 at 1:56 pm

    Gravatar

    Nvidia recommends Windows CE for ARM-based netbooks

    http://www.computerworld.com/s/article/9134522/Nvidia_For_smartbooks_Windows_CE_beats_Android_?taxonomyId=162&pageNumber=1&taxonomyName=Processors

    Jonathan Wong Reply:

    Hmm…

    I’m not very familiar with Windows CE, but I’m not convinced that Windows CE in its current state gives users the experience they want from a netbook.

    The last CE version (6.x) was released in 2006, and as expected, lacks some the one thing a mobile netbook user likely will need – a modern web browser.

    The good thing for the consumers is that they are spoilt for choice, since besides Windows CE there are likely many other OS choices (both now and upcoming) for your ARM-based netbook.

    Mikko Reply:

    i wonder what scared nvidia to recommend windows ce for arm based netbooks

    DiamondWakizashi Reply:

    Nvidia wants Microsoft to continue using their Tegra chipset in the Zune garbage.

    http://techblips.dailyradar.com/story/zune_hd_confirmed_to_use_nvidia_tegra/

    Nvidia is ridiculous, insulting Linux because of the stupid Zune.

    Ijika Reply:

    How can an organization “insult” an operating system? Do operating systems have feelings?

    Andrew Macabe Reply:

    Could be the same people that scared ASUS into dumping xp home on their little netbook.

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