Someone named Issie at Wired UK thinks that “Firing 18,000 people isn’t proof Microsoft is in trouble.” Maybe not. But if not, then what is proof the Windows and Office maker is in the midst of an Apple induced iPocalypse? It’s the numbers. They’re both good and bad.
Follow The Money
On one hand Microsoft remains enormously profitable, even in the early stages of the nascent post-PC and mobile device era. Microsoft has enough money to keep buying itself more of what it always buys– hope.
The problem with all that money is that Microsoft’s hopes for the future keep getting dashed on the rocks of a constantly changing technology industry reality.
Since the turn of the century, Microsoft has spent tens of billions of dollars in failed venture after failed venture to diversify itself away from Windows and Office.
What does it have to show for all that hope? Two things. A smaller bank account. A string of digested companies and regurgitated ventures which do not add to the bottom line.
What about Xbox?
Sorry, it’s never made any real money, and certainly not enough to have a return on investment. What about Bing? Microsoft’s giant search engine competes with search engine giant Google on everything except revenue. Google wins.
Go down the recent list. Parature ($100-million). Nokia ($7.2-billion). Yammer ($1.2-billion). Video Surf ($100-million). Skype ($8.5-billion). Greenfield ($486-billion). Fast Search ($1.2-billion). Danger ($500-million). aQuantive ($6.3-billion). Saavis ($200-million). There’s much more, but you get the idea.
After all that money and more has been spent, where does most of Microsoft’s revenue and profits come from today? Windows and Office. Microsoft has virtually no presence in the rapidly growing smartphone and tablet industries, despite spending billions to get there, and now lays off 18,000 workers, most of them from Nokia, and somehow that’s not proof that Microsoft is in trouble?
Microsoft may be rich, but the company is in trouble.
Guess who else is in trouble?
Compare To Google
Like Microsoft, the search engine giant has spent tens of billions of dollars to diversify itself away from search engine profits, which, like Windows and Office, are enormously profitable for Google.
How’s that working out?
Pretty much the same as Microsoft’s Decade Of Misadventures™ under former CEO Steve Ballmer. Google has invested tens of billions in new ventures, yet about 95-percent of the company’s revenue and profits come about the old fashioned way– search advertising.
What about Android?
Yes, Android is just like Windows and commands about 80-percent of the world’s smartphones and tablets. Except that Windows and Office make buckets of revenue and profits for Microsoft, while Android has yet to bring in any kind of return on investment for Google.
Google may be rich, but the company is in trouble.
Guess who else is in trouble?
Compare To Apple
This really isn’t a fair comparison, but it’s fact, so we need to face them. Apple is diversified like no other technology company on planet earth.
Everything Apple does of substance makes money hand over fist. It’s easier and faster to list what Apple doesn’t make money on than the other way around.
It’s not that many years ago when Apple was synonymous with the Mac. Then along came the iPod, the iTunes Music Store, Apple Retail Stores, the iPhone, the App Store, Apple TV, the iPad, and, well, you get the idea.
Apple is diversified. Microsoft and Google are not. Yet, what we hear in a steady barrage is that Apple is the company that is doomed. Well, I agree. Apple is doomed to make more money on a highly diversified product line. That’s something Microsoft and Google cannot say.