At first glance, the Microsoft empire is under attack on all fronts. And some folks — including pundits on Wall Street and in Silicon Valley — have lost faith in CEO Steve Ballmer. But take a closer look at this week’s Microsoft Worldwide Partner Conference 2011 (WPC11) in Los Angeles, and you’ll discover Microsoft still builds new, innovative multi-billion-dollar businesses. Here’s the proof.
Sure, Microsoft has its share of challenges. The PC market is growing more slowly than expected. Apple and Google dominate the smart phone software market. Microsoft is nowhere to be seen in the tablet game. VMware still owns the virtualization market. And Microsoft — like every other software company — must reinvent itself for the cloud.
Big Numbers
Let’s keep things in perspective. Microsoft is sitting on $48.72 billion in cash. Yes, that’s nearly $50 BILLION (sorry to shout…) according to Yahoo Finance. Windows 7 has been very well received. The massive Microsoft Office business still generates double-digit growth in many quarters. And Microsoft has quietly built a very large business around SharePoint, Lync and Dynamics CRM.
How large? It’s difficult for The VAR Guy to say for sure. But consider these anecdotal items… In terms of annual revenues:
- SharePoint became a $2 billion product for Microsoft in 2010.
- Lync is on track to become Microsoft’s next $1 billion product, according to multiple Microsoft executives at WPC11.
- Microsoft’s Dynamics business has generated a compound annual growth rate of 20 percent over the past 10 years, according to Ballmer.
The real challenge: Microsoft is so freakin’ large. The company’s annual revenues grew to $62.4 billion in 2010, up from $44 billion in 2006. With such large numbers in play it’s sometimes easy to overlook hot growth areas — such as SharePoint, Lync and Dynamics. And the channel media — including The VAR Guy — sometimes spends too much time focused on sexy devices rather than business applications.
Revenues: On Fire?
Bottom line: If Microsoft is an empire set to burn to the ground, how come annual revenues grew nearly $20 billion in the past four years? Can anybody else name a software company that has built two applications from scratch — SharePoint and Lync — over the past decade, and transformed them into a combined market of roughly $3 billion or more?
Sure, Microsoft has missed the boat on a lengthy list of opportunities. Bill Gates way back in 1993 predicted the birth of the wallet PC — known today as Apple’s iPhone.
Still, plenty of channel opportunities await Microsoft’s partners — especially if you focus on business applications. Lync, by the way, stole the show at WPC11. Smart Microsoft partners are already plugging into it.
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Actually that wasn’t proof, it was evidence.
Tracyanne: How’ve you been? The VAR Guy appreciates your return to the site. And if our resident blogger ever needs a good attorney he’ll be sure to look you up. Your comment made The VAR Guy smile right before he unplugged for the evening here in the U.S.
-TVG
Most of the world’s GDP comes from small businesses, not big ones. If you want to see the true engines of innovation, keep your eye on the smaller, lesser-known players.
I’m afraid I’m only a half decent Bush Lawyer. Good to see the smile.
Lawrence@3: Does The VAR Guy’s revenue engine count? (VAARooommm)
Tracyanne@4: But of course
All kidding aside: The VAR Guy thinks Microsoft deserves more credit for the Lync, SharePoint and Dynamics businesses…
-TVG
Actually speaking of Dynamics. Microsoft purchased Dynamics and integrated it into their other stuff. It does, however, and I speak from experience here, often cause a lot of problems for Developers, especially when it comes to integration of other systems, and here I’m talking about Systems built from Microsoft technologies and hosted on Windows Servers.
Basically Dynamics if chock full of legacy code.
But yes they do deserve credit for building business with Sharepoint and Dynamics.
Yes, Microsoft knows how to build million dollar businesses. However, for me as a consumer, employee and IT-geek this is not necessarily good news. What do I care if Microsoft and its partners are making money? I want good software, innovation, stuff that makes my work pleasant and easier. For quite some time this has not come from Microsoft. Sharepoint is a Swiss army knife with 50 blades; jack of all trades but master of none. Office 365 is a “fake cloud” solution which makes things complex rather than simple (compare that to Google Docs!) Or look at MS Office – where is the innovation? Apart from some dancing paperclips “Ribbons” that eat up screen real estate, it is the same as 10 years ago……
Yes, they make money. But I don’t see any passion for making good software or for innovation. Sort of the McDonalds of the software industry: it’s a big money making machine, but please don’t make me eat it every day……
Tracyanne@6: Agreed… The VAR Guy should have raised the point that the Dynamics business essentially was born from Great Plains — and some legacy code.
Pete Q@7: The VAR Guy will always welcome differing viewpoints. Our resident blogger doesn’t love all Microsoft software but he does respect what Microsoft has achieved with SharePoint and, apparently, now with Lync. That aside, your views remain welcome. Thanks for sharing them.
-TVG