By most standards, Microsoft had a healthy earnings report last week. A 16 billion dollar quarter is nothing to scoff at, but the problem is that most their money is being made on the old desktop chestnuts, Windows and Office, and if Ray Ozzie is right that business has a limited shelf life.
A closer look at the numbers shows big losses on the company's Web properties and that's not what it should be showing at this point. No wonder Ozzie quit.
Adam Ostrow reported on Mashable:
The company’s online division also posted sales growth — $527 million for the quarter versus $487 million during the same period last year – but lost a staggering $560 million. At that pace, Microsoft is losing more than $2 billion per year from its online ventures.
As I've written, the future is not on the dekstop for Microsoft, yet it's so hard for them to just abandon the part of the business that is so highly profitable. As Ozzie wrote, however, in order for Microsoft to survive long term, it needs to innovate in the Cloud.
When it's making the majority of its profits from the desktop, it's hard to wean itself from that business, no matter what the analysts and their own departing cloud architect might be telling them.
$16 billion is a nice quarter by most estimations, but unless Microsoft begins to distribute that business to web, mobile and cloud sectors of the business, it's going to have a harder and harder time generating those types of numbers over time. The hard part is committing the company completely to such a move.