JaggedSac on 25 January 2009
| Soleron said: I think of Microsoft as an investment company. It has unlimited cash from Windows and Office, but cannot expand that market much more. It invests the profit in hundreds of potential activities that appear not to make a profit, in the hope that one or two will become the 'next Windows'. So far, very few have turned out right and the Xbox 360 is the most promising, but still uncertain. Google operates like this too - search advertising still constitutes the majority of revenue, but a few side projects are beginning to gain traction like Gmail, Youtube and Android. These will evolve into major revenue streams over time. Anyway, the result is that the balance sheet looks like a huge waste of resources, but when Windows or Office fades eventually, MS will have a large number of areas to migrate to. |
This is a very good post. This also goes for the majority of large companies out there. During the good times, companies invest their profits on more product, employees, buildings, markets, etc. During the recessions, they shrink back into their core areas. We are in the shrinking phase. Which is somewhat cyclic because the more shrinking, the larger the recession, the larger the recession, the larger the shrinking.
