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Op-Ed: Vista boosts Microsoft profits, despite bad press and user loathing

By Paul Wallis     Jan 25, 2008 in Technology
Vista has probably drawn more flak than any other operating system. According to Microsoft’s last quarterly result, it had a lot to do with a 79% increase in profit. Upside: It boosts market confidence. Downside: Consumer criticism doesn’t cut deeper.
The Sydney Morning Herald, for some reason, has got into a lot of detail with its version of a Reuters report:
Analysts took the results as a good sign for technology companies in the face of a slowing economy, and Microsoft shares rose 4.5 per cent in after-hours trade. That followed a four per cent gain in regular trade, representing a gain of more than $US26 billion in its market value for the day.
Actually, it’s a consumer commodity, these days, not just a “tech” stock. It means that sales are strong, and a lot of billions have just been added to the stock market indexes.
Below is an example of the thinking which drives some of the stock market thinking, and if you feel that it lacks a few cents in the dollar, you’re right:
Net profit in Microsoft's fiscal second quarter rose to $US4.7 billion, or 50 US cents per diluted share, from $US2.6 billion, or 26 US cents per diluted share, in the year-ago period. Revenue rose 30 per cent to $US16.37 billion.
Analysts, on average, had forecast 46 US cents per share on revenue of $US15.94 billion, according to Reuters Estimates
Notice that if the result is lower, the forecast is still considered right, and stocks are marked down. The problem is always with the facts, not the forecasting.
Market estimates are always geared to growth. It’ll be interesting to see what happens if there’s a real recession, and they have to figure out what happens in a slower, or shrinking, economy:
"I think (the forecast) is pretty strong. Microsoft often sets the bar low for itself ... they are extremely conservative with regard to promising results (but) these numbers tell me that Microsoft is seeing strength in the pipeline," said Kim Caughey, senior analyst at Fort Pitt Capital Group.
Need one say more? Nobody ever talks down a market product, if they can help it, until it comes to proving themselves right.
Vista, however, is still a target for consumer critics. It wasn’t a particularly impressive system when released, and required a lot of patching.There were risks for consumers, and in terms of consumer law, not much comeback.
It got the criticism it deserved, but that criticism seemed to take a very long time to sink in to “fix it” level.
The uplift in sales obviously means that consumer acceptance has improved. The problem is that the howls of outrage didn’t make much more of an impression, much sooner. Consumer advocacy can be either a sacred calling or a sacred cow/bull career, but it does have a place in market realities.
The world is now stuck with a very few operating systems, and a global industry which seems determined to add levels of difficulty on principle.
What’s needed is some competition, and a good, working, universal operating system in the public domain, usable by everyone, with a requirement that all operating systems are compatible.
Enough of this exclusionist crap about proprietary software, hardware, media players, readers, etc.
People don’t buy products they can’t use. Nor should they have to buy whole new systems every time someone feels the urge to make a few more billion.
You don’t have to buy a house every time you want to take a bath, so you can have somewhere to put the bathroom.
I have nothing against Microsoft or Apple as primary consumer sources of computer operating systems. Nor am I suggesting some sort of compulsory third rate alternative, enforced by anti-trust laws.
But really, where’s the choices?
In any other industry, you have maybe hundreds of possible choices. Standards are enforced by buyers. The car industry is a case in point. Don’t produce what the consumer wants, and you’re history.
The odds aren’t great. Six billion people, two choices.
China is thinking of coming up with its own operating system for its own home grown computers, which could reverse the global computer industry overnight. Not much is being said about it, but the idea could be the end of the industry as we know it.
“Vista” means a view.
The overall view of the computer industry is that it’s long overdue for a change of scenery.
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