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 $222PHP 13,028INR 18,814EUR 211CNY 1,616 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 Php1,000USD 17INR 1,445EUR 16CNY 124 to Php2,000USD 34INR 2,889EUR 32CNY 248 instead of the Php4,000USD 68INR 5,778EUR 65CNY 496 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 $30PHP 1,761INR 2,542EUR 29CNY 218+ with the Atom CPU.
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Andre Marcelo-Tanner says:
still if the market is heading towards netbooks, economies of scale will make up for the lower priced xp. vista runs slow enough on the fastest systems, why put it on a netbook :)
marion says:
More reasons for MS to hurry up with its 7 release.
samarita says:
the trend now is in Netbooks , because of the financial crisis many are now buying netbooks instead of buying desktops … maybe because of its lower price than desktop and its easy to maintain and the availability of wifi networks around has increased the trend in Netbooks thus leaving other Microsoft products untouched.
sylv3rblade says:
Hmm.. I’m thinking how Windows 7 RTM will fair running on Netbooks at the moment with determine if the trend will continue.
XP is old ._. Let’s face it. I for one Welcome 7 on my MSI Wind
calvin says:
guess this proves that vista didn’t pan out for them. even some companies still haven’t switched to vista.
Gerard Espinas says:
Window Vista is one of the Microsoft’s technology blunder. I would say, it’s a failure! Will Window 7 turn the tide around for Microsoft?
John says:
Well i think one of the reason also for their weakening PC market is the expensive Windows Vista Retail Products. Windows Vista Ultimate Retail Version kicks up to 15k PHP. Many people can’t afford to lose that amount of money just to buy a 1-PC capable installer.
Matayog Online
http://matayog.com
John says:
Well i think one of the reason also for their weakening PC market is the expensive Windows Vista Retail Products. Windows Vista Ultimate Retail Version kicks up to 15k PHP. Many people can’t afford to lose that amount of money just to buy a 1-PC capable installer.
http://matayog.com
John says:
Well i think one of the reason also for their weakening PC market is the expensive Windows Vista Retail Products. Windows Vista Ultimate Retail Version kicks up to 15k PHP. Many people can’t afford to lose that amount of money just to buy a 1-PC capable installer.
Angelo Panares says:
I think the netbooks have succeeded in their objective of providing affordable, easy to use, no nonsense pc for the not so tech savy people as well as the always mobile minial users.
The linux desktop oses are a breeze to use for non-techies who just surfs, chats and types. Yet it is flexible enough to be able to install xp for the advance users.
The limitations on it are manageable considering its target market and how it is supposed to be used.
Jacobato says:
hmmm… actually, if ms wasnt allowed to play in the netbook market, lunix would have dominated it totally. glass half-empty or half-full? they should be thankful XP was allowed for netbooks by both component manufacturers and OEMs.
issai says:
noone’s buying these days. isn’t that the reason why they’re losing profit? netbooks could be just scapegoats.
they put vista on a emachines d620 laptop, and it’s cheaper than netbooks but haven’t seen these laptops sold lately ($300-$330 price range). i wonder why they stopped selling those.
well you did say “partly due”, so i guess they’re telling the truth.
LinQed Potatoes says:
imo, “partly due” will still lead to their marketing strategy. are they not thankful that xp is still in the market with all those netbooks sold?
if their marketing strategy in lowering down the price of the xp for netbooks is good then they need to wait until it’s a boom. they know that they are having a recession in their country, why not create a better marketing strategy to make their sales boost up?
as what i see in their strategy nowadays, they are only looking on the design of their OS, why not create a system in the current OS that they are marketing which will boost the business firm?
i am currently using windows 7 and i can’t use the whole system to better suits the needs of my business unlike xp where i can do everything. so what i do is to switch OS from time to time because i might see something in windows 7 that will make me switch to it fully when the commercial software is released.
elmer says:
Hmm.. maybe Intel will use the same reason. Becasue of atom the demand for core proc declined that’s why they closed out their cavite plant
Angelo Panares says:
I’m thinking Intel might also also go the same route on their Atom procs :)
JC John SESE-Cuneta says:
Interesting.
And still no one wants to use GNU/Linux. I guess, as long as XP is available, Linux will be ignored ;)
If gaming is the issue, go get a desktop :p
TechChaser says:
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.