Bangalore: On Thursday, Microsoft Corp. posted its first year-on-year quarterly fall in revenue since it listed in 1996. In the three months to March, the world’s top software maker reported revenues of $13.65 billion (Rs68,250 crore), a drop of 6% in the same period a year ago, and a 32% decline in net income to $2.98 billion. This came in the background of research and forecast firm Gartner Inc. saying that shipments of personal computers (PCs) at 67 million units in the quarter dipped by 7% compared with the same quarter last year.
Even as Microsoft struggles globally, India is a bright spot, with revenue and profits growing at a fairly rapid clip. Though the company doesn’t provide country-specific revenue numbers, trade magazine Dataquest estimates that Microsoft India had revenues of Rs3,263 crore in 2007-08.
Difficult year: Turner says personal computers growth numbers on the consumer side have been hit the hardest. Kevin P. Casey / Bloomberg
The firm’s chief operating officer,
Brian Kevin Turner, 44, was recently in India and talked about the challenges facing the company including the fall in the PC market, the rise of netbooks, imminent launch of Windows 7 operating system, its search strategy with or without Yahoo Inc. and its mobile computing plans, among a few other things. Edited excerpts:
How is Microsoft coping with the crimp in information technology budgets across the world?
Microsoft sells products and services in 191 countries across the world. Depending on geographies, there have been currency devaluations, gross domestic product shrinkage and some where stimulus plans are providing growth. So, it is a mixed bag, but certainly an interesting time to be in business.
We have studied and analysed companies which have come through different economic recessions, depressions and crises during the course of time and figured out what distinguishes the successful ones. It really came down to innovation.
When most companies are pulling back on research and development (R&D) and innovation, Microsoft has decided to enhance it. Last year we invested $8.1 billion in R&D, and as market conditions became tough we decided to increase this by $1 billion to $9 billion. If we are really going to get through this tough macro-economic environment, we have to keep innovating and keep our pipeline strong. While that might not be the popular thing to do among financial circles, we believe that is the right thing to do. We are doubling down on innovation.
We (also) have an exciting line of products coming up. New releases of Windows 7, Office (productivity software suite) and we just released a new version of our browser, business productivity online suite with our software plus services strategy. We want to seize this opportunity.
When do you see growth returning?