Microsoft's 3Q Profit Nearly Doubles, Strong Demand for Windows Mobile

[Kris Kumar]

<div class='os_post_top_link'><a href='http://abcnews.go.com/Business/wireStory?id=712641' target='_blank'>http://abcnews.go.com/Business/wireStory?id=712641</a><br /><br /></div><i>"Microsoft Corp. said Thursday that third-quarter earnings nearly doubled from last year, driven by growth in the software company's server and tools business and lower legal costs, but revenue fell shy of Wall Street expectations. For the three months that ended March 31, the Redmond-based software maker earned $2.56 billion, or 23 cents per share, up from $1.32 billion, or 12 cents per share, a year ago. ... Di Valerio noted that <b>revenue for mobile and embedded devices grew 31 percent over last year, thanks to strong demand for Windows Mobile products.</b>"</i><br /><br /> <img src="http://www.smartphonethoughts.com/images/Kris-Apr2005-MS3QHighlighted.JPG" alt="User submitted image" title="User submitted image"/> <br /><br />Earnings reported by the Mobile and Embedded Devices unit that is responsible for Windows Mobile is getting stronger every quarter. :clap: The complete Microsoft earnings report can be viewed over <a href="http://www.microsoft.com/msft/earnings/FY05/earn_rel_q3_05.mspx">here.</a>

[Santa Fe]

They seem to still be losing a chunk of money each year on Windows Mobile which I guess is more than just the Smartphone? The analysts seem to think that the Smartphone is merely an offshoot that will eventually peter out against other competition. I'm hoping they are incorrect. Is it a device/software/carrier/user or all of the above problem? At least the positive upward trend should be good for internal justification to stay in the fight.

[David McNamee]

They seem to still be losing a chunk of money each year on Windows Mobile which I guess is more than just the Smartphone?

Yup. Windows Mobile is the umbrella for Smartphone, Pocket PC and Portable Media Center. The Mobile and Embedded Device group (when last I checked) included Windows CE, Windows Mobile, Windows XP Embeded, Windows Automotive, and MapPoint Location Server.

The analysts seem to think that the Smartphone is merely an offshoot that will eventually peter out against other competition. I'm hoping they are incorrect.

Analysts don't "get" the Smartphone. Just like they don't "get" Tablet PC. Just like they didn't "get" the Atari 2600...

I do still think there needs to be a marketing push to delineate Smartphone from Pocket PC Phone Edition. Unless you've lived the phone first vs. PDA first experience, customers glaze over when you talk to them about it.

Is it a device/software/carrier/user or all of the above problem? At least the positive upward trend should be good for internal justification to stay in the fight.

IMHO, the United States has a carrier problem. The big 4 need to get their heads out of their ringtones and start delivering devices that meet the demands of an ever-mobile customer base.

[Kris Kumar]

They seem to still be losing a chunk of money each year on Windows Mobile which I guess is more than just the Smartphone?

The loss is getting smaller and smaller. As David pointed out the Mobile and Embedded Devices unit has other products as the MapPoint Location Server and Windows Automotive, which haven't started making much money. I think Windows Mobile on its own would be okay. Partly because of the Pocket PCs.

[Kris Kumar]

The big 4 need to get their heads out of their ringtones and start delivering devices that meet the demands of an ever-mobile customer base.

I agree. The carriers seem to be interested in making quick change. They don't realize the $20+ extra they can earn in the form of data services.

Plus Microsoft was late in entering the game. They have lost quite a bit of foot hold to BlackBerry and Treo.

[apeguero]

Cool Microsoft! Now bring us Magneto. Please!

[David McNamee]

Plus Microsoft was late in entering the game. They have lost quite a bit of foot hold to BlackBerry and Treo.

Agreed. Definite need for an intelligent marketing campaign. I think MS marketing should pound the Treo first. I think they are a little more vulnerable than the BlackBerry.

[David McNamee]

Cool Microsoft! Now bring us Magneto. Please!

They'll bring it, alright. The question is, "when will the carriers ship a phone running Magneto?"

[surur]

Di Valerio is the cooperate vice president of Microsoft. I think this is the first time I've seen some-one high up talk about windows mobile as a source of revenue. This devision having the attention of higher management can only be a good thing, especially as a source of revenue vs a bulwark against palm and blackberry. I think this will result in much more marketing dollars going to pocketpc's and smartphones, which is likely to really ignite the market.

Surur