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The post-PC era is starting to have some effects on parts of Microsoft’s business. Consumer licensing dropped by 6 percent, a number which will see again in future reports. It appears Microsoft is incapable of stopping this development.
One of Microsoft’s post-PC devices, the Xbox, is doing well (which makes me quite sad if I imagine how many adults are wasting their time with computer games) and the second post-PC device, the Surface, is doing quite badly, despite the fact that some journalists appear to believe Microsoft that the “Surface business came on strong.” The truth is that the Surface revenue grew only because of an immense marketing campaign but Microsoft loses money on each Surface sold. For me, this is coming on weak. If you add the bad news from Nokia, Microsoft’s future as a devices company doesn’t look so bright.
The reason that Microsoft is doing so well anyway is that there is no such a thing as a post-PC era in the enterprise world. Most of the revenue and profit gains come from this area. Software licensing sales of SQL Server and System Center grew and Microsoft’s cloud products (Office 365, Dynamics CRM Online, and Azure) are doing extremely well (107 percent revenue increase).
This success is easily explained. Microsoft’s cloud products are just awesome, and there is currently no competition in the on-prem IT market. The fact that many executives are deeply in love with their iPads doesn’t really change that.
However, this can all change very quickly if Android becomes an option for business PCs. No, not the executives; they will stick with their iPads. I’m talking about office workers. The second reason that Microsoft’s backend and cloud solutions are attractive for businesses is that there is currently absolutely no alternative to the Windows client in corporate networks.
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But as soon as Android also starts to become an option here, everything will change because then, other cloud providers will shine in a different light for many IT departments. And then the post-PC era will have arrived in the enterprise. How can Microsoft prevent, or at least slow down, this process? The only idea I have is to dramatically cut the price of Windows client licenses, perhaps to the level of Android, and that is zero. Obviously, Microsoft’s financial situation allows that.
