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Sat, Nov 21, 2009 - 05:44 PM EST  —  AAPL: 199.92 (-0.59, -0.29%)  |  NASDAQ: 2146.04 (-10.78, -0.5%)

Microsoft’s Windows earnings slide due in part to Apple’s Mac OS X surge?
Friday, April 25, 2008 - 12:34 PM EST

"Microsoft’s client revenue–Vista and XP came in below expectations–and the company cited three primary reasons: A tough comparison from year ago levels, OEM inventory build and piracy. But the elephant on the conference call may have been Apple and its Mac," Larry Dignan writes for ZDNet.

"Microsoft’s three reasons for the client malaise are all legitimate. What’s curious is that piracy–always a big deal for Microsoft–was mentioned 12 times on the conference call by CFO Christopher Liddell and analysts, who were following the software giant’s lead. The takeaway: Microsoft is facing tough growth comparisons and any blip in piracy levels can be the difference between Vista and XP hitting Wall Street targets. If Microsoft didn’t need that extra percent of growth or two it’s unlikely we’d get a conference call where piracy chatter was dominant," Dignan writes.

Dignan writes, "But let’s dig deeper: Could it be that the real elephant in the room was Apple?"

"It remains to be seen whether Apple can be a real enterprise player, but it doesn’t have to do much to be a thorn in Microsoft’s side. All Apple has to do is nibble and it will be harder for Microsoft to hit its client revenue growth targets–especially against tough comparisons," Dignan writes.

Full article here.


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Apr 25, 08 - 11:39 am Comment from: little tiny nitch guy

Beleaguered Microsoft, heh

Apr 25, 08 - 11:39 am Comment from: Mactastic

Yawn.... does anyone really care?

Apr 25, 08 - 11:41 am Comment from: iWill

This may provide a clue too...

I checked over at WDN, and this one is just too rich to pass by: "Upgrading from Vista to XP"

Yes, that's right, "UPGRADING from Vista to XP."

What's even more interesting is that this guy is doing it on a (wait for it, wait for it) on a Mac!

"Why?" You may ask yourself, especially when OS X works infinitely better on a Mac than Windows in the first place.

Also, he lists himself as one Sean Corfield, Senior Computer Scientist and Team Lead in the Hosted Services group at Adobe Systems Incorporated.

For all the hilarity, about the virtues of going back to the future, go here: http://www.windowsdailynews.com/2008/02/04/upgrading-from-vista-to-xp/#more-17

nJoy!

Apr 25, 08 - 11:53 am Comment from: Ampar

"But the elephant on the conference call may have been Apple and its Mac . . ."

Well, if he was covered in chunky peanut butter and chair splinters that was Steve Ballmer.

Apr 25, 08 - 11:59 am Comment from: Mac+

Apple resurgence is not enough to explain the drop of Microsoft. As far as I'm concerned, the huge Apple growth is equivalent to only a 1% drop of Microsoft worldwide market shares of the desktop OS.

If someone can sink Microsoft, it's primarly Microsoft itself, or perhaps a big shift of paradigm in the industry with the arrival of something brand new that will disturb the overall game. If Apple introduce something totally new that will transform the game, maybe, otherwise guys, stop dreaming, Microsoft is here to stay, just like hip hop and rock & roll.

Apr 25, 08 - 12:01 pm Comment from: HolyMackerel

I can tell you this: if MS cancel sales of XP in June and the only alternative is Vista or a cut down version of XP Home then piracy levels of XP will go through the roof.

Hollywood and the Music studios still have not learnt their lesson that you must give your customers what they want or they will get it any way they can. There is no reason to suggest MS has learnt this lesson.

Apr 25, 08 - 12:05 pm Comment from: flappo

i love apple and os-x , but leopard is crap compared to tiger

makes ya think how bad windoze must be for all the newbies

Apr 25, 08 - 12:08 pm Comment from: twilightmoon

Mac+ "Microsoft is here to stay"

I'm not one of those that says that Microsoft has to disappear. I just want them to have to *compete*.

I don't want MS the company to vanish, just MS the *monopoly*.

If they *had* to compete and produce good products, perhaps they would? Unlikely, sure, but the company would undoubtedly look very different if they really were forced to compete on their OS to survive.

Apr 25, 08 - 12:17 pm Comment from: qka

When in doubt, blame piracy!

Microsoft, the record labels, the government, whatever.

Apr 25, 08 - 12:19 pm Comment from: Jubei

Nothing would make me happier. Still highly unlikely that MS will falter anytime soon. As long as they are allowed to continue to operate as a "MONOPOLY", they will continue to own 90 + percent of the global market. Sad.

Apr 25, 08 - 12:29 pm Comment from: Ferf Muckmeyer

Not sure if "Microsoft is here to stay", at least in its current incarnation. They need to reinvent themselves in order to succeed in the future. Clearly they are on the wrong path with their operating system roadmap. The Office apps indeed are going to be around for awhile, so in that vein, MS will be around.

One thing's for sure - why is Ballmer still around? He should have been fired years ago.

Apr 25, 08 - 12:39 pm Comment from: Demon

I said it earlier I'll say it again.

Ballmer said it, "Vista is a work in progress."

With Microsoft it's always just wait till the next service pack, Next version, Next everything and when it comes out and is the same old same old.. it's the same story over and over and over again at Microsoft. Just wait for the next...

People are tired of waiting for what they what and for what works. Because waiting is not good enough any more... The Next service pack, the next version, the next...

For average users and IT organizations big and small the waiting is over... I hear it more and more ... They are evaluating their options.. Linux, Solairs, MacOS... they are all on the table... I hear it from more and more IT Managers, we've been tasked by the CTO to work out a plan for the phase out of all Windows servers and Desktops... can you help us develop a plan to migrate and retain our IT staff. My answer is always the same, yes, when do you want the migration completed and what applications does your enterprise use. For ever Windows Application their is an equal and 99.9% of the time a better Application on another OS.

Apr 25, 08 - 12:41 pm Comment from: MikeH

@qka
You forgot to mention Somalia. They too have a piracy problem.

Apr 25, 08 - 12:48 pm Comment from: Predrag

to Flappo:

You sound like one of those people to whom OS 9 was so much better than OS X and each new 'cat' was worse than the previous.

I cannot imagine going back to Tiger. Occasionally, I have to sit in front of a Tiger machine and am often annoyed by the lack of Stacks, Spaces, and, most of all, the Quick Look, among other things. On my machines (Core Duo iMac, Core 2 Duo MB), Leopard is noticeably faster than Tiger used to be. On my friend's G4 PowerBook, even more so. I can't think of any one thing that I miss from Tiger.

Apr 25, 08 - 01:00 pm Comment from: @iWill

Been done, my friend, back in December:

http://dotnet.org.za/codingsanity/archive/2007/12/14/review-windows-xp.aspx

It was original and funny the first time.

Apr 25, 08 - 01:05 pm Comment from: auren

to flappo:

Did you do a clean install of Leopard? Like a lot of folks, I used the archive and install default when I first used Leopard. I was a little disappointed with it. Then, yet again, I faced the obvious and did a clean install.

What a difference!!!

Just a thought for you.

Apr 25, 08 - 01:18 pm Comment from: Ray

Yes that is why M$ slips. If you believe that...the sun came up because I opened my eyes this morning to see it.

M$ is suffering its own death by a thousand cuts. This is happening with or without the existance of OS X. This is because the public finally figured out that the last 4 releases of WIndows were big so what's.

Just my $0.02

Apr 25, 08 - 01:24 pm Comment from: Mac+

"I'm not one of those that says that Microsoft has to disappear. I just want them to have to *compete*." - twilightmoon

This comment of yours proves you're not a blinded Apple Fanboy. Bravo!!!

"They [MS] need to reinvent themselves in order to succeed in the future...." - Ferf Muckmeyer

Not necessarily. As long as we stay in the same configuration, they're here to stay. They don't even have to bother changing anything. However, if a really new innovation appears and change the lanscape of computing, that thing could play the same role as the iceberg to the Titanic.

It could be something as simple as the focus moving from the desktop to wireless portable devices such as laptops, and all kinds of handeld and mini devices. Or some new piece of software, integrated to a web browser that will make any software run on any OS... if the later happens, Linux will dump Windows OS because why bother paying???

Apr 25, 08 - 01:27 pm Comment from: Mac n' Cheese

Read the comments in the blog here if you don't believe Apple is gaining dramatic market share: http://blogs.wsj.com/biztech/2008/04/24/vista-drags-on-microsoft/?mod=djemTECH

Apr 25, 08 - 02:02 pm Comment from: Mac-nugget

Mac+
The only problem with your initial statement is that things, that is all things are not permanent. Nothing, and I mean nothing lasts for ever. Things that where once grand and incredibly large and powerful will always inadvertently wither and die.

What can you honestly say would be one advantage to Windows over any of the alternative solutions around today? If the list is long, then you are correct. But if it's actually pretty short, then why would you think Microsoft is here for ever.

I think the alternatives are in place and all Microsoft has going for it is inertia, once it runs out of it, it's over. Or at least in the sense of them being the monopolistic power that they used to be in the late 90'.

Juts look at what happened with HD-DVD. No even big monopolistic 90% market share all powerful ruthless Microsoft could do anything to save it. Boy they tried.

Also look at Play for Sure. Are they not pulling the plug also on it this coming summer.

Don't you see a pattern of failed initiatives and half baked ideas that simply don't don't get any traction.

On one thing I do concur, it will not be fast in it's decline, but you better believe, the decline has all ready started.

Apr 25, 08 - 02:08 pm Comment from: Zune Tang®

Hey smug MAC sheep I have news for you: Apple had nothing to do with it. Microsoft clearly has a better mousetrap and law-abiding consumers are snapping up fabulous Vista.

It's piracy, pure and simple. If it wasn't for a pesky few bad customers Microsoft would surely top their projections. The music studios know all too well what havoc and disruption piracy brings to a user-centric business model. Now it's happening to the honorable folks at Microsoft. It's tragic.

Your potential. Our passion.™

Apr 25, 08 - 02:20 pm Comment from: almux

Humpf! Humpf! Can't hold from laughing! Hey! Vista is supposed to be sooooooo secure... how can it ever be pirated.
Ok! Ok! Nobody want's to pay for it. This is normal... But do so many want to put this garbage into her or his computer?!?
...Well, we're living in a silly world... maybe they are some who would "pirate" that piratry called "vista" and still poor it into a computer...

Apr 25, 08 - 02:20 pm Comment from: Gandalf

I was saying this at least five years ago, and it was true then, but there is a thing called inertia.

Microsoft has pissed too many people off.

Or as MS themselves would present in their EULA:
MICROSOFT HAS PISSED TOO MANY PEOPLE OFF.

It used to be that lemmings just went for MS despite all the shit but then they thought MS was the only game in town so they relinquished. Now the lemmings have acquired some vision albeit shortsighted but it is better than none. They can see the cliff edge a few paces ahead, they pause for thought, the queue behind stalls.

Maybe there will be a landslide.

Mega, mega kudos to Steve Jobs. A great game, well played. No I am not a fanboy, just an accomplished observer.

To Steve the overriding message is, "live long and prosper".

Apr 25, 08 - 02:25 pm Comment from: Gandalf

One more thing:

I just came across this headline, the lemmings are waking up: What Microsoft Can Learn From Michael Corleone

Apr 25, 08 - 02:36 pm Comment from: gzero

@Mac+,

"
This comment of yours proves you're not a blinded Apple Fanboy. Bravo!!!"


being called an Apple Fanboy by a Windows Troll is kind of like a being called a drug addict by someone with a severe drinking problem.

Apr 25, 08 - 02:54 pm Comment from: MCCFR

Hmmmm…is Apple even vaguely responsible for MSFT's woes? On the face of it, it seems unlikely; whilst Apple sold 2.289 million CPUs in the last quarter, that's only 1.5 million more CPUs than it did in Q2 '01. Seriously, even if annualised out to around 7.5 million CPUs, that represents less than $700 million - which is a worst case scenario - in annual OEM sales of XP or Vista licences.

For a company that booked over $50 billion in income to the end of its last financial year (30/06/07), that represents just 1.4% of income.

However there are some structural changes in Apple's Macintosh business that should worry MSFT and it's shareholders in the years to come and here are some examples…

1) At the end of Q2 '04, the rolling 36-month total for Macintosh sales was 9.468 million and the sales for the previous 12 months (i.e. Q3 '03 to Q2 '04) were 3.136 million. Which means that around 33% were 12-months old or less.

The figures as of the end of March '08 were 19.38 million (rolling 36-months) and 8.536 million for the period April '07 to March '08: which is 44.05%.

How can those stats be interpreted?

Well, either people are now replacing their Macintosh systems more quickly. Or they're purchasing multiple Macintosh systems. Or - and here's the most likely - more new people are coming into the Macintosh fold.

2) Let's just run part of that by everyone once again: Apple's rolling 36-month CPU shipments to the end of March were 19.38 million. A figure which is over 24.5% greater than the figure at the end of March '07.

Worryingly - for Apple's competition at least - that figure is steadily rising at a rate of knots: the annual growth was under 20% only a year ago and - as recently as Q1 '05 (FY) - the figure was as low as 2.48%.

In other words, there is a substantial long-term rolling trend where people are buying more Macintosh systems – either as 'switchers' or existing customers and that trend is approaching a tipping point.

Once the growth in 36-month sales goes over 30% – highly likely in the next 18 months – we will start to see annual CPU shipments in excess of 12 million units by the end of FY2010 (30/09/10).

3) Parallels has recently announced that it has sold its one millionth copy of Parallels for Macintosh. Good for them: although their support could be better (especially in the UK), it's a good product that deserves to succeed.

The problem with that figure is that it means that only around one million out of a potential 13-15 million or so Macintosh users have decided to install Windows as a virtual environment. Even if that figure were trebled to include VMWare customers and Boot Camp users, less than 1 in five of current Macintosh users feel the need to have anything to do with Windows.

Less than one in five is not a good figure for Microsoft: it means that simply cutting Mac users adrift by threatening to cancel Office is unlikely to be a positive move. But if Apple's next release of iWork is deemed to be an easier (& cheaper) move than from Office 2004 to Office 2008, Microsoft might find itself on the receiving end of a triple whammy - no Windows OEM licences, no retail Windows licences and no Office licences.

Apr 25, 08 - 03:01 pm Comment from: WindowsSoftwareList.com

The only reason we have a Windows software list is so that you have something to run in bootcamp. If Microsoft falls off the planet we may not even need that.

Apr 25, 08 - 03:20 pm Comment from: MacDoc

I work in IT in the Intel Community, 22 Years and counting all with Macs, fight the good fight!!! (Remember the Qudra 950?) We are moving from windoz 2003 servers to Mac OS 10.4 servers as fast as possible. We have Mac Pros (Mac OS 10.4) on almost ever desk. We have to use Office to collaborate with others but thats it for MS software. Apple please FIX Leopard lots of issues still to be fixed. We still need to log into SMB shares!! Not working on Net Appliance Big Boxes!!!! What happen to the domain window in the Log-in dialog BOX?????

Apr 25, 08 - 03:37 pm Comment from: Rob,

OS X has no protection against piracy, no activation, and somehow Leopard sales are great, Apple is doing great.

Apr 25, 08 - 03:47 pm Comment from: opie

Dog gone it! Zune Tang stinking the room up again! How can one person be so odoriferous? Must be that browness coming through.

Apr 25, 08 - 04:50 pm Comment from: British Mac Head

OMG seems everything in the world of Micro$oft is copying off the Mac. I mean look at the domain name "windowsdailynews.com"
PMSL

Apr 25, 08 - 05:16 pm Comment from: This never ocurred to me . . .

'Less than one in five is not a good figure for Microsoft: it means that simply cutting Mac users adrift by threatening to cancel Office is unlikely to be a positive move.'

With Pages, Boot Camp, and virtualization now a reality, cancelling Office for Mac is irrelevant--nice one Apple! And I agree. If Windows continues on down the drain, programs like Office may soon be Microsoft's raison d'etre; cancelling anything would be silly. Hell. they might even start developing it for other platforms. This could be interesting. . . .

Apr 25, 08 - 05:17 pm Comment from: AppleMacMan

@flappo

I think you have it the other way around, Tiger is crap compared to Leopard although in reality Tiger is still a very nice and intuitive OS but not as nearly polished and feature rich as Leopard. But perhaps my opinion is just as subjective as yours. smile

Apr 25, 08 - 07:00 pm Comment from: Chuck U Farley

Hey MS, so when exactly does the WOW start?
I'm not going to hold my breath for it, that's for sure.

Apr 25, 08 - 07:31 pm Comment from: hypermark

Comparing Microsoft's woes to the fall of Communism...

Before dumping my PC and moving to the Mac, I wrote a blog post comparing Microsoft to the fall of communism; namely, that an inefficient system was collapsing under the weight of an enormous legacy, and that entropy awaits.

Here is link to full post if interested:

http://thenetworkgarden.com/weblog/2007/03/microsoft_and_t.html

Cheers,

Mark

Apr 25, 08 - 08:01 pm Comment from: alansky

Whoever first said "The bigger they are, the harder they fall" got it exactly right.

Apr 25, 08 - 08:35 pm Comment from: chums

One thing's for sure - why is Ballmer still around? He should have been fired years ago.

Would YOU wanna be the one to fire him?? smile I don't think anything could contain him. It'd be a real Young Frankenstein!

Seriously, it's because Ballmer and his pals (the old-school MS billionaire club) own a majority of MSFT, precluding any shareholder revolt.

So, it'd take action from either the Old Boys Club (the folks who gave us DOS and BOB), or the current MS board (the folks who gave us Vista and the Big Ass Table) to get rid of Ballmer. Which means don't hold your breath for any changes.

Meanwhile, Apple only gets better....

Apr 26, 08 - 12:16 am Comment from: Beverly Hill Billy

I wish everyone would stop badmouthing the 'Big Ass table'.
Its a very useful piece of equipment.

The other evening, my family and I sat down at our 'Big Ass Table' and had dinner!
Yes, folks, you can eat dinner at your 'Big Ass Table' for only $15000!

And they say Micro$oft is finished. Nonsense.

Apr 26, 08 - 01:07 am Comment from: Actuary clerk

@MCCFR

Me thinks you made some BIG mistakes in your creative accounting.

Apr 26, 08 - 01:28 am Comment from: ken1w

Microsoft has always had an issue with piracy. Why make a bigger deal about it now? Looking for a good excuse to put on the table; it's the one thing they have no control over, nor any real statistically relevant data. In other words, the problem can be as large as they need it to be to cover the deficit in Windows sales.

Apr 26, 08 - 09:29 am Comment from: shen

so many comments like "M$ is suffering its own death by a thousand cuts. This is happening with or without the existance of OS X. This is because the public finally figured out that the last 4 releases of WIndows were big so what's."

do you think that if there was no working operating system to compare windows to, people would still see how bad it is? ugly isn't 'ugly' unless you have beautiful to hold next to it.

people can only recognize that windows sucks because there is an OS X to look at. lao-tzu explained this over 2300 years ago, and yet some people still haven't caught on..........

Apr 26, 08 - 10:13 am Comment from: ugly is as ugly does

do you think that if there was no working operating system to compare windows to, people would still see how bad it is?

In the case of Windows, yes.

Seriously, the frustration and hair-pulling are so great. Either people would simply give up on tech, or someone would realize the need for a better OS and build it.

What's remarkable is that Windows sells at all, what with that better working OS in the market. Then again with last quarter's 24% Windows sales drop, the tipping point just might be here.

MW: design. Indeed.

Apr 26, 08 - 12:53 pm Comment from: CW

Long term I think they just might finally be genuinely in trouble. What M$ need is a new OS from the ground. It needs to be far more scalable and modular. It should preferably be genuinely 64bit and support legacy through virtualization. You'd imagine that's what they'd do if they had any sense or more accurately a genuine long-term vision.

M$ OS development is clearly based on Moore's law hence the requirement for ever more demanding hardware just to in effect stand still. The latest generation CPU's are now extemely poweful however one unforseen effect of this has also been to create extremely scalable CPU's. We're now seeing bottom end CPU's that whilst considerably less powerful than top of the range models are efficient enough to allow for the creation of devices such as genuinely useful ultraportable notebooks. Vista just can't cope with this. M$ has had to keep XP going purely to keep a Microsoft OS viable in these devices.

Unfortunately M$ are just too large and disfunctional to take anything other than a short term view now. Windows 7 is shaping up to be a rebranding exercise for Vista. Vista as a brand has failed so let's repackage what in effect will be Vista SP2 as a new OS and distance ourselves from Vista's marketing failings. The fact that they haven't learned anything from the ridiculous number of different versions of Vista and will role out the same product platform shows that M$ are an entirely marketing driven organisation. It's fair to suggest that M$ have always been this way but given the ever increasing optons on offer to the consumer a monolithic organisation like M$ is going to have to at least consider a level of innovation in their product lines.

Personally I just don't believe they will manage it.

Apr 26, 08 - 12:59 pm Comment from: CW

One more point to consider with Vista and XP. The takeup for Vista from corporations has been a complete non-starter. Consumer sales have also been well below expectations.

Many Windows users are sticking with XP and by the time Windows 7 is finally released they will be using an operating system almost 9 years old!

Think back to what OSX was like 9 years ago!

Apr 27, 08 - 06:52 am Comment from: John C. Randolph

Microsoft will lose about 40% of their market share between now and whenever they ship Windows 7 (in about six years or so, if they're lucky.) The bulk of the server business will go to IBM and the Linux vendors, and most of the desktops and laptops will go to Apple.

I'm expecting AAPL to hit $300 by the middle of 09.

-jcr

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