Microsoft profits tumble: Big switch tipping point?

Is this the Tipping Point from on-premise software to software as a service? On the same week Microsoft announced a 32% drop in profits Apple reported sky rocketing profits.  Still the Redmond giant has a long way to fall. It makes a cool $1b Nett profit every single day! However, this is a striking contrast in fortunes during a recession. The downturn is acting as a catalyst of change and speeding up the Big Switch to cloud software services. The way we access and use technology applications is changing.

falling-stack-of-coins2At the heart of Apple’s iPhone success is the App Store and iTunes. Apple is successfully up-ending how music is distributed and how mobile phones are used. Microsoft’s poor financial results also follows the closing down of Microsoft Encarta last month. Microsoft gave up the fight because its traditional software could no longer compete with the likes of Wikipedia. The good and bad news keeps coming thick and fast. Only two months ago the SaaS CRM provider Salesforce.com reported a 34% increased in revenues and broke the philological $1b revenue barrier.

Its far too early to write Microsoft off but can the giant keep up with the increasing rate of change? Microsoft has rarely lead from the front but they have turned around and court up in the past. Microsoft’s response to the Cloud Computing Big Switch is Azure. The challenge for Microsoft will be to move away from its reliance on software licence revenues to a service based model. I’m not entirely sure they will be able to pull this one off..

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2 Responses to “Microsoft profits tumble: Big switch tipping point?”

  1. denz Says:

    Consider that MS still owns 90% hold of computer OS market, they make more profit in a day than apple does in a quarter. Yup a sure sign of the end.

  2. Nick Barker Says:

    Thanks for the comment denz,

    Its true MS do hold almost 90% of the desktop OS market and they are not going away anytime fast. Although more bad news last year (Dec 08) “Windows Market Share Drops Below 90% for First Time”, “it has historically held tight: 90 percent.”

    I also don’t think Apple is going to take over the PC desktop industry either. For starters they don’t have the capacity, infrastructure, etc. We also remain extremely reliant to MS apps. Particularly in the Enterprise.

    Still, NO company no matter how big is immune from failure in the long run. Extinction is only a matter of time for everything

    Best

    Nick

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