Microsoft filed its 10-K annual report with the U.S. Securities and Exchange Commission Thursday morning, outlining its 2009 fiscal year results in greater detail and providing more information about perceived strengths and threats to its business.
While the company repeated assertions from its last annual report that rival Apple and the Linux community are making market-share inroads, Microsoft went out of its way to write an additional line in its annual report detail what it perceives as a risk to its business:
"Partners such as Hewlett-Packard and Intel have been actively working with alternative Linux-based operating systems," Microsoft wrote, providing no additional detail.
While it's been known for some time that HP - - which sells some notebooks and netbooks and servers with Linux - - and Intel have dedicated some resources to Linux development, this is the first time that Microsoft has singled out its two biggest and arguably most important technology partners for this work. While the language in 10-K reports is traditionally dry, legalistic and boilerplate, for a company like Microsoft to add that information for the first time is notable. It also comes at a time when Microsoft reported a double-digit decline in its client software business even as it reported selling more than 300 million units of Windows Vista over the past two years. (It sold 130 million units two years ago and 180 million units of Vista last year, although it doesn't specify how many units were sold or activated with "downgrade rights" to Windows XP.)
How is Microsoft responding to threats from Apple and Linux? By pumping tons of new funds into R&D. According to its 10-K:
"During fiscal years 2009, 2008, and 2007, research and development expense was $9.0 billion, $8.2 billion, and $7.1 billion, respectively. These amounts represented 15 percent, 14 percent, and 14 percent, respectively, of revenue in each of those years. We plan to continue to make significant investments in a broad range of research and product development efforts."
That leads to the question: Can Microsoft gain enough through R&D to stem the tide of Linux and Apple against its client software business?
HP sells massive computers through outlet, BEST BUY. Running Vista, no less. Intel, the mother of all CPUs and other computer circuits, probably more CORE of the entire business.
The only way MS could compete with HP (as they are now a threat) is to make their windows licenses more expensive to HP and therefore making say DELL cheaper to buy, noting it would not have this restriction. ( although even dell computers is a bad choice since it heavely supports Ubuntu/Linux..haha )
Intel on the other hand...no competition there, unless MS wants to buy out AMD and compete there...
Now, if the exeecutives at MS want to fully control all playing fields, they would finally have to open up their own Best Buy. Circuit city would have been a good condidate for such a move, although they went outta bussiness a while back.
So, why people are 'alarmed' about these HP/INTEL remarks Im not sure... they are just detailed reports, as MS is a top grade business player, maybe even to the point of 'cut throat', then they include ALL details into their report, especially since the economic down turn.
Finally, MS was actually ABLE to sell 300 million copies of CRAP software, given they have little to NO competition aside from Apple and a small contingincy with the Netbook/Linux which is now nearly nullified. With the release of Windows 7 looking to be what Vista SHOULD have been.... the future looks VERY bright for MS and its awesome .NET api and tool sets.
MS has little to no worries, even if there is a small threat, and nothing was done to stop it, at least a little, MS is in such a good prime position no matter what other entities come along ( namely Apple and Linux ) that MS is nearly an impenitrible FORTRESS.