A Decade of MSFT

According to Nasdaq, MSFT has been flat as a pancake for a decade. So much for innovating and being beloved. If it weren’t for the dividends, the share price would be in the toilet…

Now that the market for x86 PCs has stagnated, I expect M$ will have to start earning its income or it will decline. Coming to market with “8” years after Apple and Android/Linux took over the mobile space won’t save them. The monopoly is on its last legs and shortly the mobile infrastructure will eat into the x86 market either on ARMed CPUs or ported to x86 or both. There is no basis in technology for the continued monopoly and the usefulness of the monopoly for generating cash for “partners” is in doubt. The current shortage of hard drives will punctuate this change, tipping things over the cliff. The shipments of x86 PCs is about to decline for the first time and the monopoly depends on x86. OEMs will not cling to a sinking ship. M$ has left them with tiny margins which will soon be negative. OEMs will migrate to smarter technology, ARM and cheaper technology, smart phones and tablets which will continue to grow even as x86 declines.

The joy of “7” is about to be dampened by a grim year of 2012. The monopoly will inevitably decline. With it will go all the extensions of the monopoly: office suites and servers.

M$ can afford to maintain share price by increasing dividends but they cannot stem the flow of mindshare to other technologies. At the moment, predictions are that ARMed thingies will continue to grow while x86 stagnates for years. At this rate, M$’s installed base will start to shrink shortly and it will do well to save 50% of shipments for itself within three years. With that kind of competition the monopoly will be truly dead.

Evidence of decay are found in:

Are OEMs going to do nothing as shipments decline or are they going to develop other product lines? The writing is on the wall. M$’s monopoly will shrink.

About Robert Pogson

I am a retired teacher in Canada. I taught in the subject areas where I have worked for almost forty years: maths, physics, chemistry and computers. I love hunting, fishing, picking berries and mushrooms, too.
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31 Responses to A Decade of MSFT

  1. pogson says:

    Mostly true, but the other thing is language barriers. Most of the world does not speak English and most of the stats we have are for English sites. I have seen web stats showing 20% for GNU/Linux for single sites not associated with FLOSS or GNU/Linux in various corners of the globe and I see retailers selling GNU/Linux boxes by the millions in other parts of the world.

  2. Clarence Moon says:

    I think that you are right about there being a huge growth in internet users due to the smart phones and tablets becoming common everywhere. I wonder if that might not come back to haunt Google in the long run, though.

    If you think about it, there are as many smart phones and “feature phones” in use right now as there are PCs in the world. But only about 10% of the on-line statistics counters are registering hits from these portable devices. To me that means that people using cell phones to access the internet are not really browsing like they might do with a PC but are using the focused apps that they get from stock brokers, iTunes, banks, coupon vendors, and the like.

    It’s tiring to use a phone for general browsing with all the scrolling you have to go through, but an app that connects to a content supplier site can be made very easy to use and ends up being the favorite way to do something, say check the local weather forcast using an app supplied by a local TV station that connects with their own website and controls the presentation.

    These apps do not register on the general purpose site counters, I believe, and so that is why the phones are not showing up more on statistics.

  3. Moxy says:

    Again, you provide evidence that my blog is getting lots of hits between your loading a page and your clicking a link.

    From 4 to 18? It’s a repeatable bug you old fool. But continue on with sniffing glue with the locals.

  4. Do the maths. Before long, a billion more users of the Internet will be online. Who are they going to call to search the web? That’s right, Google. Google stands to double their exposure to consumers/advertisers for a tiny investment. Google could sit back and wait for Apple, M$, and Nokia to connect the world but they don’t need to and Google can connect people across the digital divide. How many programmers is Google paying to do the work? A handful. How many times will their market expand? Probably double at least. It’s a no-brainer and Google would be very foolish not to do this rather than wait for Apple to lower its prices or M$ to get its act together and not mess with competiton (no chance of that).

  5. Clarence Moon says:

    My comments were in regard to the stock prices, and the issue of how many PCs are sold with or without Windows preinstalled is not relevant to that. As was pointed out, Microsoft does pay a substantial dividend, about 3% based on current price levels, and that is common for the blue-chips. Some may think that “sucks” as reported above, but others might praise it as substantially more than money market rates and so worth taking the risks involved.

    Whether or not their Nokia partnership proves to be successful, it illustrates the kind of tactical opportunities that are available to a major corporation with vast cash reserves as opposed to the grass roots sort of activities that Linux vendors are limited to participating within.

    In his book regarding characteristics of excellent companies, Tom Peters suggests that companies should “stick to their knitting” in the sense that taking major initiatives outside of their proven expertise were likely to lead to disasters. Microsoft may very well have done that with such a major committment to the phone market which is not so demonstrably linked to their personal computer product success.

    Google, also, had taken a bold stance with their Android effort and had previously established Android as a major brand, but they have similarly not yet shown that it will be ultimately profitable and it has only tenuous ties to their advertising success. Amazon and Barnes and Noble have introduced their own tablets with their own ecosystems for applications and content that will give them attractive revenues that divert from what Google could otherwise expect from their own application store sales.

  6. Kids want to play games:
    “One contributing factor might be Orange’s offer to give anyone upgrading to the Lumia a free Xbox 360.”

    So, M$ has to pay people to use its stuff… Is that a long-term plan?

  7. There’s no duct-tape on my system. It rocks.

    I prefer Debian GNU/Linux. It works for me.

  8. NT JERKFACE says:

    Pogson you do realize that MSFT can suck as a stock and Linux can suck as a desktop? One does not have to lose for the other to win. They can both suck eggs in the same universe.

    MSFT sucks unless you just want reliable dividends.

    Linux as a desktop sucks unless you just want a geek toy that is held together with duct tape.

    Linux is not held back by M$ but general suckage. You seem to have a lot of free time, why not go do some QA for Linux Mint?

  9. So http://www.linux.org is popular and you think that’s a problem? Fortunately I am not near my bandwidth limit.

    Again, you provide evidence that my blog is getting lots of hits between your loading a page and your clicking a link. Is this a problem? Nope. I do get lots of traffic. Some days I get close to needing extra help.

  10. I am a rational human being. 90 million personal computers of the x86/amd64 variety are shipped each quarter, more or less. M$ is getting “7” installed on 50 million of those. What happens to the 40 million??? Some are getting FreeDOS. Some GNU/Linux. None are supposed to be getting XP. That leaves Vista. Vista’s share of web-connected PCs is falling like a stone. That leaves illegal copies of something and GNU/Linux, a lot of GNU/Linux because Ballmer told us how many illegal copies were running. So…

    Who’s delusional?

  11. Moxy says:

    That used to be true but for several quarters they have been losing share rapidly and falling below sales of PCs.

    So you’re referring to your own delusions for fact? Sniffing glue with the locals I see.

  12. Moxy says:

    In other news, http://www.linux.org is 509, exceeded bandwith and has been so for several months. Linux is truly dead. Whoohooo!

    Btw, your blog is full of typical open sores quality. The main page lists 4 comments but when you click on the actual post there are 18 links.

    Gotta love open sores. Nothing but neckbeards with no facts, no clue, and no working software.

    :O

  13. That used to be true but for several quarters they have been losing share rapidly and falling below sales of PCs.

    We shall see how things go:

    Desktop operating systems Date of general availability Retail software end of sales End of sales for PCs with Windows preinstalled
    Windows XP December 31, 2001 June 30, 2008 October 22, 2010
    Windows Vista January 30, 2007 October 22, 2010 October 22, 2011
    Windows 7 October 22, 2009 To be determined To be determined

    So Vista has been tapered off for several quarters. It cannot be the cause of the decline… Wait! At the bend in the curve ended sales of PCs with XP installed and end of retail sales of Vista! Now “7” has to go along on its own and it sells fewer PCs as a result.

  14. Clarence Moon says:

    Microsoft stock moves up and down today mostly in step with the general market and varies due to quarterly results, both plus and minus surprises. Microsoft is a blue-chip cash machine and is no longer the go-go sort of high growth stock it was in the 1980’s and 1990’s. Today’s darlings are Google, Facebook, Twitter and similar “social site” companies.

    Their fate has little to do with technical innovation or the lack thereof.

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    see https://www.trefis.com/about

  16. Ch says:

    “e.g. Trefis : 78%”

    Mr Pogson, could you _please_ check at least if a link you provide actually says what you think it says? That link to Trefis is part of a learning game (“what happens to MS’ stock price if the market share goes up/down?”), _not_ any actual market share data. That’s why you can drag the line around as you please – yes, you can bring MS’s market share down by just dragging a line! Grab the line and bring the evil empire to it’s knees!
    😉

  17. choiceseeker says:

    None that I can remember at where I live. Likely influenced by

    http://www.ameinfo.com/214020.html
    http://www.arabianbusiness.com/photos/bill-gates-in-dubai-94914.html

    and

    http://techrights.org/2011/09/15/lobbying-for-msft-interests/

    The closest we get is the HP units stuffed with Novell Suse. Even so they are not on retail shelves but via corporate orders.

    Lately I began to see Asus netbooks with dual OS in supermarkets, namely, 7 and Android but unfortunately they don’t offer the best Android experience without touch screen.

    Plenty of Android tablets on the shelves now, along with the iThingies.

    RHEL and equivalent for servers are available from various implementers.

  18. Thanks. Is GNU/Linux available on retail shelves in your region?

  19. Yep. Today alone there were 45 different sources of referrals. Only a handful commented. Yesterday there were 86 referrals. Our busiest day ever had 1299 referrals. That day reddit brought in 860 referrals. There were 21 different referring sites. How many people besides me comment here? 5-10? On the busiest day 100 different search terms were used to find the site, everything from “educationcanada” to “hard drive shortage” to “linux and the government”.

    I can fiddle the logs and find unique IP addresses if you need that, but it is a lot.

    I checked the logs I saved back in the summer during an apparent DOS attack (self-inflicted…):
    From 16 July to 29 August there were 12285 unique IP addresses in the logs. See the distribution.

  20. choiceseeker says:

    I am a silent visitor from the Arab world who visits this site daily to keep up with Pogson’s latest posts on FLOSS trend which I find largely true.

    Never have I left a comment before this since the posts speak for themselves and I have no financial motivation to distort the truth.

  21. oldman says:

    “The vast majority of visitors do not leave comments so the GNU/Linux/Pogson-haters here are not representative of much.”

    Are you sure Pog?

  22. This site has had 75% of the hits of all of last month in two weeks. The rate of growth is huge and steady the last year or so. The vast majority of visitors do not leave comments so the GNU/Linux/Pogson-haters here are not representative of much.

    We are 151094 on Netcraft’s list of the million busiest sites. 18 months ago we were 580000. Desktoplinux.com is at 916027. That’s the site that SJVN used to edit. His own site, Practical-Tech.com is at 167850.

    So, Jan is wrong and talking out his posterior. I am serious and so is this site.

  23. Jan says:

    Right. Good one, Frankfurter. Tell me again, when has Microsoft collapsed?

    “To the rest of population you speak in endless circles.”

    Surely not on this blog. It’s about as popular as gum on the floor. Were it not for kind souls like us, Pogson would be all alone in the wilderness of Canada.

  24. Ivan says:

    “According to Nasdaq, MSFT has been flat as a pancake for a decade.”

    Yet Groupon, a company with a business model that qualifies as a ponzi scheme, is selling for $24.00.

    Maybe stock price isn’t an accurate gauge of anything.

  25. Waldo Frankenhammer III says:

    oldman & Jan, there’s no need to prove my point. Your logic is impeccable… to yourselves. Speak to your fellow worshipers if wish to be listened to. To the rest of population you speak in endless circles.

  26. Jan says:

    “It’s difficult to get any sense into those who blindly follow Microsoft.”

    Wrong again, Frankfurter. Nobody follows anyone blindly. Hey, if a better Desktop OS than Windows comes along, I’ll take it without regrets. I don’t believe for a minute that Windows can’t be displaced as the de facto OS for personal computers. But Linux is not the OS to make it happen. Hasn’t been, never will be.

  27. oldman says:

    “add blind Microsoft adoration as a mental illness”

    Why is it a mental illness to want to use a set of applications that meet ones needs?

  28. Waldo Frankenhammer III says:

    It’s difficult to get any sense into those who blindly follow Microsoft. Just today I read about Windows Phone sales declining from 2.7% to 1.5% compared to the 3rd quarter a year ago. It’s hard to believe that it could decline from its already rock-bottom place. Against all odds, it did. But that doesn’t matter to the masses who forfeit their grasp of reality to a blathering adoration of all that is Microsoft. No, somehow they believe that Microsoft is making a killing in the mobile phone market and they point to those numbers a proof. But they don’t stop there. Just like they did six months ago the predict that WP7 will take over the mobile phone market.

    “Just you wait and see.”

    It won’t be long before the American Psychiatric Association will add blind Microsoft adoration as a mental illness, that’s if they haven’t done so already.

  29. In that time, M$ has fallen from 92% of the x86 client market to 55-76% depending on whom you ask. I would say the monopoly is doomed. They may be able to cling to some part of the market but the market is growing rapidly. Emerging markets are about the only growth and M$ has priced itself out of that. Even in China where M$ charges only $3, GNU/Linux is selling well, not because of lower price, but because of acceptacle quality and available choice.

    e.g. Trefis : 78%

    M$: low growth (2% while PCs bought by consumers increased 3%+) while market for x86 PCs grows reasonably well and smart thingies explodes.

    IDC: The world is selling 90million PCs per quarter and M$ is selling only 50 million licences for “7” per quarter.

  30. Jan says:

    Robert Pogson. Nearly five years of unsubstantiated claims and prophecies of impending doom.

    A decade of MSFT. Still owning the desktop market. Still producing the best desktop OS on the market. Still the biggest application platform. Still not dead, but very much alive.

    Let us know if your dreams have come true at the end of 2012. Who knows? It’s the end of the Mayan calendar. Does God use GNU/Loonix, too?

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