EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

10.25.10

Windows Profit Declines Sharply Because of Competition From GNU/Linux

Posted in Finance, GNU/Linux, Microsoft, Windows at 4:02 pm by Dr. Roy Schestowitz

Old building

Summary: Slowly but surely, Free software breaks Windows and other Microsoft platforms by lowering their market value and thus hurting Microsoft’s cashflow

ONE of our sceptical readers has raised an important matter in IRC yesterday. By looking back at some numbers he claims to have found more proof that Vista 7 does not succeed in the marketplace, contrary to these ludicrous claims that “Windows 7 might be a massive commercial success” (utter BS from Engadget, no offence intended). We’ll get to the pertinent details in a moment, not before pointing out that our informant from Sweden, Mikko, claims based on this article that “[S]ilverlight on the web is dead [...] Ballmer states that Silverlight is now pretty much strictly a client, non-cross platform thing, while explicitly stating that when it comes to doing something universal, “the world’s gone HTML5″.” So, we were right about Silverlight all along [1, 2, 3, 4], but that’s a separate story.

Mikko says he “thinks that there’s only bad journalism on Engadget” and we too wrote about the subject. Microsoft even gave this publication an expensive new laptop with Vista 7 (pre-beta) preinstalled so that it can praise Vista 7 before anyone else gets to see it. It’s an exercise of PR.

Windows undoubtedly has a margins problem. Mainstream publications that we cited recently say it clearly as it’s not hard to see. And looking at the source our reader cites, there is this MSFT analysis (Q1 of 2010) and one particular image that says it all. It’s all big minuses for Microsoft’s cash cows too.

Our reader responded by saying: “Record numbers of sales but 52% decline in income? Wow!

“If Microsoft’s sales have been flat of declining, it is no wonder they have gone from virtual dominance to 68% of all units today. 68% is a Vista 7 channel stuffing number, and the actual number is probably greater than that. That is, more than 32% of desktop computers are shipped without Windows…”

As we have shown before, Windows profits declined over the years. Profit fell by more than half based on the above, but income aside, revenue is down 39% too for Windows. That’s pretty shocking unless there’s a snag to be taken into account.

Our reader summarised by saying that “you can’t see the reports, sadly but the SEC will serve them to you… I was more interested in finding the number of licenses Microsoft has sold as a fraction of world PC shipments. Both are slippery numbers, with IDC providing most of the published PC shipment figures to Microsoft boosters and few hits on license numbers.” GNU/Linux is one cause of the stated declines. Microsoft is forced to lower prices to remain competitive. This may help explain the FUD attacks we’ve been seeing recently. One talking point is about GNU/Linux being “fragmented”, which is basically a negative word for “diverse”. “”Fragmented” is a proprietary spectacles view,” explained Groklaw some days ago in relation to Android, and “[p]eople say that about GNU/Linux too. But what they miss is this: you can do whatever you want. That is a wonderful feeling, and it leads to superfast development, not to mention a lot of fun.”

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

11 Comments

  1. lightpriest said,

    October 26, 2010 at 4:20 am

    Gravatar

    Every Linux distro allows you to install a different kernel version or compile one of your own so you could add/remove support or even optimize it for your own needs.
    With package managers and different repositories you have the ability to install an older/newer version of some software if current is buggy or lack some features.
    You can even run the same software with different versions using chroot, if dependency is a problem.

    On Windows, you cannot replace the “Explorer” (shell), you cannot replace “Gena” (the login manager), but still – there are 4 major versions of Windows splitted amongst different SPs and each with its own problems/bugs. Different MSOffice versions sometimes don’t match each other making documents look funny. Different IIS versions have weird bugs, not to mention performance issues.
    Some laptop OEMs build drivers only for Vista/7, making it impossible to use XP with that laptop.

    If anything’s true about fragmentation is that every software has it.
    MS users suffer more from it. If you have a problem with a certain version of Windows you either need to pay for an upgrade, which breaks other stuff, wait for the company to build a fixed version or don’t use the feature you wanted at all.
    If that same problem occures on Linux, at worst you chroot.

    Fragmentation on Linux is an advantage, it was created that way. Fragmentation on Windows is how they do business.

    twitter Reply:

    Fragmentation, as you have noticed, is a non free software problem. Microsoft successfully labled non free Unix “fragmented” and they would like to project this on gnu/linux, bsd and other free software. They might have a point with Android because Google did not use a strong copy left license like GPL3 that would prevent Tivoisation and other non free monkey shines. Anyone can see that there is no such problem with gnu/linux because all of the same free software comes with ever distribution, with a few interesting exceptions that others have not picked up yet. Skype demonstates that it is easy enough to make non free software for gnu/linux distributions but the user is left helpless and dependent on Skype. All of these problems and more exist to a worse extent on Windows, of course. The issue is a typical Microsoft troll which inverts reality for the ignorant.

    It is better to talk about the fundamental issues of software freedom which clear the air quickly. More freedom and fewer restrictions are obviously better for everyone. “Fragmentation” does not exist where people are free to share. Most other software problems boil down to people being uncooperative and abusive towards their neighbors.

    Dr. Roy Schestowitz Reply:

    In UNIX, things are typically built upon accepted standards (not vendors), so the notion of “fragmentation” does not quite apply. The modular pieces interact quite nicely.

    twitter Reply:

    Irix, HPUX, AIX, Solaris, SCO, Next and others did incorporate some common and accepted standards but each owner had their selfish pieces that made “open” difficult. Irix had a journaling file system, for example but others did not. Free software has recreated the nice pieces of each and brought them together where they can all be enjoyed at once. I’m no expert in ancient Unix, but differences in C libraries made it difficult to port some work from Solaris to gnu/linux for me. Had all of the owners shared from the start, their hardware would now dominate the computing landscape. As things went, the survivors lost both their independent hardware and software efforts and now bow down before Intel and Microsoft. They were divided and annihilated.

  2. TemporalBeing said,

    October 26, 2010 at 12:12 pm

    Gravatar

    It’s coming to the end-game for Microsoft.

    Back when Windows 9x/Me was released, an upgrade cost $90USD, and the full version (everything!) was $199 at most. WinXP increased that slightly; I think upgrades were $120-130 range, but the full version (Pro) was still only about $199. With Vista, Microsoft more than doubled the cost. All of a sudden upgrades were $199, and the full version was $399! An inflated value that they kept for Win7, only they added the Family Pack (3-5 licenses) for a little more than that $199 upgrade price. Still, not really much of a deal.

    At least with Office they were smart enough not to change the price too significantly; but it’s still pricey; and Microsoft relies Office to drive sales of Windows. So as people and organizations have started moving off of Office, they now find themselves able to move off of Windows as well, or at least in a better position to do so.

    So, I expect that we are at the beginning of the exponential curve downwards of ousting Microsoft from the PC business. The same wave that pushed them to market dominance is now going to crush them.

    Dr. Roy Schestowitz Reply:

    They are moving into vapourware mode again.

  3. twitter said,

    October 28, 2010 at 10:44 pm

    Gravatar

    Vista 7 Failure! Despite wild raves by Microsoft boosters, first quarter numbers are not good for Microsoft. Barrons has a concise summary, with some caveats about deferred income and jubilation but little perspective.

    [16.2 billion in revenue] up 25% from a year ago. Operating income was $7.12 billion, up 59%; net income was $5.41 billion, up 51%; EPS was up 55%. Year ago period results included the deferral of $1.47 billion of revenue related to Windows 7 upgrades; adjusted for that factor, revenue was up 13% and operating income was up 20%, while net income was up 16% and EPS rose 19%.

    Sounds great, right? Not when compared to 2009 [2], the tail end of Vista failure. In 2009, the company had income of about 7 billion. So, there is little change from where Vista left them in 2009. In fact, the company is probably worse off because they managed to channel stuff 240 million Vista 7 licenses recently. Not much should be expected beyond that spurt.

    Predictably, Microsoft bills the deferral roller coaster as explosive growth. In this article, for example, claims “During Q1 FY10, before Windows 7 was released…” which is not true. Microsoft was already selling licenses for the new OS and had channel stuffed enough of them to cause a big dip when the revenue was “deferred”. A year later, we have some more channel stuffing billed as actual sales to make an apparent rise. The two year numbers tell the story more clearly but Microsoft boosters pretend to be unable to remember the numbers. Goldfish might do better.

    twitter Reply:

    Tech Crunch points out that Apple had $4 billion more revenue than Microsoft did. If we believe Microsoft when they tell us Windows 7 has been very successfull, the best selling OS EVAR, we have to conclude that Windows success makes no difference. Success or failure, Windows 7, just like Vista, has not made a bottom line difference to Microsoft.

  4. twitter said,

    October 30, 2010 at 1:47 pm

    Gravatar

    Pogson’s figures gave Microsoft more credit than they deserved because he took the company’s word. Microsoft claimed that 240 million coppies of Vista 7 had been shipped/sold. Pogson took that number and divided it by the number of computers shipped/sold in the year which was 350 million. Microsoft’s quarterly report claims only 150 million coppies. The discrepancy most likely comes from the fact that Microsoft pulled a Vista capable scam, promising free “upgrades”, long before they officially released Windows 7. The confusion is intentional, but they lied less to the SEC than they did to everyone else. 150/350 million is far less than Pogson gave the company credit for. XP has made up the majority of business purchases, because business has choices that normal people don’t, but it is probably fair to say that less than 60% of computers shipped with Windows last year.

    Poor Steve Ballmer only got a $670,000 bonus because results were so bad and even people at Information Week realize that Microsoft might not be around in five years.

    twitter Reply:

    The report referenced is actually a proxy report which has executive compensation and number of shares owned.

    Dr. Roy Schestowitz Reply:

    The bonus matters a lot less than Ballmer’s shares in the company. But a decline is symbolic. Ron Hovsepian’s bonus (Novell CEO) is almost 10 times that of Ballmer.

What Else is New


  1. EPO Crushed the Boards of Appeal (i.e. Quality Control) and Insiders Explain Why

    Team Battistelli has made a complete mockery of the EPO and also serves to devalue EPO patents, which in the long term can doom the whole system



  2. Academic Discussion About Patents' Harm and Good, Pushers of Software Patents Still Upset at Alice Decision

    In light of the Alice case, large monopolies and their messengers moan about patent quality control, whereas here in Manchester people have an open debate about the potential harms of over-patenting



  3. Links 30/7/2016: Sysadmin Day, Stardew Valley on GNU/Linux

    Links for the day



  4. Links 29/7/2016: More Microsoft Problems and Layoffs, Bodhi Linux 4.0.0 Alpha Released

    Links for the day



  5. Links 28/7/2016: CORD as Linux Foundation Project, Wine 1.9.15 Released

    Links for the day



  6. EPO Loses More Than 80% of Cases at the International Labour Organisation (ILO)

    The International Labour Organisation (or Organization) helps show just to what degree the European Patent Office (EPO) violates the rights of workers



  7. To Understand What Battistelli Has Turned the EPO Into Look at Turkey and China

    Battistelli and his notorious Vice-President from SIPO (Croatia) turn the European Patent Office, once the pride of Europe, into a human rights cesspool with SIPO (China) connections



  8. Patent Lawyers Move Closer to Battistelli's Rubber-stamping Office While the Appeal Boards Pushed Away as Collective Punishment Which Masks Decline in Patent Quality

    Urgently sending appeal boards away and urgently granting applicants patents without proper examination will be Battistelli's sorrow legacy at the European Patent Office



  9. Software Patents a Dying Breed, But Patent Lawyers in Denial Over it and Notorious Judge Rodney Gilstrap Ignores Alice (Supreme Court)

    A look at what law and practice are saying about software patents, contrasted or contradicted by the patent industry and trolls-friendly courts (which make business out of or together with patent aggressors)



  10. CAFC Meddling in PTAB Affairs; Unified Patents Fights a Good Fight by Invalidating Software Patents

    A look at how the AIA's Patent Trial and Appeal Board is invalidating software patents post-Alice, with or without involvement of patent courts



  11. Early Certainty That Benoît Battistelli is Dangerously Clueless and a Major Risk to the EPO

    The chaos which Team Battistelli is assured to deliver if it doesn't treat scientists like scientists, instead viewing them as a production line with rubber-stamping duties



  12. OIN Makes Claims About “Open Source Innovation”, But It Produces Nothing and Protects Virtually Nobody

    The Open Invention Network (OIN) reports growth, but in practical terms it does little or nothing to help developers of Free/Open Source software



  13. Links 27/7/2016: New CrossOver, Blackmagic for GNU/Linux

    Links for the day



  14. The Death of Software Patents and Microsoft's Coup Against Yahoo! Made the Company Worthless

    A look at what happens to companies whose value is a house of software patents rather than code and a broad base of users/customers



  15. Munich Attack Mentioned by EPO But Not Ansbach

    The EPO does the usual right-wing thing (exploiting disaster/emergency for domestic crackdowns), but some bemoan the omission of the explosion at Ansbach (also in Germany)



  16. Kluwer Thinks People Are Clueless About the Unitary Patent System and Pretends It's Business as Usual

    Flogging the dead UPC horse at times of great uncertainty (enough to bring the UPC to a standstill)



  17. Almost Everything That the Government Accountability Office Says is Applicable to the EPO

    The Government Accountability Office in the United States produces reports which can serve as a timely warning sign to the European Patent Office, where patent quality is rapidly declining in order to meet 'production' goals



  18. Microsoft Says It Loves Linux, But Its Anti-Linux Patent Trolls Are Still Around and Active

    Highlighting just two of the many entities that Microsoft (and partners) use in order to induce additional costs on Free (as in freedom) software



  19. Links 26/7/2016: Microsoft Growing Desperate, Linux 4.8 Visions

    Links for the day



  20. Links 25/7/2016: Linux 4.7 Final, PostgreSQL 9.6 Beta 3

    Links for the day



  21. Leaked: Boards of Appeal Face 'Exile' or 'Extradition' in Haar After Standing up to Battistelli

    A look at some of the latest moves at the European Patent Office (EPO), following Battistelli's successful coup d’état which brought the EPO into a perpetual state of emergency that perpetuates Battistelli's totalitarian powers



  22. The US Government Accountability Office (GAO) Comes Across as Against Software Patents, Relates to the EPO as Well

    Some analysis of the input from the Government Accountability Office (GAO) with focus on the EPO and software patents



  23. In the US, Patent Trolls Engage in Patent Wars and Shakedowns, Whereas in China/Korea Large Android OEMs Sue One Another

    Highlighting some of the differences between the US patent system and other patent systems



  24. Links 24/7/2016: Elive 2.7.1 Beta, New Flatpaks and Snaps

    Links for the day



  25. Links 23/7/2016: Leo Laporte on GNU/Linux, Dolphin Emulator’s Vulkan Completion

    Links for the day



  26. Links 22/7/2016: Wine 1.9.15, KaOS 2016.07 ISO

    Links for the day



  27. Haar Mentioned as Likely Site of Appeal Boards as Their Eradication or Marginalisation Envisioned by UPC Proponent Benoît Battistelli

    Not only the Staff Union of the European Patent Office (SUEPO) is under severe attack and possibly in mortal danger; the increasingly understaffed Boards of Appeal too are coming under attack and may (according to rumours) be sent to Haar, a good distance away from Munich and the airport (half an hour drive), not to mention lack of facilities for visitors from overseas



  28. EPO Attaché Albert Keyack Viewed as Somewhat of a Mole, Reporting From the US Embassy in Brazil Until Shortly Before the Temer Coup

    Public responses to the role played by Albert Keyack on behalf of the United States inside the European [sic] Patent Office



  29. EPO Insiders Explain Why the EPO's Examination Quality Rapidly Declines and Will Get Even Worse Because of Willy Minnoye

    Public comments from anonymous insiders serve to highlight a growing crisis inside the European Patent Office (EPO), where experienced/senior examiners are walking away and leaving an irreplaceable bunch of seats (due to high experience demands)



  30. Patents Roundup: BlackBerry, Huawei, PTAB, GAO, Aggressive Universities With Patents, and Software Patents in Europe

    Various bits and pieces of news regarding patents and their fast-changing nature in the United States nowadays


CoPilotCo

RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

CoPilotCo

Recent Posts