Free HEVC Codec for Windows 10 Microsoft: Understanding the Business Model Behind Windows Licensing

When it comes to understanding the business model behind Windows licensing, many people assume that Microsoft makes a significant profit from selling operating system licenses to consumers. However, this assumption may be far from the truth. In reality, Microsoft's primary source of revenue lies in its enterprise products and services, not in consumer operating system sales.

The reason for this is simple: if Microsoft were actually making a profit on selling Windows licenses to consumers, it would have implemented robust digital rights management (DRM) measures to ensure that users cannot easily activate the software without paying. However, since Microsoft doesn't make significant profits from consumer OS sales, it has chosen not to enforce basic DRM measures.

In fact, some users may find it surprising that you don't even need to pay for Windows at all – as long as you're willing to venture into legal gray areas. One example is the activation of a Windows 11 Pro copy using a CD key from Windows 7. The software activated just fine without any issues.

It's also important to consider that Microsoft may be losing money on consumer OS sales. Consoles and operating systems are often sold at a loss, with the company making up for it through other revenue streams. In this case, Microsoft may be subsidizing its consumer OS business from its enterprise profits to maintain its market share monopoly.

To put things into perspective, Windows 95 retailed for $209 in the past – equivalent to around $409 today. Considering the complexity and development costs of modern software, it's hard to imagine that Microsoft is making a huge profit on selling Windows at just 25% of the original price.

Furthermore, even if Microsoft does make some profit from consumer OS sales, the amount must be significantly lower than expected. How much can the company really make by selling an operating system for the price of two video games while supporting it with updates for 10 years and paying developers' salaries? It's likely that the actual profit margin is much smaller than many people assume.

In contrast, enterprise customers are Microsoft's bread and butter, as they also purchase full suites such as AD, Azure, O365, Outlook, and more. These customers provide a significant source of revenue for the company.

Ultimately, while it's unclear exactly how much Microsoft makes from selling Windows licenses to consumers, it's clear that the profit margins are likely much lower than expected. The company may be able to afford to eat some costs, but the actual profits made from consumer OS sales are likely to be small compared to its overall revenue.

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