02.19.10

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Business Down for Some Large OEMs Despite Vista 7

Posted in Dell, Finance, Hardware, Microsoft, Office Suites, Vista 7, Windows at 2:21 pm by Dr. Roy Schestowitz

Dell monitor logo

Summary: Dell suffers a drop in profits despite the glamorous hype and promises from Microsoft (upon releasing Vista 7)

Microsoft’s financial decline carries on [1, 2, 3, 4] as Vista 7 fails to take a recessional rebound. There are numbers that Microsoft does not want the public to see, Acer says that Windows sales were flat despite Vista 7, and a couple of weeks ago, right after Microsoft’s latest results that are dubious (Microsoft has debt), the Wall Street Journal published a report to say that business was stagnant or down for OEMs/computer makers despite the release of Vista 7.

Our reader Chips B. Malroy told us last night that there is more new evidence that Vista 7 could not have sold much. “The Dell article,” he explains, “shows that people are buying cheaper computers now. That cannot be good for MS. At some point the OEM pain of companies like Dell, will start finding ways to cut the MS profit.”

Dell profit drops despite Windows 7 PC rush

[...]

Its gross margin dropped to a relatively slim 16.6 percent as the holiday-related sales spike pushed it to sell 2 million more computers without as much profit as in the past.

It’s all about margins and it's the fault of GNU/Linux. According to another new report, Microsoft is overcharging (£30 price hike):

Microsoft got its sums wrong on the price tag for the boxed version of Office Professional 2010, forcing it to hike the product by £30.

This is classic Microsoft. Time to "whack" Dell again?

“Bill [Gates] would go to a very senior person at these other OEMs whether it was DEC or Tandy or Compaq or whoever and yell at them or tell them it had to be this way, or if you don’t do this we’ll make sure our software doesn’t run on your box. What do you do if you’re one of these OEM guys? You’re screwed. You can’t have Microsoft not support your hardware so you better do what they say.”

McGregor, Bill Gates’ colleague

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15 Comments

  1. NotZed said,

    February 19, 2010 at 5:01 pm

    Gravatar

    “The Dell article,” he explains, “shows that people are buying cheaper computers now.

    Yes, I think this is the point. A cheap computer is now far-and-ahead of what you could ever get for 4x that price even a few years ago, and there’s no longer any reason to keep upgrading them, until they wear out.

    Even my 6 year old laptop is still sufficient to comfortably run most applications – and I imagine it still will be until it breaks down (which being an ibm thinkpad with a warrantee replaced mobo & keyboard could be some time).

    Maybe we’re finally starting to see the inevitable collapse of a business model based on selling obsolete hardware that needs to be re-bought every few years? I’d be a bit worried if I were a DELL or Intel.

    Roy Schestowitz Reply:

    Here are two good videos which show the effect of the ‘motherboard cycle’:

    http://www.youtube.com/watch?v=67j7JlEZzpQ
    http://www.ted.com/talks/edward_burtynsky_on_manufactured_landscapes.html

    your_friend Reply:

    The reason your hardware still works is that you are using free software. Non free software still sucks on older hardware, as I can tell you from XP use at work. While some people claim that XP is light and practical, it takes two to three times the resources that Lenny does and XP will never be able to do a third of the things that every free desktop does out of the box. A 1.6 GHz P4 with 1GB of RAM is slow, buggy and barely usable with XP. Any 1GHz 32 bit processor with 512MB of RAM is a snappy and happy multi desktop, multi user machine under GNU/Linux. Vista and Windows 7 brokenness must be mighty for people to cling to XP. They should all move to GNU/Linux as soon as they can.

    Robotron 2084 Reply:

    ” A 1.6 GHz P4 with 1GB of RAM is slow, buggy and barely usable with XP.”

    I’m calling your bluff on this one. You’ll claim Windows will be slow and unstable on ANY system. I used a 1 Ghz P3 with 768 megs for nearly 4 years on a single install of Windows XP. It ran great. Quake 3, Day of Defeat, and Grand Theft Auto San Andreas were my favorite games on that rig. When I retired this machine I used it to replace my aging Windows 2000 file server. Regrettably, I could not bright this machine with me when I went overseas.

    Yuhong Bao Reply:

    “Vista and Windows 7 brokenness must be mighty for people to cling to XP. ”
    Not always, there are plenty of reasons people stick to good ol’ XP. Sites that break with IE >6 is another reason I can think of. There are more, of course.

  2. Agent_Smith said,

    February 19, 2010 at 8:48 pm

    Gravatar

    Just wait for ARM risc powered desktops and laptops. The Wintel reign will fall apart…

    Roy Schestowitz Reply:

    ARM claims to have delivered 1.3 billion chips last year, IIRC. All in all, the sum of ARM chips is about 12 billion (many are/were in phones).

    NotZed Reply:

    They don’t ship chips, just license cores. And the numbers were actually 3.9 billion cores – 1.3 billion just in the last quarter of 2009.

    (phones e.g. have an average of ~2 cores per phone too)

  3. Agent_Smith said,

    February 19, 2010 at 9:06 pm

    Gravatar

    Indeed, and the Wintel collusion worked hard to steer ARM processors away from people, because one scratches the back of the other. But just imagine machines powered by those powerful risc processors ??? And, note: Winblow$ doesn’t run on ARM.
    A brave new world will unfold… I can hardly wait to see it…

    Roy Schestowitz Reply:

    The same goes for SPARC.

    Also see:

    A couple of innocuous words that have insidious consequences. A simple marketing tagline, yet it appears to be seriously undermining a vast segment of the computer sector. What is it? The phrase, “industry standard.”

    It comes from the same warped (but ingenious) minds that coined the term “legacy” back in the 1990s. That harmless word served to forward the Windows NT – Intel processor gravy train at the expense of so-called inferior technologies like mainframe, OpenVMS and even Unix. Yet many would argue that despite all the genuine improvement to Windows in recent years to make it much more enterprise friendly, it still can’t hold a candle to many of these legacy systems.

    The rumor goes that the legacy propaganda was originated between a Gartner analyst and someone in the Windows NT development/marketing camp. Whether true or not, it certainly helped sell an awful lot of Wintel gear. Now we have “industry-standard” weaving its way into the computer lexicon. The hidden intention appears to be to outlaw RISC and everything else except x86-Intel fare.

    [...]

    I attempted to track down the origin of the term “industry standard,” but I didn’t have much success. Web searches are sabotaged by the fact that the term industry standard architecture (ISA) was coined in 1981 for something else entirely. So it isn’t even an original concept.

    Robotron 2084 Reply:

    You probably won’t see it. ARM is cool for portable devices, I have one in my Pam TX, but it brings few advantages to a desktop machine. If a sizable portion of desktop machines were sold using a different architecture, then Microsoft and other companies would follow suit with software to match. It’s business, and those who want to stay in business will adapt.

    Agent_Smith Reply:

    ARM is powerful, cheap and cool, and i do not mean cool as a trend, but cool as it does not heat up as cisc x86 processors do. So, it’s easier to mount ARM processors in small computer cases(or any cases). And, there’s no much to worry about heat.
    It’s something to think about: Why ARM is not in main stream computing today ??? Collusion anyone ???

    Roy Schestowitz Reply:

    It’s already in mainstream computing, but mostly in mobile/embedded devices.

  4. Danielh said,

    February 20, 2010 at 3:54 pm

    Gravatar

    @Robotron 2084

    If ARM becomes the next big thing, Microsoft is toast.

    Jump onto ARM and their current duopoly with Intel is broken and Intel can start engaging in Linux for real.

    Porting Windows 7 to ARM is extremely hard and Microsoft is the last place on earth i would imagine pulling something like that off. Winmo 7 is still left to be seen IRL and when it hits the streets, Android and Apple is miles ahead.

    Microsoft cant follow, all it can do is try to stop things from happening. They succeded in stopping Java, could services and Linux for some time but they can keep plugging all those hole in the dam forever. Sooner or later they run out of fingers.

    Roy Schestowitz Reply:

    Microsoft didn’t succeed in stopping Java. It got sued and Java is still the #1 P/L (the fastest growing ones are tied to web applications and are FOSS).

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