Enterprise

Microsoft leans on enterprises, which now account for more than half its revenue

Microsoft Store Austin
Image Credit: Tom Cheredar/VentureBeat

Microsoft is increasingly becoming an enterprise-focused company. Chief operating officer Kevin Turner announced during a financial analyst meeting today that 55 percent of the company’s customers are large businesses.

The company’s full customer profile is currently made up of 55 percent enterprise customers, 20 percent consumers, 19 percent original equipment manufacturers, and six percent small-to-medium sized businesses, Turner said.

Microsoft’s competitors Apple and Google don’t break out enterprise versus consumer revenues, but both are likely to have a much smaller percentage of enterprise customers — accounting for well under 10 percent of overall revenues in both cases.

While there’s certainly a lot of money to be made in the enterprise, the worrying thing for Microsoft might actually be its OEM numbers. Reports suggest that the PC market is on the downswing as the “bring your own device” (BYOD) movement and tablets eat away at its marketshare. An NPD report says that this year will be the first time we’ll ever buy more tablets than PCs in a year and predicts that in 2017 we’ll be buying six times more tablets than laptops.

That’s not a good trend, if you’re the dominant vendor of PC operating systems.

OEMs may be slowing down their PC production in order to accommodate for this difference in customer desires and thus aren’t buying as many licenses from Microsoft. This wouldn’t be such a huge a problem for Microsoft  if it actually had a successful tablet program with which to compete.

But it doesn’t.

The company announced in its fourth quarter 2013 earnings report that it would be taking a $900 loss on its Surface tablet division. This comes after the company already reduced its Surface table pricing by $150, making the cheapest Surface tablet $349. Even so, not enough people are buying Surface tablets.

And while Windows Phone sales are up a bit, moving into third place (after Android and iOS), it’s arguable that third place is much easier to achieve because Blackberry is biting the dust as we speak.

So where does that leave Microsoft? Well, it might be time to put more resources on the tablet division to win back some of those consumers. But for the time being, it seems enterprises will just have to do.

hat tip Mary Jo Foley


VentureBeat is studying mobile marketing automation. Chime in, and we’ll share the data.