The only successful MS consumer product to date is Xbox and its success was strongly tied to two things (i) selling the hardware for a loss and (ii) having exclusive rights to a few really popular "hard core" video games. MS would have to get really lucky to replicate the Xbox outcome with Surface and it isn't likely to be very profitable for them.
Just to back your assertion up with some numbers, Microsoft dumped in excess of $30 billion into their consumer products division before they were finally able to start turning small annual profits on it. Most of that money went into developing, manufacturing and marketing the Xbox and Xbox 360. At the current rate of return, it'll take them decades to recoup their investment.
They can't afford another "success" like the Xbox. It would break the company - especially with PC revenues set to start declining over the next decade, as the computer market begins to dry up and price pressures force them to reduce the amount they charge for Windows licenses or face increased competition from free alternatives like Linux and possibly Chrome.
Just to back your assertion up with some numbers, Microsoft dumped in excess of $30 billion into their consumer products division before they were finally able to start turning small annual profits on it. Most of that money went into developing, manufacturing and marketing the Xbox and Xbox 360. At the current rate of return, it'll take them decades to recoup their investment.
They can't afford another "success" like the Xbox. It would break the company - especially with PC revenues set to start declining over the next decade, as the computer market begins to dry up and price pressures force them to reduce the amount they charge for Windows licenses or face increased competition from free alternatives like Linux and possibly Chrome.
If the Surface isn't vaporware, which I suspect it is, it will be plagued by a fatal flaw from its inception -- Windows 8. An OS predicated on a GUI that looks like DOS bitmap boxes is so fugly it'll never sell... Call me a whacko but I predict Windows 8 will be stillborn -- dead at birth!
Is it possible that the announcement of the Surface tablet by MSFT may have the unintended consequence of causing consumers to hold off on buying a new machine until they get a chance to check this thing out? When the surface was announced, there seemed to be many MSFT people who seemed to want to buy this thing when looking at the comments section of some of the articles that were written.
I know they wanted to try to prevent some people from going over to Apple by making this announcement but maybe they will, not on purpose, cause issues for their present OEMs? It will be interesting to see what happens to sales in the present quarter and how people/consumers are thinking.
Is it possible that the announcement of the Surface tablet by MSFT may have the unintended consequence of causing consumers to hold off on buying a new machine until they get a chance to check this thing out? When the surface was announced, there seemed to be many MSFT people who seemed to want to buy this thing when looking at the comments section of some of the articles that were written.
I know they wanted to try to prevent some people from going over to Apple by making this announcement but maybe they will, not on purpose, cause issues for their present OEMs? It will be interesting to see what happens to sales in the present quarter and how people/consumers are thinking.
I doubt the bulk of the market is even meaningfully aware of the Surface at this point.
If after all that marketing by MS and Nokia, and after all this time, people are *still* barely aware there's a "Windows Phone", how much consumer awareness do you think there is for this "Surface" thing? Especially when it isn't even available for purchase.
If anything, Joe Average is dreaming about Apple gear. That's the power of Apple mindshare, and a lineup of great products that establish a stellar reputation and anticipation for the "next purchase."
Someone correct me if I'm wrong, but I think Lenovo sells a lot of low margin devices in Asia. It doesn't do much good to have 50B in revenue if you only make 50M in profit. PCs will soon be a commodity like corn. HP recognized this problem and considered selling its PC division a year ago (note that it is the world leader). It isn't very exciting to be a PC vendor these days.
Lenovo sells quite a few devices in the US, primarily in corporate accounts, where commodity, sturdy, and stable PCs are desired. I would hazard a guess that they are the top 'other' in the US category.
While still a commodity... people make money growing and selling corn... especially on a contract basis. Lenovo is the IBM ThinkPad. It's about as good as it gets when it comes to a beefy corporate laptop (The CEO travels with a Macbook Air... but his all his contractors get Lenovos).
Perhaps, but Amazon has a big problem. There's a pretty strong move afoot to require sales taxes on Internet sales - even if you don't have a nexus in the state. That, combined with the fact that as Amazon grows, they need new warehouses, expanding the number of states they pay taxes (a la California), means that Amazon is likely to lose a key cost advantage.
Given that Amazon only makes a few percent on each sale, requiring the customer to pay 10% sales tax (for example) may shift a lot of Amazon customers back to brick and mortar. While I expect that Amazon will adapt and survive, it will sure take away much of their ability to subsidize loss leaders like the Kindle Fire (allegedly).
If the recent rumors are correct, we are going to find out if Amazon can break into the smartphone market sooner than any legislation could be passed to require sales tax. I also think Amazon did a better job than anyone else in the tablet market of creating a reason for user's to buy their device. MS and Google just throw up some hardware specs and say "buy me because I'm for sale." Amazon is creating an ecosystem and has the customers to do it.
Don't get me wrong, I don't think Amazon is going to hinder Apple. I just think Amazon has a chance of succeeding in the tablet market where Google and MS don't. I see zero chance of the Surface succeeding. Surface is DOA. MS won't succeed with phones or tablets. Google will continue to succeed with phones, but I don't see success in the tablet market.
Maybe Google and Amazon should form an alliance??????
Just to back your assertion up with some numbers, Microsoft dumped in excess of $30 billion into their consumer products division before they were finally able to start turning small annual profits on it. Most of that money went into developing, manufacturing and marketing the Xbox and Xbox 360. At the current rate of return, it'll take them decades to recoup their investment.
They can't afford another "success" like the Xbox. It would break the company - especially with PC revenues set to start declining over the next decade, as the computer market begins to dry up and price pressures force them to reduce the amount they charge for Windows licenses or face increased competition from free alternatives like Linux and possibly Chrome.
Well done on the Xbox analysis. With regard to declining PC revenues, I would add that even if MS doesn't lower their price, there will be declining profits. From a performance standpoint, there just isn't a compelling reason to spend money on new computers. The upgrade cycle for desktops is going to stretch out to 5 years and beyond.
Interesting point. I hadn't thought about that. We used to upgrade our personal and office iMacs quite aggressively. Except the last cycle. It''ll be four years since our last desktop upgrades but we will probably upgrade our iPads and iPhones every 2 years.
With limited funds, the desktops are just not as exciting as the portable stuff.
Interesting point. I hadn't thought about that. We used to upgrade our personal and office iMacs quite aggressively. Except the last cycle. It''ll be four years since our last desktop upgrades but we will probably upgrade our iPads and iPhones every 2 years.
With limited funds, the desktops are just not as exciting as the portable stuff.
New hardware purchases aside, are there any compelling reasons for the consumer or enterprise to upgrade to Windows 8 or the latest Office software?
I doubt the bulk of the market is even meaningfully aware of the Surface at this point.
If after all that marketing by MS and Nokia, and after all this time, people are *still* barely aware there's a "Windows Phone", how much consumer awareness do you think there is for this "Surface" thing? Especially when it isn't even available for purchase.
If anything, Joe Average is dreaming about Apple gear. That's the power of Apple mindshare, and a lineup of great products that establish a stellar reputation and anticipation for the "next purchase."
Ah but didn't you know ZDNET took a poll of CIO's around the globe and they're all waiting to get their hands on Surface.
New hardware purchases aside, are there any compelling reasons for the consumer or enterprise to upgrade to Windows 8 or the latest Office software?
Well if they had already planned to upgrade from Windows XP to Windows 7, they might as well upgrade to Windows 8 since it is said to be less resource intensive than Win 7. Also Win 8 for the consumer would be more integrated with Surface and the XBox360.
But from my employer's perspective there really isn't anything wrong with Win XP that can be solved by Win 8. They will likely not upgrade until you can't purchase a new machine without it.
Ah but didn't you know ZDNET took a poll of CIO's around the globe and they're all waiting to get their hands on Surface.
CIOs probably love the idea because it requires the least thought on their part. They don't actually have to use the devices they force on everyone else (At least not to do anything the company gets paid for.).
CIOs probably love the idea because it requires the least thought on their part. They don't actually have to use the devices they force on everyone else (At least not to do anything the company gets paid for.).
It goes beyond that.
CIOs are strongly in Microsoft's pocket. There are a number of reasons for that:
1. it's the "no one ever got fired for buying IBM" syndrome from the 80s. If you make a choice that's outside the mainstream, you are creating risk for yourself. If the decision fails, then you could get blamed for it. If, OTOH, you choose the standard and the decision fails, you can say that it must be someone else's fault.
2. A little bribery goes a long way. Not illegal bribery (obviously), but just the same. I used to have a neighbor who was CIO for a major bank. He got a couple of nice vacations every year for him and his wife. A full week, all expenses paid at a nice, exotic location - all paid for by Microsoft. Of course, he had to attend a couple of hours of seminars every week so it was 'education' and not a bribe.
3. Comfort level. People tend to choose what they're familiar with.
Sell a flash memory device with a 11 inch screen that has a pointing device where you tap, slide, pinch with your fingers, but have to coordinate the actions of your fingers with a virtual finger that's on the display. give it a mandatory physical keyboard and you have a "PC".
Move the pointing device onto the screen itself where you can directly manipulate the content, shrink the screen by 1", make the physical keyboard optional and instead use a virtual keyboard when needed. Suddenly it's not a "PC" according to analysts, who then talk about the shrinking computer market.
The PC market isn't shrinking, it's booming and Apple is dominating that boom. Apple isn't down there with "other' in worldwide market share. Apple is at the very top. They sold 20 million iPads in the june quarter. The iPad alone makes apple #1 in world wide market share and it's not even close. They sold about 2x the computers HP sold. They sold about as many computers as HP and Lenovo combined.
PC is "Personal Computer". The iPad with WiFi+Cellular is the most "personal" computer ever made.
Comments
Quote:
Originally Posted by ash471
The only successful MS consumer product to date is Xbox and its success was strongly tied to two things (i) selling the hardware for a loss and (ii) having exclusive rights to a few really popular "hard core" video games. MS would have to get really lucky to replicate the Xbox outcome with Surface and it isn't likely to be very profitable for them.
Just to back your assertion up with some numbers, Microsoft dumped in excess of $30 billion into their consumer products division before they were finally able to start turning small annual profits on it. Most of that money went into developing, manufacturing and marketing the Xbox and Xbox 360. At the current rate of return, it'll take them decades to recoup their investment.
They can't afford another "success" like the Xbox. It would break the company - especially with PC revenues set to start declining over the next decade, as the computer market begins to dry up and price pressures force them to reduce the amount they charge for Windows licenses or face increased competition from free alternatives like Linux and possibly Chrome.
Quote:
Originally Posted by sunspot42
Just to back your assertion up with some numbers, Microsoft dumped in excess of $30 billion into their consumer products division before they were finally able to start turning small annual profits on it. Most of that money went into developing, manufacturing and marketing the Xbox and Xbox 360. At the current rate of return, it'll take them decades to recoup their investment.
They can't afford another "success" like the Xbox. It would break the company - especially with PC revenues set to start declining over the next decade, as the computer market begins to dry up and price pressures force them to reduce the amount they charge for Windows licenses or face increased competition from free alternatives like Linux and possibly Chrome.
Nice post!
If the Surface isn't vaporware, which I suspect it is, it will be plagued by a fatal flaw from its inception -- Windows 8. An OS predicated on a GUI that looks like DOS bitmap boxes is so fugly it'll never sell... Call me a whacko but I predict Windows 8 will be stillborn -- dead at birth!
Is it possible that the announcement of the Surface tablet by MSFT may have the unintended consequence of causing consumers to hold off on buying a new machine until they get a chance to check this thing out? When the surface was announced, there seemed to be many MSFT people who seemed to want to buy this thing when looking at the comments section of some of the articles that were written.
I know they wanted to try to prevent some people from going over to Apple by making this announcement but maybe they will, not on purpose, cause issues for their present OEMs? It will be interesting to see what happens to sales in the present quarter and how people/consumers are thinking.
I doubt the bulk of the market is even meaningfully aware of the Surface at this point.
If after all that marketing by MS and Nokia, and after all this time, people are *still* barely aware there's a "Windows Phone", how much consumer awareness do you think there is for this "Surface" thing? Especially when it isn't even available for purchase.
If anything, Joe Average is dreaming about Apple gear. That's the power of Apple mindshare, and a lineup of great products that establish a stellar reputation and anticipation for the "next purchase."
Quote:
Originally Posted by ash471
Someone correct me if I'm wrong, but I think Lenovo sells a lot of low margin devices in Asia. It doesn't do much good to have 50B in revenue if you only make 50M in profit. PCs will soon be a commodity like corn. HP recognized this problem and considered selling its PC division a year ago (note that it is the world leader). It isn't very exciting to be a PC vendor these days.
Lenovo sells quite a few devices in the US, primarily in corporate accounts, where commodity, sturdy, and stable PCs are desired. I would hazard a guess that they are the top 'other' in the US category.
While still a commodity... people make money growing and selling corn... especially on a contract basis. Lenovo is the IBM ThinkPad. It's about as good as it gets when it comes to a beefy corporate laptop (The CEO travels with a Macbook Air... but his all his contractors get Lenovos).
Unnecessary redundancy there? ;-)
He's channelling Microsoft.
What will happen when people realize that they only need/use minimal capabilities of Office on their tablets for content creation?
What if the likes of iWork are enough to satisfy most users? 80%?
Now I'm convinced that MS missed the opportunity to put Office on the iPad.
Office... Office.. We don't need no stinkin' Office!
Dictated on my iPad.
Did you do the stereotypical accent for that part?
Quote:
Originally Posted by jragosta
Perhaps, but Amazon has a big problem. There's a pretty strong move afoot to require sales taxes on Internet sales - even if you don't have a nexus in the state. That, combined with the fact that as Amazon grows, they need new warehouses, expanding the number of states they pay taxes (a la California), means that Amazon is likely to lose a key cost advantage.
Given that Amazon only makes a few percent on each sale, requiring the customer to pay 10% sales tax (for example) may shift a lot of Amazon customers back to brick and mortar. While I expect that Amazon will adapt and survive, it will sure take away much of their ability to subsidize loss leaders like the Kindle Fire (allegedly).
If the recent rumors are correct, we are going to find out if Amazon can break into the smartphone market sooner than any legislation could be passed to require sales tax. I also think Amazon did a better job than anyone else in the tablet market of creating a reason for user's to buy their device. MS and Google just throw up some hardware specs and say "buy me because I'm for sale." Amazon is creating an ecosystem and has the customers to do it.
Don't get me wrong, I don't think Amazon is going to hinder Apple. I just think Amazon has a chance of succeeding in the tablet market where Google and MS don't. I see zero chance of the Surface succeeding. Surface is DOA. MS won't succeed with phones or tablets. Google will continue to succeed with phones, but I don't see success in the tablet market.
Maybe Google and Amazon should form an alliance??????
Quote:
Originally Posted by sunspot42
Just to back your assertion up with some numbers, Microsoft dumped in excess of $30 billion into their consumer products division before they were finally able to start turning small annual profits on it. Most of that money went into developing, manufacturing and marketing the Xbox and Xbox 360. At the current rate of return, it'll take them decades to recoup their investment.
They can't afford another "success" like the Xbox. It would break the company - especially with PC revenues set to start declining over the next decade, as the computer market begins to dry up and price pressures force them to reduce the amount they charge for Windows licenses or face increased competition from free alternatives like Linux and possibly Chrome.
Well done on the Xbox analysis. With regard to declining PC revenues, I would add that even if MS doesn't lower their price, there will be declining profits. From a performance standpoint, there just isn't a compelling reason to spend money on new computers. The upgrade cycle for desktops is going to stretch out to 5 years and beyond.
With limited funds, the desktops are just not as exciting as the portable stuff.
Quote:
Originally Posted by bugsnw
Interesting point. I hadn't thought about that. We used to upgrade our personal and office iMacs quite aggressively. Except the last cycle. It''ll be four years since our last desktop upgrades but we will probably upgrade our iPads and iPhones every 2 years.
With limited funds, the desktops are just not as exciting as the portable stuff.
New hardware purchases aside, are there any compelling reasons for the consumer or enterprise to upgrade to Windows 8 or the latest Office software?
Quote:
Originally Posted by JerrySwitched26
Lenovo seems to be kicking ass.
Just like he said "PC sales must be really suffering".
Quote:
Originally Posted by Dick Applebaum
New hardware purchases aside, are there any compelling reasons for the consumer or enterprise to upgrade to Windows 8 or the latest Office software?
Well if they had already planned to upgrade from Windows XP to Windows 7, they might as well upgrade to Windows 8 since it is said to be less resource intensive than Win 7. Also Win 8 for the consumer would be more integrated with Surface and the XBox360.
But from my employer's perspective there really isn't anything wrong with Win XP that can be solved by Win 8. They will likely not upgrade until you can't purchase a new machine without it.
Quote:
Originally Posted by Rogifan
Ah but didn't you know ZDNET took a poll of CIO's around the globe and they're all waiting to get their hands on Surface.
CIOs probably love the idea because it requires the least thought on their part. They don't actually have to use the devices they force on everyone else (At least not to do anything the company gets paid for.).
It goes beyond that.
CIOs are strongly in Microsoft's pocket. There are a number of reasons for that:
1. it's the "no one ever got fired for buying IBM" syndrome from the 80s. If you make a choice that's outside the mainstream, you are creating risk for yourself. If the decision fails, then you could get blamed for it. If, OTOH, you choose the standard and the decision fails, you can say that it must be someone else's fault.
2. A little bribery goes a long way. Not illegal bribery (obviously), but just the same. I used to have a neighbor who was CIO for a major bank. He got a couple of nice vacations every year for him and his wife. A full week, all expenses paid at a nice, exotic location - all paid for by Microsoft. Of course, he had to attend a couple of hours of seminars every week so it was 'education' and not a bribe.
3. Comfort level. People tend to choose what they're familiar with.
strange world the analysts live in.
Sell a flash memory device with a 11 inch screen that has a pointing device where you tap, slide, pinch with your fingers, but have to coordinate the actions of your fingers with a virtual finger that's on the display. give it a mandatory physical keyboard and you have a "PC".
Move the pointing device onto the screen itself where you can directly manipulate the content, shrink the screen by 1", make the physical keyboard optional and instead use a virtual keyboard when needed. Suddenly it's not a "PC" according to analysts, who then talk about the shrinking computer market.
The PC market isn't shrinking, it's booming and Apple is dominating that boom. Apple isn't down there with "other' in worldwide market share. Apple is at the very top. They sold 20 million iPads in the june quarter. The iPad alone makes apple #1 in world wide market share and it's not even close. They sold about 2x the computers HP sold. They sold about as many computers as HP and Lenovo combined.
PC is "Personal Computer". The iPad with WiFi+Cellular is the most "personal" computer ever made.