Microsoft's Old-School Moneymakers
Connoisseurs of great television advertising will remember the days when Smith Barney made money the old fashioned way -- they eahhhned it. And so it goes at Microsoft, which, despite being behind in every new-fangled market from tablets to smartphones (actually, pretty much just those two), continues to make money the old fashioned way -- with Windows. And, um, Office.
Last week's Microsoft earnings report was something of a throwback to the '90s, or maybe even the '80s. Entertainment stuff was weak. Nobody's buying Windows Phone. But the old stalwarts in Redmond -- Windows and Office, plus Dynamics (yes, really) and some servers and whatnot -- drove Microsoft to beat analysts' earnings expectations. OK, so Microsoft is no Apple when it comes to blockbuster numbers. So what?
Tablets -- iPads, let's face it -- have already cut into PC sales. Consumers are buying iPhones and Android devices (the latter of which actually put money in Microsoft's pocket at a pretty good clip) and maybe hanging on longer to their laptops or desktops. We're in a post-PC era, et cetera, et cetera. Except for one thing: We're not.
Just about everybody who starts a desk job still gets a laptop or PC running Windows and Office. Some get iPhones, maybe even iPads, but pretty much everybody gets Windows and Office. That's still a lot of people, jokes about the job market aside. Consumers who don't want to spend a mint on a (fantastic, we'll admit) Mac and don't want to have to goof around with Linux like some basement dweller who hasn't seen the sun in years buy PCs. And when the buy PCs, they buy Windows. And usually Office.
We should pause here to point out, too, that the business stuff -- the various server operating systems, Dynamics, SharePoint and so forth -- are raking in plenty of cash in Redmond, as well. As we've said here many times in the past, those are the areas Microsoft needs to continue to either dominate or capture apace. They're not cool, and they're not trendy -- which is why they're such good, steady sources of income.
They're boring, bland, partner-enriching bedrocks of business technology, and we're guessing that most partners care a lot more about them than they do about Windows Phone or any sort of Microsoft tablet. Pitching and defense. Run the football. Solid goaltending. Pick your sports metaphor -- you get the idea. Well done, Microsoft, for continuing to get that right while screwing up so many other things.
We seem to read a lot of speculation about how much longer Windows will be a moneymaker for Microsoft, or how long it will be before Google or somebody else starts taking chunks out of Office. Well, we figure that as long as those new employees sit down to Windows machines and those consumers buy laptops and PCs from companies not named Apple, Windows and Office will keep making money. Does anybody really see, in the near future -- say, in the next five years, minimum -- the standard office PC or the consumer laptop really going away, just ceasing to exist? Nah, we don't, either. And that's why Microsoft isn't in any sort of danger, either, even if very little that comes out of Redmond is likely to be cool.
Posted by Lee Pender on April 23, 2012