Stock market prognosticating company Trefis specializes in predicting stock prices by analyzing a company's major components and calculating how much of the company's stock price is attributable to each piece. Their recent take on Microsoft Office -- the tail that waves the Microsoft stock price dog -- has caught the attention of Forbes Magazine, among others.
The Trefis analysis of Microsoft attributes 28.6 percent of Microsoft stock price to Office, 25.1 percent to Windows, 13.5 percent to Server, 7.9 percent to Xbox, 4.3 percent to Bing, 1.6 percent to Skype, and 19 percent to cash.
Back in February, Trefis estimated "that MS Office License Pricing increased from around $45 in 2009 to $50 in 2010." But Trefis' recent analysis of Microsoft stock includes this observation, "We estimate the average annual license revenue that Microsoft earns from its enterprise customers for office productivity software -- the MS Office pricing license revenue per installed base -- will decline from $47 in 2012 to $40 by the end of our forecast period" which is 2018. Looking at their current chart, Trefis estimates the average per-seat price of Office right now at $48.60.
You might want to compare that figure with your company's license agreement.
"Microsoft is offering lower priced products in emerging markets like India and China where business customers are price conscious and can't afford high-priced products. Since emerging markets form a major share of MS-Office sales, the overall pricing is also declining... Microsoft in the past has offered MS-Office for a measly $29 in China due to the large-scale prevalence of piracy," says the report.
Trefis also foresees a decline in Office market share, from about 95 percent in 2010 to 88 percent by 2018. That puts an interesting twist on the ongoing Office 365 vs Google Docs debate.
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