A Harsh Reality for Microsoft
January 22nd, 2009In line with the expectations of the financial community, Microsoft’s earnings are slowing, and layoffs of 5,000 employees are in the offing. Can it get any worse for the world’s largest software maker?
In announcing the widely-expected decision, CEO Steve Ballmer blamed an 11% drop in quarterly profits on the tragic state of the PC industry. That, of course, is probably true as far as Windows is concerned. No doubt the current economic crisis contributed to Microsoft’s woes, but it’s also true that, despite dire predictions, Apple managed to hit record earnings during the last quarter.
While sales of Mac desktops were down, it simply meant that customers were choosing notebooks instead. So overall Mac sales remained surprisingly high. Indeed, it does appear that Apple succeeded, in part, by taking away sales from Microsoft. That’s something that Ballmer is never going to admit.
Even worse for Microsoft, Apple didn’t succeed by undercutting PCs on price. In fact, Apple gets most of its Mac sales from products that cost well over a grand, which is certainly far above the sweet spot in PC pricing. So much for the claims that the alleged “Apple Tax” would ultimately do the company in.
