By Jo Best, 3 September 2004 11:20
NEWS Microsoft has filed a report with the Securities and Exchange Commission (SEC) - and it looks like the Redmond giant could be in for a lean year ahead, even going as far as to hint that Linux and other open-source rivals might be to blame.
A stagnant tech market is also weighing down the world's biggest software company and, according to the filing, the company won't be expecting to repeat previous periods of rude health.
"For fiscal 2005, we believe industry-wide factors such as PC unit growth and the success of non-commercial software could significantly affect our results of operations and financial condition. PC unit growth was very strong in fiscal 2004, increasing approximately 13 per cent from fiscal 2003. We do not expect similar growth to occur in fiscal 2005," the filing stated.
As well as suffering from a lack of PC buyers, it seems Microsoft fears that the Penguin might pick up some of its market share.
"We continue to watch the evolution of open-source software development and distributionÂ… We believe that Microsoft's share of server units grew modestly in fiscal 2004, while Linux distributions rose slightly faster on an absolute basis," the filing said.
"The increase in Linux distributions reflects some significant public announcements of support and adoption of open source software in both the server and desktop markets in the last year. 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."
More interestingly, however, Microsoft seems to be contemplating taking a cleaver to its licence costs as a result of open-source competition. According to the filing: "To the extent opens source software gains increasing market acceptance, sales of our products may decline, we may have to reduce the prices we charge for our products, and revenue and operating margins may consequently decline."
Antitrust concerns are also playing a part in the newly modest outlook, with Gates and chums hoping to resolve all the remaining antitrust scraps for between $1.1bn and $1.2bn.
The filing lists where Microsoft has identified potential market opportunities for the future. Expect to see Microsoft gunning for the search segment, putting on big consumer tech - TV, games, video - drive and trying to woo SMEs.
For a company thought to have a cash mountain of some $60bn, such worries might seem premature but Redmond has been on a cost-cutting drive that saw sundries from fizzy pop to laundered towels for staff go, as CEO Steve Ballmer announced the company would be aiming to shave $1bn off its operating costs.
Comments
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1. Goten Xiao
And Microsoft cutting costs is a bad thing? For that quality of software?
Oh, right - it's not enough for Gates to possess several billion dollars. He wants enough money to buy the United States and turn it into Gatesland.
Sheesh. Can't take a little competition. Sony seem to do all right, as do Nintendo and all the hundreds of game developers out there... But Microsoft and Linux can't coexists because...? Ah! Because Gates won't accept anything less than a monopoly, because he's a money-and-power-greedy S.O.B.
On the other hand, maybe because Linux, in comparison to Windows, is overwhelmingly better (for some applications. And if game developers start compiling for Linux as well, there won't be much that Windows has an advantage with), which means that people will save their cash and go with an option that costs less.
And everyone knows that you can't get more competetive that free. (And yes, I know you have to pay for CDs; but even those can be bought cheaply. £1.50-£4 doesn't sound like much to me for an OS and a ton of software...)
2. Steve Berry
Hmm.. So MS finally come out and say what most of us have known for years.
Bottom line guys, in the long run you can't compete with something that's free-no business can. All the lawyers, marketing gimmicks (Sql 2005 Express ?? err... snigger), tech wizardry won't wash anymore. When the devs start moving enmass to Opensource, as I believe will likely happen, although it'll take a while,
will we then see the end of MS as we currently know it ? Hmm...
You know, I think IBMs consortium decision to publicly back Opensource will probably send some serious shivers down the MS spines.
Big boys, playing big boys games... and with pretty scary consequences.
3. linus atpug
Whoever is guiding the MIcrosoft strategy to consider linux as a threat and to be avoided should be publically shot.
Its the biggest opportunity that Microsoft is missing! If a true microsoft desktop that made linux as easy to configure as control panel does for linux were and microsoft office were available for linux right now (at the right price) I'd jump right now!
(and no Microsoft doesn't have to make their software open source)