« President Obama’s Plan for College Reform—Posner | Main | Dynamic Competition and Anti Trust Policy-Becker »

09/02/2013

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Jjj Jjj

You start with the wrong premise.
The PC market is expected to be 315.4 mil units in 2013 according to IDC. in 2011 sales were 359 mil units. IDC expects the market to decline next year and have minimal growth beyond that , I expect growth to never return to the old form factors.
Some organizations and users might always need a keyboard but new form factors can also host a keyboard and the hardware it's pretty much there,the software isn't.The need for a keyboard will also be lower and lower , just a few days ago a Microsoft researcher was talking about the topic .ARM chips are powerful enough to replace low end x86 chips but Android ,iOS, Blackberry and so on haven't pushed hard enough (yet) for their OSes to better scale on bigger screens.That could change and we already have more and more devices with Android going bigger, there is Chrome OS and soon the Ubuntu Touch.
Apple doesn't compete in the sub 1000$ laptop category at all and the vast majority of laptops sold are in the 300-700$ range,if Apple had a 600$ laptop (they should do that and might do that soon) they could double their market share.
Many internet users in developing countries might never buy a traditional PC,they use the new devices and that's all they need.
You also have glasses emerging as a segment. Things like Google Glass and Oculus Rift, 2 very different devices that should converge soon enough and Microsoft is not ideally placed there.If glasses start to replace big screens , like monitors and TVs, it could be a major problem for Microsoft in a few years.

In server Microsoft has been losing share for a long time now and this is before the ARM attack on the segment starts. ARM chips will run on Linux and Microsoft's share in server could decline quite fast in the next few years.

As for Office , there have been no reason what so ever to use it for quite some time now when you have free (or cheaper) alternatives like Libre Office or Google Docs/Drive. Somehow Office is still selling, in enterprise change is difficult and Govs are easily corrupted. In Europe many Gov entities moved to free, open software it's cheaper and there is room for many more to do the same. In the US Microsoft's " marketing "is stronger so this trend is yet to start for the most part. For home users Office sells mostly because it comes bundled with the PC, something regulators should maybe look into.
Bing is loosing a lot of money , it's a pretty poor product and not gaining much traction. Consoles are loosing a lot of money and it's a dead segment.
Windows RT failed (for now) and it will be an uphill battle to make it relevant.
Windows Phone is gaining some share but slow and not much and it's all on Nokia, without them the OS would be dead in the water.
So Microsoft is endangered, they do have a lot of resources and they do have a few years before it's too late but there is a high risk for them to fade into irrelevance.
The stock price is quite high given the medium and long term prospects.Microsoft an Intel can be another Kodak so i'm always amazed that the stock is not at 20$.

For now they are trying to mask the decline with higher prices for Windows but that's not a long term strategy and customers are more motivated now to jump ship. They also seem to have included their tablets in the Windows division results and that distorts a bit the results for that division.
They alienated their partners by launching their own tablets, since they did that a few of their biggest customers launched Chrome OS products and are relying heavier on Android too.

Clayton Wohl

Office and Windows have been amazing cash cows, but both of these are expected to be on the decline. Microsoft knows this and they have been trying to establish replacement revenue streams. Fortunately, the decline of Office and Windows revenues hasn't happened yet, their profits are excellent for now, but there's a lot of skepticism that Microsoft will be able to successfully replace Windows/Office revenue with revenue from new products.

Neilehat

Correct me if I'm wrong, but the last time we had a "Communications Technology Revolution" of this scale was when we moved from Telegraphy to Telephones/Faxes. And the decision was made then to create a public regulated monopoly and utility. This allowed the Industry to create efficiencies and economies of scale unknown at the time. Some of these effciencies and economies created, but not limited to, systems standardization and integration, hardware standardization, operational standardization, transmission standardization, single source investing, to name just a few. And the end result? A communications system the envy of the World.

What do we have today? A system that is incredibilly wasteful, inefficient, and essentially non-operational due to it's lack of standardization, operability and full systems integration...

Terry Bennett

Microsoft's dilemma is more fundamental than any of this. The earth is of a limited size, and there is a certain population which is increasing in size but not nearly as fast as a "growth" company wants to, and so there is a ceiling - not quite static but calcuable - to the aggregate production (and consumption) of mankind.

If you start with a penny and double it every day for a month, you end up with millions of dollars. Similarly, a company can only double in size so many times. When you already have 51% market share in a market of fixed size you cannot double your market share. When you are already the largest company in the world, you can buy other companies but that's not really new production.

Judge Posner does hit squarely on the psychological barrier to dramatically increasing already large wealth - Microsoft got fat and happy early, and their once-young guys are now gray beards hanging on for a comfortable retirement, content to wait out their days wearing their golden shackles. As Warren Buffett said of marrying for money, "It's probably a bad idea in any case - but it's really stupid if you're already rich."

Neilehat, to which "system" do you refer? Maybe it's just me, but I generally have no trouble making phone calls, even to other countries, and it's twenty-fold cheaper now than it was back in '84 - though there was a rough patch there... Monopoly is efficient by definition, in that it eliminates duplication. The Soviets had that in mind when Stalin put out his five-year plans. We on the other hand had more than one private company competing to produce better products to serve the same market, and the benefits of that competition dwarfed the waste of the overlapped effort.

Neilehat

Terry, Your comment proves the point. The reason the "phone" system works reasonablly well is because of the "monopoly" status granted to AT&T, Ma Bell, Western Electric and the innovations that came out of Bell Labs... As for today, ever tried to get Apples and Microsofts, etc. etc., to work together properly?

Need I say more?

Terry Bennett

I understand your point now.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Become a Fan

March 2014

Sun Mon Tue Wed Thu Fri Sat
            1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31