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Q1 2013 likely left Microsoft's Ballmer sweaty and frustrated.  (Source: YouTube)
Some divisions profit, but Microsoft faces uncertainty as it races ahead to Windows/Windows Phone 8

Earnings week for the tech industry has brought a lot of bad news, with a few pleasant surprises (like Intel Corp. (INTC)).  Microsoft Corp.'s (MSFTearnings definitely fall into the "bad news" category.

Microsoft, which operates two fiscal quarters ahead of the calendar quarter, saw itself narrowly miss analyst targets in both revenue and net income (profit).  The company pulled in $4.47B USD (expected: $4.72B USD) in profit on revenue of $16.008 USD (expected: $16.416B USD).

A key to the miss was plunging revenue from the Windows unit, which saw a big drop in Windows 7 sales.  Microsoft better hope that predictions of Windows 7 being the "next Windows XP" aren't true, because it's counting on Windows 8 to revive sales, with movement of the once-sterling Windows 7 slowing to a sluggish pace.

Steve Ballmer, chief executive officer at Microsoft, roared at his critics, commenting in the earnings release, "The launch of Windows 8 is the beginning of a new era at Microsoft.  Investments we’ve made over a number of years are now coming together to create a future of exceptional devices and services, with tremendous opportunity for our customers, developers, and partners."

Windows 8 Upgarde
Microsoft is currently selling Windows 8 upgrades via pre-order.

Microsoft did defer $1.36B USD (as it typically does) in pre-order revenue from its Windows Upgrade Offer program.  Windows 8 official launches next Friday on Oct. 26.

One bright spot in the earnings report was Microsoft's servers unit, which saw an 8 percent bump on revenue, mainly on big growth in SQL Server and System Center.  And in the also-somewhat-good news category, Bing and the online service division crept a bit closer to no longer being massive money losers, with revenue 9%, driven by a 15% increase in revenue per-click.  That's particularly good as the dominant force in the search market, Google Inc. (GOOG), saw a large decrease in revenue per-click after traffic acquisition costs (TAC).

The Entertainment and Devices division earnings were a revenue draw (down 1 percent).  It is currently focused on reviving Microsoft's smartphone bid with Windows Phone 8, which launches next week.  It also was able to brag that the Xbox 360 remains sales king of the American consoles market, with a 49 percent estimated market share.  The Xbox 360's successor, which some are expecting to be named the Xbox 720, is not expected to land until sometime in late 2013 or early 2014.
HTC Windows Phone 8X
Windows Phone 8 launches next week. [Images: Nokia (left), HTC (right)]

Microsoft remains one of the best earning and most successfully diversified hardware/software giants in the consumer electronics industry.  However, it continues to be defined by the burden of high expectations, speculation, and intense scrutiny surroundings its "misses".

Shares of Microsoft were hammered in morning trading, down almost 3 percent to $28.70 USD/share.

Sources: Microsoft, FT [analyst estimates]



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By Labotomizer on 10/19/2012 1:05:12 PM , Rating: 0
I agree completely. The really funny thing is so few people who are complaining about Windows 8 even remember how it was during the transition from DOS to Windows 95. The comments are very similar. It's a good thing to push the UI in new directions. Is Metro the ideal direction? I suppose that's yet to be seen. But at least it's change, at least a major player is trying something different. Sticking with the old interface design principles is easy but it won't advance computing.

People seem to forget how important the interface is when it comes to software and hardware advancing. Since I think the desktop PC will be dead in ~5 years, replaced by a tablet or phone that docks for larger displays, Microsoft is ahead of the game with Windows 8. Also, let's be honest. iOS is nothing new. Other than a touch screen it could be a carbon copy of the original Mac OS or Windows 3. It really didn't add anything to the UI equation and relies on apps to make it functional.

Even if Metro isn't the answer, hopefully it sparks ideas so that someone will take us to a new era of computer interface design. Because using the same one for 20 years isn't cutting it.


By kattanna on 10/19/2012 2:06:00 PM , Rating: 2
quote:
Because using the same one for 20 years isn't cutting it.


and just how is it holding you back?

and just in what ways does the new overly busy interface help expand computing?


By andrewaggb on 10/19/2012 3:28:44 PM , Rating: 3
Because windows xp and 7 tablets sold so well!

There is nothing wrong with the desktop for desktop pc's, which is why windows 8 still has it with minor improvements. Realistically it's not going away, probably ever. Stuff like visual studio won't ever make sense in metro or touch. The server products likewise.

But for touch computers you need a new interface with apps specifically designed for touch.

For battery powered computers they are understanding that they need instant wake, connected stand by, and minimal multi-tasking.

I think MS is headed in the right direction. Windows 8 gets them started, Windows 9 will probably get it right.

So far windows 8 is working well for me. The hot corners in desktop is a bit weird, but it also keeps things consistent with the new way of doing things.


By 91TTZ on 10/19/2012 4:00:43 PM , Rating: 5
Windows 8 looks good on tablets. I think the main concern that people have is that Microsoft is forcing that UI on the vast majority of the public that uses PCs. Microsoft has more than 90% of the PC market and now we're all expected to run a tablet-optimized OS on it? No thanks.


By Sazabi19 on 10/19/2012 4:09:49 PM , Rating: 4
Exactly! How hard would it be to have it bundled with a "regular" Windows 8 and then an option of installing a Windows 8 *Touch*. This would solve so many problems and get this UI out of my desktop environment. Though I still have a beef with my Start menu being taken away and the weird obtuse way of navigating the OS now. Everyone knows, if I press the "x" the window will close, it's universal and now they are going to rip that from under us? Move the window down all the way and it will close it? I do that sometimes to just move it out of the way for a second to look at something behind it but keep it the active window, this isn't helpful. Want to have several windows up and once and just bring 1 down to look at another with Metro? Too bad. No true multitasking for you.


By Jeffk464 on 10/19/2012 4:29:37 PM , Rating: 3
Yup, there should be two 100% compatible versions of windows, a metro version and a desktop version. Let people with PCs choose which one they want.


By marvdmartian on 10/22/2012 11:40:25 AM , Rating: 2
This. Don't know about anyone else, but I don't necessarily want to move away from Windows 7 right now, and having ONLY the choice of Windows 8 on a new computer might very well cause me to look in another direction.

Might be that Microsoft's actions will end up being a boon for Linux!


By Maiyr on 10/20/2012 9:52:19 AM , Rating: 2
quote:
Microsoft is forcing that UI on the vast majority of the public that uses PCs


This seems to be what a lot of people think, but I just do not get it. I have been using Win8 RP since it came out on my laptop and the only time I ever see Metro is when I decide to see it; which is mostly never. When my laptop boots or comes out of sleep it goes directly to the desktop. It does not go to Metro. I use my laptop the same way I did with Win7. Anyone that wants a start button can install this for free.

http://classicshell.sourceforge.net/

Metro does not have to be used at all. I can only think that folks that are saying Metro is an issue really just haven't even installed Win8.

To each their own, but I like the option of having a different "interface" available should I so choose to use it.

Maiyr


By augiem on 10/20/2012 3:53:18 PM , Rating: 2
quote:
Metro does not have to be used at all. I can only think that folks that are saying Metro is an issue really just haven't even installed Win8.


Blanket assumptions are almost always wrong. I've installed Windows 8 three different times during its development and could not stand the workflow. Just because it doesn't bother you doesn't mean it won't bother someone else.


By kitfox on 10/21/2012 9:45:24 PM , Rating: 2
I think you missed his point. With the apps we have now, metro is completely optional.


By vol7ron on 10/19/2012 4:17:51 PM , Rating: 2
You know, one of the things I was hoping for with Windows 7 was a free, decent hypervisor. Not just the ability to run an application "in" XP.

There really isn't much difference in the interfaces of OS X and Windows 7, but Windows 8 does take things in a new direction, which I'm also a fan of, if I can quickly get back up to speed in my tasks. Automation and customization was one of MS's best features - the new interface could mean a start from scratch. And a start from scratch might mean, re-evaluate all the options on the market again, not just sticking with Windows.

One of my biggest peeves about the new interface is cosmetic. For some reason the two-tone, square icons really irritate me and I don't know why. I hope you can customize those, but I'm not a huge fan of squares - yes I'd even prefer triangles :) On the other hand, it's fluid free-movement between zones/pages.

Now, one the that impressed me with OS X was all the programs that came installed with it. There was postgres, perl, apache, mysql, php, ruby, python, git - the list goes on. There were about 150 pre-installed applications that were actually useful, which Windows doesn't come with. Not only was it nice to have them, but it saves so much time when setting your environments back up. They're right at your fingertips. Other than that, I feel that Windows is much more responsive (no waiting or errors that OSX seems to have).


By Labotomizer on 10/20/2012 7:38:21 AM , Rating: 2
You're forgetting Hyper V 3.0. Which is an enterprise grade Type 1 hypervisor you're getting for free. And it works insanely well. I've even built up VMs on my Windows 8 workstation and then moved them to our Hyper V cluster once I have everything the way I want it. That way I can work on the plane or in the hotel room without depending on connectivity back to the network until I actually need it. And vice versa, I could take a Windows 8 laptop and move a few VMs to it in a pinch if I absolutely had to.


By Sazabi19 on 10/19/2012 2:35:04 PM , Rating: 4
Why is not staying with the current scheme feasible? The OS is just the base of your computer, the UI, nothing more, nothing less. It is the placeholder and pointer for every application on your computer. It is there to simply give you pictures to make everything easier. There doesn't need to be a huge overhaul like this. Give me some awesome under the hood refinements in speed and efficiency and I would be incredibly happy. There is no reason to have Metro unless you like the look of it, I do not but I do like Aero with the frosted glass outline that I can see through. I don't need pretty crap for my computer, it is nice but not needed. Optimize Win 7 and we have a deal, but not with Win 8. I've been using it on my laptop since dev preview and have not liked it yet. There is such a huge learning curve in it that its ridiculous. The only reason it boots faster is because it loads nothing accept the start screen. If you go to the desktop it still takes just as long because it then loads everything else. There was no reason to pull the start menu out at all. Have the Metro junk and everything else as AN OPTION, don't force it on us. It is nice for touch devices sure, but not on my desktop or laptop. I hope Win 8 falls flat on its face, hard. Maybe then they will say sorry for trying to force this on us and make Win 9 better again.


By TakinYourPoints on 10/19/2012 3:07:43 PM , Rating: 2
Very very well said. Under the hood optimizations and streamlining of the existing UI is what really matters, not reinventing the wheel into something that isn't any better or is worse than what exists.


By zero2dash on 10/19/2012 4:12:02 PM , Rating: 1
Upvote this man!

I've played around with 8 in VM's several times and I cannot stand it. I don't have a touchscreen and I don't want Facebook integration in Windows. I will continue using 7 for the foreseeable future.

I think the argument of "they need to change" is laughable. Why do they need to change? To appease tablets and smartphones? Even Apple, in their high and mighty "we know what's best for people" mantra, wasn't dumb enough to try to bastardize OS X across all platforms; they forked off iOS, just like Microsoft should have forked off Metro. Clearly they didn't want to do that, however, but they STILL could have saved all this outcry by giving users the option to forego Metro in favor of "classic Windows" in OOBE/setup.


By JohnWPB on 10/19/2012 10:39:25 PM , Rating: 2
I ran out of votes before I got to this one, so alas, all I can do is add to the agreement, that MS opens it's eyes and starts listening to the vast majority of users, that DO NOT want a touch screen desktop, with some really stupid ideas, for a desktop OS.

Come on MS, wake up before you lose more fans!


By Labotomizer on 10/20/2012 7:30:50 AM , Rating: 5
Severely lacking in forward thinking.

You need to understand the trends and the way computing is going in general and then, perhaps, it will make sense. The funny thing is having two options is exactly what you have in Windows 8. The desktop is still there. It still works like it did it Windows 95 through 7. Are you really saying the lack of a little glowing orb in the bottom left has changed the desktop that drastically? How can you be so small minded? The Start Screen functions EXACTLY like the Start Menu, only you have larger choices, more information, etc. And since, like I did with Windows 7, I have my desktop icons turned off on Windows 8 and all my high usage apps pinned to the start menu, I see the start screen a couple times a day at most. And usually it involves hitting the Windows Key on the keyboard, which has always been the more efficient way of acccessing the start menu, and typing "cmd", right click, Run as Administrator. And occasionally to get to the Hyper V manager and some control panel settings. All of which are done through search. In no way is it slower than the previous way.

But back to the forward thinking. Mobile device processing power is advancing in leaps and bounds. By the time Windows 9 is in full swing, say ~4 years from now, it's unlikely the vast majority of users will even buy a PC anymore. You'll buy a dock for your phone or tablet that may have additional storage and processing power. Perhaps even an external GPU. You'll connect that to your monitor/TV/Keyboard and Mouse. When you're using that you'll have access to all your mobile apps via the new UI and access to all your legacy stuff with the old desktop.

Especially if Intel has its way and it really takes off on x86 highly mobile chips. Their architecture is already setup in such a way that they could accomplish this today with Thunderbolt. Guess what we're missing though. A UI that can bridge the gap between mobile/touch screen and desktop. That's why Windows 8 is what it is. I can't believe so few people lack the mental processing power to understand such a basic concept. How is the current UI holding us back? By not allowing us to have a truely mobile device that can also be a true production powerhouse when needed.


By Labotomizer on 10/20/2012 7:32:23 AM , Rating: 2
Wish we had edit - I have them pinned to the task bar. Not the start menu.


By Reclaimer77 on 10/20/2012 9:29:02 AM , Rating: 2
quote:
But back to the forward thinking. Mobile device processing power is advancing in leaps and bounds. By the time Windows 9 is in full swing, say ~4 years from now, it's unlikely the vast majority of users will even buy a PC anymore. You'll buy a dock for your phone or tablet that may have additional storage and processing power. Perhaps even an external GPU. You'll connect that to your monitor/TV/Keyboard and Mouse. When you're using that you'll have access to all your mobile apps via the new UI and access to all your legacy stuff with the old desktop.


I bet you a thousand dollars, straight up, that this won't be a reality by the time Windows 9 (or whatever comes after 8) hits the market.

There's "forward thinking" and there's just wild unrealistic predictions. PC's aren't just going away, certainly not that soon.


By delphinus100 on 10/20/2012 1:23:18 PM , Rating: 2
Indeed. It isn't all a matter of processing power. For those who want to do something productive, and not just consume media, there are certain ergonomic issues that push you back to something that at least looks like a PC on a (literal) desktop, and also don't lend themselves to tablets/smartphones, or assume (or even require) continuous broadband Internet connections.


By 91TTZ on 10/19/2012 3:39:00 PM , Rating: 3
quote:
The really funny thing is so few people who are complaining about Windows 8 even remember how it was during the transition from DOS to Windows 95


The transition wasn't from DOS to Windows 95. Nearly everyone had Windows 3.1 first.

DOS-Windows 3.1-Windows 95. There were others, but they didn't really catch on.


By TakinYourPoints on 10/19/2012 4:36:07 PM , Rating: 2
It is a ridiculous comparison either way. One is a move from CL to GUI, the other is taking an existing GUI and compromising its mouse and keyboard input.


By themaster08 on 10/20/2012 3:29:37 AM , Rating: 2
It's obvious why Microsoft are doing it this way. They need to do this in order to leverage their ecosystem.

If Microsoft simply released its OS strictly for tablets it would likely see the same success as Windows Phone. Whilst the product itself may be fantastic, people are not interested. People know what an iPad is, and to a lesser extent, know some Android tablets. People go with what they know. The competition is much too dominant and have much larger ecosystems of applications and other media content.

PC sales have already taken a nosedive. This is not something Microsoft can sustain. Even if Microsoft released a new OS with similar interface as Windows 7, to the average consumer, it would be more of the same, and they'd simply purchase an iPad, or an Android tablet. At least with Windows 8 it can usher in an entire host of new devices to get people interested in the PC market again.

Of course there are going to be many people that will be pissed off by this, but Microsoft are not the type of company to relegate themselves solely to the enterprise. Whilst what Microsoft is doing will not please everyone, as a company, it is something they have to do in order to stay relevant. People will adapt. As always, it takes time. Windows 8 may turn into the next Vista, but I don't think Microsoft will mind, because that will still be hundreds of millions of PC/device sales, and a massive leverage for their ecosystem.


By TakinYourPoints on 10/21/2012 12:53:48 AM , Rating: 2
I agree that this is a "trojan horse" method of getting their desktop OS, which will sell well no matter what, into tablets.

The iPad is the only reason why this is all happening.

Microsoft watched Apple singlehandedly kill netbooks and help flatten traditional PC sales (the Mac excluded since MBP sales continue to grow). That scared the daylights out of a company whose business still depends primarily on desktop Windows and Office. If the iPad becomes the lingua franca of computing, Microsoft is relegated to a sideshow.

And to be totally clear, obviously this wouldn't replace the desktop/workstation segment. Even Steve Jobs in his whole "post PC world" thing said something to the effect of "you'll always need a truck" when referring to desktops and laptops.

But replace the need to have a desktop or laptop for a large number of users? Quite possibly. At the very least it would reduce the need for multiple computers in a household, and this move is Microsoft trying to make sure they have their foot in these sorts of devices. They may not be sticking the execution in terms of clearly segmenting desktops and tablets, but as per usual they'll iterate until they get it right.


By Labotomizer on 10/20/2012 7:35:59 AM , Rating: 2
Win 3.1 was a program running on DOS. DOS still existed and was at the core. And the complaints about moving to the GUI is exactly what these complaints sound like now. Trust me, I worked with people who echoed statements exactly like what I hear in these comments. "Microsoft needs to leave my DOS alone, keep it running so I can keep using it, it's faster than Windows and I can do more" blah blah blah. And yes, the move to an OS that can finally bring us unified computing devices that can cover all needs is an equal step as moving from CL to GUI.


By Spuke on 10/19/2012 6:52:10 PM , Rating: 2
quote:
It's a good thing to push the UI in new directions.
I agree with you but most people don't like change and some don't like ANY change. You hear "reasons" why and they seem logical but if you go back a few years, you'll see the similarities. IMO, it's why iOS hasn't changed cause people don't like that. I do like the fact that there are new things (be they ideas, products, services) to satisfy those of us that don't mind change. I'd be bored sh!tless if there wasn't. MS is taking a big chance with Win8. I hope they pull it off but we'll see.


By delphinus100 on 10/20/2012 1:12:50 PM , Rating: 2
quote:
I agree completely. The really funny thing is so few people who are complaining about Windows 8 even remember how it was during the transition from DOS to Windows 95.


Uh, some of us went through Windows 3.x on the way to 95. I can still find my 'Windows 3.11 For Dummies' that has an introductory section on Windows 95. It was truly not a step of the same magnitude...


By Hieyeck on 10/21/2012 12:10:30 AM , Rating: 2
The train of thought has been, and always will be: Is the current UI setup broke? No? Don't fix.

Yes people griped about DOS > Win, but you forget that it was still DOS based. What they SHOULD be doing is taking Win7, and throwing Metro on top, just like the transition from DOS > WIN if they're looking to evaluate a new design. It took 4 versions of Windows to really get people over to a GUI from DOS, I don't expect people's mentality to change.

Remember that fiasco with Office 2007? Look where 2010 went. Right back to 2003, except the file menu is now a shiny button instead. For all intents and purposes, there has been no change.


By MrBungle123 on 10/21/2012 12:39:43 AM , Rating: 2
quote:
Yes people griped about DOS > Win, but you forget that it was still DOS based. What they SHOULD be doing is taking Win7, and throwing Metro on top, just like the transition from DOS > WIN if they're looking to evaluate a new design. It took 4 versions of Windows to really get people over to a GUI from DOS, I don't expect people's mentality to change.


ummm... isn't that basically what Win 8 is? At its core its basically Win 7.5 except the UI has this extra layer of crap on top of it getting in your way all the time.

Windows offered some clear advantages over DOS that made the trouble of learning the new UI worth it... Multitasking, more intuitive file management, and a much shallower learning curve for new users are huge advantages. What does Metro offer that the desktop does not? Better multitasking? --nope multitasking functionality in a pure Metro environment is inferior to the desktop. Better file management? --nope, they send you back to the desktop to do that stuff. Shallower learning curve? --debatable, but 95% of the computing world already knows how to navigate windows... 100% of all windows users will have some growing pains adjusting to the new UI..

Lets face it, unless you're a touch user, its going to be a bunch of trouble learning a new UI so you can have inferior multitasking capability, an extra layer of stuff to click past to manage your files, and you gain very little beyond a new version of task manager and some more informative file copy dialogs...

quote:
Remember that fiasco with Office 2007? Look where 2010 went. Right back to 2003, except the file menu is now a shiny button instead. For all intents and purposes, there has been no change.


No, the ribon that most users dispised in 2007 is still there in 2010/2013. All this shows is that MS will do what they want no matter how much the userbase complains.


By lyeoh on 10/21/2012 3:53:03 AM , Rating: 2
If you can come up with a touchscreen UI that allows something like Starcraft/WoW/Excel/Photoshop to be used much better then I think you will have made an advance in UI. If you haven't then go back to Angry Birds and stop bothering the rest of us.

Windows 95 was not a push in new directions. Go see the Mother of All Demos video.

The next real step would be a combination of thought macros and gestures. It will look like magic.

Touchscreen is fine for simple consumer stuff, but it is not an _advance_. And it is not as good as mouse+keyboard if you really want to do more complex stuff quickly and precisely.


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