Microsoft Should Dump Middlemen, Build Own Phones 262
suraj.sun writes "Microsoft has a long and illustrious history of operating system sales. The model has served the company well on the PC, but if it wants to make money in the phone market, it needs to start thinking like a consumer electronics company and start making its own phones."
Re:That could work like the xbox (Score:4, Insightful)
Great Idea! (Score:1, Insightful)
Worked for Goo... wait, what? Oh, nevermind.
Hasn't Microsoft just done this with the Kin... (Score:5, Insightful)
And seeing how the "make the OS, leave making the phone (mostly) to others" business model seems to be working rather well for Google, I don't see, why it shouldn't for Microsoft.
Re:In other news (Score:1, Insightful)
Eh... (Score:3, Insightful)
I think Microsoft should just leave the phone market all together, insofar as entire operating systems are concerned. Windows Phone 7 looks cool, but the lack of multitasking and the walled garden approach make it a moot point. Let's face it...if you are going to deal with a walled garden, you're most likely going to go with Apple.
Xbox Live connectivity is intriguing, but not only do I not care about constant contact with my Live friends list...I don't want it. The mobile gaming is also a slight draw, but that's why I have a PSP/DS...
At this point, Microsoft should just concede this market. They will never catch up to RIM/Android/Apple, and all it will do is hurt their image when it fails.
Yeah (Score:5, Insightful)
Just look how well designing the XBox 360 without the requisite expertise worked out for them...
Re:That could work like the xbox (Score:3, Insightful)
HTC?
Motorola?
Nokia?
Samsung?
is that it? Would M$ think about an aquisition for this? The only one that might be grabbable (in m opinion) is HTC. Just tossing that out there...I hope they dont...but it could be an interesting move buisnesswise - especially if they let HTC maintain other activities with Android in parallel.
Re:Eh... (Score:3, Insightful)
Let's face it...if you are going to deal with a walled garden, you're most likely going to go with Apple.
Where did you get that one from? Many cell phones have no options for installing third party software at all; the imprisoned garden would be perceived as an improvement for users of those phones. Microsoft may be coming a bit late to that party, but I do not think the party is over just yet.
"Microsoft has a long and illustrious history ... (Score:4, Insightful)
.
Here, let me fix that typo for you.
"Microsoft has a long and iniquitous history of operating system sales."
Stupid (Score:3, Insightful)
If Microsoft made its own phone all the other phone manufacturers would quit using windows mobile. Yeah, that's a great idea, convert your partners into enemies.
Just because Apple looks "cool" doesn't means that Microsof has to imitate them. In fact Android seems to be able to kill iPhone relevance in the next years. Yet Android is not the product of a company that does software + hardware.
Re:That could work like the xbox (Score:5, Insightful)
Only losing a couple million dollars is "rather well"? The XBox sells well because it's subsidized by the Office and Windows monopolies, but it's not exactly a profit center [businessinsider.com].
Re:In other news (Score:4, Insightful)
Microsoft is a software company, therefore they have 90% profit on sales.
Apple is a hardware company, therefore they have 40% profit on sales.
That's why, in spite of their revenues being about the same, MSFT makes more profit.
However, AAPL's revenue is going up at a MUCH greater rate that MSFT. AAPL will pass MSFT in revenue this next quarter, and probably pass them in profits in the next year.
Where do you want to be?
Re:Eh... (Score:3, Insightful)
You are right, ms are coming to the party late. But mobile is such a big sector, and still growing, the can't afford to leave it. Much like their attitude to the Internet, they have to be there, and will pay whatever it takes. They should just buy motorola, and probably would, but they want lots of manufacturers to make their devices.
Re:In other news (Score:5, Insightful)
Lots of companies have higher revenue but so what? Have you never heard the following saying?-
Revenue is vanity
Profit is sanity
Cash is king
If Microsoft is getting more profit from it's revenues then that means it has a better business model, and as Microsoft has both higher profits and more cash Apple's increase in revenue, like it's market cap, is largely meaningless. It'll only matter when Apple overtakes Microsoft in profit and equity and assets, until that point Microsoft is still the more solid business.
To illustrate the point, Dell has a revenue of $53bn but a profit of only $1.4bn. By your logic the fact Dell has a revenue around $10bn higher than Apple it's a stronger company, but the profits tell a completely different story. I think you'd be hard pressed to find anyone who believes Dell, despite it's high revenue is a better bet when it has such vastly lower profits and vastly lower assets and equity.
Besides, your assertion that Apple's revenues being about the same as Microsoft isn't even close to true anyway, there's about a $20bn gap with Microsoft at $62bn and Apple at around $42bn and Microsoft's latest results showed them with more revenue than Apple too meaning Microsoft are in fact widening the gap.
Even if Apple do close the revenue gap they still don't have the profits gap closed and still don't have the assets or equity of Microsoft.
So as for where I want to be, well, I'd still rather be where Microsoft is- higher revenue, higher profits, higher equity, greater assets, and not even losing ground in those metrics.
If I were you I'd get a little better understanding of what revenue actually is, what profit is, what equity and assets are and what they mean for a company. Further, you also seem to have a confused view of the importance of quarterly revenue, for example, you suggest that Apple might pass Microsoft in revenue next quarter, which is certainly a possibility, but by how much? maybe in the absolute best case by a couple of $bn but they've got a $20bn gap to close across the year so they'd need to jump at least $5bn ahead every quarter from their current position of being behind, and once they've done that they've got to go from turning $1 in 5 of revenue into profit, down to $1 in 3 into profit which is where Microsoft is, and then building equity and assets takes time. All this for them to even catch up with Microsoft, let alone overtake it.
Re:That could work like the xbox (Score:3, Insightful)
Given that the xbox has done rather well for them, but they'd be entering a market where cool is king. They would have to come up with some seriously strong designs.
How well has the Xbox done for them? They're only now turning a "profit" year to year and that ignores the hundreds of billions of money they've sunk into their entertainment division. Entertainment has lost Microsoft scads of money, there is NO way to view the Xbox or the 360 as a business success story.
Re:In other news (Score:2, Insightful)
And you should get a better understanding of hardware profits vs software profits. Because you don't really seem clued in at all on this.
And look at the last quarter for MSFT (16.1B) vs AAPL (15.7B) in revenue. That's about the same in my book. And AAPL will be above MSFT next quarter.
Also try looking at growth patterns. MSFT flat, AAPL up. Pick any time frame in the last 10 yrs or so.
You go stick with MSFT. I'll take actual price increases with AAPL.
Re:In other news (Score:5, Insightful)
"And you should get a better understanding of hardware profits vs software profits. Because you don't really seem clued in at all on this."
I'm not sure what you're suggesting I don't understand? That software nets more profit? yes, as I said, I get this, which makes it a better business model for achieving profit. Reality doesn't give a discount to Apple and say "Oh well, okay, so you made less profit, that's okay, we understand the profit you did make was made on hardware so obviously we'll give you an extra star for this". The fact is, Apple makes far less profit.
"And look at the last quarter for MSFT (16.1B) vs AAPL (15.7B) in revenue. That's about the same in my book. And AAPL will be above MSFT next quarter."
So you can see the future can you? No really, you may turn out to be right, you have a good chance, but so what? Read what I said, they need to be $5bn ahead next quarter, and then maintain it for the whole year, and then convert a much larger portion of that from revenue to profit. They aint going to achieve that, no company in history has made such a big leap and Apple despite Steve Jobs' scattering of magic wont be able to achieve it either- it's a long slow process, they may overtake them eventually but it'll be years. You seem to go on about hardware vs. software profits, but again here's the point- Apple can't increase it's revenue to profit conversion when large amounts of it's profit are on hardware so they need a massive boost in software to catch up- that's nowhere in sight, Apple admitted themselves that iTunes and the app store isn't a good money spinner and barely breaks even.
"Also try looking at growth patterns. MSFT flat, AAPL up. Pick any time frame in the last 10 yrs or so."
You're good at making stuff up, I'll give you that. MS are increasing too, certainly not at the rate of Apple, but increasing and most definitely not flat- their last quarter was their record ever profit for example which you know, means an upwards trend.
But here's where you're going wrong, you're assuming Apple can continue increasing at the rate they are indefinitely, that's a hell of an assumption to make. Rapid growth from the underdog is difficult but possible and Apple proved it as did Google, but the saying it's tough on top is very true- as Apple get bigger, they'll start to find things harder and will plateau off themselves.
Re:Microsoft = good hardware, poor software (Score:3, Insightful)
Actually, I prefer Logitech. Microsoft's scroll wheel is way too loose feeling for me.
Of course, I'm saying this as a gamer, where you want distinct click-stops if you use a mouse wheel.
Re:That could work like the xbox (Score:3, Insightful)
It kind of depends. Blackberry phones aren't "cool" but they are simple and do exactly what business users want (at least they used to, nowadays even the suits have realized they are limited devices).
Microsoft devices have always gone after business customers. If they want to start targeting teenagers, then they'll have to "get cool."
Comment removed (Score:3, Insightful)
Re:In other news (Score:4, Insightful)
– Profits are more important than Revenue
– Profits are profits, doesn't matter whether they are from HW or SW
– Microsoft has greater profits than Apple still
– Both companies profits are increasing
– Making assumptions about the future is risky
However, I think that in the case of Apple vs. Microsoft predicting that Apple's profits will out grow Microsofts profits in the very near future is a pretty safe prediction. Here is one of the "Chart of the Day [businessinsider.com]" charts showing quarterly profits from both companies. Microsofts profits are increasing in a roughly linear fashion. There is a certain amount of noise in their line, but I would expect a significant linear trend if we were to run the statistics on their quarterly revenue. For Apple on the other hand, their growth in profits is exponential.
Whether you like their products or not, and many here on
The only way I see Apple's growth slowing appreciably is if they make a major misstep, which could happen. According to some the whole "Death Grip" issue is such a misstep. I don't believe it is bad enough, but if they make too many more their house of cards could come tumbling down. They have a growing macintosh division, the iPod (still dominant), iPhone (still desirable and growing), and iPad (Demand out pacing supply for the foreseeable future). Even the death grip doesn't appear to have affected sales that I've seen.
The only way I see Microsoft's growth increasing is if they start doing more things right in divisions that are current break-even or loosing money. That means taking some of their R&D projects and turning them into profitable products people actually want. They've demonstrated over the last decade or so, that they are essentially incompetent at this translation step. You can argue that their vaporware announcements have been everything they claimed they are, but unless it can actually be purchased it is essentially pointless. Maybe Balmer will be replaced with someone that actually understand technology and can steward products from the R&D department to store shelves. Unfortunately though, I don't think that will happen soon. Balmer and all of the other board members at Microsoft know each other too well. And as you say, no one makes more money than Microsoft. However, how much money could they be making if they turned even 1/10th of their R&D projects into moderately successful commercial products?
Re:Great... (Score:3, Insightful)
What bugs me is calling it Windows. From what I've seen, there are no "Windows" in Windows Phone 7.