Former MSFT CEO says Windows 10 universal apps “won’t work” and questions revenue projections

Steve Ballmer, who remains Microsoft’s largest shareholder, offered some scathing criticism of how the company is reporting its revenues and profit margins from cloud services and hardware, as well as its universal app strategy for wooing developers to create apps for Windows devices.

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Speaking at the company’s shareholder meeting, as noted in report by Dina Bass for Bloomberg, Microsoft’s outspoken former chief executive first took aim its cloud services and hardware business, which the company has touted as key to replacing lost licensing revenues from a PC industry in decline.  Rather than reporting actual revenues and disclosing profit margins across all of its cloud services, the company has only offered a “run rate,” an extrapolation that assumes revenues remained constant throughout the year based on a snapshot of real data.   Microsoft reported 44% gross margins on its commercial cloud business, but does not report its total profits from cloud services or hardware.  Ballmer pointed out hardware and cloud services—two businesses the company has been pursuing since Satya Nadella took over as chief executive in 2014—contribute far lower margins than software.  “It’s sort of a key metric,” Ballmer said. “If they talk about it as key to the company, they should report it.” Ballmer specifically called Microsoft’s reporting of a revenue run rate “bullshit.”  When a shareholder asked Nadella to address the lack of apps for its Windows Phone platform, the company’s current chief executive outlined his Windows universal apps strategy, which hopes to entice developers to create new software that can run on both desktop and tablet Windows 10 PCs and Windows Phone.  Ballmer began talking over the top of Nadella, stating “that won’t work,” and saying that Microsoft should instead develop software to enable users to run Android apps on Windows Phone.   This spring, Microsoft announced plans for Windows 10 and Windows Phone to run a new type of universal Windows 10 app, while also enabling developers to easily port their software from Android or iOS into universal Windows apps.   Further, given that the vast majority of Windows PC users have older OS versions installed, developers wanting to target Windows desktop users are far more likely to write conventional Win32 apps than learn an entirely new development style specifically to target a minority of Windows PCs and the extremely small segment of Windows Phones and tablets that can’t run conventional Windows software.  In October, Ballmer said in an televised interview that he believed Microsoft represented the only serious competition to Apple.  “If there’s going to be any competition at all for Apple it will come from Microsoft,” Ballmer said, adding that unlike Samsung, Microsoft has the “software and the hardware capability” to offer real competition.

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