Do Microsoft’s Earnings Mean The End Of Windows?

Image via Flickr/ Thomas Hawk

The fix is in. Microsoft released its earnings numbers yesterday and Windows revenue is down — down significantly. The company’s flagship product, with which it built a PC empire, appears to be in irreversible decline. The rise of mobile computing and severe changes in the way everyone, including businesses, deals with their IT decisions is driving a completely new reality at Microsoft.

Windows is dead, and unless Microsoft manages to do something to resurrect the software on smartphones and tablets, it’s never going to hit the highs it once did. Investors are running scared from the news. Apple fans are more than likely relishing the changes at Redmond.

Microsoft Reveals Death Of Windows

Here’s the key fact that the company had buried in its earnings report: Microsoft (NASDAQ:MSFT) is expecting that sales in commercial licensing, a section that covers sales of Windows and Office to business as well as server products, will be lower in the current quarter than they were in the same period last year. Microsoft’s server businesses are growing, but not enough to pull back the collapse in revenue from Windows.

The Windows Phone is not doing well, either. Tablets as a business segment aren’t all that healthy overall, and Microsoft’s contribution to the business is insubstantial. Windows is failing in enterprise, and there are lots of reasons to believe that this shift will continue in the years ahead.

Windows Doesn’t Look Close To Recovery

Windows is never again going to be bought en masse by enterprise customers as it has been for the last 20 years, and Microsoft is aware of that. There’s more than one operating system out there, and with Apple likely pushing into enterprise, there’s going to be real competition. For many companies, particularly those working with multiplatform third-party software, this is an ideal solution.

Microsoft is trying to keep attention on itself by bringing everything to the cloud, a strategy that may yet see the company explode in value. Windows might even become part of a total enterprise solution that the company offers to business. That is a concept that keeps coming up, and mirrors the reality of Office 365.

Windows may be a service in the future, but it’s never likely to be the major part of Microsoft’s bottom line that it once was. Microsoft has already decided to give the consumer version of its next operating system, Windows 10, away for free, an apology designed to buy brand capital for an operating system burdened with too many mistakes.

Windows is dead

That’s the new reality. Microsoft is giving Windows away in order to attract customers. Let that sink in for a minute.

Windows is set to become part of a full-service enterprise solution, along with everything else coming from Microsoft. Operating systems will, if not fragment, become competitive as enterprise Android use and platforming from companies like RedHat and VMWare drive compatibility with more diverse Linux systems.

Windows is dead, and Microsoft is going to suffer heavily in the short term as a result. In the long term, it should be obvious to any listening to the proclamations of Microsoft CEO Satya Nadella that it doesn’t matter. Microsoft isn’t in the operating system business anymore. It offers enterprise services. Unfortunately, investors are simply not impressed with that particular platitude right now.

Disclosure: Author represents that he has no position in any stocks mentioned in this article at the time this article was submitted