The last quarter numbers from Microsoft are out and it’s not looking very good. As such, Microsoft has announced it will lay off 5,000 workers in the next 18 months including the 1,800 it sent out the door earlier today.
The reason — Microsoft says it’s partly due to netbooks.
Revenue growth was driven primarily by increased SQL Server and Windows Server revenue and increased Xbox 360 platform revenue, substantially offset by decreased revenue from Windows operating systems as a result of PC market weakness and a continued shift to lower priced netbook PCs. Revenue growth included a favorable impact from foreign currency exchange rates of $222 million or one percentage point. (source: page 25, Microsoft Quarterly Report, Form Q10)
I’m not surprised. With every press launch I attend that introduces newer netbooks, one of the very first questions I usually ask is the shelf life of Windows XP and how it could hurt Microsoft’s bottomline.
You see, Microsoft made deals with netbook manufacturers by offering heavily-discounted price for Windows XP Home. My guess is somewhere between Php1,000 to Php2,000 instead of the Php4,000 retail price.
That deal prevented Microsoft from selling Windows Vista and the premium price that goes along with it. In the end, Microsoft could have sold tens of millions of XP licenses for less than half the usual price.
I reckon this has the same effect with Intel — instead of selling high-margin Core 2 Duos, they’re pushing $30+ with the Atom CPU.
Microsoft is going nowhere its main competitors is readying a killer platform, HP and Oracle is in partnership to deliver the most powerful machine in this planet, this one is big and massive it could crush anything including Microsoft.