Hacker News Reader

Comment by pchristensen | Hacker News Reader

Not disagreeing, but Innovators Dilemma theory says that companies that are about to be disrupted are enjoying the greatest profits and margins ever. The problem is that the reason the profits are so high is that they've shed their less profitable divisions and products that might grow into the next big innovation. Let's say something disrupts MSFTs Office and shrinks its revenue - what do they have that could replace that?

View on HN

what do they have that could replace that? Sharepoint, SQLServer, Windows 7, Windows Server, Windows Virtual Server, CRM, Exchange Server, XBox, Xbox live, Bing, Zune, Microsoft Automotive platform, Win 7 phone.

Microsoft has one of the most diverse revenue streams of any software company. They're going to be around for a while.

Google should actually be more afraid of disruptive technologies. Their revenue is primarily from advertising. They are truly a single revenue source company.

Also the entire Dynamics series. Web people don't understand the ERP world and the profits that come from annual maintenance plans. What is Dynamics? It's what runs the internal systems for most small/mid-sized businesses that can't afford Oracle/SAP. It's a HUGE market.

I'll also chime in and support Dynamics. It's an amazing market with a ton of actual growth potential.

Azure...

Microsoft is no slouch (especially compared to Google), but these charts seem to imply that Apple still has the more diverse revenue stream:

http://www.businessinsider.com/chart-of-the-day-microsoft-op...

http://www.businessinsider.com/chart-of-the-day-in-case-you-...

Apple's also not really a software company.

Still, even if you ONLY look at Apple's software revenues, I suspect that Apple would turn out to be more diversified than Google. :)

The development suites: Visual Studio, plus those all CAL licensing fee.

I agree. Microsoft shouldn't be concerned about the fact that no one likes their products because they make so many different products that no one likes.

"Sharepoint, SQLServer, Windows 7, Windows Server, Windows Virtual Server, CRM, Exchange Server, XBox, Xbox live, Bing, Zune, Microsoft Automotive platform, Win 7 phone."

Has it actually been determined that Microsoft makes any profit at all from any of those products? Entertainment division (where XBox and Live and Zune lives) is about 12% of their revenue and is still not profitable, while search and online (which is Bing and MSN) loses $700 Million every quarter or thereabouts (at least it did last fiscal quarter).

Their bread and butter has always been Windows and Office. That other stuff are loss leaders, in a way.

Sharepoint is a pretty good seller for them. Exchange has as much of a lock on corporations as Windows.

I disagree. Microsoft derives a bulk of its revenues and profits from packaged software (Windows and Office). These products are on the verge of being disrupted. Computing is shifting away from the desktop to "thin devices" (tablets, smartphones, etc), cloud computing, and online media. Microsoft is performing relatively poorly in all three of these new computing areas.

I agree with all those points, and I think MSFT will be healthy for a long time to come. I was just saying that record-breaking profits can either be awesome or a warning sign. I would guess that MSFT is in a better position than Adobe, but I don't know much about Adobe's financials to make a point based on them.

It's quite possible for it to take a long time, though. Microsoft has been more or less in the position you describe for ~15 years: by the mid-1990s they were making huge profits, almost entirely from Windows+Office. Now, 15 years later, they've still got large profit margins on that same duo.

Reply on news.ycombinator.com