The best way to parse this kind of stuff is to remember that Balmer is a "sales guy" and most of what he says here is standard "sales guy speak."
When faced with Apple taking share, he frames it as a tit for tat. When faced with the fact that their hardware is better he comes out with (essentially) "just you wait and see what's coming out soon on our side." These is all standard marketing replies and the fact that he's used that "just you wait and see" crap at least a dozen times before doesn't seem to register on most investors. Microsoft has been just one quarter away from the some amazing device or other almost since they started, but they never have delivered it. To say these kinds of things isn't dumb it's shrewd and it's typical sales-spin, the interesting part of his remarks is where he genuinely seems to not understand what he's talking about. Specifically this remark:
Quote:
Originally Posted by Balmer
... "We do not, say, like Apple, believe in low volume, very high prices, very -- Apple is a great company, does a fine job. But their model says high margin, high quality, high price," he said. "That's kind of how they come to market. We say we want big market share. But with big market share, you take a lower price."...
He should get fired for saying this. He really should. Because it shows that he just does not understand anything about the markets he's dealing with, the product he himself sells, and how his company is responding to a very real threat.
He conflates hardware with software (when he talks about the "low price"), and doesn't seem to get that it's his product that's vastly overpriced for the market. If Microsoft was actually to survive on the model he suggests here, they would have to cut back to a company a fifth of their current size and drop everything they do except making Windows and Office. As a CEO he is committing the (often fatal) mistake of just not understanding what his company is or does and in what markets it should or should not operate.
The other really telling remark is when he talks about Apple "only" doing about ten million PC's a year. The PC market is yesterday. Apple already sells more iPhones than that and will sell a lot more, and a lot of other devices on the same platform as well. This statement is tantamount to when IBM used to brag about the sales of big iron back in the day when the desktop computer was emerging. They would say "PC manufacturers only make X amount of PCs a year, but we sell millions of dollars worth of (big iron)." Not realising that they were essentially the "kings" of a dying market.
Actually, beyond the "rounding error" statement, most of what Ballmer has to say is on point and complimentary of Apple's strategy.
I'm surprised.
His key point is that he says Windows will grab market share because their partners have some innovative hardware coming out.
As if the hardware is why people are switching to Apple products.
The reason people are switching is because of VISTA. It's because of MS's failed music initiative they abandoned. It's because of hard to use, glitchy software like Windows Mobile. It's because Windows is not only easy to exploit but also far more expensive than any other OS out there.
Very few people buy computers because they look cool. Being the CEO of the world's largest software company you would think Ballmer would understand: it's the software stupid.
Been in business a few years, best of my market. People at times say "gosh (OMG or other alternate), you're expensive", they think it's an insult. From time to time I retorted something along the lines of "does that mean you are cheap?". Only when I was feeling particularly bolshy, usually best to let them suffer in ignorance.
Steve Ballmer and rounding error sounds like an error, shouldn't it be Steve Ballmer is a rotund error?
Which is best, fat or skinny? Measured by CEOs performance no contest!
Steve (Ballmer) don't take it personally, I love it that you are CEO of Microsoft, keep up the good work (that's great work for you down in CA)..
Nice article. I myself saw Spamalot last night, which is Monty Python's Holy Grail on stage. Remember the Black Knight? King Arthur has chopped both his arms off, and both his legs off for good measure, but the Black Knight keeps on valiantly fighting, shouting: "Come back here you coward ... I'll bite your foot off!"
Steve Balmer and M$ are not any more bizarre than the Black Knight, but I think they're about the same.
They only really spend in the US, where the share gains by Apple are less of a rounding error - they are making gains in the US, so it makes sense that they look to defend.
Ballmer is right globally though, Apple's share gains overall are insignificant. Whether we Apple fans like it or not, Mac sales are tiny when compared with the overall Personal Computer market.
I can't understand why so many people would chose Windows over Mac, but there we go.
The halo effect from the iPhone is spreading abroad.
What has happened in the U.S. will eventually start happening abroad as well.
Microsoft won the desktop computer battle.
Apple is putting up a strong fight in the notebook computer battle.
Apple has won the mobile computing battle.
Now which of these segments are growing and which are getting smaller?
Some battles have been won and lost but the war isn't over yet.
Once Apple has their custom SOC for the iPhone OS platform then we are going to see things get real interesting.
When are the analysis going to start calling this guy on the carpet. He made so many of these comment only to be proven wrong like the Iphone is a tool and will not be significant in the market place. They should be coming back and saying remember when you said this and see you were wrong why should be believe you now.
Talk about drinking the Coolaid, far too many people drive the MS flavor and are true believers.
MS didn't bail Apple out. Apple had MS over a legal barrel regarding patent violations - a battle which MS would have lost. Apple at the time, in a roundabout way, blackmailed MS into a deal. And the rest is history.
Sure. Whatever you want to believe. btw, Santa Claus isn't real.
Quote:
Originally Posted by Quadra 610
??
The rest of your post makes no sense. I'm not sure how "Apple makes Windows PC more appealing." Apparently, it doesn't.
I think the success of the latest Microsoft ads proves me right. Apple's Mac has been wallowing in the sub 10% market share for 20 years, and I don't see that changing anytime soon. Microsoft is coming off of one of its worst years and still made more profits than Apple. It is hard for Microsoft to grow its market share when it has it all. I'm sure you believe that Apple will have 90% market share soon and Microsoft will will go bankrupt. When you don't have a grip on reality anything seems possible.
The best way to parse this kind of stuff is to remember that Balmer is a "sales guy" and most of what he says here is standard "sales guy speak."
When faced with Apple taking share, he frames it as a tit for tat. When faced with the fact that their hardware is better he comes out with (essentially) "just you wait and see what's coming out soon on our side." These is all standard marketing replies and the fact that he's used that "just you wait and see" crap at least a dozen times before doesn't seem to register on most investors. Microsoft has been just one quarter away from the some amazing device or other almost since they started, but they never have delivered it. To say these kinds of things isn't dumb it's shrewd and it's typical sales-spin, the interesting part of his remarks is where he genuinely seems to not understand what he's talking about. Specifically this remark:
He should get fired for saying this. He really should. Because it shows that he just does not understand anything about the markets he's dealing with, the product he himself sells, and how his company is responding to a very real threat.
He conflates hardware with software (when he talks about the "low price"), and doesn't seem to get that it's his product that's vastly overpriced for the market. If Microsoft was actually to survive on the model he suggests here, they would have to cut back to a company a fifth of their current size and drop everything they do except making Windows and Office. As a CEO he is committing the (often fatal) mistake of just not understanding what his company is or does and in what markets it should or should not operate.
The other really telling remark is when he talks about Apple "only" doing about ten million PC's a year. The PC market is yesterday. Apple already sells more iPhones than that and will sell a lot more, and a lot of other devices on the same platform as well. This statement is tantamount to when IBM used to brag about the sales of big iron back in the day when the desktop computer was emerging. They would say "PC manufacturers only make X amount of PCs a year, but we sell millions of dollars worth of (big iron)." Not realising that they were essentially the "kings" of a dying market.
Excellent point.
Here's Ballmer from long ago. At around 1:20 into the vid you'll see something all too familiar.
"just you wait and see what's coming out soon on our side."
Sure. Whatever you want to believe. btw, Santa Claus isn't real.
I think the success of the latest Microsoft ads proves me right. Apple's Mac has been wallowing in the sub 10% market share for 20 years, and I don't see that changing anytime soon. Microsoft is coming off of one of its worst years and still made more profits than Apple. It is hard for Microsoft to grow its market share when it has it all. I'm sure you believe that Apple will have 90% market share soon and Microsoft will will go bankrupt. When you don't have a grip on reality anything seems possible.
Apple functions at the Premium end of the market. It isn't one big market. There are levels to it. There are consumers in particular income brackets that are locked out of Apple's demographic. This is one of the defining characteristics of any Premium product.
There are between 50-70 million Mac users. The Mac is understood as, and marketed as, a Premium product. Fewer units sold, but at much higher margins. Apple has stated quite clearly that they refuse to operate at the low-end. This means they provide a vastly different (and very attractive and coveted) user experience that people (who are able to) are willing to pay more for. Apple would not cheapen or muddy its brand image by competing on the same level with the like of Dell, for example. Either you differentiate yourself via some clear, desirable, distinguishing features, or you compete on price like the rest of the pack.
This is what has Microsoft acting so defensive: Windows still has overwhelming unit sale market share, but it is now almost entirely at the low end of the market.There are substantial implications to Microsoft under these circumstances. Just one of the reasons they are opening these Stores. MS is trying very hard to shed its bargain-bin image. A bit late for that, though.
"Market Share" is very often misunderstood. With a fraction of Microsoft's market share, Apple is not only thriving, but it also is in a position as:
1) The industry innovator
2) The most powerful brand in the industry today
3) Producer of the most coveted notebooks and devices in the industry today
4) The one to follow. Apple does everyone else's R&D for them (apparently.)
So when you discuss "market share", you need to determine exactly which end of the market you're talking about. The lion's share of what part of the market? The Premium end of the market pyramid is near or at the top. It's much more narrow, but the consumer approaches tech (and other products) from an entirely different perspective (often not on price), with different epxectations that Apple happens to cater to. Ideally, you WANT to rule the Premium end. It's these customers that build your brand, that make it desirable, and that will pay top dollar for what you provide.
About the whole "bailout" issue, you're wrong (but don't worry, you're not alone - most Windows sufferers get this part wrong.) And if you don't think you are, then show it.
Every conference I go to, most people in the room are sporting Macs.
It makes me wonder how much the numbers bear out the reality.
Vast quantities of Windows computers are bought by businesses who want to put a cheap low end PC on every desk to do low end stuff. That's where the volume is. But when actual people want a computer, they go Mac, unless they feel they need to be compatible with apps for work. And, there is a gaming contingent. But business is where the PCs sell.
I find it funny that the room was loaded with mac and Ballmer commented on it. I can tell you I work for another Consumer Electronic company and if suppliers or anyone who does business with us walks in with a competitors product we nicely tell them is not in their best interest not to be using our products since they make their living off our business.
I bet when Apple meets with analysis they are told they are not welcome if they walk in with a competitor phone, laptop or MP3 player, and you can bet that Jobs will not sit down with anyone using a competitors product.
MS may dominate the market, but they are slowly losing the Home market and schools. They will only be left with Corporation, since it will take them a long time to transition away from PC and Windows due to past investments.
I find it funny that the room was loaded with mac and Ballmer commented on it. I can tell you I would for another Consumer Electronic company and if suppliers or anyone who does business with us walks in with a competitors product we nicely tell them is not in their best interest not to be using our products since they make their living off our business.
I bet when Apple meets with analysis they are told they are not welcome if they walk in with a competitor phone, laptop or MP3 player, and you can bet that Jobs will not sit down with anyone using a competitors product.
MS may dominate the market, but they are slowly losing the Home market and schools. They will only be left with Corporation, since it will take them a long time to transition away from PC and Windows due to past investments.
Agreed.
Having a ton of money yet failing to innovate and roll out compelling and inspiring products simply shows you're slow and lazy. A pretty dangerous position that does little to inspire investor confidence. MS can ride the coattails of its licensing cow forever, and still have a ton of money while doing nothing in particular. Then you have Apple with a fraction of MS' R&D, fewer employees, yet they are tearing up the industry and redefining whole market left and right in only a couple of years.
Suddenly that ton of money MS has doesn't look so inspiring.
Case in point: Microsoft Stores.
MS is opening stores because their brand image is horrible, they have zero mindshare, they are viewed as mere copycats that are continually embarrassed by the Premium-market focused Apple, and more telling, is that recent trends have been quite disturbing for MS:
Market share plunging from 97%+ 3-4 years ago to ~88% currently.
IE webshare plunging substantially in the wake of Firefox and other alternatives.
Overwhelming unit sale market share, but it's now almost entirely at the low end of the market.
Increasing concerns about all of this performance and their lack of focus, plus their underperforming non-core areas (Zune, etc) and no expectation of any real recovery over the next couple of quarters. Due at least in part to no vision and lousy leadership (Ballmer.)
The total failure of their marketing efforts (from Seinfeld to Laptop Hunters), and how this ties in with their free advertising for Apple.
Concerns over Google's Chrome OS (which might put even MS low-end market potential in jeopardy.)
MS' loss of control of the Premium end of the market ($1000+ notebooks), virtually owned by Apple
MS' image as a cheap, bargain-basement brand and a dinosaur company past its prime that can no longer innovate, and which depends on the ideas of others to get ahead, but get ahead too late.
So really, it's a combination of reasons. What might hurt the most, however, is their loss of the Premium end of the market and their lousy brand image. MS simply does not know what it is, and can't articulate what the hell it is. This store venture is MS' attempt to "class up" Windows and cultivate the image of "cool" and "stylish." MS wants the upper crust of income earners to choose Windows, not Apple.
Except there's a slight problem: Windows and the hardware manufacturers aren't set up for this kind of business model. The Store venture and the whole premise underlining Apple is that owning the whole widget is the first step and the most important step in providing the kind of experience that can be showcased and promoted effectively. Something that's in need of "classing up" in the first place really needs to be rethought. It's the old lipstick-on-a-pig idea.
Too many "me too" attmepts brought to market long after the party's over doesn't help matters. MS has become a follower.
The problem is (and always was), that Microsoft is just a corporate/enterprise software vendor masquerading as a home/consumer vendor. And it really shows.
Is this indicative of a downward slide? At this time, absolutely. It's been going on for years. But it's a slow process, like an old man easing into a bathtub.
I find it funny that the room was loaded with mac and Ballmer commented on it. I can tell you I would for another Consumer Electronic company and if suppliers or anyone who does business with us walks in with a competitors product we nicely tell them is not in their best interest not to be using our products since they make their living off our business.
I bet when Apple meets with analysis they are told they are not welcome if they walk in with a competitor phone, laptop or MP3 player, and you can bet that Jobs will not sit down with anyone using a competitors product.
MS may dominate the market, but they are slowly losing the Home market and schools. They will only be left with Corporation, since it will take them a long time to transition away from PC and Windows due to past investments.
You really don't know anything about Steve Jobs, do you?
P.S., I apologize. You don't know anything, period.
Quote:
Originally Posted by Maestro64
Apple like most large companies set up off short companies so they do not have to recognize international sales in the US. Apple Parks all this money in the Cayman Islands
Comments
http://www.paulgraham.com/microsoft.html
Ballmers appointment as CEO is almost like giving the village idiot the job as mayor
http://www.youtube.com/watch?v=wvsboPUjrGc
is saying?
When faced with Apple taking share, he frames it as a tit for tat. When faced with the fact that their hardware is better he comes out with (essentially) "just you wait and see what's coming out soon on our side." These is all standard marketing replies and the fact that he's used that "just you wait and see" crap at least a dozen times before doesn't seem to register on most investors. Microsoft has been just one quarter away from the some amazing device or other almost since they started, but they never have delivered it. To say these kinds of things isn't dumb it's shrewd and it's typical sales-spin, the interesting part of his remarks is where he genuinely seems to not understand what he's talking about. Specifically this remark:
... "We do not, say, like Apple, believe in low volume, very high prices, very -- Apple is a great company, does a fine job. But their model says high margin, high quality, high price," he said. "That's kind of how they come to market. We say we want big market share. But with big market share, you take a lower price."...
He should get fired for saying this. He really should. Because it shows that he just does not understand anything about the markets he's dealing with, the product he himself sells, and how his company is responding to a very real threat.
He conflates hardware with software (when he talks about the "low price"), and doesn't seem to get that it's his product that's vastly overpriced for the market. If Microsoft was actually to survive on the model he suggests here, they would have to cut back to a company a fifth of their current size and drop everything they do except making Windows and Office. As a CEO he is committing the (often fatal) mistake of just not understanding what his company is or does and in what markets it should or should not operate.
The other really telling remark is when he talks about Apple "only" doing about ten million PC's a year. The PC market is yesterday. Apple already sells more iPhones than that and will sell a lot more, and a lot of other devices on the same platform as well. This statement is tantamount to when IBM used to brag about the sales of big iron back in the day when the desktop computer was emerging. They would say "PC manufacturers only make X amount of PCs a year, but we sell millions of dollars worth of (big iron)." Not realising that they were essentially the "kings" of a dying market.
Actually, beyond the "rounding error" statement, most of what Ballmer has to say is on point and complimentary of Apple's strategy.
I'm surprised.
His key point is that he says Windows will grab market share because their partners have some innovative hardware coming out.
As if the hardware is why people are switching to Apple products.
The reason people are switching is because of VISTA. It's because of MS's failed music initiative they abandoned. It's because of hard to use, glitchy software like Windows Mobile. It's because Windows is not only easy to exploit but also far more expensive than any other OS out there.
Very few people buy computers because they look cool. Being the CEO of the world's largest software company you would think Ballmer would understand: it's the software stupid.
Ballmer's Apple antics were funny the first 25,000 times, but it's getting old now like his 1985 appearance in Young Frankenstein.
Retire already.
Steve Ballmer and rounding error sounds like an error, shouldn't it be Steve Ballmer is a rotund error?
Which is best, fat or skinny? Measured by CEOs performance no contest!
Steve (Ballmer) don't take it personally, I love it that you are CEO of Microsoft, keep up the good work (that's great work for you down in CA)..
.
Does anyone really care in this day and age what Microsoft has to say? Haven't you heard Microsoft is dead:
http://www.paulgraham.com/microsoft.html
Nice article. I myself saw Spamalot last night, which is Monty Python's Holy Grail on stage. Remember the Black Knight? King Arthur has chopped both his arms off, and both his legs off for good measure, but the Black Knight keeps on valiantly fighting, shouting: "Come back here you coward ... I'll bite your foot off!"
Steve Balmer and M$ are not any more bizarre than the Black Knight, but I think they're about the same.
Funny, all the Mac ads I've seen seem to be saying 'Hey, our operating system just works'.
It is the "laptop hunter" ads that say Macs are cool (but expensive).
They only really spend in the US, where the share gains by Apple are less of a rounding error - they are making gains in the US, so it makes sense that they look to defend.
Ballmer is right globally though, Apple's share gains overall are insignificant. Whether we Apple fans like it or not, Mac sales are tiny when compared with the overall Personal Computer market.
I can't understand why so many people would chose Windows over Mac, but there we go.
The halo effect from the iPhone is spreading abroad.
What has happened in the U.S. will eventually start happening abroad as well.
Microsoft won the desktop computer battle.
Apple is putting up a strong fight in the notebook computer battle.
Apple has won the mobile computing battle.
Now which of these segments are growing and which are getting smaller?
Some battles have been won and lost but the war isn't over yet.
Once Apple has their custom SOC for the iPhone OS platform then we are going to see things get real interesting.
Talk about drinking the Coolaid, far too many people drive the MS flavor and are true believers.
??
MS didn't bail Apple out. Apple had MS over a legal barrel regarding patent violations - a battle which MS would have lost. Apple at the time, in a roundabout way, blackmailed MS into a deal. And the rest is history.
Sure. Whatever you want to believe. btw, Santa Claus isn't real.
??
The rest of your post makes no sense. I'm not sure how "Apple makes Windows PC more appealing." Apparently, it doesn't.
I think the success of the latest Microsoft ads proves me right. Apple's Mac has been wallowing in the sub 10% market share for 20 years, and I don't see that changing anytime soon. Microsoft is coming off of one of its worst years and still made more profits than Apple. It is hard for Microsoft to grow its market share when it has it all. I'm sure you believe that Apple will have 90% market share soon and Microsoft will will go bankrupt. When you don't have a grip on reality anything seems possible.
The best way to parse this kind of stuff is to remember that Balmer is a "sales guy" and most of what he says here is standard "sales guy speak."
When faced with Apple taking share, he frames it as a tit for tat. When faced with the fact that their hardware is better he comes out with (essentially) "just you wait and see what's coming out soon on our side." These is all standard marketing replies and the fact that he's used that "just you wait and see" crap at least a dozen times before doesn't seem to register on most investors. Microsoft has been just one quarter away from the some amazing device or other almost since they started, but they never have delivered it. To say these kinds of things isn't dumb it's shrewd and it's typical sales-spin, the interesting part of his remarks is where he genuinely seems to not understand what he's talking about. Specifically this remark:
He should get fired for saying this. He really should. Because it shows that he just does not understand anything about the markets he's dealing with, the product he himself sells, and how his company is responding to a very real threat.
He conflates hardware with software (when he talks about the "low price"), and doesn't seem to get that it's his product that's vastly overpriced for the market. If Microsoft was actually to survive on the model he suggests here, they would have to cut back to a company a fifth of their current size and drop everything they do except making Windows and Office. As a CEO he is committing the (often fatal) mistake of just not understanding what his company is or does and in what markets it should or should not operate.
The other really telling remark is when he talks about Apple "only" doing about ten million PC's a year. The PC market is yesterday. Apple already sells more iPhones than that and will sell a lot more, and a lot of other devices on the same platform as well. This statement is tantamount to when IBM used to brag about the sales of big iron back in the day when the desktop computer was emerging. They would say "PC manufacturers only make X amount of PCs a year, but we sell millions of dollars worth of (big iron)." Not realising that they were essentially the "kings" of a dying market.
Excellent point.
Here's Ballmer from long ago. At around 1:20 into the vid you'll see something all too familiar.
"just you wait and see what's coming out soon on our side."
http://www.youtube.com/watch?v=dR8SAFRBmcU
Sure. Whatever you want to believe. btw, Santa Claus isn't real.
I think the success of the latest Microsoft ads proves me right. Apple's Mac has been wallowing in the sub 10% market share for 20 years, and I don't see that changing anytime soon. Microsoft is coming off of one of its worst years and still made more profits than Apple. It is hard for Microsoft to grow its market share when it has it all. I'm sure you believe that Apple will have 90% market share soon and Microsoft will will go bankrupt. When you don't have a grip on reality anything seems possible.
Apple functions at the Premium end of the market. It isn't one big market. There are levels to it. There are consumers in particular income brackets that are locked out of Apple's demographic. This is one of the defining characteristics of any Premium product.
There are between 50-70 million Mac users. The Mac is understood as, and marketed as, a Premium product. Fewer units sold, but at much higher margins. Apple has stated quite clearly that they refuse to operate at the low-end. This means they provide a vastly different (and very attractive and coveted) user experience that people (who are able to) are willing to pay more for. Apple would not cheapen or muddy its brand image by competing on the same level with the like of Dell, for example. Either you differentiate yourself via some clear, desirable, distinguishing features, or you compete on price like the rest of the pack.
This is what has Microsoft acting so defensive: Windows still has overwhelming unit sale market share, but it is now almost entirely at the low end of the market.There are substantial implications to Microsoft under these circumstances. Just one of the reasons they are opening these Stores. MS is trying very hard to shed its bargain-bin image. A bit late for that, though.
"Market Share" is very often misunderstood. With a fraction of Microsoft's market share, Apple is not only thriving, but it also is in a position as:
1) The industry innovator
2) The most powerful brand in the industry today
3) Producer of the most coveted notebooks and devices in the industry today
4) The one to follow. Apple does everyone else's R&D for them (apparently.)
So when you discuss "market share", you need to determine exactly which end of the market you're talking about. The lion's share of what part of the market? The Premium end of the market pyramid is near or at the top. It's much more narrow, but the consumer approaches tech (and other products) from an entirely different perspective (often not on price), with different epxectations that Apple happens to cater to. Ideally, you WANT to rule the Premium end. It's these customers that build your brand, that make it desirable, and that will pay top dollar for what you provide.
About the whole "bailout" issue, you're wrong (but don't worry, you're not alone - most Windows sufferers get this part wrong.) And if you don't think you are, then show it.
Every conference I go to, most people in the room are sporting Macs.
It makes me wonder how much the numbers bear out the reality.
Vast quantities of Windows computers are bought by businesses who want to put a cheap low end PC on every desk to do low end stuff. That's where the volume is. But when actual people want a computer, they go Mac, unless they feel they need to be compatible with apps for work. And, there is a gaming contingent. But business is where the PCs sell.
I bet when Apple meets with analysis they are told they are not welcome if they walk in with a competitor phone, laptop or MP3 player, and you can bet that Jobs will not sit down with anyone using a competitors product.
MS may dominate the market, but they are slowly losing the Home market and schools. They will only be left with Corporation, since it will take them a long time to transition away from PC and Windows due to past investments.
I find it funny that the room was loaded with mac and Ballmer commented on it. I can tell you I would for another Consumer Electronic company and if suppliers or anyone who does business with us walks in with a competitors product we nicely tell them is not in their best interest not to be using our products since they make their living off our business.
I bet when Apple meets with analysis they are told they are not welcome if they walk in with a competitor phone, laptop or MP3 player, and you can bet that Jobs will not sit down with anyone using a competitors product.
MS may dominate the market, but they are slowly losing the Home market and schools. They will only be left with Corporation, since it will take them a long time to transition away from PC and Windows due to past investments.
Agreed.
Having a ton of money yet failing to innovate and roll out compelling and inspiring products simply shows you're slow and lazy. A pretty dangerous position that does little to inspire investor confidence. MS can ride the coattails of its licensing cow forever, and still have a ton of money while doing nothing in particular. Then you have Apple with a fraction of MS' R&D, fewer employees, yet they are tearing up the industry and redefining whole market left and right in only a couple of years.
Suddenly that ton of money MS has doesn't look so inspiring.
Case in point: Microsoft Stores.
MS is opening stores because their brand image is horrible, they have zero mindshare, they are viewed as mere copycats that are continually embarrassed by the Premium-market focused Apple, and more telling, is that recent trends have been quite disturbing for MS:
Market share plunging from 97%+ 3-4 years ago to ~88% currently.
IE webshare plunging substantially in the wake of Firefox and other alternatives.
Overwhelming unit sale market share, but it's now almost entirely at the low end of the market.
Increasing concerns about all of this performance and their lack of focus, plus their underperforming non-core areas (Zune, etc) and no expectation of any real recovery over the next couple of quarters. Due at least in part to no vision and lousy leadership (Ballmer.)
The total failure of their marketing efforts (from Seinfeld to Laptop Hunters), and how this ties in with their free advertising for Apple.
Concerns over Google's Chrome OS (which might put even MS low-end market potential in jeopardy.)
MS' loss of control of the Premium end of the market ($1000+ notebooks), virtually owned by Apple
MS' image as a cheap, bargain-basement brand and a dinosaur company past its prime that can no longer innovate, and which depends on the ideas of others to get ahead, but get ahead too late.
So really, it's a combination of reasons. What might hurt the most, however, is their loss of the Premium end of the market and their lousy brand image. MS simply does not know what it is, and can't articulate what the hell it is. This store venture is MS' attempt to "class up" Windows and cultivate the image of "cool" and "stylish." MS wants the upper crust of income earners to choose Windows, not Apple.
Except there's a slight problem: Windows and the hardware manufacturers aren't set up for this kind of business model. The Store venture and the whole premise underlining Apple is that owning the whole widget is the first step and the most important step in providing the kind of experience that can be showcased and promoted effectively. Something that's in need of "classing up" in the first place really needs to be rethought. It's the old lipstick-on-a-pig idea.
Too many "me too" attmepts brought to market long after the party's over doesn't help matters. MS has become a follower.
The problem is (and always was), that Microsoft is just a corporate/enterprise software vendor masquerading as a home/consumer vendor. And it really shows.
Is this indicative of a downward slide? At this time, absolutely. It's been going on for years. But it's a slow process, like an old man easing into a bathtub.
I find it funny that the room was loaded with mac and Ballmer commented on it. I can tell you I would for another Consumer Electronic company and if suppliers or anyone who does business with us walks in with a competitors product we nicely tell them is not in their best interest not to be using our products since they make their living off our business.
I bet when Apple meets with analysis they are told they are not welcome if they walk in with a competitor phone, laptop or MP3 player, and you can bet that Jobs will not sit down with anyone using a competitors product.
MS may dominate the market, but they are slowly losing the Home market and schools. They will only be left with Corporation, since it will take them a long time to transition away from PC and Windows due to past investments.
You really don't know anything about Steve Jobs, do you?
P.S., I apologize. You don't know anything, period.
Apple like most large companies set up off short companies so they do not have to recognize international sales in the US. Apple Parks all this money in the Cayman Islands