Where do Microsoft's profits come from?

It's hard to fathom how much money a company such as Microsoft makes a year. In 2009, Microsoft's net income was 14.569 billion dollars. It is the most profitable software company on planet Earth. But where does all of their money come from?

Microsoft is involved in many different areas of consumer life. They make operating systems, gaming systems, games, productivity suites, and even hardware. The breakdown of Microsoft's profits may surprise some, but in general, it's much of what you'd expect from a company whose success stems from Windows and the fact that 91% of the world's computers accessing the Internet use it.

Below is a chart from Business Insider showing Microsoft's operating profits by division. You'll notice that only recently has Microsoft's entertainment and devices division begun turning higher profits. Xbox 360 was released back in November 2005, yet, nearly a year later, you can see Microsoft still losing money from it. It's also interesting to see how Microsoft's online services operate at a loss. This is probably a result of Microsoft's need to stay competitive with Google and other free, online, cloud based services. Microsoft can probably expect further losses in this area once Web Apps are released (unless they plan on supporting it through ads). As expected, Office and Windows seem to be the core of Microsoft profits.

Microsoft Operating Profit by Divison

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