Microsoft's profits, by division

Practically all of Microsoft's profits come from selling Windows and Office. Everything else, including Zune, Xbox and all that it does online, either loses money or barely breaks even.


  1. People use Office. Office works on Windows. Microsoft has the lock in on MS Office document formats and rides it all the way to the bank.
    Any real manufacturing business keeps at least 2 suppliers for any critical component this is to ensure a failure does not cause a loss in supply and to make sure there is competition on price. Somehow the hallowed business halls forgot that basic tenet of operations when they went down the path of “productivity software”. Strange that cost minimization crazies of business world are so happy with the status quo.

    1. Manufacturing is very different from information processing. I have no idea how you think someone could have two different suppliers for, say, spreadsheet software. It would be a nightmare.

      1. Zio, I’m no expert on Microsoft, but I’m pretty sure that they charge money for their software, otherwise they wouldn’t be making a profit from selling it. Maybe it came bundled with your computer, and the computer dealer or manufacturer included the cost of the software in the cost of the system, but at some point you paid for it.

        1. yeah i know. and since i paid for a copy that came with my laptop wanting it or not i feel entitled to install windows for free on the rest of my machines. and seeing how much my government spends on microsoft leases and maintenance (paid with my tax money) i advocate free windows for the end user.

          i guess i am what you would call a pirate. isohunt is my appstore and itunes.

          there is a theory that says microsoft is tolerating (if not actively promoting) end user piracy in order to establish and maintain a monopoly. it’s a win-win situation until something else comes along. piracy is the price you pay for being a de facto standard. apparently it pays well too.

  2. This makes Office 2007 all the more confusing.

    “I know – let’s take one of our only two money-making products, and make it so confusing that only the most loyal fanatics will like it, and the learning curve to migrate to our biggest competitor is actually easier than upgrading from a previous version of our own product.”

    I don’t get it. I just don’t.

    1. I think Office 2007’s ribbon interface and other interface changes were the best change they’ve made since moving from DOS. Unless you’re an experienced office user with built-up habits, the Ribbon is much easier to figure out than a scad of menus with dozens of menu items each. That’s just my personal opinion, but I know I’m not the only one that likes it.

      1. I disagree, but it’s hard to be objective about how easy something is to learn. One thing I know for certain, though, is that when I’m reading a document the vertical screen space is what counts. I don’t want a giant ribbon in the way no matter how easy it makes changing the page margins.

    2. “I don’t get it. I just don’t.”

      Microsoft products have an incredibly huge 3rd party training industry.

    3. This is what happens when some bonehead in marketing realizes that — believe it or not — there are still more people on the planet that don’t use Office than those who do. And the only thing stopping these people is the learning curve (i.e., it couldn’t have anything to do with social/economic/political factors).

      So in the rush to sell to a market that’s larger even than the huge existing market, all the loyal customers are left eating dust.

      I’m really curious if at any stage anyone stopped and asked how many of the non-users were likely to become customers even with a lower bar to entry. (And if you look at PowerPoint 2003, for example, if you can’t figure out how to make a presentation then you probably shouldn’t be using a computer.)

  3. And that’s why there’s so little innovation at Microsoft any more. Don’t you dare to threaten the cash cows by making an online version of office, or a tablet (both projects I’ve heard directly from their leaders were shut down by the Office group).

  4. We spend our money to purchase Windows and Office. Microsoft could use this money to make improvements to these products but instead they are on a perpetual drunken spending spree, wasting money on projects like XBox and Zune that have no redeeming value.

    Then they go out and develop .NET and tell us all to use it for our apps, but they continue to use the old school C++ for their own development.

    Why Oh Why do you do business with these people? Are you demented?

  5. That breakdown seems a bit misleading when it comes to Xbox – lumping it into entertainment & devices with things like the zune and when the machine is intentionally sold at a loss for the licensing revenue from the games

  6. The disparity is amazing-even Online’s losses seem insignificant compared to Office and Windows..and they are huge losses (2 billion/year?) And the Xbox and Zune get hyped well above what they actually contribute profit wise, at least.

  7. XBox used to be a money pit, but is now profitable. You have to look at the scale. Is it saying entertainment and devices made ~$200M in a month? That really doesn’t sound like barely breaking even. Although if the XBox live thing is included in Online Services that should wipe some of it out.

  8. Yikes, there is some non-information in the comments above unsurprisingly.

    “…Don’t you dare to threaten the cash cows by making an online version of office…”

    There is an online version of office coming out, Office 2010. The online portion will most likely be free. Yep, behind the times (also unsurprisingly), but responding is better than ignoring completely I suppose.

  9. So you can see why Microsoft has been freaking out and throwing everything at the wall to see what sticks. Windows/Office is a good game to play, but it won’t last forever. Microsoft has to know this – after all, they stepped on IBM back in the day in exactly the same way, when IBM got bloated and secure in its dominance. All it takes is a single technology shift – like when computers got cheap enough to put a full computer on everyone’s desks instead of just a dumb terminal – and they’re screwed.

    I think the guys at businessinsider are a bit myopic if they really think that google is targetting Microsoft specifically. Google is targetting everyone. Buzz isn’t aimed at Sharepoint – Buzz is aimed at Facebook. Sharepoint is small potatoes in comparison. (ChromeOS is aimed at Windows, Android at Apple – Google isn’t particularly choosy about making enemies).

  10. $200m might look like a lot, but in terms of Microsoft’s overall balance sheet, it’s not significant — especially considering past losses. The plan was for it to be making billions by now, as Sony used to and Nintendo does.

  11. Is this really about SALES of Windows/Office or the LICENSING of Windows/Office? Only your EULA knows for sure!

  12. I could very easily be mistaken, but doesn’t Google make a great majority (if not virtually all) of its money from ads? Everything else (Mail, Docs, Blogger, Voice, and so on) is free, so they must be losing money on it…yet this seems to be working pretty well. I guess when you start talking hardware, it’s a bit of a different story, but I don’t think that on the whole this should be looked at as a bad strategy by Microsoft.

  13. Seriously, why is it so difficult for some of you to understand that your personal preferences aren’t universal? And why when something isn’t to your personal liking do you have to invent some sort of evil backstory for explaining how that came to be? I had to scroll up to be sure I wasn’t on Endadget.

  14. Based on the stated profit for Microsoft’s Entertainment and Devices division they made $1.579 billion in the last reported quarter. By comparison Apple made $1.67 billion for all their entire operations. Google made $1.97 billion. Sure, for a company with $8 billion in quarterly profits $1.5 billion doesn’t seem like much, but let’s be realistic about this and say that most companies would, and should, be very happy with that and can hardly be described as “barely brakes even,” much less “loses money.”

  15. Eh-oh! MSFT is baaaaad! Grrrrr… Office! Booooo… Windows!

    It’s the internet stuck record that’s as old as vinyl and still just as niche.

  16. >>>Manufacturing is very different from information processing. I have no idea how you think someone could have two different suppliers for, say, spreadsheet software.
    <<< Standards. How can so many different web browsers render the html for all those web sites. Just replace -spreadsheet software- with browser and you see it naturally works where Microsoft did not have a lockdown monopoly to displace all other competitors. Microsoft came late to the Web and is still trying to lockdown the web with activeX, .asp, .net etc. Good for us HTML is standing firm. The Open Document Format (ODF) is a movement away from Microsoft. Microsoft countered with OOXML. And is the answer to the spreadsheet problem. An open standard format is all it takes.

  17. Sure, MS is evil etc but I just wonder what I’d do if one fine morning I woke up with the option of either buying overpriced Apple stuff or blowing my mind trying to make Linux work. Thanks MS for keeping us sane.

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