Windows Mobile Revenue Up $46 million, or 45% Over 2004

[Ed Hansberry]

<a href="http://www.microsoft.com/msft/earnings/FY05/earn_rel_q4_05.mspx">http://www.microsoft.com/msft/earnings/FY05/earn_rel_q4_05.mspx</a><br /><br /><i>"Mobile and Embedded Devices revenue growth for fiscal year 2005 was primarily due to unit volume increases in all major product lines, especially Windows Mobile software sales and Windows Embedded operating systems. Increased revenue for Windows Mobile software was primarily driven by increased market demand for connected mobile devices such as phone-enabled PDAs and Smartphones, and strong growth in volume shipments for standalone PDAs. The increase in Windows Embedded revenue was due to our operating system being included in new product designs for both new and existing customers. The segment also benefited from the increased demand for online mapping and the introduction of new MapPoint finished goods products. This new functionality resulted in increased unit sales for Mobile, Embedded and MapPoint product categories. In fiscal year 2005, revenue for Windows Mobile software increased $46 million or 45%, revenue for Windows Embedded operating systems increased $19 million or 21%, and revenue for MapPoint and Windows Automotive increased $25 million or 45%. Mobile and Embedded Devices realized positive increases in customer satisfaction ratings from both mobile operator partners and the developer community. In fiscal year 2005, Mobile and Embedded Devices released Windows Mobile 5.0, which is the latest version of our mobile operating software. "</i><br /><br /><img src="http://www.pocketpcthoughts.com/images/hansberry/2005/20050727-microsoftprofit.gif" /><br /><br />I didn't realize that the Mobile and Embedded division had grown to over $330 million annually. In contrast, PalmSource, which also has a fiscal year end in June, <a href="http://www.palmsource.com/press/2005/062905_q4earnings.html">reported $71 million</a> in annual sales, a drop from its previous year of $73 million. If you do the math, if Windows Mobile revenue was up $46 million and that represents a 45% increase, that means Windows Mobile revenue alone this year was $148 million, more than double what PalmSource took in.<br /><br />Looking at the above chart some may be asking what is in "Other." Those are corporate level expenses not directly attributable to one of the business segments, things like "operations related to broad-based sales and marketing, product support services, human resources, legal, finance, IT, corporate development and procurement activities, research and development and other costs, and accrued legal contingencies."

[Darren Behan]

Unfortunately, it still doesn't look like they're actually making any money on it yet. I'm curious to know to where the nearly 400 million difference went. That said, if it was anyone else I'd be nervous but they've got the $$ to sustain it and if past performance is indicative of future results (which it ain't) then they should be profitable next year. Palm taking the next year or so to regroup won't hurt anything either.

db

[macattack]

Yeah, it's good to see revenues climbing, but, unless I read the chart incorrectly, the WM group is still not profitable.

Palmsource, with only a fraction of the revenue, was actually profitable. Though there is no denying Palmsource is in trouble, it does speak to the benefits of a leaner infrastructure. MS needs to learn how to work with less bloat. Right now they seem to own the collective computing world, but nothing remains the same forever. If MS doesn't learn to operate in a more lean fashion, I believe we will start to see chinks in the armor.

I'm not MS bashing. I want them to succeed with WM. I just think they could be a little more profitable and flexible if they laid off the fatty foods.

[Ed Hansberry]

Yeah, it's good to see revenues climbing, but, unless I read the chart incorrectly, the WM group is still not profitable.

Palmsource, with only a fraction of the revenue, was actually profitable. Though there is no denying Palmsource is in trouble, it does speak to the benefits of a leaner infrastructure. MS needs to learn how to work with less bloat. Right now they seem to own the collective computing world, but nothing remains the same forever. If MS doesn't learn to operate in a more lean fashion, I believe we will start to see chinks in the armor.

I'm not MS bashing. I want them to succeed with WM. I just think they could be a little more profitable and flexible if they laid off the fatty foods.
Ok, that sounds good and all, but please be specific. You have asserted that they are bloated, have an infrastructure that is too large for the system it supports, and have asserted that they would be more flexible and profitable with appropriate changes.

Please enumerate.

[whydidnt]

I'm not MS bashing. I want them to succeed with WM. I just think they could be a little more profitable and flexible if they laid off the fatty foods.

Well, it would appear they are taking your advice. Revenue in the Mobile/Embedded division increased by 90 million, but the loss decreased by $173 million. They seem to have reduced expenses by $83 million. Hopefully that wasn't in R&amp;D!!

One reason M$ has been able to eat Palms market share (and lunch) over the last several years, is M$ hasn't had to rely an profits from the division, while Palm has always had a need to make money from their efforts. Not exactly a level playing field, but it certainly has helped advance the gadgets we love to use. M$ will tell you they are simply investing in the future, once they have substantial market share, then profit will come.

[Patrick Y.]

Go Windows Mobile!! 8) Well, I really, REALLY want WM to be successful. After all, I think it is the best handheld operation system available. Also, I really admire the way they improve their products over the years. :way to go:

When I decided to purchase a PDA a year ago, I was going for Palm originally because of the price. However, I'm really, REALLY glad that I chose Windows Mobile instead of the defeated palm. My good experience with Pocket PCs have motivated me to upgrade to x50v recently. :D :D Now, I just LOVE my x50v. :D Even though there are still lots of rooms for improvements, I believe Microsoft is already doing a good job. I mean, windows mobile really improved a lot over the years. :D :mrgreen: :way to go:

[treopalmchatter]

http://news.com.com/Handheld%20market%20still%20tanking,%20study%20says/2100-1041_3-5806721.html?tag=nefd.top

[ADBrown]

http://news.com.com/Handheld%20market%20still%20tanking,%20study%20says/2100-1041_3-5806721.html?tag=nefd.top

Nothing pundits love more than predicting the imminent implosion of the handheld market. It never occurs to them that perhaps the reason is less dramatic: specifically, HP's recent round of iPaqs is very sub-par, and has been driving users to Dell, or else convincing them not to buy/upgrade right now after all.