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Noen
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Quote :
"2005: Skype was bought by ebay for 2.5B approx
2009: Ebay sold 70% of its skype stake to private investors for a valuation of 2-2.5B approx.
2011: MSFT buys skype for 8.5B

Did the value of skype really multiply by a factor of 3.5 between 2009 and 2011??
As of 2010, Skype makes a 7M loss on revenue of about 860M.

This is a business with a fairly low barrier to entry. Not sure what MSFT gets in return in this transaction. This is like Hotmail all over again."


This makes 4 audio/video conferencing technologies for Microsoft. There's Office Communicator, which was eclipsed by Lync. There's Lync. There's Windows Messenger. And now there's Skype.

My guess (and it's totally a guess) is that it's cheaper to buy Skype and ditch the other three completely, than to merge the other two (Lync and Messenger) into a single service that works for Enterprise, Consumer and multi-platform world ready VOIP and Video Conferencing.

5/10/2011 7:20:54 PM

Prospero
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how on earth can it NOT be cheaper than 8.5 billion dollars, i mean MSFT takes 8.5 BILLION dollars (yes that's 8,500 MILLION dollars) to merge three technologies? i think the only thing they really save is time... and just another example of how MSFT is too big for it's own good that it has 3 technologies that it didn't have the foresight to merge a long time ago.

5/10/2011 7:43:18 PM

Noen
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While I agree that 8.5B is a shitload of money (I agree it seems hugely overvalued), you'd be surprised how damn difficult it is to merge multiple platforms even within the same company. It takes a lot of time and a lot of resources.

This way (hopefully) Microsoft can quickly integrate Skype technology and ditch the other technologies. It would be a big growth opportunity and allow MS to redirect all those resources to new product spaces rather than spending on merging technologies.

8.5B is not a lot of money in the overall scheme of things, considering the total operating budget of the company, and how expensive and time consuming a merge + parity play would have been (Skype has multiple platform support, voip support, international calling, multi-party video and a slew of other features that MS video options dont).

5/10/2011 8:03:55 PM

CaelNCSU
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Quote :
"how on earth can it NOT be cheaper than 8.5 billion dollars, i mean MSFT takes 8.5 BILLION dollars (yes that's 8,500 MILLION dollars) to merge three technologies? i think the only thing they really save is time... and just another example of how MSFT is too big for it's own good that it has 3 technologies that it didn't have the foresight to merge a long time ago.
"


I don't know how many other services like Skype are there out there with as many users as they have?


Quote :
"At peak times, 23 million users are logged into Skype (as of March 2010)."


Facebook is valued way north of $50,000,000,000 with 500,000,000 users. That's $100/user
Skype $8,500,000,000 with 23,000,000 users (some of which that actually pay to use it). That's $363/user.
Super bowl for 30 second spot: $0.03 per "user" (60,000,000 watch Super Bowl at 2 million a 30 second spot).

Sounds reasonable to have that many people's undivided attention for long periods of time.... It's hard as fuck to get users btw, despite what you see on TV.

http://gigaom.com/2010/04/20/skype-q4-2009-number/

I pulled most of those numbers out of my ass from memory...


[Edited on May 10, 2011 at 8:23 PM. Reason : a]

5/10/2011 8:21:36 PM

BobbyDigital
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http://econ.st/liVAfc
Quote :
"Microsoft and Skype
Why buy Skype?

May 10th 2011, 20:55 by M.G. | SAN FRANCISCO

*
*

“IRREPRESSIBLE” is a word that is usually used to denote something that is hard to control or restrain. Steve Ballmer, the boss of Microsoft, is obviously very fond of it. At a press conference on May 10th to announce the company’s whopping $8.5 billion purchase of Skype, an online phone and video-calling service, he used the word several times to imply that Microsoft was still a dynamic company. But the firm’s shareholders may end up wishing that Mr Ballmer had shown considerably more restraint when negotiating the firm’s largest ever takeover.

The way the deal came about shows how desperate the software giant was to get its hands on Skype. The target company was heading for a stockmarket flotation until Microsoft suddenly lobbed in an unsolicited offer for it. The amount Microsoft ultimately coughed up for Skype was generous enough to convince the firm’s investors, which include Silver Lake Partners, a private-equity fund, and Andreessen Horowitz, a venture-capital firm, to jettison the planned public offering in favour of Microsoft’s all-cash deal.

Yet it is hard to see how the company can justify splashing out the equivalent of 400 times Skype’s operating income last year for its prey. Although Skype’s service has become so well-known that its name has become a verb, it has struggled to get users to pay for premium services such as calls to mobile phones. It had 663m registered users last December and made $860m in revenue in 2010, implying revenue per user of a mere $1.30. And it has singularly failed to develop a convincing advertising model.

Announcing the deal, Mr Ballmer (pictured, left, with Skype's boss, Tony Bates) tried to spin these as opportunities. But people chatting away on video calls are unlikely to pay a great deal of attention to ads, no matter how expertly sold by Microsoft’s salesforce. And the company will have to come up with incredibly compelling offerings to persuade folk who have been conditioned to getting a wonderful service for nothing to dip into their wallets and purses.

The corporate market may be more promising. Microsoft has a big footprint here thanks to its Windows and Office products. And its Lync service, which combines various different communications tools such as video chat, instant messaging and web conferencing in a single package to spur collaboration inside companies, has proved very popular. Splicing Skype onto it could allow it to compete even more effectively with offerings from rivals such as Cisco.

There may also be potential for the company to come up with new offerings by linking Skype’s service with, say, its Xbox 360 gaming consoles and its Kinect motion-sensing devices, allowing gamers to see the outrage on friends’ faces when they zap their online characters for the umpteenth time. And by integrating Skype with the operating system for its Windows 7 phones—which is also likely to become the operating system for phones from Nokia, with whom Microsoft has an alliance—it can better compete with video offerings from rivals.

But why buy Skype to achieve all this? After all, had the start-up gone public, it would no doubt have been keen to work with Microsoft on these and other offerings to drum up revenue. Perhaps the answer is that Microsoft desperately wants to be seen as a place that is home to cool consumer technologies and hopes that owning Skype outright will give it more credibility as a hive of edgy innovation. The snag is that the firm has fallen so far behind the likes of Google and Apple in the consumer arena that its fall from grace there may well be irrevocable."

5/12/2011 1:27:54 PM

Chance
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http://www.ritholtz.com/blog/2011/05/how-microsoft-caused-the-dotcom-bubble/
Quote :
"At the same time, Microsoft had grown fat and wealthy and complacent: They became a Wall Street darling and founder Bill Gates became the wealthiest man in the world. But, the company lost its drive and whatever creativity it had. The history of Microsoft is not one of innovation – most of its major products were purchased, copied or stolen – but it quickly became a utility, with Windows and subsequent replacements a necessary evil to maker computers operate.

And what of their Innovation today? Microsoft has missed just about every major trend in computing over the past decade. They missed Search, they missed MP3 players, had to buy webmail, missed user generated content, maps,blogging, online video, cloud computing, location sensitive apps, smart phones, Apps, texting, social networking, tablets, micro-blogging (ie, Twitter). On and on goes the list of latest and greatest technologies, with MSFT nowhere to be seen.

The list of recent Microsoft innovations is astonishingly short. They were always better copiers than they were innovators; even now, they seem to have forgotten how to steal effectively. They may have bought their way into gaming, dropping several billion dollars to become competitive, develop the X-Box and buying Bungie — but all in, it is hardly a winner for them.

And now their latest ill-advised, wildly over-priced, $8.6 billion purchase of Skype. It is their attempt to buy their way into the Smart Phones, yet another innovation they missed. It is their attempt once again to purchase relevancy.

The rich fat kid just wants to be cool . . ."

5/12/2011 5:40:24 PM

Prospero
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Aside from Windows 7

5/12/2011 6:00:45 PM

Stein
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Quote :
"And now their latest ill-advised, wildly over-priced, $8.6 billion purchase of Skype. It is their attempt to buy their way into the Smart Phones, yet another innovation they missed."


Wait, what?

5/12/2011 6:24:24 PM

BobbyDigital
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that line doesn't make much sense to me either. It's as if the author does not realize that Skype and smartphones have zero co-dependency.

5/12/2011 10:25:54 PM

ThatGoodLock
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or that they have an entire smartphone platform

[Edited on May 12, 2011 at 10:31 PM. Reason : also from the article like way ^^^^^^^^ it sounds like MSFT should have just bought the super bowl]

5/12/2011 10:28:14 PM

Stein
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Quote :
"that line doesn't make much sense to me either. It's as if the author does not realize that Skype and smartphones have zero co-dependency."


What this does hand Microsoft, assuming the choose to leverage it properly, is a shared instant messaging client on every smartphone.

Basically a BBM for everyone.

5/12/2011 10:36:33 PM

qntmfred
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people already have SMS. it's argpuably an inferior solution, but it has the inertia. skype doesn't provide any benefits to that need. i used to want skype on my smartphone to avoid using cellphone minutes, but I don't use cellphone minutes anymore, and carriers would rather sell data plans anyways. once i finally did get skype on my iphone, i used it all of 3 times

now if MS can find an innovative way to leverage skype on WP7 to provide some kind of feature or experience that wouldn't be fully available on other platforms (like what apple did with facetime), then they might make good use of it. but even then, there's probably no reason they couldn't have just done the same thing with live messenger or lync or whatever.

[Edited on May 12, 2011 at 10:59 PM. Reason : .]

5/12/2011 10:56:53 PM

qntmfred
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http://brooksreview.net/2011/05/ballmer/

mostly a criticism of Ballmer, but framed in the context of Microsoft's decline over the last decade

5/13/2011 11:53:08 AM

ThatGoodLock
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its not like every big company can catch everything before it comes or succeed even if they do(google wave and buzz) or realize they have a good thing going (flip by cisco)

ive stopped understanding why companies do these things and just put my support behind the ones that 1) are open to the modding community and 2) provide things that actually make life easier

5/13/2011 11:59:18 AM

Stein
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Quote :
"I can definitely see the benefit in it though. It lets MS put popular video conferencing in a living room for $300."


So apparently the cost of entry in getting Skype into your living room might be even lower than I expected:

http://www.engadget.com/2011/06/14/comcast-invites-skype-into-its-cable-boxes-mobile-apps/

6/14/2011 9:33:49 AM

gs7
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I read that as Swype and my brain thought they had integrated themselves as an input method for Kinect. I can't imagine trying to use it with flailing arms instead of just a finger.

But Skype as a fixture in the living room, yes, now that's a concept that's been a long time coming. Hello, George Jetson.

6/14/2011 10:11:34 AM

BobbyDigital
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6/14/2011 1:23:12 PM

AndyMac
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Too bad kinect is only 640x480

6/14/2011 1:46:24 PM

Stein
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Quote :
"Too bad kinect is only 640x480"


See also:

Apple iPad
Apple iPhone 4

But realistically, the Comcast/Skype combo is supposed to be 720p, and while it's true the Kinect's camera is lackluster, keep in mind that it's "something it could do" vs. "the main reason it exists" as is the case with both Apple cameras.

Again, there's also no telling whether or not MS will go down the Skype via Kinect route, but I think it'd be a great opportunity for them if they really want to make a push for widespread Skype adoption outside of the computer/mobile space.

6/14/2011 2:12:40 PM

Stein
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In further MICROSOFT IN DECLINE! news:

http://blogs.forbes.com/greatspeculations/2011/07/11/android-could-be-a-billion-dollar-business-for-microsoft/

7/13/2011 11:27:48 AM

Patman
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I learned the other day that Microsoft makes a $15 royalty on every Android device that gets sold. The idea that Microsoft is on the decline is wishful thinking.

7/13/2011 3:06:29 PM

flatline
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Here's a cheerful chart about MSFT success in the Online division.

7/14/2011 11:21:40 PM

AndyMac
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I don't know what "online operating income" means

7/15/2011 2:01:29 AM

msb2ncsu
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http://www.microsoft.com/investor/EarningsAndFinancials/Earnings/PressReleaseAndWebcast/FY11/Q4/default.aspx

Quote :
"Microsoft Corp. today announced record fourth-quarter revenue of $17.37 billion for the quarter ended June 30, 2011, an 8% increase from the same period of the prior year. Operating income, net income, and diluted earnings per share for the quarter were $6.17 billion, $5.87 billion, and $0.69 per share, which represented increases of 4%, 30%, and 35%, respectively, when compared with the prior year period.

For the fiscal year ended June 30, 2011, Microsoft reported record revenue of $69.94 billion, a 12% increase from the prior year. Operating income, net income, and diluted earnings per share for the year were $27.16 billion, $23.15 billion, and $2.69, which represented increases of 13%, 23%, and 28%, respectively, when compared with the prior year."

7/21/2011 5:35:28 PM

flatline
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Quote :
"Microsoft's perennial money-losing online services unit, which runs the Bing search engine and MSN Internet portal, posted a 16.5 percent increase in sales to $662 million, but its loss widened to $728 million from a loss of $688 million a year ago, as Microsoft continues to pour money into attacking Google. The unit has now lost almost $6.5 billion in the last three fiscal years.
"

7/21/2011 8:24:01 PM

EuroTitToss
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ha

Quote :
"This makes 4 audio/video conferencing technologies for Microsoft. There's Office Communicator, which was eclipsed by Lync. There's Lync. There's Windows Messenger. And now there's Skype."


Communicator is the biggest piece of shit ever. This is how my day at work typically goes:

1. I find a horrible bug in some MSFT product I use at work (usually sharepoint)
2. I go to IM a coworker to complain using communicator
3. My attempt to IM them actually causes their communicator client to crash

[Edited on July 21, 2011 at 8:39 PM. Reason : asdfasdfasdf]

7/21/2011 8:38:18 PM

Noen
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^Believe it or not, I feel you pain on that exact scenario.

Fortunately Lync is about 1000x better than Communicator, and Skype is about 1000x times better than Lync, so at least things are moving in the right direction

7/21/2011 11:16:07 PM

smoothcrim
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are you sure lync isn't a facelift for communicator with maybe some added functionality that's a bit more obscure? we use communicator at work and have written a few apps that interface with it and our phone system and they work without modification on lync. as far as reliability, im going to say it's in the implementation. ours is pretty rock. i'd venture to say AIM goes down more than communicator (~11000 employees on it)

7/22/2011 8:50:06 AM

Prospero
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^^"things are moving in the right direction" implies that buying other technologies that are better and making them your own is "the right direction"

7/22/2011 11:01:35 AM

Noen
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^^ yes its a different application. there is I'm sure some shared pieces but from almost every major component, they scrapped it and redid the thing.

^ not really. just that communicator / lync is a corporate technology, while Skype is a proven commercial scaling service. I don't know that lync can/could scale to a mass consumer service.

7/22/2011 2:18:39 PM

skokiaan
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Look at this shitbox:

http://arstechnica.com/microsoft/news/2011/10/microsoft-works-to-win-desktop-users-over-to-the-start-screen.ars



Design by committee FTL. The dumbasses probably employ the most usability experts in the world, too. Just goes to show how worthless the soft sciences are.

10/15/2011 7:45:58 PM

qntmfred
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said exactly like somebody who doesn't know what they are talking about

[Edited on October 15, 2011 at 8:01 PM. Reason : aka didn't read any of the requirements or science that led to the current designs]

10/15/2011 7:51:36 PM

Noen
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^^that's the search results screen, not the start screen. durrr

10/16/2011 1:00:25 AM

Noen
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950,000 Xbox 360 units sold last week. That's a 2% install base jump in one week.
800,000 on black Friday
750,000 Kinect units

And this is before live television hits in December.

Nokia Lumia 800 is selling like wildfire in Europe. At one point was the #1 volume in sales (quite possibly not the case now). But euro carriers are pushing the phone big time.

HTC Titan finally available here, wish there was a cdma version.

Lenovo announced their win phone coming next year.
Dell moving the company onto its wp7 and off of BlackBerry

Lync client coming to everything

Not a bad winter so far for MS.

11/30/2011 3:20:29 PM

qntmfred
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my coworker won a Titan 2 weeks ago. it is NICE

11/30/2011 3:34:31 PM

Stein
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I want a Focus S and I will spend the next several months convincing SandSanta to get the Lumia.

11/30/2011 3:39:50 PM

smoothcrim
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I just want a wp7 slider on gsm

[Edited on November 30, 2011 at 3:42 PM. Reason : that's not a piece of shit like the lg quantum]

11/30/2011 3:42:23 PM

Noen
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^^ You can order them from Amazon.de right now (for $750 bones)

11/30/2011 5:13:57 PM

AndyMac
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I don't like that Nokia cut so many features from the 900 when they made the Lumia

Right now I'd prefer a Focus S or Titan over it even though it's an absolutely gorgeous phone.

11/30/2011 11:15:38 PM

Hoffmaster
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I got my hands on a windows phone a few days ago for the first time. I'm not even sure what the hardware was but I was impressed with the OS. That is saying a lot since I am a die hard iPhone user. If I had to move to a different phone platform it would probably be to a windows phone instead of android.

12/1/2011 12:01:43 AM

qntmfred
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That's what happened to me last year. I had an iPhone since v1, switched to an android, wasn't all that impressed and switched to WP7 2 months later

[Edited on December 1, 2011 at 12:00 PM. Reason : .]

12/1/2011 11:59:26 AM

qntmfred
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http://www.theverge.com/2012/4/19/2960794/microsoft-q3-fy12-operating-income

Quote :
"It's been a good quarter for Microsoft, who just posted $17.41 billion in revenue for its fiscal Q3 2012 — a six percent increase over the same period last year. Operating income was up 12 percent to $6.37 billion.
"


[Edited on April 19, 2012 at 4:25 PM. Reason : .]

4/19/2012 4:24:36 PM

Arab13
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MS isn't in decline but they are no longer considered a dynamic player. Big player yes. Pre-eminent? arguable.

4/23/2012 3:47:20 PM

Tarun
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MS as Enterprise company is very strong and dominant, MS as consumer company, not so much.

http://www.informationweek.com/news/software/productivity_apps/232900660

4/23/2012 3:56:23 PM

AndyMac
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No mention of xbox?

4/24/2012 12:33:41 AM

disco_stu
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It's not like consumers play video games, AndyMac. Clearly M$ is a terrible consumer company.

4/24/2012 9:32:19 AM

Perlith
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Quote :
"From my perspective, IBM is essentially a giant (and I do mean giant) consulting services company now, and pretty much that's the only long term game they are playing."


Agreed, that was the image they built up in the 90s and until about the mid 2000's. Now there is a significant shift away to Software. (Hi Watson and Smarter Planet!). That is public / not a secret. Software has a lot better margins than Services, and IBM has a fairly good core competency in developing software.



OK, somebody from Microsoft Investor Relations gets an F-- for having an annual report in .doc format with an 11.4MB size. Convert that nonsense to PDF, 90% smaller in size. Some interesting tidbits:

Quote :
"approximately 75% of total Windows Division revenue comes from Windows operating system software purchased by original equipment manufacturers (“OEMs”), which they pre-install on equipment they sell. In addition to PC market changes"


I never realized it was that high from OEM's. Must be a hell of an OEM relationship division to keep everybody happy / negotiate deals.


Quote :
"Search and display advertising generally accounts for nearly all of [Online Service Divisions]’s annual revenue."


This has me curious right now. This isn't a sustainable model ... three years running with operating losses ... $6B in goodwill even before the Skype acquisition ... there needs to be something more than this they are hedging the risk against. Maybe Microsoft will be the first to have data aggregation from multiple hardware devices (rather than purely on a software/app level)? Be curious to see what's in the pipeline for this division.


Servers and Tools looks like a cash cow, but their cost of revenue is ridiculously high.

Doing the math, Microsoft Office (Office/Sharepoint/Exchange) accounts for half of the operating income of the company. Well-made products with limited competition (NONE/IBM/IBM).



I've read HP and Oracle's annual reports, neither left much of an impression of me. Microsoft annual report actually makes me feel like I'm looking a business that knows what they are doing. I'd be really curious to see what the product pipeline looks like internally ... somebody somewhere has probably already come up with a series of ideas to tie all of the divisions together. Be interested to see what will be coming out for both businesses and consumers in the next few years.

[Edited on April 30, 2012 at 11:26 PM. Reason : .]

4/30/2012 11:24:45 PM

Tarun
almost
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ummmm not sure if this is the correct thread but anyone follow home automation stuff from few years ago that microsoft labs worked on

http://research.microsoft.com/en-us/projects/homeos/

pretty cool idea

5/1/2012 9:21:02 AM

Noen
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Quote :
"I never realized it was that high from OEM's. Must be a hell of an OEM relationship division to keep everybody happy / negotiate deals."


One thing Microsoft Sales knows how to do is to sell big ass volume and enterprise agreements.

Quote :
"This has me curious right now. This isn't a sustainable model ... three years running with operating losses ... $6B in goodwill even before the Skype acquisition ... there needs to be something more than this they are hedging the risk against. Maybe Microsoft will be the first to have data aggregation from multiple hardware devices (rather than purely on a software/app level)? Be curious to see what's in the pipeline for this division."


The reason for the continued investment is that there is no alternative. Microsoft cannot cut Bing. It relies on Bing for a TON of integration services to link different product verticals. Bing gives Microsoft Visual Search, Voice Search, Product Search, etc etc. All of these services are mandatory for success in the mobile space, and provide key differentiation in many industries.

Quote :
"Doing the math, Microsoft Office (Office/Sharepoint/Exchange) accounts for half of the operating income of the company. Well-made products with limited competition (NONE/IBM/IBM)."


Basically, yes. Office is competing against Google Docs and Gmail. IBM isn't even on the radar.

Quote :
"I'd be really curious to see what the product pipeline looks like internally ... somebody somewhere has probably already come up with a series of ideas to tie all of the divisions together."


It's no big secret. That series of ideas is Windows 8 and Windows Azure. And it's not so much "tie them all together" as it is "throw them all in the same pit together for Gladiatorial combat" while Windows watches.

5/1/2012 9:30:17 PM

qntmfred
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Quote :
"Microsoft cannot cut Bing. It relies on Bing for a TON of integration services to link different product verticals"


i saw something online the other day about MS trying to sell Bing to facebook. just a rumor i'm sure, thought it was interesting though

5/1/2012 9:47:14 PM

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