Microsoft planning $1 bln in annual cost cuts

[Tuttle]

"Chief Executive Steve Ballmer is planning to cut costs by $1 billion annually since the company's expenses have grown faster than its revenues for three years running, The Wall Street Journal reported in its online edition on Tuesday."

http://biz.yahoo.com/rc/040706/tech_microsoft_report_1.html

Not any surprise to those who have been following the financial press. But it does give a pretty good indication that MS is not going to be in any sort of mindset to subsidize another brute force approach like the first xbox or willing to artificially keep a future console alive over an entire console cycle again.

MS's core monopoly revenue streams that have subsidized the first xbox are going to be under ever growing pressure from the mass migrations to Linux and are going to have an ever lessening ability to support expensive hardware components.

This financial pressure is most likely why the dramatic change from MS attempts to market the first xbox as having the most powerful hardware to their current attempts to brand/publicize their software development tools under the title XNA.

 

[jvd]

the reason why this is happening is because long horn is so late .

They should have already released a new os .

 

[AlphaWolf]

Not any surprise to those who have been following the financial press. But it does give a pretty good indication that MS is not going to be in any sort of mindset to subsidize another brute force approach like the first xbox or willing to artificially keep a future console alive over an entire console cycle again.

I don't disagree with your assessment, but the argument could be made that that is exactly why they are making cuts now, to gear up for a console onslaught.

 

[cthellis42]

They have attacks coming in a lot of directions, though. Linux is a viable option in many markets, and even when not being seriously considered will still get used to drive down Windows prices. Longhorn is ending up being very late; 64-bit Windows is coming along slowly; IE has been losing a lot of ground to the other browser options though inattention; other software has been waiting on keying to Longhorn and is getting delayed as well; tablet PC's and media center PC's have not taken off like they were hoping to hold them over...

It's not like MS is in trouble or anything, but they can't pin all their hopes on one event and try to ride the same gravy train as always. There's still a lot of litigation to look out for, too.

They're not going anywhere, but the game they play this round may be very different.

 

[Lazy8s]

Tuttle:

But it does give a pretty good indication that MS is not going to be in any sort of mindset to subsidize another brute force approach like the first xbox

Expense cuts can come from a lot of places; better planning for cost reductions will provide a lot just by itself. An expense breakdown by market would be needed before such an assumption could be made, and that would still end up sketchy since Microsoft doesn't get too specific in their reports.

or willing to artificially keep a future console alive over an entire console cycle again.

Look at the continued investment in MSN.

This financial pressure is most likely why the dramatic change from MS attempts to market the first xbox as having the most powerful hardware to their current attempts to brand/publicize their software development tools under the title XNA.

You must've missed the past hardware generations where manufacturers really tried to play the "most powerful" card. Microsoft treated it mostly as the foregone conclusion it was this time around since consumers would be choosing between PS2 on the strength of its library and not its performance. That kind of marketing is actually more prevalent when the console releases are closer to one another, as differentiation in the game library as a selling point isn't significant yet and consumers are left to decide between the two hardwares directly.