Tuesday, January 16, 2018
Business

Analysis: Microsoft no longer a tech innovator, but still a profit machine

When Microsoft announced its financial results for the second quarter last week, the market panicked. The firm's stock dropped 10 percent in after-hours trading, even though revenue and profits both topped their numbers from 2012's second quarter.

Why did the market freak out? The biggest reason was that Microsoft booked a $900 million charge for "inventory adjustments" for its Surface tablets. In plain English, Microsoft admitted that its heavily promoted tablet is selling poorly. And that's an ominous sign for the Redmond, Wash., firm's long-term prospects. Tablets and smartphones are the future of computing, and Microsoft is falling farther behind the market leaders, Apple and Google.

Even so, Microsoft chief executive Steve Ballmer shouldn't be too depressed. Microsoft probably won't lead the next generation of high-tech innovation. But history suggests that Windows and Office, its existing cash cows, will continue generating profits for years to come. The numbers bear this out: Second-quarter revenue was up 10 percent, to $19.9 billion. And profits were $6 billion, compared with a small loss a year ago.

Tablet computing is an example of what Harvard business guru Clay Christensen dubbed a disruptive innovation. While the term has become so overused as to render it almost meaningless, Christensen gave it a precise definition. Disruptive innovations are those that are dramatically simpler and cheaper than what's already on the market — in this case, the PC.

Tablets are less powerful than full-featured PCs. But their simplicity and low cost allow many more people to experiment with them — witness the hundreds of thousands of apps in the Apple and Google app stores. That has led to a rapid pace of innovation in mobile software. Over time, disruptive technologies like tablets outstrip the capabilities of the older technology like PCs, despite the latter's greater complexity and initial sophistication.

Microsoft has repeatedly tried to enter the mobile operating system market — with dismal results. The company introduced its first tablet PC more than a decade ago, and it was offering a mobile version of Windows for years before the iPhone came on the scene. But Microsoft was too invested in the PC business model to succeed in the mobile marketplace. It tried to offer the full capabilities of a PC in a mobile form factor, producing an interface that was too cluttered and confusing for small screens. And its business model of charging smartphone manufacturers for each Windows phone it shipped left the company flat-footed when Google offered Android for free.

Microsoft is due for a decade of stagnation as the computing industry shifts from PCs to mobile devices. Yet PCs aren't going away. Businesses are not going to put iPads on people's desks any time soon, and they're not going to ditch Microsoft Office in favor of Google Docs. So if Microsoft can keep its costs down, it can continue to be profitable for years to come.

Comments
Help wanted: Seminole Hard Rock in Tampa has 250 jobs to fill

Help wanted: Seminole Hard Rock in Tampa has 250 jobs to fill

TAMPA — Seminole Hard Rock Hotel & Casino is holding a hiring event next week to fill more than 250 positions. The event will take place in the Hard Rock Cafe from 9 a.m. to 1 p.m. Jan. 24. Available positions include culinary, beverage, hotel, spa, ...
Published: 01/16/18
Airbus could abandon A380 superjumbo amid lackluster sales

Airbus could abandon A380 superjumbo amid lackluster sales

New York TimesThe days may be numbered for the world’s largest passenger aircraft.Airbus, the European aerospace group that makes the A380 superjumbo, said Monday that it would have to end production of the plane if its only major customer, Emirates,...
Published: 01/15/18
The closing of 63 Sam’s Club stores has big implications for small business

The closing of 63 Sam’s Club stores has big implications for small business

Special To The Washington PostLast week, Walmart announced that it would be closing 63 of its under-performing Sam’s Club stores at various locations throughout the country, including a South Tampa location.PREVIOUS COVERAGE: South Tampa Sam’s Club i...
Published: 01/15/18
Brawny pickups, futuristic SUVs star at Detroit auto show

Brawny pickups, futuristic SUVs star at Detroit auto show

Associated PressDETROIT — It’s the year of the pickup truck at the 2018 North American International Auto Show in Detroit as General Motors, Fiat Chrysler and Ford unveil new trucks in a fast-growing and highly competitive U.S. auto market. Fiat Chry...
Published: 01/15/18
2017 still a deadly year for Tampa Bay pedestrians, bicyclists

2017 still a deadly year for Tampa Bay pedestrians, bicyclists

Another year gone, another year that Tampa Bay was one of the most dangerous places in the country for those walking or riding their bikes.More than 100 people were killed walking in Hillsborough, Pinellas and Pasco counties in 2017, according to sta...
Published: 01/15/18
If Florida’s offshore oil rush ever happens, only one side of the state is likely to see it

If Florida’s offshore oil rush ever happens, only one side of the state is likely to see it

The offshore drilling rigs that pepper the central Gulf of Mexico off Louisiana and Texas tap some of the nation’s richest oil and natural gas reserves.That proven and profitable productivity is why the energy industry has pushed for decades to open ...
Published: 01/14/18
Large crowds grab deals as Sam’s Club prepares to close South Tampa location

Large crowds grab deals as Sam’s Club prepares to close South Tampa location

TAMPA — Large crowds have gathered to snap up some deals before the Sam’s Club in South Tampa closes its doors for good on Jan. 27.On Thursday, the retailer announced it was closing dozens of stores, including a location at 5135 S Dale Mabry Highway...
Published: 01/13/18
For the first time, the 3 best-selling beers in America are light beers. Can craft brewers catch up?

For the first time, the 3 best-selling beers in America are light beers. Can craft brewers catch up?

Is it time for the King of Beers to hand over its crown?Preliminary analysis of national 2017 beer sales indicates that, for the first time in decades, Budweiser is no longer one of the top three beer brands sold in the United States. Bud Light, whic...
Published: 01/13/18
Valley National launches ‘Pop-Up Moments’ campaign for Tampa Bay nonprofits

Valley National launches ‘Pop-Up Moments’ campaign for Tampa Bay nonprofits

Leaders from Valley National Bank/USAmeriBank surprised the students of two local schools, Ybor City’s Academy Prep, 1407 E Columbus Drive, and St. Peter Claver Catholic School, 1401 N Governor St., with donations of much-needed supplies. This happen...
Published: 01/12/18
Updated: 01/14/18
Lottery winner minefields: Financial planning, emotions, relationships

Lottery winner minefields: Financial planning, emotions, relationships

The biggest challenge for lottery winners isn’t the massive sum of money suddenly dropped into their lap — it’s everything else that comes with it. "They’re going to be pulled in a lot of different directions," Steve Athanass...
Published: 01/12/18
Updated: 01/13/18