* A look at what Microsoft plans to do to make four failing business units successful
Today I wanted to draw your attention to the second of a two-part series Network World has put together on the business of Microsoft. Most people don’t realize that while Microsoft’s reputation is one of a moneymaker, the fact is that four of its seven business units are in the red: To the tune of $1.6 billion in fiscal year 2003.
Today I wanted to draw your attention to the second of a two-part series Network World has put together on the business of Microsoft.
Most people don’t realize that while Microsoft’s reputation is one of a moneymaker, the fact is that four of its seven business units are in the red: To the tune of $1.6 billion in fiscal year 2003.
Our story looks at those business units and delves into what the software giant has to do to make them successful. The business units in question are Microsoft’s Business Solutions, Mobile and Embedded Devices, MSN, and Home and Entertainment divisions.
Our author (jfontana@nww.com) says that despite the losses, Microsoft’s competitors recognize these business units as slumbering giants, units not only coddled by a cash reserve of $51 billion but with a thirst to become Microsoft’s new growth business now that traditional cash cows, client operating systems and Office, have matured.
For example, the rewards, risks and challenges are epitomized in Microsoft’s $10 billion dream for its Business Solutions Group, which produces ERP, CRM and other applications to automate business functions for small and midsize businesses (SMB), which Microsoft defines as those with 1,000 or less employees. In the past two years, Microsoft built the group based on its largest acquisitions ever, laying out $2.5 billion to acquire ERP vendors Great Plains and Navision.
Fontana writes that CEO Steve Ballmer is pegging the division’s yearly revenue potential based on selling applications, and supporting infrastructure and services at $10 billion by 2011.
To understand the magnitude of its ambition, $10 billion is just short of the revenue generated in 2003 by Microsoft’s top-grossing Windows Client division, which produces software that sits on 94% of corporate desktops. The $10 billion would make Business Solutions bigger than current-day Oracle or SAP, longtime business application players that will compete with Microsoft and untold others to capture a slice of more than 45 million SMBs.
The goal is to draw users to the business applications and in turn sell them client operating systems, the Office suite and infrastructure servers to support the rollout.
Good stuff. For more on this story see: https://www.nwfusion.com/news/2004/0119microsoft2.html
