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Microsoft sees sluggish PC growth ahead

No repeat of fiscal 2004

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In Microsoft's latest SEC filing again, Redmond warns that next year won't see the handsome growth in PC sales that it has seen over the past twelve months.

Fiscal year 2004 in Redmond ended in June, and Microsoft saw revenues soar on the back of 13 per cent unit growth in PC sales. It says it doesn't expect similar growth next year. The prediction echoes the mood of the gloomy outlook offered by Intel last week, although the chip giant was careful not to say which way it expected unit sales to fall. Recent semiconductor studies say the growth of the past two years will peak in the next twelve months.

Microsoft says it sees a "significant" threat from Linux although the boilerplate wording has changed little from recent filings. Sixteen months ago Microsoft's ass-covering investor warning stated:

"To the extent the Open Source model gains increasing market acceptance, sales of the Company's products may decline, the Company may have to reduce the prices it charges for its products, and revenues and operating margins may consequently decline."

Now it warns, "To the extent open-source software products gain increasing market acceptance, sales of our products may decline, which could result in a reduction in our revenue and operating margins."

Plus ça change? Well, not necessarily. Microsoft's retention of contracts such as Newham and the Royal Navy have been hard fought. Unless such users display particularly inept negotiating tactics - something you can never rule out with the public sector - Microsoft can either retain market share or high margins, but not both. ®

Related stories

MS beanies worry about Linux, suits, nasty governments
OSS torpedoed: Royal Navy will run on Windows for Warships
Newham and Microsoft sign 10-yr deal
2004 – the year Microsoft's prices bend, buckle or break?
Windows pricing begins to buckle

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