You shall not (Game) Pass | Opinion

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For a few decades, Microsoft occupied one of the most privileged and profitable positions any company, in any industry, has ever enjoyed. The company was synonymous with personal computers throughout the era when they went from being rare and expensive curiosities to being ubiquitous devices in every home and office – yet it did not manufacture any computers of its own.

The actual process of manufacturing, distributing, and selling computer hardware (which is risky, capital-intensive, and generally low-margin thanks to high logistical overheads and fierce market competition) was carried out by countless other companies, not by Microsoft itself. Instead, each time one of those companies sold a computer to a consumer, Microsoft was paid a handsome license fee for installing the Windows operating system.

PC manufacturing was and remains a cut-throat business, and many of the companies that were once huge players in that space have either sold off their PC divisions or folded entirely, but the impact on Microsoft was minimal; manufacturers came and went, but they all still needed to pay for their Windows licenses regardless.

Nowadays, Microsoft's business is much more diverse; Windows licenses are a relatively small part of it, and much of the company's future growth prospects are in areas like cloud services and AI. Still, the model that built the company to the giant it is today – selling a dominant, high-margin operating system for computers built by other companies, while staying well clear of the risky, low-margin hardware business – isn't easily forgotten. It's an enviable position, one that most companies would probably love to be in, with