Bonum Certa Men Certa

Microsoft Hides Billions in Losses in Areas

"I was out with a couple of Silicon Valley software guys in New York the other night and got their view of Microsoft’s finances. Microsoft makes 60 percent of its profits on Windows, 60 percent on Office, and minus 20 percent on everything else, they said. "

--Technology & Finance



Summary: "Nineteen quarters in a row Microsoft's Online Division has lost money," says AOL and it is not the only division suffering from this type of performance; another older article says that "[i]n the last half decade, Microsoft has swept over $25 billion of these “Other” losses under the rug"

On the Internet, in the period of just 1 year, Microsoft suffered $2 billion in losses. And that's just one area among several where Microsoft is cashflow negative. How come almost nobody covers it? AOL is one of the exceptions here. It writes:



the division lost $560 million for Microsoft. That’s better than the previous quarter when it lost a staggering $696 million, but it’s much worse than a year ago, when it lost $477 million. In the past year, Microsoft has lost well over $2 billion from the division.

Let me repeat that: 1 year, a $2 billion loss.

Obviously, any startup that did that would have long since gone under — with that kind of burn rate, they probably would have gotten the plug pulled a few weeks into existence no matter how well-funded they were. But Microsoft keeps pumping money into the division. And they have to. Because even they realize it’s the future.

Of all the money Microsoft makes, the vast majority comes from two divisions: Windows & Windows Live Division (Windows) and Microsoft Business Division (Office). They make a good amount of money from the Server & Tools division too, but it’s less than half of those other two. And both of those two are under direct assault.

The web is making Windows (and every operating system) less vital, while at the same time coming up with free and/or cheap tools to replace the relatively expensive Office. And new devices like smartphones and tablets have created an ecosystem where Windows is essentially a non-player (though we’ll see what happened with the just-released Windows Phone 7). And Office is basically non-existent in these spaces.

[...]

Five years ago, Microsoft’s Online Division was actually making money. Granted, it wasn’t a lot. But they were in the black. But for the past 19 quarters in a row now, Microsoft has lost money in this division. And as this chart put together last quarter by SAI shows, the losses have actually gotten worse over time. It’s a bloodbath being covered up by the profits from other divisions.


Nessuno remarks on this article by writing: "A great picture!

"I suppose they're supposed to be burning cash.

"There's an older article on Microsoft's Office profits. I'll try to dig it up.

Eventually he did and here it is. The author says that "[i]n the last half decade, Microsoft has swept over $25 billion of these “Other” losses under the rug" and to give some fragments from this long article (3 years old):

These three enormously profitable businesses allowed the company to painlessly absorb nearly $8 billion in losses–in just one year–related to its spectacular failures in WinCE, Windows Media, Windows Mobile, the Xbox 360 and Zune, its online businesses, and that “Other” black hole of what the company calls “corporate level activity.”

The “Other” losses Microsoft documents every year includes many individual fines and lawsuit settlements in the range of hundreds of millions of dollars related to its criminal activities around the world. In the last half decade, Microsoft has swept over $25 billion of these “Other” losses under the rug, in addition to the many billions sprayed at failed efforts to establish monopolies in the online, mobile, and consumer electronics arenas. [...]

Why do they spew such venom about the iPhone, Linux, and the Mac? Because Microsoft’s obscene profits from the sales of its outdated, overpriced, and consumer hostile products help to directly support the wags’ chatterbox industry.

Spreading fear, uncertainty and doubt by spewing ignorance and false information are efforts to keep the world stuck in the tech rut of the 90s, where no critical thinking was required. Lazy pundits like no possibility of being wrong, so working to keep the technology world enslaved to Microsoft helps them appear to be insightful when they prophesy that Microsoft will eventually come out with a copycat version of whatever anyone else is doing. Sure enough, it happens. [...]

With zero competition in the desktop PC operating system and productivity application markets, it’s no wonder why Microsoft hasn’t bothered to crank out any innovation in new versions of its products over the last half decade. It simply doesn’t have to!

Microsoft makes tens of billions of dollars every year selling intellectual property licensees without any competitive pressure from a functional market economy.

It’s no mystery why the record labels and studios desperately wanted Microsoft to set them up with the same sort of “free money” pipeline policed by the extreme, unilateral, anti-consumer DRM of Windows Media.

It says volumes that Microsoft’s only competitor on the PC desktop is a non-profit volunteer effort. The company is so rich it can proudly operate above the law, as it documents in its earnings reports. [...]

If Microsoft were to lose its monopoly position with Office to real competition, a third of the company’s revenues would be at serious risk, but almost half of its profits would be in danger.

Without the easy money from Office, Microsoft would have to compete on a level playing field, something that the company has no proven ability to do. In fact, in markets where Microsoft has to compete, it always fails miserably. Outside of its three monopolies, Microsoft hemorrhages cash faster than nearly a half dozen Amtrak operations combined, or eight times faster than Apple did at its most beleaguered point in 1995 when it reported a loss of nearly a billion dollars....

Without the Office cash cow, Microsoft would be unable to dump unfathomable amounts of money into profitless exercises intended to hold back innovation and prevent competition in new markets to increasingly broaden its sphere of influence. It’s therefore no surprise that Microsoft is working hard–and playing dirty–in efforts to maintain its monopoly position in Office software, which is worth nearly as much to the company as its Windows business.


Recall how much corruption was involved in the OOXML saga. It's all about trying to save the few things that still bring income while Microsoft brings debt.

“Ballmer is credited with maintaining up the revenue stream from Office and Windows, which he has done in part by corrupting standards bodies and threatening to sue users of open source.”
      --Nessuno
"A basic question here is," Nessuno adds, "how could they be so incompetent? In the recent analysis of this question in the media it's been pointed out by both Microsoft insiders and outsiders that they are in some ways their own worst competitors, for example, cloud computing threatens Office, mobile threatens desktops, etc. And stories have been told about how groups inside Microsoft who are trying to do something new get sabotaged by the Office or Windows group because it will threaten them.

"Ballmer is credited with maintaining up the revenue stream from Office and Windows, which he has done in part by corrupting standards bodies and threatening to sue users of open source. But he's also allowed good ideas inside his company to get crushed.

"Other companies (Google, Apple) don't suffer from this problem.

"There was a post here quite a few years ago about a guy at Microsoft who was working on IE7 (I believe). He talked about how his group was trying to make a standards-compliant browser, but was getting opposition from the management. Even in IE8 (and I think IE9) the support for standards is somewhat wishy-washy.

"There are probably also struggles inside Microsoft regarding open source (those who favor it, those who hate it).

"Microsoft still leads the pack in profits, mostly because of Office and Windows, but has lost it this year in market cap and revenue."

Comments

Recent Techrights' Posts

On Groupthink, Mindless 'Sheep', and Toxic Online Cults
This week, treat yourself to a life free of social control media
BetaNews is Run and Written by Bots That Make Clickbait
At least one author is doing this
Technology: rights or responsibilities? - Part VIII
By Dr. Andy Farnell
GNU/Linux Reaches All-Time High in Europe (at 6%)
many in Europe chose to explore something else, something freedom-respecting
 
Links 25/11/2024: Egypt Harasses Bloggers, The University of Michigan Has Become Like a Corporation
Links for the day
Links 25/11/2024: Climate News, Daniel Pocock Receives a Fake/Fraudulent €17,000 Electricity Bill
Links for the day
[Meme] Microsoft: Our "Hey Hi" Hype is Going So Well That We Have MASS Layoffs Every Month. Makes Sense?
Contradiction
Latest Mass Layoffs at Microsoft Are Confirmed, Bing and Vista 11 Losing Market Share
They tried to hide this. They misuse NDAs.
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Sunday, November 24, 2024
IRC logs for Sunday, November 24, 2024
Gemini Links 25/11/2024: Purity and Cory Doctorow's Ulysses Pact, Smolnet Portal and SGI
Links for the day
Patents Against Energy Sources That Reduce Pollution
this EV space (not just charging) is a patent mine field and it has long been that way
DARPA’s Information Innovation Office, Howard Shrobe, Values Compartmentalisation But Loses the Opportunity to Promote GNU/Linux and BSDs
All in all, he misses an opportunity
Wayland is an Alternative to X
the alternative to X (as in Twitter) isn't social control media but something like IRC
BetaNews, Desperate for Clicks, is Pushing Donald Trump Spam Created by LLMs (Slop)
Big clap to Brian Fagioli for stuffing a "tech" site with Trump spam (not the first time he uses LLMs to do this)
[Meme] Social Control Media Bliss
"My tree is bigger than yours"
Links 24/11/2024: More IMF Bailouts and Net Client Freedom
Links for the day
Gemini Links 24/11/2024: Being a Student and Digital Downsizing
Links for the day
Techrights' Statement on Code of Censorship (CoC) and Kent Overstreet: This Was the Real Purpose of Censorship Agreements All Along
Bombing people is OK (if you sponsor the key organisations), opposing bombings is not (a CoC in a nutshell)
[Meme] The Most Liberal Company
"Insurrection? What insurrection?"
apple.com Traffic Down Over 7%, Says One Spyware Firm; Apple's Liabilities Increased Over 6% to $308,030,000,000
Apple is also about 120 billion dollars in debt
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Saturday, November 23, 2024
IRC logs for Saturday, November 23, 2024
[Meme] GAFAMfox
Mozilla Firefox in a state of extreme distress
Google Can Kill Mozilla Any Time It Wants
That gives Google far too much power over its rival... There are already many sites that refuse to work with Firefox or explicitly say Firefox isn't supported
Free (as in Freedom) Software Helps Tackle the Software Liability Issue, It Lets Users Exercise Greater Control Over Programs
Microsofters have been trying to ban or exclude Free software
In the US, Patent Laws Are Up for Sale
This problem is a lot bigger than just patents
ESET Finds Rootkits, Does Not Explain How They Get Installed, Media Says It Means "Previously Unknown Linux Backdoors" (Useful Distraction From CALEA and CALEA2)
FUD watch
Techdirt Loses Its Objectivity in Pursuit of Money
The more concerning aspects are coverage of GAFAM and Microsoft in particular
Links 23/11/2024: Press Sold to Vultures, New LLM Blunders
Links for the day
Links 23/11/2024: "Relationship with Oneself" and Yretek.com is Back
Links for the day
Links 23/11/2024: "Real World" Cracked and UK Online Safety Act is Law
Links for the day
Links 23/11/2024: Celebrating Proprietary Bluesky (False Choice, Same Issues) and Software Patents Squashed
Links for the day
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Friday, November 22, 2024
IRC logs for Friday, November 22, 2024
Gemini Links 23/11/2024: 150 Day Streak in Duolingo and ICBMs
Links for the day