The Windows Cash Cow Takes a Beating

By  |  Thursday, July 23, 2009 at 2:52 pm

Windows LogoMicrosoft has announced its fourth quarter financial results, and for those of us who are Microsoft customers rather than shareholders, the most striking factoid may be this: The company’s revenue from Windows took a hit of more than a billion dollars compared to what it reaped a year ago. How come? Well, the crummy state of the worldwide economy didn’t help, but another factor was the ongoing popularity of netbooks. They typically sell for less than a $400, and usually ship with a copy of Windows XP that Microsoft can’t charge as much money for as it’s used to getting for Windows. No wonder we haven’t heard Microsoft (or much of anyone else in the PC industry, including netbook manufacturers) wax enthusiastic about netbooks.

The industry keeps predicting the imminent downfall of netbooks, which will supposedly be killed by more powerful thin-and-light notebooks which just happen to cost more. Starting in three months, those thin-and-lights will ship with versions of Windows 7 which Microsoft will be able to charge more for–and it seems like a safe bet that Windows 7 will help Microsoft’s financial statements look a little rosier in general once the OS ships. But I persist in believing that it’s also entirely possible that $400 (and $300) netbook-type computers are here to stay, and could make up a significant part of the laptop industry from here on out. If consumers buy ’em, there’s little or nothing that PC manufacturers and Microsoft can do to stop them. And if netbooks stick around, they’ll have a profound effect on Microsoft’s fortunes whose real impact is yet to be seen.

 
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3 Comments For This Post

  1. Marc Says:
    July 24th, 2009 at 1:21 am

    Why does only Windows and Office get labelled a Cash Cow? Surely Apple’s ridiculously overpriced hardware is equally a ‘cash cow’ – one that allows them to sell their software on the cheap, because they make so much margin on hardware.

  2. Tom B Says:
    July 24th, 2009 at 4:35 am

    “Why does only Windows and Office get labelled a Cash Cow?”

    Historically, these are the only MSFT products that make any profit. Recently XBox had some positive quarters, but not enough to justify the 21 billion sunk into the division, by any measure……

  3. Vulpine Says:
    July 24th, 2009 at 5:43 am

    First off, Microsoft isn’t taking a beating on this, though it would appear so. Instead, just like with nearly every other product made, when you announce something brand new, sales effectively stop while customers wait for the product to come available. It may look like a beating now, but it appears there will be a boom in the not-so-distant future.

    The problem is, unless Microsoft releases 7 before October, they’re going to see another quarter of ‘diminishing returns.’

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