Melanie Hollands on her concerns over the long term prospects for Microsoft.

Despite its overwhelming market share, I still have long-term concerns about Microsoft and its growth outlook. Aside from slowing growth at the company and the competitive threat of Linux, my concerns include the delay of Longhorn and the transition leading up to its introduction.

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Long-term (not a thesis for the up-coming earnings call) the basic problem with Microsoft is that IT budgets are not going to grow very fast over the next several years, and they already own large chunks of the market. So there is limited ability to increase revenues from the MS Office business because the company risks ticking people off and driving more people off license.

The one point that I think is left out (probably because this rumor has just recently surfaced) regards the potential impact of enterprise license changes that Microsoft is pondering.  While it is still likely 12 months away before we will see these changes surface en masse, they will have a significant impact on Microsoft realizes revenue, if not the actuals as well.