Earlier this year, we saw Microsoft's sales falling for the first time in its history and its earnings heading south. At the time, it was blamed on the problems in the PC market with people switching to cheaper options.
But Microsoft's problems are structural and systemic. The deterioration in the PC market is just an excuse for far deeper problems.
This week, The Wall Street Journal reported that Microsoft is expected to post declines in profit and sales next week. This comes at a time when Microsoft and Yahoo are close to signing a deal to collaborate on search technology but the reality is that's no big deal. Search, whether it's done by Bing or through this deal, only accounts for a fraction of Microsoft's earnings. The problems will continue.
PC World gives us seven reasons why Microsoft's profits are tanking. It's good food for thought.
First, is the problem with Vista. Then we have falling sales in Xbox. PC World also points out the problem with Microsoft's search engine effort in Bing which will cost somewhere around $100 million to market and for what? It won't put a dent in Google's dominance. People have also been underwhelmed by Zune, Microsoft's version of the iPod and iTunes. Then there is the growing impact of Netbooks which Microsft hates because they are powered by Linux, not Windows. Combine that with falling PC sales and the on-again-off-again deal with Yahoo and you see the problem.
A weak economy isn't helping but the list of Redmond's sins suggest these problems are the result of the organization's culture. And for that reason, they're not about to disappear.
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