Microsoft's CES 2009 booth (photo by Ben Franske)

Where does Microsoft make money? (Updated 2010)

THIS INFORMATION IS OUTDATED. Click here to see the updated 2012 report.

Since my previous article on this topic has received a lot of attention, I figured I should update the numbers for 2010.

Before I post these numbers (which are publicly available via Microsoft’s 10K filing), let me clearly state that I do not compile this information in order to advocate a pro- or anti-Microsoft agenda. My primary purpose in compiling this information is to help individuals discuss Microsoft with some level of objectivity.

So without further ado, here’s a simplified version of “where does Microsoft make its money (2010).”

Total Revenue and Operating Income (June 2009 – 2010)

Total Revenue: $62,484,000,000
Operating Income: $24,098,000,000

For those who don’t know, Operating Income = Operating Revenue – Operating Expenses. In other words, “Operating Income” is the profit made from normal business operations. (A more formal definition is available from Investopedia: “Operating income would not include items such as investments in other firms, taxes or interest expenses. In addition, nonrecurring items such as cash paid for a lawsuit settlement are often not included. Operating income is required to calculate operating margin, which describes a company’s operating efficiency.”)

Revenue and Operating Income by Division (June 2009 – 2010)

Microsoft’s products are divided into five divisions: Windows & Windows Live (formerly “Client”), Server and Tools, Online Services, Microsoft Business, and Entertainment and Devices. The types of products and services provided by each segment are summarized below:

Windows and Windows Live – Windows operating system: Windows 7, including Home Basic, Home Premium, Professional, Ultimate, Enterprise, and Starter Edition; Windows Vista, including Home Basic, Home Premium, Ultimate, Business, Enterprise and Starter Edition; and Windows XP Home. Windows Live suite of applications and web services.

Server and Tools – Windows Server operating system; Windows Azure; Microsoft SQL Server; SQL Azure; Visual Studio; Silverlight; System Center products; Biz Talk Server; Microsoft Consulting Services; Premier product support services; and other products and services.

Online Services Business – Bing; Microsoft adCenter; MSN; and Atlas online tools for advertisers and publishers.

Microsoft Business Division – Microsoft Office; Microsoft SharePoint; and Microsoft Dynamics ERP and CRM, as well as Microsoft Office Web Apps, which are the online companions to Microsoft Word, Excel, PowerPoint and OneNote.

Entertainment and Devices Division – Xbox 360 console and games; Xbox LIVE; Windows Phone; Windows Embedded device operating system; Zune; Mediaroom; and numerous consumer software and hardware products (such as Mac Office, mice, and keyboards); and Windows Automotive.

Microsoft’s previous fiscal year (June 2009-2010) was a particularly interesting one, with major headlines including the Windows 7 launch, Office 2010 launch, a redesigned XBox 360, Windows Phone 7, a new search and advertising agreement with Yahoo!, and the first full year of Bing-branded services. Some of these announcements came late in the fiscal year, which can indicate significant development cost without corresponding sales (keep that in mind).

The 2009-2010 Revenue and Operating Income for each division, in USD, is as follows:

Windows and Windows Live
Revenue: $18,491,000,000
Operating Income: $12,977,000,000

Server and Tools (Windows Server, Windows Azure, Visual Studio, Silverlight)
Revenue: $14,866,000,000
Operating Income: $5,491,000,000

Online Services (Bing, MSN, Hotmail)
Revenue: $2,199,000,000
Operating income: $-2,355,000,000

Business (Office, SharePoint, Dynamics ERP/CRM)
Revenue: $18,642,000,000
Operating income: $11,776,000,000

Entertainment and Devices (XBox 360/LIVE, Zune, Windows Phone, hardware)
Revenue: $8,058,000,000
Operating income: $679,000,000

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10 thoughts on “Where does Microsoft make money? (Updated 2010)”

  1. So here’s how to ruin Microsoft,

    o upgrade to Linux 0$ (i suggest Xubuntu)

    o Wine 0$ takes some casual gamers

    o LibreOffice 0$

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