Another Thanksgiving arrives here in the United States, and some people consider what they have to be grateful for. I celebrate by talking turkey, not just eating it, about the companies I cover. It's tradition, going back to 2006, that I present the things Microsoft should be grateful for.
Last year, 11 items made the list, keeping with the 2011 theme. For 2012, I reduce the list to eight; my hat tip of respect to Windows 8, which launched nearly a month ago. There are many more things Microsoft could be grateful for, but I chose some that might not readily come to mind. The list goes from least to most important.
8. CBS. The network's primetime lineup is one long Microsoft commercial. Characters on programs like CSI and Hawaii 5-0 quite visibly use Windows gear as part of the plot -- there is more than product placement at work.
During this week's Five-Oh episode "Ohuna", Kono Kalakaua pulls out a Surface tablet on site at a crime scene, with that definitive click of the kickstand. It was quite an amazing feat, too, since Surface doesn't have built-in cellular radio and surely she wouldn't use an open hotspot -- especially in an episode about hackers. She does all this Surface magic from a remote, rual location, adding mystery to question: How does she connect? Hey, whenever do details matter in suspend-all-sense-of-reality cop dramas?
7. FTC, Competition Commission. The US Federal Trade Commission and European Union Competition Commission breathe down Google's neck. The search and information giant faces antitrust troubles on two continents, ahead of likely formal investigations.
As Microsoft learned all too well from its own problems, the government can screw up product development and forever tarnish a beloved brand -- that's with investors as much as customers.
Legal woes could make Google a less-nimble competitor, while giving Microsoft a venue to complain about bad behavior. Hey, it's payback for when Google filed complaints against Microsoft. Revenge beats leftover turkey any day of the year.
6. Apple investors. Suddenly Apple's stock stinks like grandpa's socks. The change is quite dramatic, but by no means disastrous. Except analysts, bloggers, reporters and other writers can't shut up about Apple's plunge, which feeds the selling frenzy. On Wall Street, bad news is more bad news.
Apple opened at $564.25 on Wednesday. That's about 21 percent down from the 52-week high set in September. Just two months ago, those writing woes today couldn't shut up speculating about the stock soon hitting $1,000 a share. Now they're crying about declining valuation. Oh yeah, what miserable situation. The company is worth less than 500 billion bucks, a story blasted all over the InterWebs last week (recovered to more than $523 billion since).
Microsoft CEO Steve Ballmer would love to have that problem. His company trades with market cap of $225.95 billion, early Wednesday. Surely he can't complain about Apple crybabies creating negative sentiments.
As I often say, in business perception is everything. Negative perceptions about Apple stock feeds unsavory stories about current strategies and the company's future -- and that's lots better for Microsoft than endless rumors about the next iThing and how it will transform industries X, Y and Z.
5. Steven Sinofsky. Microsoft can thank the fallen Windows divisional president for bringing Windows 8 to market and exiting soon after. What's that saying about soldiers wanted for war but rejected during peacetime?
Sinofsky was Microsoft's wartime consigliere. He recovered the company from the Vista debacle and paved a post-PC future with Windows 8. While Microsoft technically remains at war with Apple and Google, among others, a great period of unification is ahead. Product groups must work more closely together -- to be political -- and Windows' general was the stereotypical loyalty leader. The cause is more important than one man, now. There is no room for hero worship.
4. Windows 7. In September, Windows 7 usage finally exceeded XP. You expected Windows 8 here instead? The new operating system is the future, while its predecessor remains the present and will be for sometime. Many larger businesses recently deployed Windows 7 or will do so soon.
Many others will purchase Software Assurance, decreasing Microsoft dependence on PC licensing, so they can downgrade to Windows 7 and maintain compatibility across systems. The more businesses opt for the older version, the better for Microsoft's bottom line and chances to shift Windows' revenue balance -- three-quarters of which comes from PC sales.
3. Microsoft Store. Microsoft operates 65 company stores -- the majority temporaries for the holidays. The stores' importance cannot be understated, and their value is much bigger than selling new products. The shops create big brand presence and give many shoppers reasons to buy something with a Microsoft logo rather than the bitten fruit. They're crucial to selling the Microsoft lifestyle and showing off recently-launched Surface, Windows 8 and Windows Phone. Microsoft would be wise to secure permanent locations in most malls with temporary shops.
2. Server & Tools. Suddenly Office and Windows aren't the brightest stars in Microsoft's revenue firmament. Weak third-quarter PC shipments drove down demand for the company's flagship products. But Server & Tools division rose above them. Business division revenue and income each fell by 2 percent during calendar Q3, while Windows & Windows Live plummeted 33 percent and 50 percent, respectively. By comparison, Server & Tools revenue rose by 8 percent and income by 12 percent.
But here's the kicker: For the first time, the division's revenue and income both exceeded the Windows group, by $1.3 billion and $1.1 billion, respectively.
Consider cloud computing hype and the idea more enterprises will buy less server software. So far, Microsoft not only defies the precept but provides tools big businesses want for creating private clouds, improving business intelligence and consolidating server infrastructure (including virtualization).
No matter what happens to PCs over the next couple quarters, and sales lift or drag on Windows, server software remains a growth business Microsoft can depend on.
1. Windows 8 hate. Everybody who is nobody has an opinion about Windows 8's future. Over the last week or so, naysayers came out in droves proclaiming the operating system's doom. PC sales don't meet Microsoft's projections, so 8 isn't great, they claim. There's a saying in advertising that even bad news is good news. What people remember at the end of the day are Microsoft and Windows 8. Negativity dissipates.
Worst-case scenario would be nobody talking up the operating system. Endless punditry and debate keeps the brand visible, which Microsoft needs during the holidays. Lots of people will wonder what the fuss is all about and check out Surface, Windows 8 and RT portables.
Remember: Most of the debate is about sales, which can turn on a dime, rather than major problems with core Windows 8 functions. Sure, some people gripe about the Modern UI but who liked the Start menu in 1995? Now people moan about Microsoft taking the thing away. Windows 8 hate -- debate -- is great.
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