A day after the excellent quarterly results from Apple it was Microsoft turn. Although revenues were up 2% to $16.63 billion, net income was down 11% to $4.17 billion, which demonstrates a significant fall in profitability. This drives the need to reduce costs and has led to confirmation that 5000 jobs will be cut at Microsoft in the next 18 months

Why is Microsoft struggling in a market where Apple is thriving?

Product Lifecycles

I think a lot of this down to timing and their respective product lifecycles. Apple have the iPod, which is a mature product and cash cow, but also have the iPhone still at the growth stage.
Microsoft, on the other hand, have Windows 7 still at the introduction stage. The beta version is available for download right now but there is uncertainty as whether we will see a full release this year as Microsoft’s statement is that:

The specific release date will be determined once the company meets its quality bar for release

Don’t expect Steve Ballmer to be sipping champagne at the “quality bar” this year. Based on the product life cycle what you can expect is Apple to have a great 2009, with strong revenues from the iPhone, while Microsoft users like myself stick with Windows XP, eschew the poor performance of Vista and wait for Windows 7 with its promises of improved performance and an easier user interface with touch technology, speech recognition and the new “superbar”. {Maybe Microsoft execs are too focused on bars right now}

Technology is the way forward

In the 44th president’s inauguration speech, Barack Obama talked the key role of science and technology in rebuilding the USA.

“We will restore science to its rightful place and wield technology’s wonders to raise health care’s quality and lower its costs.”

The Big Apple

Bucking the trend of gloomy results, Apple posted results for the quarter ending December 2008 with a record profit of $1.61 billion on a record revenue of of $10.17 billion, a 5.6% rise on the same quarter last year.

Sales of the major product lines were all up in the quarter compared to last year

• MAC;s up 9% to 2.5 million
• iPods up 3% to over 22.7 million
• iPhones up 88% to 4.3 million

This is clearly where American companies can excel: great technology and great marketing   

GM (and Chrysler) need Genetic Modification – Blue Collars to turn Green

The challenge for the Obama government is enabling those technological and branding skills to be applied to its ailing, outdated car industry. A $50 billion handout of transition relief may be a necessary palliative measure but what is required is investment in greener cars combined with overriding the motor industry’s vested interest in combating air pollution. Basically Americans, like the rest of us, need to get used to driving cheaper, smaller, greener cars.

The deepening recession paves the way for a carrot and stick approach to greening the United States with the carrot being Obams’s plan to create five million ‘green-collar’ jobs in ten years.

Intel’s fourth quarter profits took a hammering as their quarterly net income fell 90% from $2.014 billion to $0.234 billion. The credit crunch had driven revenue down from $10.217 billion to $8.2 billion.

Intel decided to get all the bad news over at once this quarter with a $0.95 billion write off on their WiMax Clearwire investment

The reduction in revenues was due to lower demand and the fact that PC manufacturers were running down their existing inventories of chips.

The exception to this was the new Atom chip, which is used in the new ultra light weight laptops, known as netbooks. These chips are simply too new for the PC manufacturers to have significant inventories.