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Microsoft CFO Amy Hood Says Pandemic Showed the Importance of Windows

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  • Amy Hood, Microsoft's finance chief, acknowledged Tuesday she has found a way to talk about the success of its longstanding Windows operating system.
  • The story of Windows being a key revenue driver for the company took hold during the pandemic.
  • Windows held almost 80% share of the market in 2021, compared to about 11% for Google-backed Chrome OS and 8% for Apple's MacOS, according to a data tracker.

Microsoft's finance chief, Amy Hood, acknowledged Tuesday she has found a way to talk about the success of its longstanding Windows operating system, whose revenue growth soared due to the Covid-19 pandemic.

That stands to reason because personal computers don't attract the kind of attention that newer technologies do — such as cryptocurrencies or augmented reality.

But Windows, which dates to 1985, still brings Microsoft tens of billions of dollars per year in highly profitable revenue, with over 1.4 billion devices running Windows 10 from 2015 or last year's Windows 11. Windows held almost 80% share of the market in 2021, compared to about 11% for Google-backed Chrome OS and 8% for Apple's MacOS, according to data from technology industry researcher IDC.

After Satya Nadella replaced Steve Ballmer as Microsoft's CEO in 2014, the company shifted its focus from Windows, opting to highlight its cross-platform services and cloud infrastructure.

But the story of Windows being a key revenue driver for the company took hold during the pandemic. In 2020, Microsoft said people were spending much more time on Windows 10, and the gains have persisted into 2022. In the fourth quarter, Windows revenue expanded nearly 20%.

Hood stresses that Windows' strength during Microsoft earnings calls, and during the last two has touted the faster-than-expected growth rates for sales to device makers, thanks to a strong PC market, especially for commercial devices that bring in more revenue per license.

On Tuesday, Morgan Stanley analyst Keith Weiss at the firm's Technology, Media & Telecom Conference asked Hood about her suddenly "more positive tone" about PCs on recent earnings calls.

"I should have been talking about Windows," the Microsoft chief financial officer said.

"The utility of that device and my inability to accurately explain it may in fact be the issue, people are just now realizing, 'Wow, she just figured it out, Windows matters.' No," Hood continued, "I just figured out how to talk about it. And so the reality is, a large screen device over the past couple of years, we've all been reminded of the role it plays. There are more PCs per households and more time being spent on PCs.

"We're continuing to see that even with hybrid. And so there are jobs to be done. And it plays a great role in many jobs to be done."

The growth of Windows has been benefiting other parts of Microsoft's business, too, such as consumer subscriptions to Office 365, search advertising, internet browser market share and gaming, she said.

"This is one where whatever review form I got this year should say, 'she forgot about to talk about Windows for a long time.' And now, we're going to remedy that because you're seeing it in users, you're seeing it in usage, you're seeing it in the market," Hood said.

Supply shortages have sapped sales of Windows, as well as Surface PCs and Xbox consoles, for several months, and on Tuesday she said that while constraints are still present, device makers are stepping up.

"I am optimistic," she said. "I'm more optimistic about what Windows can mean to a user. Now we can continue to make it better, more integrated, make it easier to do the things you like to do. For me, that's Excel. For others, maybe something else is fun."

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