Why Microsoft Doesn’t Need Your Money: Business Brings Home the Bacon
Consumers may interact with Microsoft products every day, but apparently they’re not making the company much cash. The money trail shows Microsoft drifting away from consumers and closer to business. Will its products follow suit?
Microsoft delivered a pleasant surprise to investors this week, revealing earnings of $5.1 billion for its third fiscal quarter of 2012. That’s down a bit from a the year-ago figure of $5.23 billion, but that was boosted by a one-time tax benefit. All told, the numbers were stronger than analysts and investors has expected, particularly since sales of its flagship Windows operating system ought to be lukewarm, as both consumers and business put off purchases of new software and new computers in anticipation of Windows 8.
The shocker: For all its name recognition among consumers, Microsoft generates surprisingly little money from its consumer offerings, including its Xbox 360 game console, Windows Phone, and Bing, it’s would-be rival to Google’s dominance of the Internet search market. In fact, if it weren’t for sales of Windows on consumer PCs, Microsoft arguably wouldn’t be making any money at all in the consumer market — a stark comparison to companies like Apple that derive nearly all their revenue from consumer sales.
How do the numbers stack up? And does Microsoft’s apparent failure to resonate with consumers derive from the fact that most of Microsoft’s spending money has nothing to do with consumers?