Feeds

Cheap PCs will damage MS software sales, says CFO

And our redoubtable bean-counter doesn't expect to make money from Win2k for another year yet...

  • alert
  • submit to reddit

The Essential Guide to IT Transformation

Cut-price PCs may finally start to erode Microsoft's dominant position in the software market, company CFO Greg Maffei suggested yesterday at the company's analysts meeting. Maffei appears not to have floated the possibility of rival operating systems breaking into the market, but he was clearly concerned that the need for manufacturers to force the total price tag down would hit the company's applications revenues. Over the past few years Microsoft has been determined not to cut the price of Windows to OEMs, while PC prices have fallen. This on its own has meant that the company's slice of total revenue per PC has increased as a percentage, while bundling of Microsoft applications software on these PCs has given the company even more of the total. As you may have noted from our trial coverage, there does appear to have been a certain amount of linkage between bundled Microsoft applications and discounts on Windows licences. But from what Maffei says now, it seems clear that Microsoft won't be able to combine continued high pricing for applications bundles with holding the lion's share of the applications market. The company is unlikely to cut its prices to maintain market share, because it can still derive a lot of revenue from the corporate market, where Office is the de facto standard, so the likely result will be more bundling deals for rivals like Corel. Although Maffei appeared to be concerned about applications rather than operating systems, Microsoft should also start to come under pressure on the OS front, for similar reasons. As prices go down further, the company is going to face the choice of either cutting prices, or losing share. Maffei also had some interesting things to tell analysts about Windows 2000. As you may recall, when Microsoft introduced the Corporate Preview Program beta of Win2k earlier this year, strange stories started going around about Microsoft having an "internal" target ship date of October for Win2k. Officially of course it wouldn't go any further than 'on target for the end of the year,' but there seemed to have been a bit of briefing by the spin-doctors, nevertheless. Well, this is precisely not what Maffei has been telling the analysts. Windows 2000 is expected to be released to manufacturing at the end of calendar year 1999, he said. So it might be finished by then, but with OEM testing and actual manufacturing and distribution to be taken into account, February looks more realistic as a ship date. That's not what Maffei said of course, but the clear implication is there. And it could get worse. He did say that a "revenue upside" from Windows 2000 was expected in late financial year 2000. That means he's not expecting to earn money from it until late Q2 next year. ®

Boost IT visibility and business value

More from The Register

next story
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.