Nuts. Insanity. Beyond explanation. How can Microsoft continue to fund its “Online Services Division,” host to such luminous (*sarcasm*) businesses as Bing, adCenter, and MSN.com. (The company also claims that “publisher tools” are in there – if this includes really good stuff like SharePoint, then “publisher tools” needs a new division to report in to.)
Here is a little history on the revenue and operating income from Microsoft’s Online Services Division. (Note that MSFT has restated its financials about every two years, so comparing a single division over numerous years is just about impossible…)
The division has been stuck at around $2 billion in revenues over the past ten years. Chalk one up for consistency.
On the operating income side, the division was a loser to the tune of about $400 million per year up until around 2004, when it managed to eek out a couple hundred million in shekels per year.
Then, in 2007, over the cliff we went:
- Fiscal 2007: loss of $630 million
- Fiscal 2008: loss of $619 million
- Fiscal 2009: loss of $1.7 BILLION
- Fiscal 2010: loss of $2.4 BILLION
Through the first quarter of the current fiscal year, things are “staying the course” as Bush #41 would have said. Revenue is coming in at exactly the $2 billion annual pace (whatever happened to “growth”?). And operating income?
As if scripted – a loss of $560 million.
All this money flushed down the online toilet. Microsoft could have just given it to AIG or Fannie Mae, and helped us out of this damn recession.
Here’s what’s more important, though. There is a bigger opportunity in cloud computing than in online advertising. And Microsoft has just launched an aggressive set of offerings and related marketing to back it up. “Cloud Power” bundles a sexy suite of products like Office 365 and Windows Azure.
Just imagine what $2 billion, transferred from a shuttered Online Services Division to the marketing kitty for Cloud Power, could do. I can see the Seinfeld TV spot already.
Heck, for $2 billion, Jerry might actually agree to do two Cloud Power spots.