Understanding Microsoft’s Business

Jan Dawson recently broke down Microsoft’s revenue and growth by business segments. This helped me to understand the significance of the enterprise segment and at least partially understand the direction in which it is moving.

Points that caught my eye;

  1. Windows revenue is dominated by sales through OEMs. “Windows OEM revenue” is 15.5% of total whereas “Retail and other sales of Windows” is only 0.5%. This means that very few consumers upgrade Windows themselves, and continue to use the OS that shipped with their machine. This suggests consumers are indifferent about the new features provided with new Windows versions. When you think about the new features in Mac OS Yosemite, you realize that a lot of these are actually about integration with iOS devices and not about Mac OS X itself. It’s something worth thinking about.
  2. Consumer Office revenue (3.0% of total) is puny compared to Commercial Office revenue (25.0% of total). Although this may suggest that Google Docs is dominating in the consumer space, I think this may also suggest that consumers don’t really use Office suites very much. I have seen very little data strongly supporting either possibility.
  3. Server products are really quite strong. It’s amazing that sales continue to rise despite the rise of cloud computing. I would really like to understand what is happening here, and whether this strength will continue.

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