Lose a little, make some $$ elsewhere

Bill Gates isn't concerned about the money Microsoft's four loss-making units are losing--it's all part of the plan.

Lucky he's got those cash cows eh? I guess that the earlier news that Microsoft makes its money off basically Windows and Office alone should come as no suprise. Loss leaders such as MSN (pre v.8), Windows Messenger and all the other 'freebies' Bill give us merely serve to promote / operate on / tie into the products that they make their big bucks from. (Consider the recent launch of the corporate version of Messenger for instance.)

He told the the Financial Times at this week's Comdex Fall trade event: "Of the businesses that we are investing in, (the losses are) all very intentional. It is not like we thought we'd be making money on Xbox at this point, or on business solutions, or mobile, or MSN."

For the most recently reported quarter, Microsoft's client division (mostly made up of the Windows operating system business) made $2.48 billion on revenues of $2.89 billion and its information worker division turned in profits of $1.88 billion on $2.3 billion of sales.

Margins were not quite as meaty at the server software division but it is clear how much these established businesses--the subject of the anti-trust proceedings over the past five years--have carried the newer areas.

View: Gates: Losses are very intentional