Microsoft's Still Toast

steve ballmer

…[A] recovery in business spending, not [the cost-cutting that Microsoft is doing], is what is factored into the continuing tech rally.

After the PC market shrank this year, the argument is that a need to replace worn-out computer kit will return it to strong growth – helped by a desire to upgrade to Windows 7…. Microsoft, though, cautioned that corporate IT budgets are still very tight and likely to grow only slowly. The initial favourable consumer reaction to Windows 7 is helpful but the businesses that provide the bulk of tech spending weigh decisions to upgrade very carefully – particularly when shareholders are pressing them to keep costs under control…

Netbooks are still depressing prices and margins for the PC industry. And Bing’s increased share seems to be coming mainly from Yahoo, whose search function Microsoft has anyway agreed to take over. The familiar problems of an aggressive Google and the shift towards selling software as a service remain. Cost-cutting does not change that…

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