Vulnerable to disruption seems a bit of an understatement. When consumers have left the building it is only the hard to influence corporates that remain. However, when the leviathans also start to turn they will be unstoppable.
Looking at these figures, Microsoft’s cash cow is obvious: licensing server products, Windows and Office to businesses, which is profitable almost to the point of disgrace: gross margin $million 10,077 on sales of $million 10,888. Microsoft breaks this down a little. Hyper-V has gained 5 points of share, it says, and Windows volume licensing is up 10%. Cloud (Office 365, Azure, Dynamics CRM online) may be growing strongly, but it is a sideshow relative to the on-premises licensing. How do we reconcile yet another bumper quarter with the Microsoft/Windows is dead meme? The answer is that it is not dead yet, but the shift away from the consumer market and the deep dependency on on-premises licensing are long-term concerns. Microsoft remains vulnerable to disruption from cheap and easy to maintain clients like Google’s Chromebook, tied to non-Microsoft cloud services.