Microsoft Corporation (NASDAQ: MSFT) |
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Description of Microsoft's Business Segments
Devices and Consumer
Our D&C segments develop, manufacture, market, and support products and
services designed to increase personal productivity, help people simplify tasks
and make more informed decisions online, entertain and connect people, and help
advertisers connect with audiences. Our D&C segments are made up of D&C
Licensing, Computing and Gaming Hardware, Phone Hardware, and D&C Other.
D&C Licensing
The principal products and services provided by the D&C Licensing segment
are: Windows, including original equipment manufacturer (“OEM”)
licensing (“Windows OEM”) and other non-volume licensing and academic
volume licensing of the Windows operating system and related software; non-volume
licensing of Microsoft Office, comprising the core Office product set, for consumers
(“Office Consumer”); Windows Phone operating system, including related
patent licensing; and certain other patent licensing revenue.
The Windows operating system is designed to empower individuals, companies,
and organizations to simplify everyday tasks through seamless operations across
the user’s hardware and software.
Windows revenue growth is impacted significantly by the number of Windows operating
system licenses purchased by OEMs, which they pre-install on the devices they
sell. In addition to computing device market volume, Windows revenue is impacted
by:
the mix of computing devices based on form factor and screen size;
differences in device market demand between developed markets and emerging markets;
attachment of Windows to devices shipped;
customer mix between consumer, small and medium sized businesses, and large
enterprises;
changes in inventory levels in the OEM channel;
pricing changes and promotions, pricing variation that occurs when the mix of
devices manufactured shifts from local and regional system builders to large,
multinational OEMs, and different pricing of Windows versions licensed;
piracy; and sales of packaged software.
The versions of Office included in our D&C Licensing segment are designed
to increase personal productivity through a range of programs, services, and
software solutions. Growth depends on our ability to add value to the core product
set and to continue to expand our product offerings in other areas such as content
management and collaboration. Office Consumer revenue is impacted by sales to
customers that buy Office with their new devices and by product launches, as
well as the transition to Office 365 Consumer, our subscription-based cloud
service that provides access to Office plus other productivity services. Office
365 Consumer revenue is included in our D&C Other segment.
The Windows Phone operating system is designed to bring users closer to the
people, applications, and content they need. As noted above, prior to our acquisition
of NDS, Microsoft and Nokia jointly created new mobile products and services
and extended established products and services to new markets through a strategic
alliance. Windows Phone revenue associated with this contractual relationship
was reflected in D&C Licensing. Windows Phone revenue also includes revenue
from licensing mobile-related patents.
Computing and Gaming Hardware
The principal products and services provided by the Computing and Gaming Hardware
segment are: Xbox gaming and entertainment consoles and accessories, second-party
and third-party video game royalties, and Xbox Live subscriptions (“Xbox
Platform”); Surface devices and accessories; and Microsoft PC accessories.
The Xbox Platform is designed to provide a unique variety of entertainment choices
through the use of our devices, peripherals, content, and online services. We
released Xbox 360 and Xbox One in November 2005 and November 2013, respectively.
Surface devices are designed to help organizations, students, and consumers
to be more productive, offering accessories and compatibility with peripherals.
Surface devices were first released in October 2012. Our latest Surface device,
the Surface Pro 3, was released in June 2014.
Phone Hardware
The principal products and services provided by the new Phone Hardware segment
are Lumia Smartphones and other non-Lumia phones, which we began manufacturing
and selling with the acquisition of NDS on April 25, 2014.
D&C Other
The principal products and services provided by the D&C Other segment are:
Resale, including the Windows Store, Xbox Live transactions, and the Windows
Phone Store; search advertising; display advertising; Office 365 Consumer, comprising
Office 365 Home and Office 365 Personal; Studios, comprising first-party video
games; and our retail stores.
Windows Store and Windows Phone Store are online application marketplaces that
are designed to benefit our developers and partner ecosystems by providing access
to a large customer base and benefit users by providing centralized access to
certified applications. Xbox Live transactions consist of online entertainment
content, such as games, music, movies, and TV shows, accessible on Xbox consoles
and other devices.
Search and display advertising includes Bing, Bing Ads, MSN, Windows Services,
and Xbox ads. We are the exclusive algorithmic and paid search platform for
Yahoo! websites worldwide. We have completed the Yahoo! worldwide algorithmic
transition and the paid search transition in the U.S. and planned international
markets.
Office 365 Consumer is designed to increase personal productivity through a
range of Microsoft Office programs and services delivered across multiple platforms
via the cloud.
Studios designs and markets games for Xbox consoles, Windows-enabled devices,
and online. Growth depends on our ability to attract new users and increase
engagement by developing a deep library of content which consumers seek.
Commercial
Our Commercial segments develop, market, and support software and services designed
to increase individual, team, and organization productivity and efficiency,
and to simplify everyday tasks through seamless operations across the user’s
hardware and software. Commercial is made up of the Commercial Licensing and
Commercial Other segments.
Commercial Licensing
The principal products and services provided by the Commercial Licensing segment
are: server products, including Windows Server, Microsoft SQL Server, Visual
Studio, System Center, and related Client Access Licenses (“CAL”);
Windows Embedded; volume licensing of the Windows operating system, excluding
academic (“Windows Commercial”); Microsoft Office for business,
including Office, Exchange, SharePoint, Lync, and related CAL (“Office
Commercial”); Skype; and Microsoft Dynamics business solutions, excluding
Dynamics CRM Online.
Our server products are designed to make information technology professionals
and developers and their systems more productive and efficient. Server software
is integrated server infrastructure and middleware designed to support software
applications built on the Windows Server operating system. This includes the
server platform, database, business intelligence, storage, management and operations,
virtualization, service-oriented architecture platform, security, and identity
software. We also license standalone and software development lifecycle tools
for software architects, developers, testers, and project managers. Revenue
comes from product revenue, including purchases through volume licensing programs,
licenses sold to OEMs, and retail packaged product. CAL provide access rights
to certain server and Office products, including Windows Server, Microsoft SQL
Server, Exchange, SharePoint, and Lync. CAL revenue is reported along with the
associated server or Office product.
Windows Embedded extends the power of Windows and the cloud to intelligent
systems, including the Internet of Things, by delivering specialized operating
systems, tools, and services.
Windows Commercial revenue is mainly affected by the demand from commercial
customers for volume licensing and software assurance, often reflecting the
number of information workers in a licensed enterprise, and is therefore relatively
independent of the number of PCs sold in a given year.
The versions of Office in Commercial Licensing are designed to increase personal,
team and organizational productivity through a range of programs, services,
and software solutions. Office Commercial revenue is mainly affected by a combination
of the demand from commercial customers for volume licensing and software assurance
and the number of information workers in a licensed enterprise, and is therefore
relatively independent of the number of PCs sold in a given year.
Skype is designed to connect friends, family, clients, and colleagues through
a variety of devices. Revenue is largely driven by the sale of minutes, subscriptions,
and advertising.
Microsoft Dynamics products provide business solutions for financial management,
customer relationship management, supply chain management, and analytics applications
for small and mid-size businesses, large organizations, and divisions of global
enterprises. Revenue is largely driven by the number of information workers
licensed.
Commercial Other
The principal products and services provided by the Commercial Other segment
are: Enterprise Services, including Premier product support services and Microsoft
Consulting Services; Commercial Cloud, comprising Office 365 Commercial, other
Microsoft Office online offerings, Dynamics CRM Online, and Microsoft Azure.
Enterprise Services, including Premier product support services and Microsoft
Consulting Services assist customers in developing, deploying, and managing
Microsoft server and desktop solutions and provide training and certification
to developers and information technology professionals on various Microsoft
products.
Office 365 Commercial is an online services offering that includes Microsoft
Office, Exchange, SharePoint, and Lync, and is available across a variety of
devices and platforms.
Dynamics CRM Online is designed to provide customer relationship management
and supply chain management for small and mid-size businesses, large organizations,
and divisions of global enterprises. Revenue is largely driven by the number
of information workers licensed.
Microsoft Azure is a scalable operating system with computing, storage, database,
and management, along with comprehensive cloud solutions, from which customers
can build, deploy, and manage enterprise workloads and web applications. These
services also include a platform that helps developers build and connect applications
and services in the cloud. Our goal is to enable customers to devote more resources
to development and use of applications that benefit their businesses, rather
than managing on-premises hardware and software.
Composition of Microsoft Corporation Revenues by
Segments |
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Productivity and Business Processes |
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42.28 % |
of total Revenue |
Intelligent Cloud |
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36.68 % |
of total Revenue |
More Personal Computing |
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21.04 % |
of total Revenue |
United States |
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51.04 % |
of total Revenue |
Other Countries |
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48.96 % |
of total Revenue |
Server Products and Cloud Services |
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33.95 % |
of total Revenue |
Microsoft 365 Commercial Products and Cloud Services |
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30.33 % |
of total Revenue |
Gaming |
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9.45 % |
of total Revenue |
LinkedIn |
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6.59 % |
of total Revenue |
Windows and Devices |
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6.48 % |
of total Revenue |
Search and News Advertising |
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5.11 % |
of total Revenue |
Enterprise and Partner Services |
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2.72 % |
of total Revenue |
Dynamics Products and Cloud Services |
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2.75 % |
of total Revenue |
Microsoft 365 Consumer Products and Cloud Services |
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2.62 % |
of total Revenue |
Other |
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0.01 % |
of total Revenue |
Microsoft Cloud |
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58.74 % |
of total Revenue |
Q2 three months ended (Dec 31 2024)
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Revenues by Business Segments |
Revenues (in millions $) |
%
(of total Revenues) |
Productivity and Business Processes |
29,437.00 |
42.28 % |
Intelligent Cloud |
25,544.00 |
36.68 % |
More Personal Computing |
14,651.00 |
21.04 % |
United States |
35,537.00 |
51.04 % |
Other Countries |
34,095.00 |
48.96 % |
Server Products and Cloud Services |
23,641.00 |
33.95 % |
Microsoft 365 Commercial Products and Cloud Services |
21,117.00 |
30.33 % |
Gaming |
6,581.00 |
9.45 % |
LinkedIn |
4,587.00 |
6.59 % |
Windows and Devices |
4,512.00 |
6.48 % |
Search and News Advertising |
3,558.00 |
5.11 % |
Enterprise and Partner Services |
1,892.00 |
2.72 % |
Dynamics Products and Cloud Services |
1,913.00 |
2.75 % |
Microsoft 365 Consumer Products and Cloud Services |
1,821.00 |
2.62 % |
Other |
10.00 |
0.01 % |
Microsoft Cloud |
40,900.00 |
58.74 % |
Total |
69,632.00 |
100 % |
Q2 three months ended (Dec 31 2024) |
Revenue Growth rates by Segment |
Y/Y Revenue % |
Q/Q Revenue % |
Productivity and Business Processes |
13.86 % |
3.96 % |
Intelligent Cloud |
18.67 % |
6.03 % |
More Personal Computing |
0.07 % |
11.19 % |
United States |
10.04 % |
4.79 % |
Other Countries |
14.7 % |
7.65 % |
Server Products and Cloud Services |
20.64 % |
6.71 % |
Microsoft 365 Commercial Products and Cloud Services |
15.26 % |
3.27 % |
Gaming |
-7.45 % |
17.08 % |
LinkedIn |
9.34 % |
6.87 % |
Windows and Devices |
3.42 % |
4.23 % |
Search and News Advertising |
12.31 % |
10.33 % |
Enterprise and Partner Services |
-1.3 % |
-1.87 % |
Dynamics Products and Cloud Services |
15.31 % |
3.46 % |
Microsoft 365 Consumer Products and Cloud Services |
8.46 % |
5.44 % |
Other |
0 % |
0 % |
Microsoft Cloud |
21.36 % |
5.14 % |
Total |
12.27 % |
6.17 % |
Q2 three months ended (Dec 31 2024) |
Income by Business Segments |
Income (in millions $) |
%
(Profit Margin) |
Total |
24,108.00 |
34.62 % |
Q2 three months ended (Dec 31 2024) |
Income Growth rates by Segment |
Y/Y Income % |
Q/Q Income % |
Total |
10.23 % |
-2.27 % |
Annual Report on Microsoft Corporation Divisions, Sales by Country |
Twelve months ended 2024
|
MSFT s Annual Revenue by Geography and Business Segments |
Sales (in millions $) |
%
(of total Sales) |
Total |
245,122.00 |
100 % |
Twelve months ended 2024
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MSFT s Annual Income by Country and Business Segments |
Income (in millions $) |
%
(Profit Margin) |
Total |
88,136.00 |
35.96 % |
Twelve months ended 2024
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Annual Revenue and Income Growth by Country and Business Segments |
% Y/Y Sales Growth |
% Y/Y Income Growth |
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