Originally posted by: Zugzwang152
They need to have a reason to get those XP users to buy a new OS.
Actually they really don't. When extended support for Windows XP ends in 2010, they're going to need to upgrade because they will lose security patches.
Ya, but Most of Microsoft's realy long term licensing deals with big companies end this year...
It's the licensing model changes that MS did.. It put some people off and they are holding out on it trying to get deals. IBM likes to tell people, big companies, that if they throw the terms 'IBM' and 'Linux' around a bit they can probably get pretty good deals on MS software.
Lots of the realy long term lucrative deals that MS has with it's software subscriptions are ending a bit. They offered big discounts for long term contracts a couple years back to boost revenue. Or something like that. I don't know the details to much.
So people want to hold out for them to start offering nice deals again.
The thing to look out for is something called 'deferrred revenue' or 'unearned income'. This is money that people paid to a company for services that are not yet delivered. Stock market people like to look at it to see how subscription-based businesses, like big software businesses, are doing.
Like if you pay monthly bills for cable TV. Instead of paying for one month, you pay for six months instead. So those 5 months of TV that you haven't had yet, but paid for, the income from that is unearned income, or deferred revenue.
The current income is nice, but the unearned income shows what is happenning in the future and thats what investors care about; the future.
So lately MS's income has increased nicely and predictably, but not the deferred income, which has dropped off from analyst's predictions.
That means more people are getting close to ending contracts are aren't renewing them.
So that's why MS realy realy needs to get Longhorn out the door. If you already own Windows XP on all your computers, and they all are fast enough, everybody has all the copies of MS Office they need, and all your servers are running fairly well, why do you need to pay for more upgrades? You'll probably pay for service contracts, but MS (I dont' think) makes much money off of that stuff.
So if people respond to Longhorn and get excited about the Beta (as oposed to the current 'developer's release') then it's likely that they will be willing to enter into new service contracts.
If Longhorn is a flop in people's minds then they will probably not renew long-term contracts and buy software on the short term to keep their options open and put presure on MS for more discounts. Which in turn increases short-terms operating costs for new licenses and makes MS competitors look more attractive.
At least that's my thinking on it.
Pay attention to this stuff around the end of July, I think that's when you'll be able to tell more about what is going on financially. The beta should be out and people should start feeling the pressure to buy new software subscriptions.
Right now it's a bit of a tough time for MS. Their stocks have been pretty much flatline for a while now and if they flop then they'll loose investor confindance.
I don't think that will happen though. MS is huge and most businesses are hooked very strongly on MS software.
All this is just my speculation. It doesn't mean much and I am probably mostly wrong.