2010 Microsoft Wrote Some Checks That 2013 Microsoft Can’t Cash

The RapGenius breakdowns of recent Andrew Mason and Warren Buffet statements by Marc Andreessen and Ben Horowitz are, well, genius. And they got me thinking back to some of my favorite blog posts along the same lines: breaking down corporate speak, vagueness, or pure bullshit line-by-line. Strolling down memory lane, I landed upon this post from June of 2010, in which I broke down some high and mighty numbers put forth by Microsoft’s communications chief Frank Shaw.

Then I had to read his post again. I almost couldn’t believe it. Nearly every number boasted about two and a half years ago has now turned against Microsoft. I mean, it looks really bad. And it’s probably why we get bland press releases instead of mouthy or frank updates. Such updates have a tendency to come back and bite you in the ass.

So let’s let the ass-biting begin, shall we?

Shaw kicks his post off by touting some impressive Windows 7 sales numbers. But then he pulls back to say that he’s going to let Microsoft’s numbers speak for themselves. Except he’s not really doing that. Instead, he carefully aligns each number against numbers from rival companies in an effort to make Microsoft look good. Unfortunately for Shaw, the numbers that made Microsoft look good in 2010 make them look bad in 2013.

Number of Windows 7 licenses sold, making Windows 7 by far the fastest growing operating system in history

Having just launched Windows 8, Microsoft has been a bit vague in terms of actual sales numbers. They’ve stated that 60 million licenses have been sold (in other words, most to OEMs, not directly to consumers) and that the trajectory is “similar” to that of Windows 7. Nothing necessarily wrong with any of that — unless you believe that each new Windows version should be bigger than the last.

Technically, if Microsoft is to be believed, they sold 60 million licenses for Windows 7 in 74 days and 60 million licenses for Windows 8 in 75 days. Very close, but not enough to overtake the “fastest growing operating system in history” bestowed by Shaw.

And just to compare Apples to oranges for a second, at the 60 million in 75 days, Microsoft is selling exactly 800,000 Windows 8 licenses a day. Impressive. But perhaps not impressive as the fact that Apple averaged selling 833,000 iOS devices a day last quarter. Which leads us to Shaw’s next 2010 stat…

7.1 million
Projected iPad sales for 2010.

58 million
Projected netbook sales in 2010.

355 million
Projected PC sales in 2010.

This is where the wheels start to come off. Shaw is clearly trying to suggest that the much-hyped sales of the then-brand-new iPad are nothing compared to those of netbooks. And that the iPad looks particularly bad compared to overall PC sales (of which netbooks are a part). Remember, this was 2010, when we were at peak-netbook. Mosts analysts thought the sky was the limit for these devices. And they thought that iPad sales would be relatively timid. Those analysts were wrong. So. Very. Wrong.

The source Shaw cited guessed that 20 million iPads would be sold in 2012. The actual number was around 66 million. Original projections for netbook sales by 2012 were closer to 100 million. Instead, the segment is all but dead, with many of the major OEMs no longer making those devices. Overall sales are hard to peg for 2012, but the number was certainly below the 29 million sold in 2011 (which was well below the 39 million actually sold in 2010 — you’ll notice that the estimate Shaw stated in June of that year also missed by a lot).

I think it’s safe to say that netbook sales were well below 20 million for all of 2012. That’s interesting because just in the holiday quarter of 2012 alone, Apple sold around 23 million iPads.

Think about that and then read what Paul Thurrott wrote in 2010 about the iPad being no threat to the netbook market:

And IDC is now forecasting that ‘mininotebook’ (i.e. netbooks and sub-12-inch machines) will sell 45.6 million units in 2011 and 60.3 million in 2013. If I remember the numbers from 2009, they were 10 percent of all PCs, or about 30 million units. Explain again how the iPad will beat that. Please. Even the craziest iPad sales predictions are a small percentage of that.

It’s pretty simple, Paul. In math, a higher number usually beats a lower number. Not only did the iPad destroy the netbook, it even beat the fictional netbook sales forecasts by some silly analysts.

As for global PC shipments, Gartner reported that the number came in at 352.7 million last year. You’ll notice that this is below the number Shaw stated for 2010. In other words, the iPad is going the right way (and fast), the netbook is going the wrong way (and fast), and the PC is like Matthew McConaughey’s high school girls in Dazed and Confused — “they stay the same…”

Percentage of US netbooks running Windows in 2008.

Percentage of US netbooks running Windows in 2009.

Something perhaps impressive to tout in 2010 is something to probably be embarrassed about in 2013. It showed that Microsoft was clearly thinking and betting big on this segment of the market. Unfortunately, 100 percent of 0 is 0.

Number of paying customers running on Windows Azure in November 2009.

Number of paying customers running on Windows Azure in June 2010.

Shaw was quick to note that in just a few short months, Azure went from 0 to 10,000 paying customers. Since then, there hasn’t been a whole lot of horn-tooting. Microsoft said in 2011 that they had 31,000 customers. And last year would only say they had “high tens of thousands of customers” and that they were adding “hundreds” of new customers every day. This is Microsoft. “High tens of thousands” and “hundreds” mean precisely jackshit.

16 million
Total subscribers to largest 25 US daily newspapers.

14 Million
Total number of Netflix subscribers.

23 million
Total number of Xbox Live subscribers.

Netflix now has over 33 million subscribers. Xbox Live now has north of 40 million subscribers (though probably not yet 50 million of you’d think they would have touted it). Both have seen good growth, but Netflix is clearly growing faster (despite a period of losing users).

But hey, at least the newspapers are still dying. In related news, Microsoft sold more Surfaces than the dinosaurs did.

21.4 million
Number of new Bing search users in one year.

Bing did hit an all-time high in search market share (in the U.S.) this past January with 16.5 percent. Unfortunately, the gains came at the expense of their search partner Yahoo. Google continues to dominate the space, as they also rose this past month to 67 percent market share (and the percentage is higher in many places overseas).

All of this slow cannibalization has only cost Microsoft something like $15 billion over the years. Shaw did not tout that number.

Linux Server market share in 2005.

Predicted Linux Server market share for 2007 (made in 2005).

Actual Linux Server market share, Q4 2009.

Not much to report here in boring land, but Linux has been slowly rising while Microsoft has been slowly falling. (Also humorous that Shaw called out false/missed projections, just like I’m doing here!)

8.8 million
Global iPhone sales in Q1 2010.

21.5 million
Nokia smartphone sales in Q1 2010.

55 million
Total smartphone sales globally in Q1 2010.

439 million
Projected global smartphone sales in 2014.

Another good one. Clearly, the idea here was to show that the iPhone was puny compared to the overall market and the market leader, Nokia.

Things change.

Apple sold 47.8 million iPhones in Q1 2013 — nearly matching the size of the entire smartphone market in 2010. Nokia, meanwhile, has fallen from first to seventh in the smartphone race. Last quarter, they sold 15.9 million smartphones, of which 9.3 million were Asha “full touch” smartphones, which you could certainly argue aren’t smartphones at all.

You may recall that in early 2011, Microsoft and Nokia formed a partnership on smartphones. That makes Shaw’s 2010 reference all the more juicy. Microsoft may have not been the reason for Nokia’s collapse, but they certainly haven’t helped.

Shaw’s overall point was clearly that it was the early days of smartphone and that the market was going to expand hugely. Both of those things ended up being true. But Shaw undoubtedly thought that the soon-to-be-released Windows Phone OS would be able to compete for those 400 million or so new smartphone customers. Unfortunately, aside from just Nokia, Windows Phone itself is also going the wrong way in terms of marketshare. In the U.S., Microsoft controls just 2.9 percent of the market. iOS and Android combine to control about 90 percent of the market.

173 million
Global Gmail users.

284 million
Global Yahoo! Mail users.

360 million
Global Windows Live Hotmail users.

299 million
Active Windows Live Messenger Accounts worldwide.

Rank of Windows Live Messenger globally compared to all other instant messaging services.

Gmail now has 425 million users. It is the No. 1 email service, taking the lead last year. Hotmail? It still has 360 million users, as of the last reports. “They stay the same…”

And what about the No. 1 instant messaging service in the world? Microsoft is shutting it down this year.

$8.2 Billion
Apple Net income for fiscal year ending Sep 2009.

$6.5 Billion
Google Net income for fiscal year ending Dec 2009.

$14.5 Billion
Microsoft Net Income for fiscal year ending June 2009.

$23.0 billion
Total Microsoft revenue, FY2000.

$58.4 billion
Total Microsoft revenue, FY2009.

This one really hurts (especially in light of my “decoding” from 2010). First of all, Shaw erroneously stated that Apple made $5.7 billion in fiscal 2009 and had to correct it in the intro of the post (pretty big error). But even at $8.2 billion, Microsoft probably thought they had a lot of breathing room…

Yeah. Not so much.

Apple made $41 billion in net income in fiscal 2012. Yes, that’s income, not revenue. Profit. Straight cash, homey.

Microsoft made $21.76 billion in net income in 2012 — roughly half of the company once so far in their rearview. Meanwhile, Google, with a net income of $10.7 billion, is growing faster than Microsoft.

As for revenue, Apple made $156.5 billion in fiscal 2012. Microsoft made $73.72 billion. Again, I refer you to the art of math.

My point here isn’t to rag on Microsoft — well, at least that’s not the only point. The point is to show that numbers worth touting one year may come back to haunt you in the future — especially if you’re focusing on comparing yourself to your rivals. And if you’re going to get cute in calling out your rivals, it’s probably best to make sure that your body can cash the checks your ego is writing.