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Email Zip Microsoft Can Only Keep Growing The Hard Way: By Clawing For Market Share Matt Rosoff | Sep. 14, 2011, 7:59 PM | 490 | 7 A A A x Email Article From To Email Sent! You have successfully emailed the post.
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Ballmer Lays Out The 7 Most Important Products For Microsoft
Steve Ballmer Just Gave A Shout-Out To Zune
Microsoft Still Loves Yahoo, Even Without BartzSteve Ballmer and other Microsoft execs just finished talking to financial analysts for three hours, and while they tried to paint an optimistic picture -- as they always do -- it was really clear that Microsoft has no big ace in the hole to drive growth this year.
Instead, it's going to keep doing what it's been doing for the last decade -- trying to dominate the markets it already owns, and clawing market share away in other areas.
Take a look at what Ballmer mentioned in his speech as big areas of focus for the company's current fiscal year (which started July 1). None of these areas -- not one -- will add $1 billion to Microsoft's top line (let alone bottom line) in the current fiscal year.
The launch of Nokia Windows Phones. Microsoft thinks they can become a "very strong third ecosystem in the smartphone world." But recall that Microsoft only charges about $15 for each copy of the Windows Phone platform it sells. If the Nokia Windows Phones are a hit, Nokia will gather most of the revenue -- not Microsoft.The integration of Skype, which Ballmer hopes will clear regulatory hurdles in Europe in teh next few months. Skype is a "very very" real business, as Ballmer said -- but even so, it's only got $900 million a year in revenue. Microsoft is going to use Skype to boost other businesses -- Ballmer mentioned enterprise meetings via Lync, Xbox Live, and Windows Live. But as a standalone revenue source, it won't make much of a dent.Lync videoconferencing. Video meetings are a big trend, and his videoconferencing and IM app for corporations was one of the few product demos during Ballmer's speech. It's a fast-growing part of the Office family of products -- revenue was up 20% last quarter from the previous year. But it's also growing from a small base -- probably well under $1 billion at this point.Adding TV to Xbox Live. Neat idea if Microsoft can get the licenses signed. But the Xbox is a tiny part of Microsoft's overall business -- its division contributed only $1.3 billion in operating profits and $8.9 billion in sales last year. Microsoft's total operating income was $27.2 billion, and its total sales were just shy of $70 billion. Small potatoes.Windows 8. That's a cost center for FY'12, not a growth generator -- the product almost certainly won't be out until late calendar year 2012, or Microsoft's FY'13.Office 365. Office and its related products (Lync, Exchange for email, and SharePoint for collaboration) are the company's biggest and fastest-growing areas right now. Office 365 is the online version of these products. It's going to be important for helping Microsoft to make more money in China -- it's a lot harder to pirate a service than software -- and to capture more money from small businesses. But it just launched in April, and Microsoft declined to say how much uptake it's getting or what mix of Office revenues it expects to come from Office 365 this year. In fact, COO Kevin Turner -- the second-most powerful man at Microsoft -- noted that Microsoft actually made it easier to add Office 365 services to existing software contracts last year, and that's helping to drive growth. In other words, enterprise software is still the main driver here, and the transition to services will take a while.Looking at all this, it's clear that Microsoft is not about to pull an Apple and come out with some great new product that makes revenue skyrocket.
Instead, it's going to ride the PC growth rate to keep selling Windows and Office, convince corporate customers to add new products, and try to take market share away from enterprise software competitors like Oracle (in databases), IBM (email), and VMWare (in virtualization).
That's not a sexy story, but it's allowed Microsoft to grow revenue pretty consistently at about 10% per year during most of the last decade, with the exception of the big downturn in 2008 and '09.
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600px wide (preview)400px wide (preview) 300px wide (preview) Blackboard Home » Edit » Microsoft
Summary Microsoft Corporation is an American public multinational corporation headquartered in Redmond, Washington, USA that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to... More » Edit » Nokia 
Summary Nokia Corporation is a Finnish multinational communications corporation that is headquartered in Keilaniemi, Espoo, a city neighbouring Finland's capital Helsinki. Nokia is engaged in the manufacturing of mobile devices and in... More » Edit » Skype 
Summary Skype was founded in 2003. It’s based in Luxembourg, with offices in Europe, the US and Asia. It’s owned by an investor group led by Silver Lake and which includes eBay Inc, Joltid Limited and Skype founders Niklas... More » Edit » Steve Ballmer 
Summary Steven A. Ballmer is CEO of Microsoft Corporation and has worked with the company since graduating from the Stanford University Graduate School of Business in 1980. Bill Gates, who attended Harvard undergraduate with Ballmer... More » Edit » Windows Phone 7 
Summary Windows Phone 7 is a mobile operating system developed by Microsoft, and is the successor to its Windows Mobile platform. It is aimed at the consumer market instead of the enterprise market like its predecessor. It launched in... More » Edit » Xbox 
Summary The Xbox is a sixth-generation video game console manufactured by Microsoft. It was released on November 15, 2001 in North America, February 22, 2002 in Japan, and March 14, 2002 in Australia and Europe and is the predecessor... More » 
Matt Rosoff is Silicon Alley Insider's West Coast Editor Contact: e-mail: AIM: mattrosoff Subscribe to his RSS feed | twitter feed View his Google+ profile Ask Matt a QuestionRecent PostsBallmer Spot-Checks Financi...Microsoft Still Loves Yahoo...Steve Ballmer Just Gave A S... The Water Cooler
Receive email updates on new comments!cvszEmail7 Comments 0 0 Flag as Offensive kevin72 on Sep 14, 8:33 PM said: Or internationally. The vast majority of the world still doesn't have PCs or Tablets. Reply 0 0 Flag as Offensive pu$ybref on Sep 14, 9:10 PM said: @kevin72: At first, all my friends first getting on the internet wanted to video chat, then they got tired of that, then just texted, then got tired of that, most dont even talk on the internet anymore, just log on to play some youtube files, the novelty has worn off, GAME OVER DUDE. Reply 1 0 Flag as Offensive JohnCha on Sep 14, 8:45 PM said: Don't forget by extorting money from Android manufacturers with useless patents that they aren't even going to look at after they license them from MS. Reply 1 0 Flag as Offensive 
James Watts on Sep 14, 8:54 PM said: "Instead, it's going to keep doing what it's been doing for the last decade"Working towards the lowest common denominator. Great move. Reply 0 0 Flag as Offensive lizhias on Sep 14, 8:54 PM said: ===== { w w w }{better-----wholesaler }{ us } =======
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--- -- (w w w ) ( cabikini ) ( c o m ) --- ---- -- Reply 0 0 Flag as Offensive Eko Zen Strive Prasetyo on Sep 14, 9:12 PM said: Oh I am sure Ballmer will claw things up, literally. He is crazy like that. Just look at him! Reply 0 0 Flag as Offensive jar jar on Sep 14, 9:25 PM said: So with Windows 8, Microsoft will charge $15 for the phone version.
$30 of tablet version, $200 for desktop version, and $1000 for server version.
So how is Microsoft going to maintain their profit margin, better start buying
arm chip manufacturer, flash memory.
One OS to rule them all. Reply Join the discussion with Business Insider
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