back to article Goldman downgrades Microsoft stock to 'neutral'

Pre-packaged software giant Microsoft saw its stock rating lowered to neutral by Goldman Sachs today, in response to the company’s sluggish entry into the tablet and smartphone market. The brokerage’s concerns reflected those of Microsoft’s own board, which last week put a cap on CEO Steve Ballmer’s bonus payout because of his …

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FAIL

slashed Microsoft’s price target to $28 from $32

Much as I'd like to see Microsoft seriously retrench, a 10%ish drop in the predicted share price is neither here nor there amongst the noise from the teenage scribblers and banksters that now control our destiny in the UK and the USA.

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Linux

MS-Unix

Am I the only reader of Redmond related articles left wondering why they do not port their stack to Linux/BSD?

This could be achieved in reactively short order (through buying up wine and other cross over expertise) which would put them on a level playing field with the likes of Google but with the added advantage of their existing vast ecosystem.

Im sure this very notion might horrify people with feet in either camps but with MS's poor record on core OS development and likewise unix's begrudging relationship with the concept of GUI's could this be a match made in heaven with each party playing to its strengths? Both Ubunutu & Apples OSX are surely the case study in point.

There you go Steve an idiots guide to getting that bonus reinstated :-)

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Anonymous Coward

You and everyone else who hasn't paid attention

Dave Cutler, the big ToyOS wheel at NT-central, is an incorrigible and petty unix hater. You can see it in many design choices, that often seems to consists of nothing more than "what would unix do? we pick something, anything else!". Of course that made him a good fit, and he's still at it in redmond.

So, no. This is extremely unlikely to happen.

Besides, I don't think the gui is a ToyOS strength. And neither is security. But warm body eyecandy, killing the competition, and enterprise manager "safe to buy (so buy, or else)!" salespitches are. Even if anybody on any side were willing, redmond wouldn't, and in fact couldn't, bring anything technically worthwhile to unix. An emulation layer of sorts would be a much better idea, and redmond already killed lindows dead once.

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WTF?

Poor record in core OS design?

I'm sorry? When did 95% ownership of the desktop market, and ~50% (I forget exactly, and CBF to go look it up) share of the server market constitute a poor record? And however much the Apple and Linux weenies will kick against this, that market share has been achieved with, mostly, good products.

So, they should throw this all away, and port their applications to a platform they have no control over? Yeah, that'll be right....

GJC

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Anonymous Coward

Ah, the "If it's popular, it must be good" argument

Can I interest you in a job lot of Twilight books, episodes of Big Brother and X Factor winners' debut albums? I'll even throw in a copy of The Sun to sweeten the deal.

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MS in the cloud

I wouldn't necessarily bother with the Windowing system/GUI, but I would suggest they port Office to Linux. Then I don't have to use OpenOffice and will be able to read anything the world sends to me.

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Anonymous Coward

Misinterpreting for fun and profit

Where do you read "poor record"? I didn't say that. I said "The chief NT guy hates Unix". Which is true and well-known. This has nothing to do with mettle.

Now that you mention it, yes, I would argue that main problem of the windows architecture is that no such thing actually exists. But it would be besides the point, for it isn't needed to see why redmond is unlikely to do anything resembling what apple did underpinning macos with darwin.

But then, you're not interested in making useful comparisons. Desktop share is not a fair measurement of OS design quality. It's more of a measure of network effect and inertia. Recall that the XP share of windows installs is still around 66%. Server share isn't either, not straight-up, and worse, is open to interpretation.

Lifting some numbers from wikipedia here. For IDC claims the "windows" share of servers, in units, is 75-odd%. But in revenue, it's just shy of 50%. With a 23-odd% "linux" revenue. Note that the majority of linux installations, being free distributions, don't contribute revenue to that number. In fact, pitching some netcraft numbers against that: 42% windows, in units, against 41% linux. but W3Techs, checking the top 1mio web servers, found 34% windows and 64% linux. What does that tell us? Windows for servers is apparently overpriced, needs more units to do the same work, and is more likely to be found serving less busy websites or doing non-public server-y things.

And that makes perfect sense. Because if you need your servers to do Real Work you can afford the Professionals to run them properly and if you have any clue, you don't saddle them with windows. That's before realising that running windows on a public-facing server is a disaster waiting to happen. Running the eyecandy for a desktop is a different kettle of fish than running a server. And that again is quite different from running a serverfarm.

Or a super. Go ahead and look up what the OS distribution in the HPC top500 is. When did micros~1 even deign to enter that market? When they needed marketing for their cloud initiatives. Apparently even among the top500 there are some suckers for a redmondian salespitch.

But all this, as mentioned, is pretty much entirely besides the point. Even if Dave Cutler didn't hate Unix, micros~1 is too married to their belief in the superiority of their "contributions to improve other people's lives" and the resulting NIH syndrome that they'd never "pull an apple" with their ToyOS.

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FAIL

No, not that argument

The old "If it's popular, it must be designed well for the target audience" argument. It is not an emphemeral popular entertainment product, it's a product that commercial organisations choose to use to run their businesses. There is a difference.

GJC

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FAIL

Err, I was talking to GCom, not you, Mr. AC.

I know the threading hereabouts is primitive, but do try to keep up.

GJC

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Anonymous Coward

Oh dear

Yes, you're right, GCom did say that. On the other hand, that doesn't change your percentage argument into something that suddenly holds water. A simple sarcastic sneer doesn't really make for a good rebuttal either. Popularity as a business tool or otherwise still has no demonstratable relationship to core OS engineering quality. "Most securest windows evar!" (repeat ad nauseam) and "security was no priority" (for at least a decade) come to mind. I could go on, but, well, there's no point really; plenty of risk of flamewar and nothing will change. At some point in the future it'll become a point of contention for politicians to "protect the computer security industry's jobs", or something. Valuable contributions to society indeed.

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Will the Cloud Save Microsoft?

Cloud computing has been a big busines success for Amazon, but it's hard to predict how Microsoft will do. The Red Dog operating system is an amazing piece of technology, probably Dave Cutler's last great work (he's in his 70s now). He did a research on the requirements of large geographically distributed data centers -- and grasping requirements is really the hardest problem in inventing an OS. Furthermore, on multicore processors, Red Dog is reported to hit its Amdahl-Law limit at 128 cores (compared to 4 cores for spin-lock-addled LInux and 8 for NT). It's also likely to be as stable as NT, while large Linux enterprise sites (like Amazon) have to expend a lot of money and energy keep Linux -- with its race conditions, unsafe file systems and broken entry points -- patched and functioning.

That said, Microsoft could fail by being late to the market, and offering a less flexible service than Amazon. We know Google fell flat by limiting the capabilities of its so-called cloud computing. Oil companies are not going to buy blocks of CPU time to run seismic analysis rewritten in python or java. Amazon sells exacty the computing and storage resources that people need to do almost anything. Microsoft falls somewhere in between, with its strategy, but I think they could still be erring by requiring .NET API programming instead of general Kernel 32 API. They are forcing a lot of people to rewrite code before it will run, and that can be a serious cost to users.

it seems like Microsoft is losing it, under Ballmer's non-visionary leadership. I can imagine them winning a share of the pad market. The real shame for Microsoft is they had an eBook team more than 10 years ago developing a pad computer, and they pioneered the multitouch interfaces we see on Apple's products, with Dave Kurlander's work on MS Surface. And they just dropped the ball. it's particularly hard to imagine them winning back the phone market andgetting people to write apps.

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Anonymous Coward

@Don Mitchell

Your usual FUD I see

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"keep Linux -- with its race conditions..."

I'm sure Amazon, Google and all the others, esp. the supercomputer owners must be desperate to move to this wonderful new Dead Dog - if what you say is true ?

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FAIL

Fate of too big companies

"it seems like Microsoft is losing it, under Ballmer's non-visionary leadership. "

Interestingly, this and other stuff in your article sounds very much like the critique recently directed at Nokia. It, too had bright people doing inventions that others ran with (for example, Nokia could have fielded a touch phone years before Apple). Lack of vision and too complex organization nixed the ideas. An article in the latest monthly supplement of "Helsingin Sanomat" (the leading daily in Finland) had one former Nokia manager summing the problem nicely: Too many managers who could say "no", too few who could say "yes" to a new idea. I wonder is MS is having the same problem?

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Re: Dave Kurlander's work on MS Surface

Dave Kurlander may have done a lot of work, but both Microsoft and Apple owe a huge debt to Jeff Ham's TIR backscatter work at NYU.

http://en.wikipedia.org/wiki/Jefferson_Y._Han

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FAIL

People still listen to these old farts?

Goldman Sachs was one of those offered bail-out cash because of poor fiscal responsibility and lack of view. They took around $12B USD and then STILL had the gall to hand out bonuses to top execs. You can trust them about as much as you can trust FOX News.

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Thumb Up

Best news I've heard in weeks

Couldn't happen to a nicer bunch of goons

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Anonymous Coward

If WinMoPhone7 is anything less than an incredible success

Ballmer may well be joining the CEO merry-go-round.

Perhaps SAP can find him an opening?

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Who do you believe

So a bank that conned it's customers by telling them that a buy was a good deal while knowing it was dodgy. While being itself conned by lots of other banks.

Thinks a highly profitable company is a bad bet?

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If Goldman say sell you should buy

I would remind you all of their recent fine for playing one fool off another

No more trustworthy than a, oh lets see in these PC days I better be careful, than a pie-quay

Sell off the games division?

Ah now here be the meat; AFAIK the xbox has been a fail what with all the recalls, so why would anyone buy it?

Xbox live is why, subscriptions Pay As You Go software, yeee harr gold

Goldman are so full of shit, someone ought to kick their fucking face in

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Jobs Halo

Ignore Goldmans at your peril

Regardless of what you think of Goldmans as lay people, in the financial sector their rating holds, with the possible exception of JP Morgan, possibly the biggest weight of any institution. Ultimately whilst it won't necessarily influence individual investors, it will certainly influence Hedge/Pension funds and Unit trusts beyond the paltry dividend increase. MS has been very bad at finding and monetising technology beyond Office and Windows, technologies which for interesting reasons no longer have the cachet which they used to, as more people are doing more work on their phones and tablets, markets where MS is but a distant memory (for now). If you look at Ms's performance over the last 5 years vs Google et al, its been pretty shoddy with a few massive own goals.

I realised that I haven't even used my main home pc for months the other day, not even for syncing my iPhone and iPad because all my content creation from those goes to a cloud service (Google in this case). The only PC I use is at work. This pattern of usage, whilst perhaps atypical, should inform MS's thinking about how their future business should be shaped.

Despite Xbox Live subscriptions and its micro-transactions on the market place, making MS just over $1 billion last year, the combined profit Xbox has made over its lifetime (including Xbox1) is a drop in the ocean towards the startup, marketing, R&D, RROD compensation costs (more than a billion $ on its own), not to mention the other massive losses by the same division from stupid failures like the Zune and the Kin. If MS sold off the Xbox brand, it would not necessarily be a bad business decision...

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Anonymous Coward

In order to win back a gold star,

"In order to win back a gold star, Microsoft needs to divest its non-core businesses, such as gaming. At the same time the firm needs to push up its dividend to grab a bigger investor base, said the brokerage."

Errrr..... Microsoft needs to get its mojo back in the phone space (Win Mob 6 wasn't all that bad - they just got complacent). It needs a coherent tablet strategy. It needs an ecosystem through which it can sell content (applications, games, books, music, anything) to mobile consumers and it needs to do all this a bit sharpish while it can still keep the likes of HTC on board. What Microsoft does not need to do is listen to Goldman. Throwing away gaming would be idiotic.

Of course, Microsoft could remain a desktop focused company but I doubt that's on their agenda.

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Welcome

Maybe MS should buy a Windows-antivirus company

After all, if buying a Windows-antivirus outfit makes Intel financial geniuses...

Or maybe MS should hire some proper non-presentation-layer people to write the innards of a proper secure OS, and market it as "Windows 8, no antivirus necessary". After all, that's pretty much what MS did for NT 3.x, and it was reasonably successful (technically speaking) till Gates took over the "design expert" role. And that can't happen again, because Gates is gone. Isn't he?

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Gates Horns

Maybe MS should buy a Windows-antivirus company

Another one ? They bought a company (GeCAD, product RAV antivirus) which removed Windows viruses from Linux servers in 2003. And then they killed the product.

http://www.macobserver.com/tmo/article/Microsoft_Acquires_Linux_Company_Then_Discontinues_Its_Popular_Linux_Antivi/

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Bizarre.

I'm no lover of M$ but Windows 7 is an acceptable OS. It works OK, which is what you need and pretty much all you can expect nowadays.

Still little sign of the Linux lobby getting their act together to produce a serious retail alternative for non-geek mainstream users because what that would entail goes against the core culture of Linux.

Smartphones, tablets and other mobile toys don't replace laptop and desktop computers. They're just extras for those with money to burn who like to show they can. Would you seriously consider chucking out all of your laptop and desktop machines and relying on a smartphone and a tablet?

And the Cloud? Placing all of your data on someone else's server, and being that reliant on your ISP? You must really love and trust your ISP, and consider their service to be absolutely reliable. Cloud apps (webmail is the most obvious) are slow. Typing in Googlemail can be painful and inaccurate (multiple uses of the cursor keys seem to flummox it).

And before Linux fans all have a go, citing Cheerful Chipmunk or Zippity Zebra as the future of retail computing, 90% of users don't even know what an operating system is, much less that they could use a different one. If you are talking mainstream PC sales, step outside the geek bubble first. Linux may work fine. It may be more secure than Windows. It may even allow you to do everything you need to do on your PC without spending a penny on software. But that does not of itself make it likely to take serious market share from Windows in the mainstream retail chain.

Real foods, fresh vegetables etc, are cheap, healthy and good for you, but the majority of the population live on processed crap, full of salt, fat and sugar. In sales, the packaging can be more important than the product.

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Anonymous Coward

"If you are talking mainstream PC sales, "

"likely to take serious market share from Windows in the mainstream retail chain."

Er, why would a Linux even get a look in in the mainstream retail chain (and not just because it's downloadable for free or borrowable from a mate for free).

if you are talking mainstream PC sales, then

(1) you are completely ignoring the Windows tax, where if a manufacturer dares to stray off the MS straight and narrow for any of its product, they suddenly end up paying more than they used to for their Windows licences. Hard for a mass market manufacturer to break out of the MS stranglehold because of that.

(2) you are taking your numbers from people who are part of the certified-MS-dependent ecosystem; they are NOT going to offer the best solution for the customers needs, they are going to offer the one where (for retailers, manufacturers, etc) MS continue to pay for much of their advertising so long as it says "PrettyCrap World Recommends Windows 7 Ultimate" on every advert.

If you really aren't aware of this you need to open your eyes a little.

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Grenade

Rgr all this..

Ballmer's Apple love-in has been giving me nausia for a while now.

Laugh in the face of html5 - don't implement it. Wheel out the patents greatist hits, starting with 20070262964. Not copying Apple's appstore idiocy in WinMo7 etc...

They were definately right to cap the bonus, and as long as Ballmer looks like he's working for Jobs long may it continue.

Might be good for picking up some cheap Microsoft shares soon...

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