Microsoft, Apple, and Google: where does the money come from?

Microsoft, Apple, and Google: where does the money come from?

Summary: After reading last month's SEC filings, I was inspired to make some pie charts. Microsoft's a software company. Apple's a hardware company. What business is Google in? If you said search, guess again.

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Three companies are at the forefront of modern personal computing: Microsoft, Apple, and Google.

After reading through the most recent SEC-mandated financial reports for each company, I was inspired to put together these three pie charts. The data paints a vivid picture of where each company's revenue comes from.

Microsoft is a software company. Apple's a hardware company. But what business is Google in?

Microsoft

A well-rounded software company that has been surprisingly successful in recent years with its consumer entertainment devices, the Xbox 360 and Kinect. The company has high hopes for its online services. (Source: 10Q FY12 Q2, filed January 2012)

Apple

The most successful reinvention of a hardware company ever. The iPhone and iPad didn't exist five years ago, and last quarter they accounted for more than $33 billion in sales. That is mind-boggling. (Source: Q1 FY12 Form 10-Q [PDF], filed January 2012)

Google

"We generate our revenues almost entirely from advertising... Advertising revenues made up 97% of our revenues in 2009 and 96% of our revenues in 2010 and 2011." (Source: Form 10-K for the fiscal year ended December 31, 2011, filed January 2012)

If you want to understand why a company acts the way it does, just follow the money.

Topics: Mobility, Apple, Google, Hardware, Microsoft

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  • RE: Microsoft, Apple, and Google: where does the money come from?

    Nice job, Ed. Follow the money, indeed.
    DayTrader$
    • RE: Microsoft, Apple, and Google: where does the money come from?

      @DayTrader$ I agree. I wasn't too surprised by the Microsoft and Google pies, but the Apple pie was very telling. More than 2/3 of their revenue is coming from devices which didn't exist 6 years ago. It's pretty obvious that the iOS platform is blowing away everything else they sell. Consumers have obviously embraced iOS far more than they ever embraced OS X on the desktop. This also confirms a trend I've noticed where Apple seems to treat OS X machines as support boxes for a mostly iOS consumer experience.

      Looking at these numbers also boosts my belief that an iOS-based set-top box is coming with iCloud integration, and iPad HD application compatibility. Hopefully, they've integrated HD DVR functionality via iCloud to allow us to set up recordings remotely from our iOS devices.
      BillDem
      • Apple TV mark 3 maybe?

        @BillDem
        [i]"...my belief that an iOS-based set-top box is coming with iCloud integration, and iPad HD application compatibility. Hopefully, they've integrated HD DVR functionality via iCloud to allow us to set up recordings remotely from our iOS devices."[/i]

        I am 100% with you there! I just hope that this really does eventuate; effectively an Apple TV + PVR + more features. Drooling!
        rahbm
      • RE: Microsoft, Apple, and Google: where does the money come from?

        @BillDem

        Yes but it makes them vulnerable if their income is solely based on one thing. Galaxy 2 was rated the best phone is the world right now. Apple should broaden a little.
        ttremeth
      • RE: Microsoft, Apple, and Google: where does the money come from?

        @BillDem

        Yes but it makes them vulnerable if their income is solely based on one thing. Galaxy 2 was rated the best phone is the world right now. Apple should broaden a little.
        ttremeth
      • RE: Microsoft, Apple, and Google: where does the money come from?

        @BillDem

        Yes but it makes them vulnerable if their income is solely based on one thing. Galaxy 2 was rated the best phone is the world right now. Apple should broaden a little.
        ttremeth
    • RE: Microsoft, Apple, and Google: where does the money come from?

      @DayTrader$
      From a risk perspective MS is the most well grounded because of it's diversification. Even if Windows dies as a client OS, MS will still live on.

      Google is the most at risk. What would happen to Google if competitors start chipping away at it's market share in search. From a revenue perspective they are a one product company.

      Apple is a mixed bag. If people get board of the the iPhone they still have enough momentum to continue on but they would have to run major cost reductions to stay out of chap 11
      sharkboyjohn
      • Major Cost Reductions???

        @sharkboyjohn MOST LAUGHABLY BOGUS CLAIM I'VE SEEN THIS WEEK!!!

        Apple could use its existing cash to cover ALL its expenses other than parts that go into its products, with ZERO revenues, for YEARS to come.

        So you're dead wrong on the Doomsday Scenario. How about if somehow Samsung proves that Apple copied an essential patent, and totally puts the phone out of business?

        Still seems pretty fantasy land but again, it's utterly impossible: you've lost sight of the fact that in EACH of its four major businesses (iPhone, iPad, iPod, Mac), Apple makes more profit than ALL its competitors combined.

        People are paying up to have the products that actually work for them in the scenarios of usage that are most important (and importantly, are NOT being fulfilled by anybody else).

        So thanks for the giggles.
        WaltFrench@...
      • RE: Microsoft, Apple, and Google: where does the money come from?

        @WaltFrench Oh God, shut up. What he said is exactly right. 95% of Google's revenue comes from frickin' ads. Anyone takes market share away from Google in that area and they will feel the sting. They are not diversified in any way.
        jhammackHTH
      • RE: Microsoft, Apple, and Google: where does the money come from?

        @sharkboyjohn Google at risk?Not at all.Right now it's impossible to beat Google as search engine.It devours competitors,who has to fight for a small share.So,"the one-product company"(have you heard about Chrome,Chrome OS,Android?)can feel safe.Apple,on the other hand,relies too much in IOS,while Mac OS remains irrelevant.And if competitors turn the tables and left IOS behind (could happen,because in smartphones there is more competition),Apple would be in real trouble.Although they always can sell hardware for double the price of its competitors.It seems to work fine for them.
        anto31
      • RE: Microsoft, Apple, and Google: where does the money come from?

        @sharkboyjohn Google at risk?Not at all.Right now it's impossible to beat Google as search engine.It devours competitors,who has to fight for a small share.So,"the one-product company"(have you heard about Chrome,Chrome OS,Android?)can feel safe.Apple,on the other hand,relies too much in IOS,while Mac OS remains irrelevant.And if competitors turn the tables and left IOS behind (could happen,because in smartphones there is more competition),Apple would be in real trouble.Although they always can sell hardware for double the price of its competitors.It seems to work fine for them.
        anto31
      • RE: Microsoft, Apple, and Google: where does the money come from?

        @sharkboyjohn

        Google is diversifying though with the purchase of Motorola. That's a big leap forward.
        Clawdawg
      • RE: Microsoft, Apple, and Google: where does the money come from?

        @sharkboyjohn <br><br>[i]Apple is a mixed bag. If people get board of the the iPhone they still have enough momentum to continue on but they would have to run major cost reductions to stay out of chap 11[/i]<br><br>Chapter 11? Really? Maybe you haven't heard about the iPad business. If consumers get board like you say (doubt that will ever happen), the iPad will carry the company forward. The iPods continue to sell well, although not at well as previous years it's still healthy. Total iPod sale last quarter alone was still 15m. The iPod Touch, the best selling iPod is obviously doing tremendously well. Macs are breaking sales records. MacBook Airs are everywhere. iTunes which was always seen as a loss leader to Apple's hardware is bringing billions a year by itself. The iBook Textbook market is said to be a 2 billion a year market. Retail 6 billion a year. <br><br>Apple's iPhone Business Alone is Now Bigger Than All Of Microsoft. <br><br> <a href="http://www.ijailbreak.com/wp-content/uploads/2012/02/iphone-vs-microsoft.png" target="_blank" rel="nofollow">http://www.ijailbreak.com/wp-content/uploads/2012/02/iphone-vs-microsoft.png</a>
        dave95.
  • If there's a punch line I'm not getting it

    Advertising from what?<br><br>Oh. Search.<br><br>Without it they don't have a business.
    wendellgee2
    • RE: Microsoft, Apple, and Google: where does the money come from?

      @wendellgee@... Don't they have business services and such? I guess that's what the "Other" represents.
      jetsethi
    • And email. And Google Docs, and Chrome

      and Android. Basically, anything Google can use to mine data from you to sell advertising.
      baggins_z
      • RE: Microsoft, Apple, and Google: where does the money come from?

        @baggins_z

        They don't get money from Android. Android is a cost to Google. Ed should follow the money further. Which bins do they put their costs in?
        tkejlboom
      • @ tkejlboom: Android is worth about $0.11/month/handset to Google.

        @baggins_z

        With 250,000,000 handsets out there in use, that is a good number. Not great but not bad.
        Bruizer
    • RE: Microsoft, Apple, and Google: where does the money come from?

      @wendellgee@... That is like saying CBS, ABC and NBC are Television Broadcast companies - they're not. They're advertising companies. You wouldn't say that these same companies are BILLBOARD CONSTRUCTION companies (although they own a combined heckuva lot of Billboard placements). They build billboards to deliver their revenue generating stream - advertisements. Their media broadcast ventures exist primarily to facilitate advertisement delivery. Your TV is a billboard in your home. To get you to look at the thing, they put interesting content on it. What is happening this Sunday? Your television set is going to become the most-viewed advertising content delivery system in the United States delivering the most expensive-to-run ads you'll view all year. Oh... and there is going to be some football game on, too.
      dcolbert@...
      • That isn't quite true

        @ dcolbert@...

        A quick look at CBS (your first example) shows that, in addition to advertising, it also operates content creation/distribution businesses. About 2/3 of CBS's revenue comes from advertising, but the other 1/3 comes from content licensing/distribution and affiliate and subscription fees.

        At least in the case of CBS (I haven't checked the others), you're right that it is an advertising firm. However, in contrast to Google, it isn't 'just' an advertising firm. It's also a content creation/distribution firm (and people/firms are willing to pay for its content, unlike Google's 'free' services).
        WilErz