back to article Cloud growth? Take a number, Microsoft. Two engines have stalled

Microsoft’s second fiscal quarter showed a company at a dangerous stage in its transition. It also revealed a firm that is unable to rely on the certainties of old. Not so long ago, Microsoft could call on three engines of growth to drive its business – Office/personal productivity, server and tools, and Windows client …

  1. HCV

    Antler heaven? Carry a big stick, Roger. The refrigerator is full

    See? I can do this, too!

    1. Anonymous Coward
      Anonymous Coward

      Microsoft beat pretty much all analysts expectations. Microsoft's second-quarter earnings per share rose 11 percent from 70 cents in the year-earlier period. Microsoft also reported deferred revenue, or sales that have been booked but not yet recorded, of $25 billion. Hence why the share price jumped more than 8%.

      Only The Reg could cast such a performance as in anyway negative! A more balanced commentary is here:

      http://www.cnbc.com/2016/01/28/microsoft-reports-fiscal-second-quarter-earnings.html

  2. a_yank_lurker

    Accounting Gimmicks

    When a company resorts to accounting gimmicks it is usually to hide some horrible news in amongst better news. Slurp seems to be indicating that the pure cloud business is either marginally profitable or more likely unprofitable with little chance of being profitable. And this is area they are betting the company on.

    The problem with the "Cloud" is many companies either will not or legally can not store their data with a third party unless that third party will abide by the appropriate privacy laws for the data. So, there is only a fraction of the companies who might use the cloud. My thinking is for most who will regularly use the cloud it will be an adjunct to their internal systems not a full replacement.

    1. Anonymous Coward
      Anonymous Coward

      Re: Accounting Gimmicks

      "The problem with the "Cloud" is many companies either will not or legally can not store their data with a third party unless that third party will abide by the appropriate privacy laws for the data"

      Microsoft are one of the few cloud companies that fully address that problem - you can bring and control your own encryption keys - and can control where the data is stored. And it can also be kept and controlled within the EU by independent trustees.

  3. msknight

    This'll be downvoted but...

    Last weekend I converted yet another friends computer to Mint and took him through the process to do his own installations complete with scripts I'd written to automate his packages and install his fonts, etc.

    People just don't like Microsoft's new way of doing business... which is, screw the customer harder than ever before. Spy on them, force them to upgrade and give them no quarter.

    I'm waiting for the time bomb of the .net Minecraft to hit. I think Reg covered the upcoming Win 10 only Beta version, which contains in-app purchases and offers itself free to non-Windows Java users. On top of which, children will need an Office 365 logon just to access the educational version in the near future.

    The only thing I can see in M$'s future, is more M and less $. - but that's just my opinion.

    (M for megalomania)

    1. keithpeter Silver badge
      Coat

      Re: This'll be downvoted but...

      "...complete with scripts I'd written to automate his packages and install his fonts, etc"

      In a spirit of respectful enquiry, why on earth are you preventing your friend from taking autonomous control of his computer by providing scripts that hide the distro-specific details? Is that not replacing one form of dependency (Windows commercial mystery) with another (some random guy's idea of a useful script)? Are you offering a support contract?

      PS: I don't downvote, I'd rather engage just in case I'm wrong.

      Coat: despite the rain, I'm off out as this is a Windows thread really.

      1. msknight

        Re: This'll be downvoted but...

        @keithpeter - It's just a way of enabling him to get a set up working, in a useful way, while he learns about Linux. For a non-techy to have to encounter all the quirks while still doing their own non-computer job, it's a bit much and too steep a learning curve, too soon, can put people off.

        1. keithpeter Silver badge
          Coat

          Re: This'll be downvoted but...

          "For a non-techy to have to encounter all the quirks while still doing their own non-computer job, it's a bit much and too steep a learning curve, too soon, can put people off."

          £80-£100 for a recycled Thinkpad/Dell Latitude of ebay would take the pressure off the main machine and allow time to be allocated in small chunks.

          Best of luck with it.

          1. Anonymous Coward
            Anonymous Coward

            Re: This'll be downvoted but...

            £80-£100 for a recycled Thinkpad/Dell Latitude of ebay would take the pressure off the main machine and allow time to be allocated in small chunks.

            We tried that approach. I found I learned more when I tried installing it (Red Hat Linux 4.1) on my main PC (and bricking the Windows 95 installation at the same time).

    2. BobChip
      Linux

      Re: This'll be downvoted but...

      People just don't like Microsoft's ... way of doing business. There. Fixed it for you. This is not a new way of doing business, just an extension and intensification of their old ways, and yes, people do not like it.

      Like you, I have pointed any number of frustrated Windows users to Linux - with Mint being the preferred choice, though a couple have settled happily into Ubuntu. I show them both packages at the start of the process, and they choose. Key point is that not one user who has seriously tried Linux for productive work has ever expressed any wish to go back to M$.

      You get an upvote from me.

      1. Doctor Syntax Silver badge

        Re: This'll be downvoted but...

        I think next week I'll be putting Zorin on another cousin's computer. She got hit by Teslacrypt. I'm hoping I'll be able to recover some of her original files from free space. Just another benefit of the Windows ecosystem!

      2. Pompous Git Silver badge
        Unhappy

        Re: This'll be downvoted but...

        Key point is that not one user who has seriously tried Linux for productive work has ever expressed any wish to go back to M$.

        But we don't just use PCs for productive work only. We also use them for play; in the Git's case the HTPC. There my enthusiasm for Linux (Cinnamon Mint) has faded considerably. Kaffeine, the best of a bad lot is too unstable for TV watching. Audio quality of flac files is terrible compared to Windows (odd harmonic distortion). Reverting to Win 7 I tried Hauppage WinTV that came with the DVB tuner purchased for compatibility with Linux and that's unstable! So, it was back to Windows media Centre that "just works".

        In order to avoid the forced "upgrade" to Win10 and goodbye to Media Centre, the machine is now airgapped, so not only no wasting of bandwidth or my time by MS, no youtube either.

        For some reason I feel utterly fucked over by all of this nonsense.

        1. KjetilS

          Re: This'll be downvoted but...

          Have you tried XBMC? It works wonders on my Raspberry Pi's

          1. Pompous Git Silver badge

            Re: This'll be downvoted but...

            I tried several different TV applications and XBMC might have been the one that wouldn't change channels. If it was stuck on the correct channel (we only watch one 99% of the time) that wouldn't have been a problem. Another was a dedicated distro that displayed controls as very dark grey on black and so almost impossible to see clearly what was happening and didn't respond to the mouse, only the keyboard. The stool the mouse sits on is nowhere near large enough for a keyboard. We tried some time ago to use a Logitech ultra-miniature keyboard with touchpad, but we both hated it.

          2. Anonymous Coward
            Anonymous Coward

            Re: This'll be downvoted but...

            >> Have you tried XBMC? It works wonders on my Raspberry Pi's

            It works even better on a Windows platform. The new Atom based TV boxes are top banana.

        2. Roo
          Windows

          Re: This'll be downvoted but...

          "Audio quality of flac files is terrible compared to Windows (odd harmonic distortion"

          Some motherboards appear to have over-driven audio outputs (they really do clip at max volume), I've got a couple like that. In those cases all I do is back off the master volume a smidgeon (Linux desktops volume controls often show a slider with 100% in the middle - I set it to about 90%).

          Could be a bug too - but the volume is worth looking at as it's very easy to "fix". :)

          1. Pompous Git Silver badge

            Re: This'll be downvoted but...

            Most likely a bug; the "easy" fix has no effect on the distortion. Not using the onboard audio; I use an external USB sound card to avoid noise injection from the rest of the computer circuitry. I use this machine for transcribing vinyl to flac file among other things. Changing the ASUS USB sound card for the Soundblaster USB makes no difference.

            All of this came time as the ~10 yr old TV I use as a monitor decided to die with an intermittent fault. Fault-finding that saw opening up the TV and finding a fault with the HDMI socket that wasn't the problem, changes of video adapter, etc. Now the TV's replaced by my beautiful 27" Dell semi-professional monitor while I source a suitable replacement. I want to get a Philips 40" UHD and Mrs Git doesn't want us to spend a $1,000. [sigh]. I don't want 2nd hand because that's usually a waste of money... So it goes...

        3. This post has been deleted by its author

    3. Anonymous Coward
      Anonymous Coward

      Re: This'll be downvoted but...

      I'm entering my 20th year as a Linux user now. I've endured years of snide remarks about this being Year of the Linux Desktop.

      Since the release of Windows 10, never before have I seen so many non-technical people ask about it, and whether they could switch across to it. I've seen even more technical people literally up sticks and move.

      It really has given the industry a big shake up. Sometimes disrupting the market is a good thing, and sometimes a long-time player can disrupt the market in good ways. Seems this market shake-up has backfired rather badly for Microsoft.

      1. msknight

        Re: This'll be downvoted but...

        @Stuart Longland @BobChip - Agreed. But Nadella's way of doing business does seem to be causing them problems. I mean, the number of people asking about Linux has risen considerably... and M$ haven't really done anything that financially drastic yet... just upset privacy and a load of nagging.

        In a world where a good chunk of people struggle to buy a £300 laptop, free software is the thing that people are asking for. If M$ turn on the financial screws in 2016, then it will backfire... badly.

        A good chunk of people leave work and then want nothing to do with computers. They have this thing I'm jealous of... called a life :-)

        1. GrumpenKraut
          Coat

          Re: This'll be downvoted but...

          > They have this thing I'm jealous of... called a life :-)

          "life" sounds good! Tell me, where can I download one?

          1. allthecoolshortnamesweretaken

            Re: This'll be downvoted but... / download a life

            Be careful - the in-app purchases it offers can really bancrupt you.

        2. Anonymous Coward
          Anonymous Coward

          Re: This'll be downvoted but...

          msknight, Yep, it has. That's exactly what I was saying.

          They tried to give the IT industry a big shake-up by forcing things on their users including a very heavy push to "the cloud" and yes, it's backfiring.

          As for financially drastic, I wouldn't be so sure. 1 Billion write-down on the original Surface. Windows 8 put a BIG dent in computer shipments. Windows 10 has NOT helped this recover in any significant way.

          A good chunk of people leave work and then want nothing to do with computers. They have this thing I'm jealous of... called a life :-)

          Indeed. There are times I go home and feel exactly the same way. Had this last week actually. Long day, arguing with computers for pretty much all of it. Get home at what would normally be my bed time, the phone rings, it's someone wanting advice on switching to Linux.

          Being competent with computers is a curse.

          1. Pompous Git Silver badge

            Re: This'll be downvoted but...

            Being competent with computers is a curse.

            Always has been since Win95. So, when some relative stranger comes up to me and asks for help with their computer problem because they heard from a friend... I just say that they must be mistaken; I'm a paedophile, not a computer egg spurt. Relative stranger then says that's alright then and goes away ;-)

            1. CrazyOldCatMan Silver badge

              Re: This'll be downvoted but...

              > So, when some relative stranger comes up to me and asks for help with their computer problem because they heard from a friend..

              I generally tell them what my hourly rate is..

              Inflated, doubled and a bit extra on top. Especially if they have an attitude.

          2. Anonymous Coward
            Anonymous Coward

            Re: This'll be downvoted but...

            "1 Billion write-down on the original Surface."

            Surface is a billion dollar a quarter business now and still growing rapidly - while say Apple - and most other companies - are declining in that space. It was well worth the investment costs.

            "Key point is that not one user who has seriously tried Linux for productive work has ever expressed any wish to go back to M$."

            Apparently many employees of Munich council would beg to differ. They desperately wanted to revert according to the mayor.

    4. bombastic bob Silver badge

      Re: This'll be downvoted but...

      "Last weekend I converted yet another friends computer to Mint"

      no downvote from ME!

      "People just don't like Microsoft's new way of doing business... which is, screw the customer harder than ever before. Spy on them, force them to upgrade and give them no quarter."

      I had been complaining for MONTHS over in discussions on Microsoft's 'answer' forums about how us customers aren't treated like customers by Microsoft, a clear violation of the principles taught in any 'Business 101' class. But of course the mods finally got tired of me over there, so I left before they banned me for saying things like that (along with a significant number of others, with similar stories, saying similar things).

      Microsoft SAID they wanted feedback from customers when they developed Windows 10, but in truth, they ONLY want SYCOPHANTIC feedback and "fan-dom". They are REFUSING to see that people really do NOT like the spyware, adware, and strong-arming tactics associated with Windows 10 and the general direction they're moving. (not to mention 2D flat ugly like 8!)

      And so, the Q1 and Q2 numbers ARE predictable, and Microsoft must "cook the books" to try to make it look like it's not as bad as it is so the investors don't SCREAM.

      Microsoft abandoned what they were good at 10+ years ago, and then jumped (and tried to grab at) a bunch of straws. Oops. Arthur C. Clarke's "Superiority" comes to mind, as do the 'whiz kids' under LBJ's administration in the 1960's, and their general micro/mis-management of the Vietnam war.

      The prevailing BAD ATTITUDE at Microsoft is PROBABLY a "bunch of kids" (now running the show) that think they're SMARTER than the previous people that either retired, or left for other places, and it's THEIR TURN now to PROVE how much SMARTER *THEY* are by no longer BUILDING ON what was done before, but RE-INVENTING IT because it's THEIR CHANCE and THEIR TURN to do it THEIR WAY. Even when it's WRONG to do so. (clearly obvious to the most casual observer, an observer that is NOT those new 'whiz kids' that is)

  4. Mikel

    New boss is a cloud guy

    Let's move our profitable businesses into his barn so we don't get the axe when cutting starts.

  5. Mage Silver badge

    SQL Server, Systems Server, Systems Center products

    So not actually "Cloud" (i.e. subscription hosting / Azure MS 365) at all!

    Idiots.

  6. Anonymous Coward
    Anonymous Coward

    New business plan

    Repackage BSD as windows, skin it and let the open source community to do the work on the server services. Worked for Apple. It'd save a bomb in development plus since MS still has it's hooks into government and education there's no incentive to produce a loss making OS. A side benefit would be better drivers in the open source market as the manufacturers competed for Windows X certification, apple's hardware is too limited and locked down.

    No it's not a troll, Android is linux based but the release under the requirements of the GPL are stretched to the limit, so BSD would negate all those thorny legal issues plus pave the way for a whole new generation of 8 year olds taking Microsoft certification exams for the tabloid press.

    1. kryptylomese

      Re: New business plan

      They should base it on Linux as I previously suggested - it would end up being much better as there is a much bigger community to develop it.

      1. Anonymous Coward
        Anonymous Coward

        Re: New business plan

        No the GPL is too restrictive for Microsoft, and most Linux source code compiles under BSD so they can keep their existing software revenue streams and profit from the extended server software.

        I'm personally surprised that the FSF hasn't started up law suits against google though I suppose that the GPL doesn't have a time limit built in to how long it takes a company to release the source code.

      2. bombastic bob Silver badge

        Re: New business plan

        Linux might have to become less restrictive on its GPL-related policies, "tainted" drivers, not including things with the kernel, etc.. Even ZFS suffers from that kind of thinking.

        But Linux is DEFINITELY a 'choice' for an alternative to Microsoft's near-monopoly on desktop and notebook operating systems. Linux ALREADY owns the mobile world. Microsoft won't succeed by turning desktops into oversized PHONES with their "Phone OS" known as W10. And W10 HAPPENS to run on a desktop. Wheeee.

        Intel and AMD should invest HEAVILY into Linux, just so they'll be able to SELL CHIPS FOR NEW COMPUTERS.

        and BSD is fine with me, too, since I use FreeBSD for my 'daily OS'. Either one would work, but I think the Linux distros ARE getting more development effort and support these days. for now.

      3. Doctor Syntax Silver badge

        Re: New business plan

        "They should base it on Linux"

        After all, Linux seems to be drifting to become more Windows-like as it is. But I doubt they'd be able to live with the GPL. On the other hand I dread to think what they'd do to BSD with EEE.

        1. kryptylomese

          Re: New business plan

          No - "Linux seems to be drifting to become more Windows-like as it is" no it is not becoming more Windows like.

  7. Craig 2

    Thanks to the 20+ million tossers helping to bring about the whole "software rental" paradigm...

    1. bombastic bob Silver badge

      'software rental' isn't new. back in the mainframe and minicomputer days, periodic license fees AND support contracts were the way they did business [vertical market]. It still is, actually.

      doing that for our PCs, though, is a mistake. most people perceive OWNING the PC, *not* having to rent a space for it in the OS trailer park.

      1. Down not across

        'software rental' isn't new. back in the mainframe and minicomputer days, periodic license fees AND support contracts were the way they did business [vertical market]. It still is, actually.

        doing that for our PCs, though, is a mistake. most people perceive OWNING the PC, *not* having to rent a space for it in the OS trailer park.

        This. Most people expect to run what they've bought as it is for as long as it works or they decide to upgrade, without having to cough up extra dosh. People won't be happy if suddendly their Office or OS stops working until they feed more coins into the MS slotmachine. Even though internet connectivity is fairly good (mostly) these days, stuff not working just because your internet connection is down, or you're out and about with your laptop (tethering can be cost prohibitive) or just because the cloud not working for some other reason.

        Perhaps not best example, but some of us may recall the backlash when CC replaced CS.

        The rental model works for enterprise software with support contracts (sure its often gouging (looking at you Larry, oh sorry you need a nother yacht/island)) not so well for non-commercial users.

  8. Tezfair

    Ribbons then downhill

    Lets face it, MS have lost the ability to listen to what the market wants. We were happy with toolbars, so were forced to ribbons. We were happy with the start menu and we got blocks. All these years latter MS will not admit they got it wrong and resolve the issue, meanwhile other OS's are mopping up the people that are willing to try other things.

    These days MS are all about squeezing as much out of enterprise as they can. I recall quoting a SQL server in 2012, 30 users and would have cost IRO £7000. In the end the client went to a CPU licensed 2005 version for £1000. Now support is finishing for SQL 2005, I dread to think what the license will be as they have now expanded to 60 users.

    Sad so say that MS have peaked. XP / server 2003 was their glory and anything they try these days will fail.

    Roll on business grade software for Linux.

    1. Anonymous Coward
      Anonymous Coward

      Re: Ribbons then downhill

      >> I dread to think what the license will be as they have now expanded to 60 users.

      Much less than for Oracle or any other realistically competing option.

      >> server 2003 was their glory

      You know Microsoft's server market share is still increasing?

      >>Roll on business grade software for Linux.

      Maybe one day.

  9. ecofeco Silver badge

    This is a no brainer

    365 and Win 10. Utter shite and too radical a change for even power users.

    1. Anonymous Coward
      Anonymous Coward

      Re: This is a no brainer

      "365 and Win 10. Utter shite and too radical a change for even power users."

      That's the way the vast majority of recent enterprise IT contracts are going, so those that control such things clearly disagree....

      1. CrazyOldCatMan Silver badge

        Re: This is a no brainer

        > That's the way the vast majority of recent enterprise IT contracts

        There are many and various reasons for this - the primary one being (from our perspective) that the costs come out of the revenue budget, not capital. And since our capital budget is 1/10th the size it was last year, moving to a paid service model is the only way we can function and deliver a service to the people who are paying us to do so.

        Much though we don't like it, economic reality forces us to.

        1. Destroy All Monsters Silver badge

          Re: This is a no brainer

          More like economic unreality.

      2. ecofeco Silver badge

        Re: This is a no brainer

        Unfortunately AC, you are right. Still doesn't change the crippled usability of the new systems nor the very real complaints and degradation of productivity.

  10. Charles Manning

    Two engines have stalled....

    out of how many?

    From what I understand, Microsoft really only has two engines and they are mutually linked:

    Office and Windows

    People only use Windows because that's what Office runs on and people continue to use Office because that is what runs on Windows.

    Microsoft seriously pissed off the customers when they did the ribbon thing to Office. It was only the dual momentum of Office & Windows that kept them through that.

    Now they're doing the same, just worse, with Windows 10 and the only reason they keep going is because of Office.

    It can't last forever. Eventually enough people will use Linux in their private lives to become confident and Windows will eventually die in corporate environments.

    Unfortunately that won't be this year. Likely not even this decade.

    1. Anthony Hegedus Silver badge

      Re: Two engines have stalled....

      "Eventually enough people will use Linux in their private lives to become confident and Windows will eventually die in corporate environments."

      - people are using Linux in their private lives - Android and iOS are linux derivates (or, well, Unix).

      The OS is going to be irrelevant for most people. For most people, most of the time, all you need is access to documents you're working on, email, and web pages. And for that, the licence-checking-engine with bolted on operating system known as Windows isn't really necessary.

  11. allthecoolshortnamesweretaken

    "Last September, Microsoft revamped the way it reports revenue. It still has three units, but now known as Productivity and Business Process, Intelligent Cloud and More Personal Computing."

    Is that supposed to be "More Personal Computing" or "More Personal Computing"?

    Oh, and "Productivity and Business Process" - IME that's more often a contradiction in terms than not.

  12. Destroy All Monsters Silver badge
    Mushroom

    Meanwhile, in production...

    Office365 has suddenly decided to pull down JavaScript from something called "msedge.net". Probably yet another Microsoft domain after "live.com", "dead.com", "msoffice.com", "msazure.com", "azurems.net", "momoneyforms.com" and "msafia.net".

    This is the new way of working with production software: random shit changes with no compelling reason. You get to know new domains, new ways of throwing JavaScript into your face, it's a blast!

  13. largefile

    Meanwhile...normal people love Windows 10.

    You folks here are so jaded by your hatred for all things Microsoft. Month after month, year after year. My enjoyment of the OS continues to rise as does the balance of my investment account.

    I'll keep watching as Microsoft continues to remake itself and rise, while relishing in your disgust and indignation.

    Thanks for the hatertainment!

    1. Anonymous Coward
      Anonymous Coward

      Re: Meanwhile...normal people love Windows 10.

      > My enjoyment of the OS continues to rise

      WOAH. The junkheap now comes with Customer Masturbatory Experience (CoMEx), too?

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