If Fewer People Are Buying Computers, Why Is Microsoft Making So Much Money?


Microsoft ($MSFT) builds smartphones, but they barely sell. They make the Windows operating system and programs for PCs, but fewer people are buying computers. They even compete in the video game space with their Xbox One, but Sony’s ($SNE) Playstation 4 has outsold it by a large margin.

Yet somehow, Microsoft is still one of the biggest companies in the world. In fact, they just had their best day ever on the stock market. They’re not only surviving a dwindling computer market, but doing better than before.

But how?

For decades, Microsoft was the biggest company in the consumer technology industry.

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Canadapanda / Shutterstock.com

All that changed when Apple ($AAPL) won people over with their portable devices.

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Flickr/Chris Harrison

Do you know anyone who owned a Zune? Neither do I.

For over a decade, Microsoft struggled to win back customers and compete with a changing product landscape.

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Peppinuzzo / Shutterstock.com

They tried over and over again to make Windows Phone 10 popular, but given the fact that most people own an Android or an iPhone, Windows 10 will likely never be anywhere near that popular.

In the last few years, Microsoft was able to retool themselves as a services company. First, they sold subscriptions to Microsoft Office.

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Microsoft

Microsoft Office is pretty much an industry standard for word processing, spreadsheets, and presentations. Nothing comes close to its ease of use and popularity. Even Outlook, the office e-mail client, is basically synonymous with e-mail.

They also became a cloud hosting platform with Azure.

Adriano Castelli / Shutterstock.com
Adriano Castelli / Shutterstock.com

Amazon ($AMZN) (the online store) makes billions every year by hosting websites in the cloud. Windows Azure does the same, and is seeing similar returns.

Thanks to the company’s recently announced success in both of these fields, their stock is trading at an all-time high.

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StockTwits

It’s not Apple levels of awesome, but if you’re a Microsoft investor, you’re having a very good year.


Microsoft still tries to compete in consumer spaces and sees middling results. For instance, their wearable Band was recently discontinued due to lack of success, and their Xbox is in the middle of a sales slump. Thankfully, these negatives won’t weigh down the positive impact Azure and Office have on the company, and the company will likely continue to grow thanks to their popular services.

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