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On Sunday, the NYT’s Randall Stross looked at my original By the Numbers post, and noted that I had completely missed on an incredibly important piece. As Stross said:
"Unfortunately, by trying to argue that Microsoft is doing well in all areas, including those dominated by Apple and Google, Mr. Shaw fails to show Microsoft at its best. Lost from view is what arguably is Microsoft’s very best story — its transformation into a powerhouse supplier of the specialized software that meets the complex needs of large corporations, what the trade calls selling to 'the enterprise.”'
Microsoft’s enterprise software business alone is approaching the size of Oracle. But despite that astounding growth, Microsoft must accept that, fair or not, victories on the enterprise side draw about as much attention as being the No. 1 wholesale seller of plumbing supplies."
That’s a good point, and one I should’ve made more clearly, because missing the fact that under Steve Ballmer, Microsoft’s Server and Tools business has grown from $4.1 billion in revenue in 2000 to $14.9 billion in revenue in 2010 (an increase of 263 percent) with operating income of $5.5 billion -- is a pretty big miss.
Today, I don’t feel quite so alone, because Holman W. Jenkins, Jr., a columnist in the Wall Street Journal, made just the same omission in a piece suggesting we should up our dividend. The column does make some good points – that Microsoft has tripled revenues and doubled profits over the past 10 years, that we’ve returned over $100 billion to shareholders through dividends and stock buybacks, and that some of our investments like Bing and Xbox cannot be measured solely in terms of short-term profit and loss. Jenkins also makes some suggestions for what we could/should do better, and input is always welcome.
Yes, we’ve got good numbers. Five days ago, we announced blowout earnings – 22% revenue growth and 49% operating income growth for the quarter compared to last year. We announced that Windows 7 was the fastest growing operating system in history, selling 175 million copies in just 9 months. We also have a pretty solid fall lineup (Windows Phone 7, Halo Reach, new Hotmail, Kinect for Xbox 360) plus some great momentum in areas like Windows 7, Windows Azure, Internet Explorer 9 and Office 2010. And in addition to our collection of businesses with more than a billion dollars in revenue, there is the Server and Tools business. I won’t miss that ever again!
Posted by Frank X. Shaw Corporate Vice President, Corporate Communications