Online Services a loss leader for Microsoft
Microsoft is indeed hemorrhaging money from its Online Services division. But at the moment that doesn’t actually matter a damn.
TechCrunch writer MG Siegler is a self-confessed Apple fanboy. Which is his right. We have a few of them here at Blorge so I’m well used to it. But Siegler has an unnatural love for ripping into Microsoft whenever he sees an opportunity to. As he has done in asking, ‘When Will Microsoft’s Internet Bloodbath End?‘
Siegler’s monumental rant, during which he repeats himself several times, was borne out of Microsoft stating, “Online Services Division revenue grew 14 percent year-over-year primarily driven by increases in search revenue,” in its latest financial report for Q3 2011. This statement is “total misdirection bullshit,” apparently.
It’s nothing of the sort. All companies focus on the positive aspects of their business. Cuts are a necessary path to the future, layoffs are streamlining, bad financial results are a mere blip which will be rectified. And Microsoft is just following the trend.
Sure, the Online Services division isn’t pulling in a profit. In fact it’s losing money at a rate that most companies would deem unacceptable. But this is Microsoft we’re talking about, and $726 million is small change to a company that made $5.23 billion in the last quarter from revenues of $16.43 billion. Especially when those Online Services are acting as a loss leader for the company on a wider scale.
Microsoft needs to be a part of the online world, and in Hotmail, Bing, MSN, Messenger, Xbox Live, and all the other elements that form part of this division, it’s reaching many millions of people on a daily basis. The majority of those people will know the services they’re using come from Microsoft, and that’s important in keeping the brand on the tips of people’s tongues.
Then there is the fact that Microsoft is likely looking to the longterm (for a change). It’s spending a lot of money on its Online Services in order to be in a better position years down the line. Bing is doing surprisingly well against Google, Hotmail is holding its own, and Messenger is widely used across the Web. Spend a little now and claim it back in the future. Not a bad strategy when you’re cash-rich.
I really like Siegler and his writing style, even though he comes in for a lot of criticism from the regular commenters over at TechCrunch. However, we will never agree on Apple, Microsoft, and the need for fanboys of the former to continually poke fun at the latter for very misstep it’s accused of making. Especially when the arguments against Microsoft are often specious and easy to counter.
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May 3rd, 2011
every bad news abt M$ is good news