You might ask yourself: how does Microsoft make money from Windows 10? Although some means are obvious, such as selling licenses, others are not, and the company’s revenue generation sources from Windows 10 may be quite surprising. With Windows 10, Microsoft delivered not only a new operating system, but also a different business model. Here are the ways in which Microsoft makes money from Windows 10:
1. Selling licenses of Windows 10 (Retail, Enterprise, and OEM)
First of all, Windows 10 is available for sale. Although the company allowed users of Windows 7 and Windows 8.1 to upgrade their computers to Windows 10 for free, it never stopped selling licenses for their new operating system. Windows 10 is available for you to buy as retail software directly from Microsoft, as well as from shops and Microsoft partners. Considering that all Windows 10 editions are priced above 100 USD, the company is definitely making some good money from the retail licenses.
However, the big money is made from selling Windows 10 licenses to Enterprises, which are sold in bulk, for corporate networks with thousands of computers. Those contracts are negotiated directly by Microsoft with their largest customers, and details are not made public. If you would like to know more, visit: Microsoft Enterprise Agreement.
Besides selling Windows 10 in retail stores, Microsoft also sells OEM licenses for Windows 10. Most new computers, laptops and similar devices that you buy from stores, come with Windows 10 preinstalled. Although you might think that you are getting it for free, the truth is that you don’t. Manufacturers pay Microsoft in bulk, for the Windows 10 licenses that they installed on the computers and devices that they are selling. Those licenses are called OEM (Original Equipment Manufacturer), and they are tied to the products on which they are installed. In other words, each time you buy a new device with Windows 10 preinstalled, you buy a new Windows 10 license, although you already had one on your old computer. Microsoft makes money with each new computer that is sold with Windows 10 on it.
According to Microsoft’s 2019 Third Quarter Results, the company had a 15% Windows OEM Pro revenue growth, and a 1% Windows OEM revenue growth.
2. Office 365 and Microsoft 365 subscriptions
Many new computers and laptops come with Microsoft Office apps pre-installed. When you open them, you are asked to buy a subscription to Office 365. However, newer versions of Windows 10, starting with May 2019 Update, also include shortcuts to the Office web apps. These are free, lightweight versions of the Microsoft Office apps. Does it sound too good to be true? Why would Microsoft give you access for free to some of its most popular software? The idea is that you get to do basic stuff using the web apps, but, for the most complex tasks, you need the full Office suite. And that’s when Microsoft tells you that “hey, you should subscribe to Office 365, which is only that amount of money per month!” Do not forget that it all started from a few links well placed in the Start Menu from your Windows 10 PC.
In the third quarter of 2019, Microsoft had 34.2 million consumer subscribers to Office 365. Another similar method of generating revenue is through selling Microsoft 365 subscriptions to businesses of all sizes. These subscriptions bundle together Windows 10 with Office 365.
3. Apps, games, movies and other items from the Microsoft Store
One of the essential parts of Windows 10 is the Microsoft Store. The store is a portal from which you can download and install various software, both from Microsoft and from third parties. Some of the apps and games from the Microsoft Store are free, but there are also a lot of them that cost money. Whether you spend money right from the start when you buy a new app, game or a movie from the Microsoft Store, the company gets its share. Third-party developers are obliged to pay a share of their revenues to Microsoft.
4. Bloatware apps that are preinstalled in Windows 10
With Windows 10, Microsoft seems to have forever forgotten the idea of offering an operating system that is free from bloatware. It seems that, not only did they ditch the old Microsoft Signature program, but the company shifted to the opposite direction. In Windows 10, Microsoft bundles plenty of bloatware apps that nobody wants. Even when you clean install the operating system, you still get some bloatware apps and games such as Candy Crush Saga in your Start Menu. Microsoft gets money from the developers who want their apps or games to be bundled in Windows 10. Each of those apps and games, that you didn’t ask for, mean some dollars for the Redmond company. Not great for users, but great for Microsoft.
Fortunately, you can get rid of those pesky bloatware apps that Microsoft bundles in Windows 10. To know more, read this guide: Stop Windows 10 from promoting apps on the Start Menu.
5. Advertisements in Windows 10
The entire Windows 10 operating system is riddled with advertisements. Obviously, their main purpose is to generate revenue for Microsoft. We don’t know how much but, if they didn’t make money, the company wouldn’t have used them. Windows 10 shows ads in the Start Menu and on the taskbar, on the Lock Screen, in File Explorer, and the Action Center.
The good thing is that you can disable all these ads and never see them again if you follow this guide: Windows 10 ads: How to turn them off from everywhere.
6. The search feature in Windows 10
If you are using the search from Windows 10, you are also likely to use Bing, because all the web searches made in Windows 10 are powered by Bing. If you didn’t know, Bing is Microsoft’s own internet search engine, and an alternative to Google. It is the perfect environment for the company to show you advertisements based on the searches that you make.
According to Microsoft’s 2019 Third Quarter Results, the company had a 12% search advertising revenue growth. A small part of that revenue is generated by the search feature from Windows 10.
7. OneDrive subscriptions
OneDrive is Microsoft’s storage service for hosting files in the cloud. In Windows 10, it is bundled as a system app, that is always running in the background. The good news for Windows 10 users is that OneDrive is free to use. The bad news is that it’s free only as long as you do not use all your free space. Arguably, that free space is not that much, and you might soon find yourself needing more. That’s when Microsoft starts making money: because you are already hooked up on the benefits of using your own cloud storage services, Microsoft asks you to buy a subscription for more space in OneDrive, or to buy Office 365, which includes OneDrive.
According to Microsoft’s 2019 Third Quarter Results, the company had a 20% cloud services revenue growth, which includes OneDrive.
8. Skype subscriptions
Windows 10 also bundles Skype, which is run and owned by Microsoft. It’s a great app both for chatting and for audio and video calls. Many business users use it regularly. An advantage of Skype is that it also lets you call landline phone numbers and mobile phone numbers, internationally. Guess what? If you want to do that, Microsoft sells you minutes or subscriptions.
What is your opinion on how Microsoft makes money from Windows 10?
There are more than a few ways in which Microsoft generates revenue from Windows 10. Over the last few years, it looks like the company found new ways of monetizing its users, to make more money than ever before. Some may sit well with their users, while others do not. For example, many users do not enjoy how their Start Menu is filled with advertisements and bloatware. Before closing this article, tell us your opinion about Windows 10 and how Microsoft uses this operating system to make money.
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