Surface had lots of price cuts too and it's unclear how they account for price cuts,they could count the full price as revenue and count the cuts as expenses. It's worth pointing out that they provide gross margins not income to hide the loses in certain segments. In phones ASP was down hard and they lost a bit of share on quarter so when adding context,it's not actually all that good.Q1 in phones won't be good either ,they have a soft presence in China where Q1 is seasonally strong , the new models are overpriced midrange and low end that are slightly different than existing models but not better or better value.The shift away from the Nokia brand might also harm them more than they expect but devices with the new branding are just starting to show up in retail so it will take a while to see the impact.
Accounting standards do not work in a way, that discount would be reported as separate expense (at most it might be shown as separate line, but still above the revenue subtotal; nobody is however doing it so as discounts are part of sales strategy that you do not want to show off to your competitors). Case example: If your pricelist says something costs $1,000, but you give 70% discount on it, you will recognize revenue of $300.
M$ reported segments are one of the most detailed of the tech firms (compare to e.g. AMD, Apple).
So the consumer hardware business has low margins and is barely profitable. The consumer software side still has good margins but is on a very sharp decline. Any business that's declining 23% YoY in income is basically a dying business.
The commercial and the cloud side are very strong and keep getting stronger. Exchange is a massive success, SharePoint is right up there, and others like SQL Server are all doing very well too. Azure has been an unexpected phenomenon, and keeps getting better and better.
The more I think about it, the more it's evident that Microsoft doesn't need the consumer side that much. I don't have the numbers but on the surface, I'd say a lot more resources (i.e., employees) are tied up on the consumer side than the commercial side, and yet the latter is the one that's growing and widely profitable. Sooner or later, Microsoft has to realise this too.
MS wants a bigger slice of the consumer side. They want to be relevant in all facets and the consumer potential is growing faster than commercial. MS just needs better vision and management to entice more consumer buy in which would lead to more hardware vendor buy in and get them out of the consumer hardware business.
Consumer usage of Microsoft software drives Commercial sales. Free windows 10 for consumers will increase people's familiarity of the new OS. Businesses will be less hesitant to upgrade to the latest version if their employees don't need a lot of training to use the new version.
I'm troubled by the direction Microsoft has taken as of late. I think that win 8, 8.1, 10, RT, surface, phone, xbox one, hololens have all been disappointing, They seem to try something wasting a lot of money then abandon the people who support it initially. They are losing previously loyal customers.
I'm not sure how any of the products you listed except RT are abandoning customers. Windows 8/8.1 will be upgraded to 10, along with phones (unlike WP7, where you'd have a point, minus the technical hurdles involved anyways).
RT is admittedly a mostly "failed" venture, but I think it accomplished one of the things it set out to do, which was to add further pressure to Intel to get a competitive chip going. It's disappointing that it won't be seeing Windows 10, but it ultimately never had much uptake.
Also, Surface is a line that's making money now, so I don't see that they're wasting money. It's also well praised by press and public alike, imo. Xbox one is getting more sales, and hololens isn't even a product yet. Where's the money "wasting" occurring in most of those products?
How much did people pay for WMC? They didn't. it was a free product included in windows xp, 7 and a addon option for 8 pro.
WIth that said, i'm sure windows 10 will have much of the features your looking for. People just wanted microsoft to keep making a free server kernal, and got mad when microsoft stopped updating it.
With the exception of Windows 8's UI and the whole concept behind Windows RT, I don't agree with anything you've said. Windows 10 is quite simply what Windows 8 should have been (much like how Windows 7 was what Windows Vista should have been) and Xbox One is overall a great console. Surface is a technology showcase that is more of a "here's how it's done" product than a product for Microsoft to make money on. Windows Phone is and always has been excellent, but it's marketed very poorly, causing low adoption and thus poor software selection.
And to call Hololens, an augmented reality UI, disappointing...well you're on your own.
I this some kind of next level joke? This has been the shittiest console generation in forever, and the Xbone trails the PS4 in specs. As far as I can tell the only reason people buy them is for Halo.
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jjj - Monday, January 26, 2015 - link
Surface had lots of price cuts too and it's unclear how they account for price cuts,they could count the full price as revenue and count the cuts as expenses.It's worth pointing out that they provide gross margins not income to hide the loses in certain segments.
In phones ASP was down hard and they lost a bit of share on quarter so when adding context,it's not actually all that good.Q1 in phones won't be good either ,they have a soft presence in China where Q1 is seasonally strong , the new models are overpriced midrange and low end that are slightly different than existing models but not better or better value.The shift away from the Nokia brand might also harm them more than they expect but devices with the new branding are just starting to show up in retail so it will take a while to see the impact.
ppi - Tuesday, January 27, 2015 - link
Accounting standards do not work in a way, that discount would be reported as separate expense (at most it might be shown as separate line, but still above the revenue subtotal; nobody is however doing it so as discounts are part of sales strategy that you do not want to show off to your competitors). Case example: If your pricelist says something costs $1,000, but you give 70% discount on it, you will recognize revenue of $300.M$ reported segments are one of the most detailed of the tech firms (compare to e.g. AMD, Apple).
aryonoco - Monday, January 26, 2015 - link
So the consumer hardware business has low margins and is barely profitable. The consumer software side still has good margins but is on a very sharp decline. Any business that's declining 23% YoY in income is basically a dying business.The commercial and the cloud side are very strong and keep getting stronger. Exchange is a massive success, SharePoint is right up there, and others like SQL Server are all doing very well too. Azure has been an unexpected phenomenon, and keeps getting better and better.
The more I think about it, the more it's evident that Microsoft doesn't need the consumer side that much. I don't have the numbers but on the surface, I'd say a lot more resources (i.e., employees) are tied up on the consumer side than the commercial side, and yet the latter is the one that's growing and widely profitable. Sooner or later, Microsoft has to realise this too.
nathanddrews - Tuesday, January 27, 2015 - link
Hence, free Windows 10.RamarC - Tuesday, January 27, 2015 - link
MS wants a bigger slice of the consumer side. They want to be relevant in all facets and the consumer potential is growing faster than commercial. MS just needs better vision and management to entice more consumer buy in which would lead to more hardware vendor buy in and get them out of the consumer hardware business.Mayuyu - Saturday, January 31, 2015 - link
Consumer usage of Microsoft software drives Commercial sales. Free windows 10 for consumers will increase people's familiarity of the new OS. Businesses will be less hesitant to upgrade to the latest version if their employees don't need a lot of training to use the new version.457R4LDR34DKN07 - Monday, January 26, 2015 - link
I'm troubled by the direction Microsoft has taken as of late. I think that win 8, 8.1, 10, RT, surface, phone, xbox one, hololens have all been disappointing, They seem to try something wasting a lot of money then abandon the people who support it initially. They are losing previously loyal customers.Drumsticks - Monday, January 26, 2015 - link
I'm not sure how any of the products you listed except RT are abandoning customers. Windows 8/8.1 will be upgraded to 10, along with phones (unlike WP7, where you'd have a point, minus the technical hurdles involved anyways).RT is admittedly a mostly "failed" venture, but I think it accomplished one of the things it set out to do, which was to add further pressure to Intel to get a competitive chip going. It's disappointing that it won't be seeing Windows 10, but it ultimately never had much uptake.
Also, Surface is a line that's making money now, so I don't see that they're wasting money. It's also well praised by press and public alike, imo. Xbox one is getting more sales, and hololens isn't even a product yet. Where's the money "wasting" occurring in most of those products?
457R4LDR34DKN07 - Monday, January 26, 2015 - link
3 letters WMCMorawka - Monday, January 26, 2015 - link
How much did people pay for WMC? They didn't. it was a free product included in windows xp, 7 and a addon option for 8 pro.WIth that said, i'm sure windows 10 will have much of the features your looking for. People just wanted microsoft to keep making a free server kernal, and got mad when microsoft stopped updating it.
Samus - Monday, January 26, 2015 - link
With the exception of Windows 8's UI and the whole concept behind Windows RT, I don't agree with anything you've said. Windows 10 is quite simply what Windows 8 should have been (much like how Windows 7 was what Windows Vista should have been) and Xbox One is overall a great console. Surface is a technology showcase that is more of a "here's how it's done" product than a product for Microsoft to make money on. Windows Phone is and always has been excellent, but it's marketed very poorly, causing low adoption and thus poor software selection.And to call Hololens, an augmented reality UI, disappointing...well you're on your own.
Salvor - Tuesday, January 27, 2015 - link
"Xbox One is overall a great console"I this some kind of next level joke? This has been the shittiest console generation in forever, and the Xbone trails the PS4 in specs. As far as I can tell the only reason people buy them is for Halo.