Windows: No Longer Microsoft’s Biggest Earner?

23rd March 2016 by in category IT Support Blog, Microsoft Windows tagged as , , , , , with 0 and 4

Windows installations now the company’s fourth biggest earner

A set of Windows servers?

Servers, pretty web servers, some of which we presume are on Windows Azure infrastructure. Today, servers and cloud computing are a big hitter for Microsoft (Image courtesy of Shutterstock).

Today, it is possible to use Microsoft Windows (or any of its main programs) on other formats. If, by means of running Windows itself on another machine, we have the wonders of virtualisation. On a Mac, through Bootcamp (though you still need to buy a copy of Windows and partition your Mac’s hard drive).

With high-speed broadband available in most parts of the UK, Software as a Service and cloud computing has risen in popularity. Using Microsoft Office no longer needs x amounts of hard drive space. You can do your work on the cloud and login to your Office 365 account. The main MS Office programs are online, which means no more hard drive space is needed. With a username and password, and a variety of paid packages, Office 365 is one of Microsoft’s big hitters, alongside its Azure cloud services.

Where does Windows lie in the scheme of things? It is now the company’s fourth most profitable field. Second only to the cloud computing and server products is gaming – the XBox and XBox 360 – which is now the subject of greater integration with bog-standard Windows PC. As further proof of its role in the games industry, Microsoft has purchased Mojang, developers of the Minecraft series of games. In third place, Microsoft Office, which is still used in a number of schools, offices and household PCs today. Not only on Windows systems, but also on Mac OS X operated PCs.

Microsoft’s latest figures came from its latest 10-Q, the quarterly report that U.S. businesses file to the Securities and Exchange Commission. What is most apparent is how the balance of power has shifted. A Microsoft-powered games system seemed improbable in 2001, a year dominated by the Sony PS2 and Nintendo consoles. Its purchase of key developer studios – such as Rare (hitherto Tim and Chris Stamper’s legendary Ultimate Play The Game of Ashby-de-la-Zouch) – proved to be a winning move.

Fifteen years on, the games console changed from being the preserve of geeks to an integral part of any living room or man cave. With tablets rising in popularity over ‘traditional’ PCs, cloud computing has offered an ‘anytime, any place, anywhere’ solution. Any work on Office 365 can also be done on an iPad, an Android tablet, or a Chromebook – with the correct login details. Microsoft has realised this with their Windows Phone and its purchase of Nokia.

Unfortunately for Microsoft, the purchase of a successful mobile phone manufacturer didn’t turn out to be an instant success. The balance of power was shifting in favour of Apple’s iPhone, plus high-end Android-powered smartphones by Sony and Samsung. Its Windows Phone operating system has failed to make the same impact as Android. This is reflected in a number of available apps and pitiful 2% market share.

Where next for Microsoft?

Many commentators think the SaaS [Software as a Service] model is a good fit for Microsoft. With Microsoft’s applications being – increasingly – accessed from non-Windows-based systems (Mac OS X, iOS, Android and Linux for example), this may be the way to go. Their cloud computing services could become the norm for home users as demonstrated with Google Drive. Some commentators think the next version of Windows may be SaaS-based.

Though not as groundbreaking as the original release of Windows was in 1985, Microsoft has brand recognition in its favour. MS Office is still seen as the de facto standard office productivity suite in many homes and office, which is where Office 365 may benefit. This in the face of competition with free alternatives, like Google Drive’s equivalent and LibreOffice.

What of Windows Phone? Numerous pundits have written its obituary in the last year. Worldwide, its market share is 2%. In the UK its market share is 8.6%, making Great Britain a Windows Phone stronghold. It has hovered between the 8% and 12% in Britain, being the country’s third most popular mobile OS. Its peak was 12%, achieved in July 2015. Even so, could Microsoft bite the bullet and discontinue Windows Phone?

The gaming industry will remain a big earner for Microsoft, as proven by its recent acquisitions. By Christmas 2016, playing XBox games will be possible on a Windows 10 PC as well as a dedicated console. This could reawaken the PC gaming scene; over 40% of Windows 10 installations are used by gamers. With this in mind, they could hold the key to Windows’ destiny.

By the end of this decade, it is set to be very different. Our word processing files could be stored up in the clouds, whereas servers could store family photos and heavy duty work. As for the next version of Windows, who knows?

Tabard IT, 23 March 2016.

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