Many PC makers and their customers continue to push back against Windows Vista. Software as a service (SaaS) and open source are giving Microsoft fits. Yet, it's far too early to bury Microsoft. Here are seven reasons why the software giant's empire won't fall anytime soon.
1. Big Profits: Although profits fell 11 percent during Microsoft's most recent quarter, the company still generated $4.39 billion in net income during the period. That's roughly $49 million in pure profit every business day during a 90-day quarter.
In stark contrast, Red Hat's net income during its most recent quarter was $22 million. In other words, it takes Microsoft less than half a day to surpass Red Hat's entire quarterly profits.
2. Windows Installed Base: Some folks may hate Vista, but the operating system's installed base has grown to 140 million licenses, up from 100 million in January. That's impressive and pathetic, considering all of the folks who are downgrading to Windows XP or jumping to Mac OS X or Linux. But still, I have to concede that the Windows installed base continues to beat the competition by a wide margin on the desktop.
3. Managed Service Providers: Sure, MSPs and software as a service (SaaS) experts are embracing open source applications. But they're also flocking to hosted versions of Microsoft Exchange Server, Microsoft Dynamics and Microsoft SharePoint, notes Ingram Micro. In fact, many MSPs are buying up Microsoft software partners in a race to enter the SaaS market.
4. Server Applications: Microsoft's server and tools sales rose 18 percent to $3.3 billion, helped by the launch of new versions of Windows Server and other major software franchises, notes the Associated Press. Do some quick math, and it's difficult to find any other server-centric software companies generating more than $13 billion in annual sales while generating near-20 percent annual growth.
5. Independent Software Vendors (ISVs): Ultimately, Microsoft's primary customers are ISVs — the very folks who keep writing more and more applications for Windows. And even open source companies such as SugarCRM say they are more than happy to offer applications on Windows Server.
6. Market Fragmentation: Sure, Oracle has acquired numerous application providers. But generally speaking, Microsoft remains the only major software supplier that has a full arsenal of options — operating systems, tools, databases, application and online services.
7. Xbox Marks the Spot: Revenue from the division responsible for the Xbox 360 video game system ballooned 68 percent to $1.58 billion, which Microsoft attributed to robust demand for game consoles, noted AP. More importantly, kids (including my own) are hooked on the Xbox Live video game service. With any luck, Microsoft's business developers will steal a few pages from the Xbox Live online service experts.
Yes, Vista has missed the mark with many customers. And Microsoft will continue to take some lumps for the next few years.
But the Internet and open source were supposed to kill Microsoft in the 1990s. So far, all of those deadly blows were merely flesh wounds.
Disclosure: No position.