Microsoft FY2016-Q2. Revenue $23.8 bn, Op Income $6.0 bn, Net profit $5.0 bn. Beating expectations AGAIN.

[DonFerrari]

Mummelmann said:

Teeqoz said:

LudicrousSpeed said:

I'm not keen on all this financial stuff, but how does MS have roughly the same revenue as Sony but over five times the profit? Do they just have divisions that lose way more money?

Microsoft is in businesses with way higher margin (software), while Sony is primarily in businesses with lower margins (hardware). Apple is basically the only hardware/electronics company that manages to maintain a very high operating margin.

It also obviously doesn't help that a lot of Sony's divisions have performed weakly, but in general, software has higher operating margins than hardware.

That's how one can easily see how overpriced Apple products are; look at their insane profit margins on hardware and it becomes clear that customers are paying a whole lot for brand and not really for components.

Anyway, MS has always been a software company first and foremost, and that yields significantly more profits on average, for obvious reasons. I still remember fondly when I had to explain to a member on this very site that the development cost of games is not tied to how many copies you printed (yes, he actually tried to argue that).

Well, the margin on SW is ridiculous as well, but that is because they have very small cost for production.

On the discussion of dev cost. They could at most imply that when you expect a certain bracket of sales you calculate the cost to dev. And the cost to burn, print, package and distribute but they are very small.