Microsoft has been struggling against an inexorable decline for 10 years now. Most most the Redmond Monopoly's business units operated at a loss. They have beens subsidized by the minority of its profitable units.

The popular press preferred to report on Bill Gates, the Geek Billionaire. The Microsoft fan-boys were convinced that Microsoft would always be dominant because it was dominant. Even most Microsoft haters did not pay attention to the number of computer users who were drifting away from reliance on Microsoft products.

It is not an accident that Internet Explorer's share of web traffic has dropped below 70%. Neither is it an accident that neither Windows Media 10 nor Windows Media 11 content make up more than a drop of media content on the Internet.

You can't say that the Emperor has no clothes, but he is down to his skivvies.

OK, I know others will jump on me, but they had a net income of 3.05 billion dollars. Profit of 3 billion last quarter alone. That is 1.1 billion more than apple did - so bad quarter for MS - yes. MS about to go under? Not a chance!

dw9

OK, I know others will jump on me, but they had a net income of 3.05 billion dollars. Profit of 3 billion last quarter alone. That is 1.1 billion more than apple did - so bad quarter for MS - yes. MS about to go under? Not a chance!

dw9

The "world economic collapse"? When did the whole world's economy collapse?

No, America's economy collapsed. Everyone else's economy has been in the s**tter for years.

Anyway, MS will just do what it does best — strong arm, needle and misdirect its way back to the top.

Not only is this decline something Microsoft has foreseen — they have repeatedly commented that their profits from Windows and Office (their two major profit sources) would eventually decline — but it's why Microsoft has done what it has done this last decade.

The effective DOS/Windows monopoly arose as a result of a combination of luck — Microsoft got the contract more or less because of the Gates family's contacts and DRI's lack of initiative — and other people's stupidity. (IBM got stupid three times: first by not recognizing the value of the PC market, then by not realizing that compatibility would be more important than manufacturer reputation, then by not locking down Microsoft's committment to OS/2. Had IBM been wise at any of those points, there would be no Windows now.) The effective Microsoft Office monopoly came about in a more complicated way, but still boils down to good luck for Microsoft and other people's stupidity.

Microsoft's management knows this. It also knows that although stupid people abound, there's no way to guarantee that future stupidity will benefit Microsoft. And they are not counting on good luck, although they won't hesitate to take advantage of it if and when it appears.

Since they have decided not to sit around hoping lightning will strike again, they have to find some other way to compensate for the inevitable eventual decline in profits. They have correctly determined their strength: creating "fast follower" knockoffs of established products. This reduces R&D cost while making it easy to drive out other companies — let the innovator find out what does and doesn't work, and then copy the successful result and sell it at a lower price. (Innovation has not been a good strategy for Microsoft: the one clear example of Microsoft innovation remains Microsoft Bob, which evolved into the famously annoying assistant in Microsoft Office.)

The problem (from Microsoft's point of view) is that Microsoft's products really aren't very good — or, at least, not good enough to compete on the basis of quality — even using the "fast follower" strategy. They therefore cannot count on dominating a market just by entering it.

To compensate, Microsoft has been entering EVERY emerging software-related market where there was only one major competitor, attempting to undercut that competitor. Once you realize this, the huge number of un- or only marginally-successful product launches undertaken by Microsoft in the last decade become not just understandable but the best possible strategy. There's simply no other way for such a company to have a good chance of creating new revenue stream.

Of course, Microsoft will get a burst of revenue from Windows 7 — but the writing is on the wall for Windows as a revenue stream, largely thanks to Vista's lackluster performance. By Windows 10, there will be enough migration to Linux and Mac OS that Microsoft will have to drop prices, and will quite possibly cease turning a profit on the OS.

A high proportion of Windows users are used to getting things 'good-enough', so when they got to XP, many decided it was 'good-enough' and when the bad press of Vista came out, too few saw much point in upgrading since their computers were working 'well-enough' - add to this he economic downturn and what is the point of spending money unless your computer dies (when you ma not get a choice of Vista vs XP on an off the shelf PC)

It makes me chuckle and as an Apple stock holder (bought two splits ago) I am glad microsoft is planning on opening stores "near Apple locations." It further ratifies Apple.

ms still doesn't get it. They talk as though they create cool products, but they don't. Their public relations machine is out of sync with reality.

I think its entirely premature that we all start sucking each other off.

These guys still posted a 3 billion dollar profit and they have a slew of new products on the horizon with updates to Windows and Office coming.

Until they start posting losses, as in 0 profit, I wouldn't get too excited personally.