Enterprise. Never forget enterprise.

Microsoft makes money through their enterprise lines that Apple and Google wish they could get their hands on.

We pay MS $3-5m/yr for desktop & server licenses to support a company wtih about 25,000 users/PCs. Their licensing model is extremely convoluted, and near impossible for a single person to fully understand. All the VARs have their own teams to work with enterprises on MS licensing & true-ups, and of course MS have their own org to help, too. It's not just counting usage, either, because so many products can be licensed in so many different ways.

For example, you can license Windows desktop OS by named user or by machine. If you do it by machine, it's cheaper, but if you do it by named user then that user can utilize the license on up to 5 (I think) devices (PCs, tablets, phones, whatever). Generally speaking, licenses by machine are called CALs (client access licenses), and the way you get to a number is by running a report in Microsoft's System Center Configuration Manager (MS SCCM), which is a server platform that helps you manage and distribute software to machines attached to your Active Directory domain(s). However, there is another option for desktop licensing: desktop virtualization using Microsoft Remote Desktop running on a server or VM. In this case, you have to pay for RDP CALs, which cost about 3x what a desktop "Core" CAL does. If you're running Terminal Server (for the RDP clients to access), you have to license that (the server OS + Terminal Server itself) ... however, you can reduce the Server OS license by also licensing Windows Server Datacenter Edition, which lets you pay once per Virtual Host and lets you spin up as many Windows Server VMs on that host as you want.

Anyway, counting all this and figuring out the contract amount is done using these SCCM reports, plus a bunch of manually counted stuff plugged into a complicated Excel workbook with many tabs, formulae and hidden VBA ... and then you start the person-to-person negotiations with Microsoft, because depending whether you're a category A, B, or C enterprise you get different pricing, and you can be in different categories for different products or product lines.

I'd say that each time we have to do a true-up it consumes about 1000 person hours.

m = 1000, or m = 1000000?

(Sorry, my definition of those suffixes has been forever muddled by working in finance :( )

I'm guessing he meant "M". "k" is usually described to count thousands. [1] I'm curious, in what country do you live that finance uses different prefixes?

[1]: https://en.wikipedia.org/wiki/International_System_of_Units#...

The US -- have worked at a couple of banks so far, and M for thousand and MM for million have been constants.

1,000,000

The iPhone alone is making more in a quarter than Microsoft makes in an entire year. I'm pretty sure Apple couldn't care less about Microsoft right now.

Let's not overstate things. Apple is roughly twice as large as Microsoft as far as the numbers go, with 30K fewer employees. Jobs' decision to own the entire tech stack paid off for them handsomely.

>Jobs' decision to own the entire tech stack paid off for them handsomely.

Sure. But to be fair, Microsoft's four decades of returning non stop profits is more remarkable than Apple's relatively recent success and it's chequered record overall. No technology company is likely to wield the kind of power that Microsoft had in the 90's. So the advantage in doing software or the entire stack is very time period sensitive.

> Microsoft made money by selling their OS

I think Microsoft cash cow is their Office Suite. To run that suite you still need a Microsoft OS and recently their Office 365 cloud version is also showing strong growth.

I imagine Microsoft still make a good bit of cash from OS sales but mostly from manufacturers buying in bulk for new PCs, not so much from individual upgrades. It's the individual upgrades they are giving for free. Dunno if it's China only or if we can get them elsewhere?

>to run that suite you still need a Microsoft OS

False. http://www.microsoft.com/mac/office-university

That works until you get into anything complicated. Recently, I had a spreadsheet that our finance team built that provided different calculated values (for a multi table aggregation, nothing simple for sure) on Excel Windows and Excel OS X. This is not an uncommon problem - I've seen it a handful of times. Excel for OS X is at about 90+% parity with Excel for Windows.

This only bites you occasionally, but when you are a spreadsheet driven org (e.g. Finance groups in a company) you often need the performance/top-end feature set of Excel for Windows.

If they can create an actual Windows App Store (not a mobile, but Windows), they could more than make up the cost in the long run with a 30% cut (thats what everyone is charging for stores these days after all).

Not to mention their Office 365, MSDN, etc lines that are mad profitable.

I think it's unlikely.

1) Apple makes a fraction of its revenue from the app store, about 8%. And they're considered one of the two, if not the most, successful app store on the planet.

2) PCs, as opposed to mobile platforms, are open systems with a radically different distribution culture. You visit a website, click a button to launch an installer, choose a directory and go. Yes, the customer would prefer an app store, but giving MS a 30% cut when you drive all the traffic and marketing and downloads on your websites anyway? Unlikely. On Mobile there's not much of a choice.

It's obvious that a windows store will generate revenues and would be a good move. Mac and Linux have em, and if well executed on the biggest PC/Laptop platform in the world, then it can be a big deal. Just look at Steam, somehow it drives so many eyeballs that publishers are willing to give a cut to Steam to do something they're already doing themselves on their own website easily: distribution.

But steam being the favorite by far, still makes between 1 and 2 billion dollars in revenue.

In short it's pretty unlikely to see MS really thrive on app store revenue. It'll be a decent product, but it's probably more for improving the customer experience (through a properly curated store) and get people to like Windows again than to make a ton of money. For MS it seems it's still all about selling licenses to vendors, office and enterprise/education. It's kind of funny how extremely non B2C it is, and how B2B focused it really is, for a company that builds products used by billions of people. I think these latest moves have kind of shown MS understands that and is trying to get closer to (dealing with) the customer: build their own hardware, make their software free.

>>> Not to mention their Office 365, MSDN, etc lines that are mad profitable.

Combined with their Azure services, they've developed several other valuable streams of revenue. Probably enough where they can give away their OS for free in order to gateway these users onto their other products and services. This is a classic business move, the same thing Apple has done for years with its products.

Granted, they're not the biggest, but they are starting to put a dent in Amazon's market:

http://www.infoworld.com/article/2608726/cloud-computing/clo...

"Our commercial cloud revenue grew 147 percent this quarter, driven by both Office 365 and Azure. Our commercial cloud annual revenue run rate more than doubled this year and now exceeds $4.4 billion and with this rapidly growing scale we continue to expand our cloud gross margins."

>> thats what everyone is charging for stores these days after all But as soon as Microsoft starts doing it, everyone will bury them in negative reviews and criticism for being evil, greedy and the reason the industry sucks. The "everyone else is doing it" excuse doesn't work for Microsoft, people just want more reasons to hate it.

They also tried this with Windows RT.

Do you mean non-RT apps? Microsoft has two app stores already, one for phone and one for tablet/desktop.

The desktop Windows Store is so bad, it hardly counts as a real app store. You're more likely to install a scam than the app you want.

Making hardware - Surface, Dongle PC: http://news.softpedia.com/news/Microsoft-Unveils-Windows-8-1...

They are also giving away visual studio now which is part of >1bn$ development business division

Most of those that qualify for the free version open-source, individual, and businesses under $1 million USD/year gross are a very small part of the money they made, and likely creates far more benefit to mindshare than the losses they're seeing.

They were never making money off the pirates anyway. This way they can get more people on their services, on a more secure OS that will be evergreen, potentially paying for extras, and at the very least helping their ML algos.

There are still OEMs who will have to pay for it. I think the number of people who actually upgrade their version of Windows rather than just buying a new device is relatively small.