Via MG Siegler
Here’s the thing. Everyone seems to want to rush to point out that Microsoft’s first quarterly loss was misleading because of a one-time $6.2 billion write-down.
I mean, does anyone think anyone else really doesn’t understand that? But that anti-misleading talk is also misleading, in my opinion (still with me here?).
Yes, overall, Microsoft’s quarterly numbers were fine. A record for the quarter when it comes to revenue, even. That’s great. But there are several not-so-subtle points bubbling just under the surface (not to be confused with the Surface — though that may end up being one of them) that point to some very big changes already underway within the company.
Points like this one get quickly shot down by folks because people have been wanting to be the first to call Microsoft’s downfall for years. But this time, I think we’re actually seeing it. You can disagree, of course. But I’m not writing this out of some misguided hatred for Microsoft. I’m writing it to have it on record because I believe I’m right. Time will tell, obviously.
I think what we’re seeing in Microsoft’s numbers right now is the full-on shift of the company towards enterprise. To be clear, I think the company will remain alive and probably even thrive in that regard for a long time. I just think the time of their consumer dominance is already over. And within the next decade, it will be completely over.
I think at that point, Microsoft will be an enterprise software and services company with a strange, but successful gaming sub-division that will probably be spun off by then.
Over the next two quarters, everyone will rush to say that I’m wrong and point to big Windows 8 numbers. But that will also be misleading. The computing world has already changed. The Windows PC is over. OEMs will juice the numbers out of the gate for a bit, but then they’ll quickly go back on the decline. Microsoft’s money, increasingly, will come from Office and Services.
Are the children of today going to grow up to buy Windows-based PCs? Microsoft hopes they will, but all kinds of numbers are already showing the opposite happening. And if you look at even Microsoft’s current, seemingly strong fiscal numbers the correct way, I believe you can see it.
While the quarterly loss is being overblown in the short-term (it’s a one-time hit), it still matters. It shows just how bad of a mistake the company made in the Online Services division (already a constant mistake itself). And for the first time, such a mistake couldn’t be covered up by Windows and Office numbers. Some will say it was just a one-time mistake. But what if Microsoft had bought Yahoo for $50 billion? The lack of mistakes isn’t for a lack of trying.
It’s all related to the problem. But that’s another post…