I predicted years ago that what would eventually do Microsoft in was
white-box PC makers defecting because they needed to claw back profit
margin as the Windows license became the largest single item in their
bills of material....And here’s the confirmation I’ve been awaiting:
Microsoft Missing Netbook Growth as Linux Wins Sales.
The phrase “sales fell short of forecasts” is deadlier than it sounds.
The profitability of Microsoft’a businesses is consistently poor
outside of the core OS and office products; their ability to sustain a
broad product strategy and frequent acquisitions against investor
pressure has been dependent on their ability to deliver figures
indicating smooth sales and revenue growth in the core business. If
investors stop trusting that guidance, Microsoft’s room to maneuver
(for example, by moving further into software-as-a-service businesses)
will be sharply limited....
That will be at least four million netbooks running Linux by year’s
end. The truly deadly news, however, is at the end of the article:
Equipping Linux on a computer costs about $5, compared with $40 to
for XP and about $100 for Vista, according to estimates by Jenny
a Taipei-based analyst at CLSA Ltd. [...] “The engineers designing
computers understand that if they want to cut costs, the only way
do so is to get rid of Microsoft,” IDC’s Chang said.
When even financial analysts are figuring this out, you can bet
Microsoft is already in deep trouble.