Microsoft Business Model – How does Microsoft make money?

Don’t compare yourself with anyone in this world… if you do so, you are insulting yourself.

This motivational quote is written by Bill Gates.

It’s no surprise that Bill Gates is the world’s richest person who is the founder of Microsoft. No matter whether you’re running a small or large business, you actually need a Microsoft software to accomplish your world. The tool Microsoft is used by almost 80% of companies. There are multiple reasons for them to use Microsoft such as improve team communication, increase productivity, user-friendly and more.

What is Microsoft?

Microsoft is the popular vendor of computer software, gaming systems, hardware, mobile, cloud services and more. The company headquarters is situated in Redmond, Washington. Microsoft offices are located across the globe. 

As mentioned earlier Bill Gates is the entrepreneur of the world’s largest company i.e Microsoft. He is one of the richest people around the world. Microsoft is the most valued company. Microsoft net worth is $1000 billion by the end of October 23, 2020. The net revenue is $1 trillion, sounds amazing right!!!

Let’s discuss the history of Microsoft, business model and how does Bill Gate earn money.

Origin of Microsoft

It’s all started on April 4th, 1975. At that time Americans use typewriters. This could be difficult for them to complete their work as the procedure is time-consuming. Therefore, Bill Gates and Paul Allen has founded “Microsoft”. Their primary goal is to build effective computer software that makes everyone’s job easy. By 1979, Microsoft has grown into a leading multinational technology company. When Bill Gates become the world’s youngest billionaire when he was 31 years old in 1987.

Microsoft Business Model – Explained

Microsoft has introduced amazing products such as Microsoft 365, Office, Windows, Surface, Xbox and much more. Microsoft is running a successful company since it was the origin. Also, it is stated that Mircosoft is the 3rd large organization in the United States as of 2nd Sep 2020.

Le’s discuss Microsoft business model

Microsoft is a popular and leading technology organization that is offering excellent software products and services to people around the world. According to its reports, Microsoft has three business segments. Let’s have a look at how exactly Microsoft is making money.

How does Microsoft make money?

Microsoft is not just about Windows. It’s no surprise Microsoft is playing a major role in the market. There are multiple ways the company is making money. Let’s discuss them now,

Productivity and business processes

The business segment consists of a set of Microsoft products and services. These are ranging from productivity to information services. According to the analysis, Microsoft has generated over 33% of the net profit from productivity and business processes.

Office commercial – Microsoft is earning good profits whenever users installed and purchased a license of Microsoft Office software suite. Microsoft is responsible to enhance the individual and business productivity. This business segment is the primary driver of Microsoft revenue. People are subscribing to Microsoft office for various services such as Office, Exchange, Skype for Business, Microsoft Teams and SharePoint.

LinkedIn – LinkedIn is the leading destination that connects professional under one roof. The professional social media channel is generating good income by offering monetised solutions such as talent solutions, premium subscriptions and marketing solutions.

Dynamics – Microsoft is providing a cloud-based solution to help its customers. Also, the on-premises business solution is also introduced such as ERP and CRM. Here, the revenue is generated by the number of subscribers.

Intelligent cloud

According to recent reports, the Intelligent Cloud business segment is comprised of more than 31% of revenue for Microsoft. Intelligent Cloud is offering Microsoft public, private, and hybrid server products. On the other hand, Microsoft is offering cloud services that are important to run a modern business.

Server products and amazing cloud services

Did you know Microsoft’s server is offering provides integrated server infrastructure? Yes!!! This is an excellent service provided by the company. Also, the software is offering a middleware designed to assist software applications that are built and designed on Windows operating system

The popular server products are Microsoft’s SQL and Windows. These products are generating good income by launching several licensing programs. Also, the company is offering a rich set of cloud services such as Microsoft Azure. This is making good income whenever a user subscribed to the service.

Enterprise services 

Have you ever heard about Microsoft Consulting Services? This is the best service offered by Microsoft. This service is completely project-based commitments to support customers plan. Ultimately, customers can get good value with Microsoft products or services.

More personal computing

Here is something interest news for all the users. Microsoft is earning a good income through “More Personal Computing”. This segment consists of Microsoft products and services are provided according to the user interest. Also, developers and IT experts can personalize the services and products as per their requirement. This segment includes

  • Windows OEM licensing
  • Windows Commercial
  • Windows Cloud Services
  • MSN display ads
  • Search Advertising
  • Gaming – Xbox, Subscriptions

Devices

Someone said, “Microsoft is no more a software company”. This statement is absolutely true!!! The company provides several devices such as gaming consoles, mobile devices, PC accessories and more. These devices are affordable and high-quality, therefore most of the people prefer to buy Microsoft products.

Microsoft Surface series portable laptops are one of the stylish and premium devices so far introduced. People are showing interest to buy Microsoft Surface as the device is available on a budget. Also, Microsoft mobile phones are also generating good income for the company.

Now, let’s talk about Xbox. If you love gaming then you would have Xbox. This is the best gaming device introduced by Microsoft. It’s no surprise that Xbox is the best gaming console available in the market and loved by the people in the gaming community. According to the analysis, Microsoft has sold more than 100 million Xbox gaming console. Ultimately, Microsoft has earned $13 billion in 2020.

Advertising

Did you know the company is making good income through adverting? Yes!!! Similar to other platforms such as Facebook and Google, Microsoft is generating good revenue by advertising other products and services on Microsoft Edge. Microsoft Advertising is earning over $7.63 billion in this segment.

Other businesses along with the estimated revenue

Apart from Intelligent cloud, personal computing and advertising, there are other sources of revenue for Microsoft. The other sources include Skype, Github and set of software.

Skype is a popular communication software specially designed for audio calls, video conferencing, chat, share and more. Small and large businesses use Skype for various purposes. Microsoft is earning good income through Skype i.e $1.7 billion in Q2 2020. On the other hand, Microsoft is generating good income through its software. The popular Microsoft software’s are Access, Excel, OneNote, PowerPoint, Xbox, OneDrive, Teams and more. Though this software’s are available for free while there are few paid software.

GitHub is one of the leading services available on Microsoft. The ultimate goal of the GitHub project is to help developers to design the projects without hassles. Currently, there are more than 50 million people use GitHub to build and design their own projects. Microsoft has earned more than $250 million through GitHub.

Conclusion

Is there anybody who’s unaware of the brand – Microsoft? Ofcourse nobody right. It was founded by Bill Gates. Whether it could be an operating system or cloud services, Microsft is the best option. In this article, we have discussed the history and business model of Microsoft. As mentioned earlier, Microsoft has a diversified business model. The business has several moving parts that helping its growth. While Microsoft Office and Windows operating system have remained as the key products of the organization. Microsoft is generating good income through various segments such as cloud services, gaming, devices, search advertisements, LinkedIn and more. Microsoft net worth is $1trillion by the end of October 23, 2020.

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