Why is Windows making less and less money for Microsoft?

The Windows operating system has always been one of Microsoft 's main sources of revenue. But the tech giant's financial report released recently showed that Windows sales fell 13% year-on-year. The decline in personal computer sales is one reason, but the end of XP's life and the failure to boost sales of new versions of Windows are also an important factor.

Microsoft reported second-quarter earnings last week, with some bright spots, such as rising sales of mobile devices and cloud services. Although Microsoft's profit fell 10.6% to $5.9 billion due to acquisitions and layoffs, the company's overall sales for the quarter ended December 31, 2014, were up 8%.

Despite Microsoft's impressive sales growth, revenue from installing its Windows operating system on new computers, a long-reliable source of revenue, fell 13% year-on-year. Why is this happening?

First, the PC market has been sluggish in recent years, which means that sales of PCs running Microsoft operating systems have declined.

But there is another reason that is completely beyond Microsoft's control.

By the end of 2013, Microsoft had essentially stopped providing technical support for Windows XP for business users, which convinced many corporate IT and finance departments that it was finally time to upgrade the more than 10-year-old operating system, which would boost sales of Microsoft's new operating systems, such as Windows 8.

However, XP's demise didn't boost Windows sales last year, which explains the year-over-year slump in Windows sales. (Microsoft also said lower-priced Windows systems sold to academic institutions also hurt revenue in that category.)

We can expect that Windows may no longer be Microsoft's cash cow in the future. The company recently announced that its upcoming next-generation operating system, Windows 10, will provide free upgrades for users of older versions of Windows. This move is very consumer-friendly and should increase the adoption rate of the system, but it will further reduce Windows revenue. However, if Microsoft can continue to make great strides in mobile and cloud services, the resulting revenue will be enough to make up for the loss of free upgrades.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.