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. Links 1/9/2014: Poettering on systemd, ITNews on DBMSs

    Links for the day



  2. Moving Away From Windows to GNU/Linux and the Abandonment of Windows as the Modest Proposal These Days

    Morale of GNU/Linux and an embrace of GNU/Linux is very high, despite recent propaganda from Microsoft MVPs and boosters (primarily security-themed and Munich-themed FUD)



  3. Korean Press Slams Microsoft Over Patent Extortion Against Linux/Android as New Abuses Resurface

    Harsh words from the national press of South Korea as Nokia's role in Microsoft's anti-Linux tactics becomes more apparent



  4. More Good News About Patents and Their Demise in the United States

    A roundup of news about software patents and patent trolls in the land where these thrive



  5. Links 31/8/2014: Linux 3.12.27, Akademy 2014

    Links for the day



  6. Links 30/8/2014: Jailhouse 0.1, *buntu 14.10 Beta

    Links for the day



  7. Links 28/8/2014: Many New Games, CTO of Red Hat Steps Down

    Links for the day



  8. We Are Gradually Winning the Battle Against Software Patents

    The once-elusive war on software patents is finally leading to some breakthrough and even the Federal Circuit reinforces the trend of software patents' demise



  9. Free/Open Source Software (FOSS) Companies Versus FOSS Moles (VMware, Sonatype, Xamarin)

    A look at three entities which pretend to be pro-FOSS but are actually FOSS-hostile and very much determined to replace FOSS with proprietary software



  10. Links 27/8/2014: GNU/Linux in Space, China, LinuxCon

    Links for the day



  11. FUD Against Google and FOSS Security Amid Microsoft Windows Security Blunders

    In the age of widespread fraud due to Microsoft Windows with its back doors there is an attempt to shift focus to already-fixed flaws/deficiencies in competitors of Microsoft



  12. Microsoft Spin Watch: IDG Turns to More Microsoft Propaganda, Hires Microsoft Boosters

    Media in Microsoft's pocket is telling Microsoft's lies and deceives the public for Microsoft's bottom line



  13. Microsoft's Massive Tax Evasion Becomes Better Known

    A new report about Microsoft's admission that it plays dirty tricks with tax (sometimes using moles in government) is increasing awareness of Microsoft's criminal aspects



  14. Links 25/8/2014: China's Linux Revolution Imminent

    Links for the day



  15. Links 24/8/2014: GNU/Linux Specialisation and Benchmarks

    Links for the day



  16. Links 23/8/2014: GNU/Linux Growth

    Links for the day



  17. Microsoft-Funded Attacks on Android Security and Patent/Copyright

    A look back at examples of people who smear Android and are receiving (or received) money from Microsoft



  18. Blowback in Chile and Munich After Microsoft Intervention

    Microsoft's attacks on the digital sovereignty of countries involves lobbying, corruption, an attack on standards (e.g. ODF), an attack on FOSS policies, and even an attack on accurate reporting (truth itself)



  19. The End of Microsoft is Nigh

    A look back at a tough year for Microsoft and a not-so-promising future



  20. Links 22/8/2014: Linux Foundation LFCS, LFCE

    Links for the day



  21. UPS Burned by Microsoft Windows, Gives Away Massive Number of Credit Card Details

    UPS is the latest victim of Microsoft's shoddy back door with software on top of it (Windows); attempts to blame FOSS for data compromise actually divert attention from the real culprit, which is proprietary software



  22. Microsoft's Funding of ALEC and Other Systemic Corruption

    Microsoft role in writing of laws by proxy, via groups such as ALEC



  23. Microsoft is Still Preying on British Taxpayers, Playing Politics

    Some news from the UK showing how Microsoft uses politics to extract money out of taxpayers, irrespective of their preferences



  24. Microsoft's Patent Troll Intellectual Ventures is Collapsing as 20% of Staff Laid Off

    More good news regarding the demise of patents as Microsoft's leading patent proxy is collapsing more rapidly than anyone ever imagined and software patents too are collectively doubted



  25. Links 21/8/2014: Conferences of Linux Foundation, Elephone Emerges

    Links for the day



  26. Links 20/8/2014: Linux Event, GNOME Milestone

    Links for the day



  27. Corruption Watch: Microsoft Lobbying Designed to Kill Chile's Free Software Policy and Promote Microsoft With Subsidies, More Dirty Tricks Emerge in Munich

    icrosoft is systematically attacking migrations to GNU, Linux and Free software, using dirty tricks, as always



  28. Vista 8 Such a Disaster That Even Microsoft Cannot Cope With It, Vapourware Tactics Start Early

    Microsoft's Windows-powered services are failing and Windows gets bricked by Microsoft patches, whereupon we are seeing yet more of Microsoft's vapourware tactics (focusing in imaginary, non-existent versions of Windows)



  29. On BlackBerry and Other Patent Trolls

    A roundup regarding patent trolls, starting with the bigger and latest joiner, BlackBerry's new patents apparatus



  30. Links 19/8/2014: Humble Jumbo Bundle 2 Betrayal, Mercedes-Benz Runs GNU/Linux

    Links for the day


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