Microsoft 10-K Says Open Source Is Major Threat Again


A website called CMSWire gets this year's Half a Loaf award for scouring the Microsoft (MSFT) 10-K annual report released July 30, 2009 for interesting tidbits and then being the first to file a half-baked story. The writer apparently did not look back at the 10-Ks Microsoft releases around the same time every year.


This annual story that isn't a story is Exhibit A for why I have said in other posts (see Is BusinessWeek Out to Get the Enterprise Software Business? and Headline at BusinessWeek Misleads...) that you really need to take your father's advice when it comes to IT journalism: "Don't believe everything you read in the newspapers." And make sure your bosses get the straight skinny, too.


Breathlessly, CMSWire reports that Microsoft Blames Open Source for Sales Slump. Then the article cites multiple-year-old sentences, from years when Microsoft grew 20 percent or more, as if the info was new news and somehow contributory to Microsoft's 16 percent revenue drop in its Client Division in its fiscal '09 that ended June 30 (see below for more financial detail).

In particular, the sentence about the GNU General Public License (GPL) cited by CMSWire dates back at least to 2006 (and is probably even older, but Microsoft changed the format of its 10-K that year, when it changed its organizational structure, and I don't feel like doing a search). Most of the sentences in the Competitor and Risk-factor sections of any 10-K are cautious lawyering and - like all lawyering - involve a lot of cutting and pasting from previous legal documents (the previous year's 10-Ks). No one is lawyered up the way Microsoft is.


Rather than repeat myself on the details, just read these blog posts from August 2008 "When it comes to Microsoft, don't believe what you read in InformationWeek" and "Open source community rants six years late about Microsoft 10-K." The Half-Loaf winner and 10-K examples are different this year, but the point -- the facts are wrong -- is the same.


For the record, the Microsoft Server and Tools Division grew 8 percent in Microsoft's Fiscal 09, and the Business Division -- mostly Office -- was down slightly because of decreased bookings in the Dynamics product line - which were down 7 percent. Part of the drop in the Client Division was due to accounting adjustments prescribed by Generally Accepted Accounting Principles. Although Microsoft has already recognized or even possibly received revenue from OEMs for Windows 7, it cannot count it as revenue in a publicly filed financial document like the 10-K until after the official ship date, currently slated for Oct. 22.


For a more accurate, non-lawyerly look at what Microsoft thinks of its compeition, see For Enterprise Software, Microsoft Wants You!