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Archive for August 2012

According to some press and industry, you’d think that Microsoft was all but dead. Microsoft’s tactical and strategic technology and business missteps are well publicized and dissected ad infinitum. Less well documented are Microsoft’s strengths from both a consumer and enterprise perspective and there are plenty of those.

Microsoft Strengths

One of the most notable company wins in the past five years is the Xbox 360 and Kinect.

Xbox 360 and Kinect: Simply put, this is an unqualified success. The latest statistics released earlier this month by the NPD Group show that Microsoft has a 47% market share and sold 257,000 Xbox 360 units in the U.S. in June, besting its rivals the Sony PlayStation 3 and Nintendo Wii for the 18th consecutive month. But Microsoft and indeed all the hardware games vendors find their sales shrinking due to the sharp increase in the numbers of users playing games on their smart phones. In Microsoft’s 2012 third fiscal quarter ending in March, Xbox 360 sales dropped 33% to $584 million. The consumer space is notoriously fickle and games users are always looking for the next big thing. Microsoft’s ace in the hole is the Kinect motion-controller, which still has a lot of appeal. The company is banking on that as well as slew of new applications and functions like the Kinect PlayFit Dashboard which lets users track the number of calories they burn when they play Kinect games.

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It’s been a busy summer for Microsoft and chief executive Steve Ballmer.

In recent weeks, the software giant; released customer previews and ship dates for the newest versions of its flagship Windows and Office products; purchased Yammer, a cloud-based enterprise social networking company; hosted its annual Worldwide Partners Conference (WPC) in Toronto, and; vocally signaled its intent to leave no stone unturned in competing head-on with rivals Apple and Google.

Sounds good, right? Unfortunately all of these positive moves are overshadowed by three things:

  • Microsoft reported the first quarterly loss in its 26 years of being traded as a public company. Slipping into the red for the first time in nearly three decades, Microsoft has reported a loss of $492 million in the June quarter. Most worrisome is the reason for the loss. Microsoft took a non-cash write-down of $6.2 billion related to non-performance of online advertising business and Internet services division, aQuantive, which Microsoft acquired in 2007. On a positive note, revenue for the fourth fiscal 2012 quarter rose four percent to $18.05 billion, compared to the $17.36 billion sales Microsoft posted in the same period a year ago.
  • A scathing profile, titled “Microsoft’s Lost Decade” in the current issue of Vanity Fair magazine by contributing Editor Kurt Eichenwald. In it, Eichenwald makes a case that Microsoft has spent the last ten years unsuccessfully dithering in several key market segments including smart phones, search engine, social networking, mobility and tablets, falling far behind competitors like Apple and Google.
  • Windows 8 is being dubbed as a “disaster” three months in some quarters before its scheduled October ship date.

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