Microsoft's Q1 Figures Plummet As PC Market Splutters & the World Waits for Windows 8

The financial earnings numbers keep piling up — and after a week of poor performances, the closing bell in the stock exchange is beginning to sound a bit like a death knell. Last night, Microsoft released its figures for Q1, which fell by 22 percent on the same time last year as the PC market tries to pull out of a massive wobble.

Microsoft’s Windows 8

At this point, after looking at all the figures, the wobble is beginning to look like a terminal skid on the black ice of tablet sales. But with Windows 8 in the works for next week, Microsoft is hoping to get itself back on track.

While there are a lot of positives to be taken from the figures — despite the fact that, in most business sectors Microsoft declined — everyone was focused on PCs. Specifically, they are wondering whether the Windows 8 OS will have enough umph-factor to create interest in a market that has gone tablet mad.

Indeed, most analysts suggest the timing of the Windows 8 release is a response to the growing popularity of tablets, since it includes new functionality that favors touch screens aimed at PC makers. Those PC makers are already talking up new ranges of laptops that will be able to double as tablets with detachable screens, or screens that fold down onto the keyboard. Is this where the Microsoft rebound will happen? Only time will tell.

Microsoft Q1

But returning to the figures; Microsoft was well below analysts’ expectations. Net earnings dropped by 22 percent, from US$ 5.74 billion this time last year, to US$ 4.47 billion for the quarter ending September 30 this year.

Revenues were US$ 16 billion, down 8 percent from US$ 17.4 billion in the same quarter last year. Revenues from Windows declined 33 percent to US$ 3.24 billion  — though if Microsoft had not deferred revenue related to Windows 8, that decline would be only 9 percent

Even the lucrative business applications division that develops and sells Microsoft Office products, which would normally be sustained by a buoyant PC market, declined by 2 percent, to US$ 5.5 billion in this quarter.

The Server & Tools business reported US$ 4.55 billion in first-quarter revenue, an 8 percent increase from the prior year period, driven by double-digit revenue growth in SQL Server sales and more than 20 percent growth in System Center revenue. This was also helped by the release of Windows Server 2012.

Standing back and looking at the numbers as a whole, they are in keeping with the figures of other major players in the market. IBM, which also reported earnings this week missed out on analysts’ expectations.

Microsoft’s PC Market

But for Microsoft, the real issue is how the PC market is going to hold up in the coming months and whether Windows 8 is going to help it pull it out of the doldrums.

The company is betting hard on this release — the biggest software product from Microsoft in years — with a US$ 1 billion global advertising campaign (already underway in the US) to counter act any negative feelings users may have about changes in Windows 8.

In fact, for this quarter Microsoft is using Windows 8 to explain many of its ills, which sounds a bit like placing too many eggs in the same basket.

While enterprise revenue continued to grow and we managed our expenses, the slowdown in PC demand ahead of the Windows 8 launch resulted in a decline in operating income. Multi-year licensing revenue grew double-digits across Windows, Server & Tools, and Microsoft Business Division products as businesses commit to our technology roadmap,” said Peter Klein, chief financial officer at Microsoft.

 

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Source : cmswire[dot]com

Nokia Design EVP Thanks Apple's Lawyers

During the closing arguments of Apple's patent lawsuit against Samsung, Harold McElhinney, lead counsel for Apple, contended that design innovation was indeed happening outside Cupertino, notably with Nokia's Lumia device series. "Every smartphone does not have to look like an iPhone," he said, displaying pictures for the jury of Lumia and other smartphones, which were intended to show the lack of innovation happening at Samsung.

The Lumia 900, with its polycarbonate unibody and bold cyan colors, was one of the most compelling alternatives to the iPhone when it hit market, and today, Nokia unveiled its latest iteration: the Lumia 920. Featuring a 4.5-inch curved glass display, inductive charging and NFC functionality, as well as Windows Phone 8, Nokia's newest flagship is proof there is life beyond iPhone, as McElhinney had argued. "I saw [his] quote, and I was like, 'Thank you,'" says Marko Ahtisaari, executive VP of design at Nokia, with a smile. "The best way to respect competition is to do something meaningfully better that's different--not different for the sake of being different, but something that's meaningfully different and a new expression."

With Apple's $1 billion patent-infringement victory over Samsung, device makers across the industry are likely reassessing their approaches to hardware design. But while some believe the trial's outcome could spark widespread industry innovation, others argue that forced differentiation does not equate with innovation--it could lead to "different and dumb," as my colleague Kyle Vanhermert put it.

Ahtisaari agrees that different is not always better but sees opportunity in the lack of differentiation currently in the market. "You look out there, and it's a sea of black and gray and occasionally white devices with rounded corners," he says. "That's what the market is right now: hugely competitive but a lot of stuff that just looks the same."

For the Lumia 920, he thought, "Can we make an expression that's modern and new?" His design team pushed to refine the device's polycarbonate body, add wireless charging capability, and create an atheistic that meshed well with Microsoft's metro design language of Windows 8, colors and all. "I think we've done [something modern and new]...and Apple's lawyers seem to agree," Ahtisaari quips.

But Ahtisaari stresses that Nokia is not being different for the sake of being different. "We're a company that's turning around and design is playing a big role in that," he says. "You build a recognizable identity for products over time, and you evolve and refine that."

Source : fastcompany[dot]com