Increased piracy hurt Microsoft's quarter
For several quarters, Microsoft has been seeing a drop in piracy rates, which has been helping fuel improved business in its Windows unit. In the just-reported March quarter, however, Microsoft saw an increased rate of piracy, an executive told CNET News.com on Thursday.
Colleen Healy, Microsoft's general manager of investor relations
(Credit: Microsoft)In an interview, Colleen Healy, Microsoft's general manager of investor relations, said that the number of unlicensed PCs, particularly in Asia, increased during the company's third quarter. That was one of the factors that caused the Windows unit to come in shy of what the company had forecast.
"Q3 was a tough quarter on the unlicensed front," Healy said. "We had been making gains there for the past several quarters."
Overall, Healy said the PC market came up about a percentage point shy of Microsoft's growth forecast.
"We saw the PC market take a different mix," Healy said. "Emerging markets on the PC hardware came in a little stronger; mature markets came in a little weaker."
Weakness in the Windows unit and the Microsoft Business Division, which includes Office, was offset by higher-than-expected sales in the Entertainment and Devices unit, which includes Xbox, Healy said.
Healy said that the company expected the piracy reduction trend to return in the current period, the company's fourth quarter, which runs through June.
She also said that Microsoft continues to see a strong market for software, despite rumblings about the economy.
"When we look at the envirnonment, IT and software spending continues to look healthy," she said. "From where we sit, the economy is looking good from an IT and software spending standpoint."
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Piracy is not increasing, could MSFT market share be decreasing for both Windows and Office?
OpenOffice.org is free, MS Office is $300, even a non-economist will tell you it's simply a matter of time.
I know that XP is still available for new computers, but it is a bit of a PITA to get a new computer with XP, you can't walk into the store and buy it, you have to go to a sellers web page, hunt for XP systems, which is usually not the main option and have them build it.
Since the OEM price of VB and XPP is the same, it makes sense for companies to buy computers with the Vista Business license and downgrade to XP. They can choose to upgrade to Vista later (or just keep the Vista license as an upgrade path to Windows 7), so there's more value than buying an XP Pro license at the same price.
Of course, Microsoft can claim companies are buying Vista Business, but the reality is that they are buying the Windows Vista Business license to run licensed Windows XP via the downgrade rights.
Lenovo offers a downgrade option, offering a CD for their customized XP pre-load, or a service center downgrade to buyers of PCs with Vista Business.
Dell offers the option of an XP pre-load for buyers of PCs with Vista Business.
It's the consumers who buy Vista Basic, Home Premium, and Ultimate that have no choice. Microsoft also wins because consumers have to choose the OEM "upgrade" to Vista Business to run licensed XP.