Posted July 21, 2011 5:16 pm by with 6 comments

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We concentrate on the online space most of the time here at Marketing Pilgrim. With that in mind, we just had to point out that despite all the relative calm about Microsoft’s Q4 reporting (meeting expectations, profitable etc), we can’t keep our eyes off the staggering $728 million loss on $668 million in revenue for the online piece of the tech giant.

If you are keeping track that means that the online loss for the fiscal year totals $2.56 billion (yup, with a b) on revenues of $2.53 billion. Here’s a picture of Microsoft’s online track record thus far from SAI.

Is there any hope for turning this continuing trend around? What do they have to show for it thus far? A few percentage points gained here and there in search share against a competitor, Google, who may have finally broken their social networking glass ceiling with Google+?

Of course, it’s not like the online operations will sink the tech giant but if online is the future of the business world and it appears that your online operation is a bleeder, what does that say about the future?

We desperately need competition for Google in search but how long can Microsoft continue to keep online operations afloat? Oh, and let’s not forget that some of their cash cows’ fields are being grazed by Google online bovine like Docs, Chrome and more.

What’s your take on Microsoft’s future be it online or off?

  • Wow Frank, that’s not a pretty picture!

  • Dan

    Be careful when interpreting this chart; it might not say anything about Microsoft’s 1.6% ownership of Facebook. With Facebook’s estimated value going anywhere from $50 billion to over $100 billion, this could make up for what the chart is showing.

    • @Dan – Ownership of Facebook doesn’t do anything to help their performance as a web entity. They are getting little traction and will continue to lose money which will offset that gain.

      They lost $2.56 billion in online in one year which means that in order to offset that their Facebook investment (which only turns into money if it is sold) would need Facebook to be valued at around $150 billion. Even the most generous IPO valuations don’t come near that. Oh and that loss is a recurring deficit not just a one timer. Online is a millstone around Microsoft’s neck.

      • Dave M

        I think they’re making a big push for it and it’s the right move. Like you said, it’s the future of business so why not invest profit from other sectors into this space. They have a history of doing it and succeeding, see Xbox. In my mind though, for them to have real success they need to team up with Facebook and Twitter, create the only real search engines integrated with real time UGC from Facebook and Twitter and keep Google out of it. The real time results that come from Twitter and FB can be the item that finally gets someone some search engine share w/o flat out paying for it.

  • “We desperately need competition for Google in search”

    Agreed. It’s not healthy for just one big giant entity to control so much of the online market. I had high hopes for Bing but the big G still dominates.

  • I think Microsoft will lose all positions in online world including search engines and browsers. Not now maybe, but the ultimate fate is not so far.