Retailers Fail To Back Windows 10 PC’s Orders Slow
ChannelNews has been told that retailers are backing away from supporting Microsoft who has moved to compete head on with mass PC retailers by giving away the Windows 10 OS for free, they are also set to open their own store in Sydney where they will compete head on with the likes of Harvey Norman, JB Hi Fi, Officeworks and hundreds of small corner store PC shops by selling PC’s and tablets direct to consumers.
An executive from a major US PC supplier said “Orders for new Windows 10 ready PC’s have not been placed with manufacturers by some major retailers”
Yesterday Microsoft slashed an additional 7800 jobs after consumers failed to buy their Windows phone offering. Around the world consumers are also preferring the Sony PS4 gaming console over the Microsoft Xbox.
Malfunctioning video game consoles wasn’t the only hardware write down for Microsoft. In 2013, the company took a $900 million charge for unsold inventory of its Surface tablets with employees at retailers in Australia being offered $50 to sell a Surface over a Microsoft partner’s product. This was a move that upset several Microsoft partners.
According to retail sources Microsoft is still acting coy over the revenue opportunities for retailers – and distributors – around Windows 10.
Since the day Microsoft announced Windows 10 would be a free upgrade for users of Windows 7 and 8 (excluding enterprise customers – companies with at least 250 users or devices) several partners have been asking “What’s the catch?” with several retailers concerned that once Microsoft has built a database of millions of consumers who have registered for Windows 10 for free that they will start selling cloud based services and hardware directly cutting out their current retail partners.
Microsoft’s voice piece Ogilvy PR is still banging on that “There is no catch”.
Microsoft is also staying mum over revenue opportunities despite forward revenue projections for the Companies Windows Division showing a quadrupling of growth.
There could be some mention of revenue opportunities at Microsoft’s Worldwide Partner Conference from July 12th to 16th, but don’t hold your breath.
Microsoft did hint at some ‘revenue opportunities’ at Computex recently, but that was around the host of new devices running entirely on Windows 10, not around the actual operating system itself.
In the meantime, I asked retailers what they thought of the revenue opportunities around Windows 10, and opinion was mixed. Some were disappointed there are no license selling opportunities, while others were happy to charge customers for their “experts” opinion.
Another move that has upset PC manufacturers is that Microsoft has increased the price of an OEM Windows 10 license a move that will see hardware running the new OS rise.
Yesterday Microsoft said that barely a year after Microsoft paid $9.5 billion for Nokia’s handset unit, the company has lost $7.6 billion of that value.
That’s equal to about 95 percent of what Microsoft paid for the assets, excluding the cash that came with them.
Along with a hefty write down, Microsoft plans to cut as many as 7,800 jobs bringing the total job losses this year to over 18,000.
Bloomberg said that as horrifying as this deal may sound in retrospect, it’s neither the biggest write down for Microsoft by size nor its largest destruction of value. We’ve put together a list breaking down four of the most costly charges in the company’s history.
But first, it’s worth noting that between the blunders have come some truly brilliant deals. A 2007 investment of $240 million in Facebook valued the company at $15 billion then. The social networking giant now has a market cap of more than $240 billion. The 2000 acquisition of Bungie, which brought Halo to the Xbox, was made for an undisclosed amount, reported at the time to be in the tens of millions. The franchise has become the foundation for its Xbox console and has brought in more than $4 billion in sales.
And then there’s PowerPoint, which Microsoft obtained in the $14 million purchase of Forethought in 1987. PowerPoint may be the bane of many office workers’ existence, but it’s a linchpin of Microsoft’s lucrative Office business.
The Nokia acquisition was one that Steve Ballmer, the former chief executive officer at Microsoft, pursued over the initial rejection of his board and protests from several of his top executives, people familiar with the matter said last year. Satya Nadella, the current CEO, was among those who opposed the purchase. Now that Nadella has his say, he needs a lot more deals that look more like Bungie and Facebook, and less like the list below.
1. Bubbly investments in the dot-com era
During the frenzy of the late-1990s and early 2000s, Microsoft made a series of bad bets that added up to an exceedingly big number. After taking a $5 billion stake in AT&T as well as investments in European telecom providers, Microsoft took $9.1 billion in impairments during its fiscal 2001 and 2002. Chasing Internet and cable glory in the bubble years, Microsoft had poured billions into companies planning to hawk broadband services, interactive television, and satellite, many of which went belly up or were massively scaled back. When the dust cleared, Microsoft’s portfolio was worth little, and the chastened company was much more careful with where it took stakes.
Biggest destruction of value? The 2012 write down of Internet advertising company AQuantive saw Microsoft’s $6.3 billion purchase in 2007 practically evaporate. The charge totalled $6.2 billion, or 98 percent of the acquisition price. At least that decline in value took five years. Nokia wins for the speediest.
3. Xbox 360’s Red Ring of Death
Microsoft wrote down more than $1 billion in 2007 associated with Xbox 360 warranties. The machines had become afflicted with what became known as the Red Ring of Death, which rendered the hardware effectively useless.
Malfunctioning video game consoles wasn’t the only hardware write down for Microsoft. In 2013, the company took a $900 million charge for unsold inventory of its Surface tablets. Computer-wielding dancers weren’t enough to save this product.