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Microsoft carried by enterprise customers

Summary: Microsoft has flashier products---Windows 8 and Kinect---but the staid products that appeal to corporations are carrying the company.

Larry Dignan

By for Between the Lines |

Microsoft's Windows 7 may seem like a has-been in the lead-up to Windows 8 in the second half of 2012, but the corporate upgrade cycle continues for the software giant. In fact, Microsoft's enterprise businesses are carrying the company.

Although Microsoft's Windows revenue was sluggish in its fiscal second quarter last week, there were a bevy of bright spots. Among them:

  • Microsoft had good cost discipline;
  • The company has a well rounded product line-up;
  • Its enterprise businesses are chugging along;
  • The entertainment and device division is buoyed by Kinect;
  • And corporations continue to upgrade to Windows 7.

That final point was among the most notable in Microsoft's quarter that ultimately was led by products targeted at the enterprise. CFO Peter Klein said:

The overall business environment remains very strong for us and so all of our macro indicators for business spending in IT remain good, unearned revenue, our renewal for enterprise licensing agreements and enterprise deployment to Windows 7.

He also mentioned Windows 7's corporate chops earlier. Klein said:

The PC market was challenged this quarter, with particular softness in the consumer segments. However,Windows 7 momentum in the enterprise continues and today over one-third of enterprise desktops worldwide are on Windows 7.

Microsoft's ability to weather the lead-up to Windows 8 largely depends on the enterprise. Kinect will get the attention, but it's just a cheap headline. SharePoint, Office and launches of Windows Server 8, SQL Server 2012 and System Center 2012 are carrying the team. Meanwhile, corporate Windows 7 upgrades continue.

Simply put, Microsoft's enterprise businesses are humming. Consider the data points:

  • Six quarters since launch, Office 2010 upgrade continue.
  • Microsoft had double-digit revenue growth for Exchange, SharePoint, Lync and Dynamics CRM.
  • Office 365 has 100,000 businesses in the fold.
  • Windows Server Premium and System Center had double digit revenue growth quarters.
  • Microsoft's Lync unified communications platform continues to gain steam.
  • Windows Server 8, SQL Server 2012 and System Center 2012 are on tap to launch.

Bottom line: Microsoft has flashier products---Windows 8 and Kinect---but the staid products that appeal to corporations are carrying the company.

Topics: Windows, Microsoft, Operating Systems, Software

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26 comments
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  • RE: Microsoft carried by enterprise customers

    Microsoft so reminds me of the IBM of old. BIG, SLOW and trying to grow by carrying a BIG STICK.

    Just like IBM, they will be humbled by those FASTER and MORE NIMBLE.
    BrentRBrian
    Reply Vote

    • RE: Microsoft carried by enterprise customers

      @BrentRBrian What you have just said is somewhat painfully obvious and a tad bit redundant. Over the course of nearly a decade we in the business world has already come to grips with the more relevant technologies of smart phones, iPads, and the like of completing our day to day work and communications. I am at in the hospital administration sector and most of my work is done on such devices as I see most everyone from the hospital administrator all the way down to the cleaning crew using these devices including the iPod Touch II (though this device cannot make phone calls, but does video, skype, facetime, text messaging, and document sharing through WI-FI.

      My iPad II has already replaced my office laptop and has done so for a while.
      The Douginator
      Reply Vote

      • Actually The Ipod Touch II can make wifi calls...

        @The Douginator
        If you sign up for Google Voice and install Talkatone. You can call anyone in for Free in the US.
        lenohere
        Reply Vote

      • RE: Microsoft carried by enterprise customers

        @The Douginator
        Your full time ipad job pretty much explains your job complexity... Now that you have figured out that all work can be done on ipad and crappy android phones, why not dump all the big machines that run IBM/Microsoft software in your company.
        owlnet
        Reply Vote

      • RE: Microsoft carried by enterprise customers

        @The Douginator
        I could see an iPad working in that position. Although a Cisco Cius (with the dock) would be even more appropriate at that point given your usage cases listed. That way you have your normal desktop (with monitor) and phone (powered by your tablet-phone, and then your tablet-phone travels with you as well.

        Actually any modern tablet would work provided the backoffice servers are setup properly and platform independent (ie not leaning towards MS Win32 apps).
        admiraljkb
        Reply Vote

      • RE: Microsoft carried by enterprise customers

        @The Douginator
        Hospital administration work and the business world are miles apart.
        kstap
        Reply Vote

    • RE: Microsoft carried by enterprise customers

      @BrentRBrian
      What's wrong with IBM? Last time I checked their revenue hasn't declined significantly... Who says they want to be the latest and greatest? That's what this articles points out: that businesses (which are always slower than the consumer markets) keep the company alive. What's wrong with such a business model?
      belli_bettens@...
      Reply Vote

      • Nothing's wrong with it

        IBM is a great success story. It managed to completely reinvent itself when the market shifted.

        MS profit story has been the same for over a decade, it's finally being outed. Nothing wrong with being a windows & office company. Just drop pretending youre something else and save the wasted R&D spend.

        Eventually these markets will decline, Steve B will have to pull a rabbit out of the hat. Sadly I don't think he's good with animals.
        Richard Flude
        Reply Vote

      • Not to go all negative on you

        @Richard Flude
        but you don't see much, as you don't allow yourself to look beyond your "anti-MS" world.

        You bring up the same stuff so many times, it appears that since you base all your posts off data from some tiny bubble in time, that you really can't see he future as clearly as you think.

        If that works for you, great, just as long as you don't get surprised when things don't turn out as you believe.
        William Farrel
        Reply Vote

      • RE: Microsoft carried by enterprise customers

        [i]but you don't see much, as you don't allow yourself to look beyond your "anti-MS" world.[/i]

        And it's a big world, too. Far bigger than that corporate lifeboat you keep clinging to.

        [i]You bring up the same stuff so many times, it appears that since you base all your posts off data from some tiny bubble in time, that you really can't see he future as clearly as you think.[/i]

        If you really think MS will be around forever, I have a nice used bridge to sell you. Wholesale.

        All corporate monoliths crumble eventually. Either the markets for them have changed and they didn't react fast enough, or through government intervention. Nothing lasts forever. Even that lifeboat you are clinging to will one day sink.

        [i]If that works for you, great, just as long as you don't get surprised when things don't turn out as you believe.[/i]

        Maybe you should be asking yourself just that. Go clean your mirror.
        ScorpioBlue
        Reply Vote

      • RE: Microsoft carried by enterprise customers

        @belli_bettens@...
        Nothing is wrong with that business model... MS is also spreading out in to other consumer industries just to keep things balanced moving forward. They are in great shape.
        kstap
        Reply Vote

    • RE: Microsoft carried by enterprise customers

      @BrentRBrian/The Douginator,
      Not all computing is done on the client. With products like Office 365 and Google Docs, more work is being done on the server ( or Cloud if you wish). Enterprise customers are increasingly less concerned about the client OS and products and more concerned with the back-end server that provides the services. Microsoft continues to position itself to provide products in the space (as does Oracle) (examples. Azure, Sharepoint, Office 365, SQL Server, System Center, Dynamics). Honestly, the fact that you want to use your iPad or smart phone instead of your laptop isn't going to shake up this strategy.
      bmonsterman
      Reply Vote

    • There is no resemblance at all

      @BrentRBrian
      to IBM. IBM saw eneterprise only, (how many consumer devices do you see labeled "IBM"?), while MS at least sees, and is starting to embrace the consumer. XBox360, Kinnect, WP7, even Windows 8 on the tablet that people, quite honestlly, are waiting for.

      So, I disagree with everything you said as you seem to be talking about MS of 6 years ago.
      William Farrel
      Reply Vote

      • RE: Microsoft carried by enterprise customers

        @William Farrel IBM PC jr with the chicklet keyboard is an example of an IBM attempt at consumer, I believe it was IBM's last attempt.
        TGGR
        Reply Vote

    • RE: Microsoft carried by enterprise customers

      @BrentRBrian
      You are right on the current MS. Most of MS's problem is too many MBA's in Product Marketing. Once those are laid off (supposed to be happening shortly), MS should be back to their nimble self again though.

      The IBM you reference I know well, but that was IBM of the past, the one that botched OS/2... The current IBM appears fairly nimble, in spite of its size, and they're making a ton of money off Linux based solutions.
      admiraljkb
      Reply Vote

    • RE: Microsoft carried by enterprise customers

      @BrentRBrian DUDE IBM is faster and more nimble today... what's your point?
      Hasam1991
      Reply Vote

  • Not all bad..

    Business isn't going to change and suddenly start hoping on every band wagon that comes by. Never have, never will. A steady, predictable move to new technology that meets business requirements is exactly what is desired in the business world.
    NoAxToGrind
    Reply Vote

    • Well said

      @NoAxToGrind There is too much investment in working processes and procedures to jump on every new thing. The highway of tech is littered with the latest/greatest that did not make it. It might be surprising to some that MS Office is a massive enabler for end user data consumption. This is not going to change any time soon. This "don't mess with success" approach is so well understood that there are bugs in Office that have been there for many years but do not get addressed for fear of breaking the system (and most people understand these limitations and work with them).
      happyharry_z
      Reply Vote

  • RE: Microsoft carried by enterprise customers

    This was to be expected. Microsoft provides solutions for enterprise customers. Its supply and demand. Microsoft gives them what they need to run their business, they purchase it. I wouldn't necessarily call it being carried.
    Loverock Davidson-
    Reply Vote

    • RE: Microsoft carried by enterprise customers

      @Loverock Davidson-

      I agree. I'm not sure I can live in a world where we agree on something! ;)
      admiraljkb
      Reply Vote
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