|As a reminder, tomorrow's email will be dedicated to Apple earnings (to be released today at 4:30PM ET).
Microsoft Earnings. Microsoft kicked off a busy week of tech earnings yesterday. Overall, the quarter was a mixed bag with relatively "ok" results from consumer & devices. Guidance for commercial was a bit weak due to FX, some execution issues, and tough comps surrounding the Windows XP refresh cycle. Even though hardware represents a small part of Microsoft's earnings, I thought it would be interesting to look at Microsoft's hardware results in relation to Apple as there have been some increased chatter surrounding the long-term implications of a Surface-type of product (hybrid between laptop and tablet).
Revenue from the Microsoft Surface (a product Microsoft has marketed against the MacBook Air) was $1.1 billion, compared to what I estimate to be around $3-$4 billion for MacBook Air. Meanwhile, the iPad likely represented $8+ billion of revenue last quarter. On a unit basis, Microsoft shipped around 1 million Surface units and considering the size of the distribution channel, it is easy to see the product isn't exactly selling like hot cakes. MacBook Air likely outsold Surface by nearly 4x, with iPad outselling the device by nearly 10-13x.
Microsoft shipped 10.5 million Lumia phones with an average selling price well under $200 (not the same market as iPhone). Xbox console sales were down 11% from 2013 with the company shipping 6.6 million Xbox consoles. For comparsion, Apple probably sold 1.5 million or so iPod touch units (mostly used as gaming devices) during the same period.
Three takeaways from Microsoft earnings:
1) Microsoft has $90 billion of cash available ($10.96/share), which goes a long way in buying time (and finding relevancy).
2) Even though Surface held its own during the busy holiday shopping season, there is no evidence of widespread market demand for such a device, which undoubtedly has to do with both the software and hardware.
3) Add Microsoft to the list of tech companies that issued weak guidance due to FX issues. Even though Apple has a hedging program, I would expect the strong dollar to have an impact on guidance. There is only one question. How big of an impact? This question is especially relevant considering revenue from the Apple Watch launch may potentially offset some of the headwind.
Related Links: Jan Dawson, founder of Jackdaw Research, published a concise review of Microsoft's earnings. - Beyond Devices
Related Links: Business Insider published a few comments from Microsoft's "gloomy" conference call last night. - Business Insider
Anxiety over Apple shares heading into earnings is at the highest in seven quarters. Why? A strong dollar. - Bloomberg
In a piece titled "Winter is Coming For Wearables," a guest columnist for TechCrunch does a good job describing the current wearable space pre-Apple Watch: lack of reason, problematic hardware, no end place for calculated data. - TechCrunch
As yet another sign of a dying platform, companies are now pulling their apps out of Windows Phone Store. - Windows Central
Angela Ahrendts continues to make her mark on Apple retail, reportedly looking to get rid of the iconic blue t-shirts that employees wear for a more "fashionable" look. - 9to5Mac
Related: Apple is sticking with the mural concept for nearly finished retail stores in China, with the second Apple Store mural unveiled. - 9to5Mac
Former Google executive Dennis Woodside, who ran Motorola for Google, gave a pretty frank interview to The Telegraph about his time at Google. One bit of info was that Apple altered Motorola's plans for Nexus 6 by buying the best supplier in fingerprint recognition, AuthenTec. - The Telegraph
While Apple may seem unique in how it focuses on the details to create a superior customer experience, there are indeed examples of other companies doing very similar things. There were two interesting articles at Fast Company that seemed to embody this theme.
Disney: Lee Cockerell, former EVP of Operations at Walt Disney Parks and Resorts, sat down with Fast Company for an interview. What is the secret to Disney's continued success? Attention to detail. - Fast Company
Fiskars Scissors: Here is a closer look into Fiskars, maker of the iconic orange-handled scissors, which have been produced since 1967. The Fiskars Corporation was founded in 1649. What's the secret of success? Design. - Fast Company