MG Siegler thinks Microsoft’s last quarter is the tip of the iceberg:
Yes, overall, Microsoft’s quarterly numbers were fine. A record for the quarter when it comes to revenue, even. That’s great. But there are several not-so-subtle points bubbling just under the surface (not to be confused with the Surface — though that may end up being one of them) that point to some very big changes already underway within the company.
Maybe. I rather think Microsoft’s biggest stumbling block is change itself.
Overall, the quarter was indeed solid, but that’s only when you look at Microsoft’s home turf where it’s always done well, like Windows and Office. Beyond that, Microsoft keeps falling—and more recently, hard—when it tries to expand its core competency and compete, seemingly aimlessly, with just about any other company doing well in tech, but most especially web services. It’s lost billions on web services every year, sometimes nearly three-quarters of a billion in a single quarter, since 2005.
But Microsoft is now missing on an even larger scale. For this quarter, it’s a writedown for aQuantive, an online ad shop Microsoft bought in 2007 to compete with Google which, at its time, was a record $6.2 billion acquisition for the company. That confusing buyout was surpassed in both price and inexplicability by another, last year: Skype for $8.5 billion. While it’s a little early to say Microsoft pulled an aQuantive with Skype, the company does seem to be experiencing a little buyer’s… bewilderment. At the time of the purchase over a year ago, no one had a clue what the plan was, and I don’t think even Microsoft is trying to pretend anymore. In this context, the reminder Siegler uses at the end of his piece is a whopper: what if Microsoft had succeeded in trying to buy Yahoo for $50 billion?
Now, Microsoft’s forthcoming third attempt at a tablet market it sparked but has never really been a part of, due this fall with Windows 8 and the brand-transplanted Surface, isn’t shaping up too well. Like Skype, though, it is again way too early to call anything. But if Windows 8 doesn’t do well, it could become the third strike on a staggeringly expensive loss record, one that shows when Microsoft isn’t utterly blind to the fact that something needs to change, it falls flat on its face when it actually makes an effort.