Microsoft Reporting Losses is Not Necessarily A Bad Thing!

Yesterday, Microsoft reported a loss for the first time in over 25 years. It was the first time they reported losses after it became a public company. A lot of people have written about the shocking decline of Microsoft and some even were writing obituaries.

It might be tempting to say that in the supposedly ‘post-pc’ era, Microsoft with it’s Windows platform is dying. But it is not the PC sales that have hurt Microsoft, but it’s strategy for the web.

In 2007, Microsoft bought a company called Aquantive for $6.4 Billion. It was supposed to rival Google as an advertisement platform. Unfortunately, Aquantive could not make profits and Microsoft had to write it off. This has led to a loss of $442 Million past 3 months.

Writing off on failures even at the cost of declaring losses, is indicative that the company is trying to focus on its core competencies, which are selling operating systems and Office software suites. So despite a reported loss, Microsoft stock went up after the news broke out.

The revenues of Microsoft are up by 4% despite slow sales of Windows 7. A slowdown of Windows 7 purchases will probably continue as Windows 8 is expected in October.

Microsoft’s Journey From Arrogance to Humility!

Steve Ballmer – CEO of Microsoft

Microsoft has made a lot of aggressive moves which were arrogant in the past. They under-estimated companies like Google and Apple about 10 years ago. They pretty much disregarded the internet as a medium itself.

By ignoring mobile platforms, they let Apple with their iPhones and Google with Android become big players. Microsoft was so arrogant because it was making big money for so long; that they simply did not pause to think, that they were surrendering their future.

They kept throwing money at Bing and then making purchases like Aquantive to challenge Google. Unfortunately throwing money does not always get best results and today despite Bing growing slowly, it is far from being a profitable venture for the company. The fact that they were not taking web technology seriously was evident from how Internet Explorer 6 as a browser survived for over a decade.

But recently, Microsoft has woken up to reality and has tried to shed it arrogance. First signs in recent times has been it’s “Browser you loved to hate” campaign for IE9. Instead of suggesting other browsers were useless or pathetic, they were admitting that their previous versions were poor but it was time to give their new version a try.

A Humble Microsoft is Good News

Companies find it hard to become humble. In other words they find it hard to admit defeat. When Steve Jobs returned to Apple as its CEO, he shed the arrogance and famously refocused the company into concentrating on its core products. He also gave up on the idea of trying to defeat Microsoft.

An almost bankrupt Apple, was suddenly focusing on creating something new for the future and the rest is history.

Microsoft seems to be getting a lesson in humility and they seem to be focusing not of beating other companies but rather to improve their products and services.

Microsoft unveiled Surface tablets a few weeks ago. The tablets are not trying to compete with iPad directly. The tablets are designed differently and it is looking to bring something different in the tablet niche.

Windows 8 also is designed very different from previous versions of Windows. This refocus exercise by Microsoft is finally good news because in the end consumers might be the real winners.

What are your views on the future of Microsoft? Do drop in your comments.

Link: Microsoft’s Q4 and Full Year Report