Bing might be more popular than ever; however, as Microsoft is finding out, it costs a lot of money to buy friends. In its latest quarterly earnings report Microsoft said it earned $84 million dollars in online revenue mainly from Bing. But Microsoft's online services expenses grew by nearly $292 million, according to analysis by Business Insider. You don't have to be an economist to see that spending an extra $292 million to make $84 million is not a viable long-term business strategy.
Tablets such as the iPad and Motorola Xoom may not be sold as widely as PCs running Windows, but the new devices are certainly growing in popularity with users. Apple has sold 19 million iPads since launching the device in 2010, and most Apple competitors are looking to Android to develop an iPad challenger. Microsoft, meanwhile, appears unwilling to give up on Windows as a tablet OS. The Windows 7-based HP 500 Slate was panned for trying to put a traditional mouse pointer interface on a touch-based device. Nevertheless, Microsoft plans to show off a Windows 8 tablet in June, reportedly with an interface inspired by Window Phone 7. It's strange the company has shown little interest in using the actual Windows Phone 7 OS to challenge the iOS-based iPad and Android tablets, despite the obvious parallel between the three mobile operating systems. Until Microsoft has the guts to put out a Windows Phone 7 tablet, it's out of the fast-rising tablet game.
Losing: Windows Phone 7
Microsoft hasn't talked about Windows Phone 7 sales since December, when it said 1.5 million Windows Phone 7 devices had shipped during the platform's first six weeks. It's not hard to see why Microsoft is struggling in the smartphone business with sluggish sales and constant software update problems due to hardware bugs and reported carrier distribution delays. Windows Phone booster Paul Thurrott said in January that in the first three months of Windows Phone 7 Microsoft released zero software updates--while Apple released six updates in the first three months of iOS. You can't play catch up if you aren't updating your OS, Microsoft.
Losing: Mine's Bigger
Apple and Microsoft are rivals when it comes to products and profits. For nearly two decades Microsoft has dominated Apple in the earnings department. Apple, however, broke Microsoft's win streak in its most recent quarter with a $5.99 billion profit for that period--just sneaking by Microsoft's $5.23 billion. Apple has beaten out Microsoft on a number of business metrics in recent months. In May 2010, Apple surpassed Microsoft in value as measured by the total value of its shares, and then in October, Apple beat Microsoft's quarterly revenue (but not profits).