Microsoft Faces Many Hurdles – Transformation Delayed


Microsoft released their impressive Q3 result beating street forecast. On one hand OEM, Online and Entertainment/Device business unit still struggling whereas their cash cow Enterprise business unit covers up the weakness of other business unit. Microsoft for the last many years trying to break out from Google dominated online and mobility ecosystem and showed little improvement. At one hand their online service business unit showed impressive revenue growth of 25% and achieved 872 million but it was not enough to make the business unit operation profitable. In sharp contrast Google is still dominating the Online services and minting fat profitability. Microsoft managed to reduce online service business unit loss to 321 million but at the same time acted as major hole of profitability pull down. Microsoft also achieved 6% growth in Entertainment and Device business unit with revenue achievement of $2.08 billion. The deep cut in product prices and low off-take of device license resulted in 171% loss in operating income and made the business unit as a loss making unit. The struggle in both unit clearly indicate that everything is not good in Microsoft and they are trying hard to turn the tide in their favor. When Microsoft launched Nokia device buyout move, it received criticism as well as thumbs up from different section of analyst. At that point of time, I highlighted Microsoft hidden agenda and that was to buy in user ecosystem to turn online business and its associated service into driving force for future revenue. With the growing competitive environment in both Online and device segment and especially post exponential growth of mobility ecosystem dominated by iOS and Android mobile OS is going to slow down Microsoft attempt to revert Entertainment and Device business unit into profitability. In my point of view, Microsoft move to acquire Nokia Device unit is going to propel their advertisement and online business unit provided Microsoft opt to open their mobility ecosystem. It is also clear post recent market share decline their Mobile OS due to competing OS compelling offer is going to keep many potentials at bay. I observed that Microsoft equity price is higher by 10% post result but it is not out of the woods. In my point of view, they are many quarter away before posing competitive threat to bigger players of online and device segment. The most crucial success KPI’s of Transformation would depend on impending management change in next 6 month post current CEO pass the baton to new one.

Share this

Visionary Leader with 22 years of multi-functional experience - combine astute tactical, strategic, business, technology and industry skills in ICT domain at domestic and international level (Wired/Wireless/ networks /platforms/ connected device) .... More

Related Posts

Next Post »