In late April, two weeks before Microsoft announced the biggest batch of layoffs in its history, the company experienced a lesser-noticed milestone that may have signaled even more about the state of its business.
For the first time in Microsoft’s history, revenue in its Server & Tools division — which makes behind-the-scenes corporate systems and programming software — surpassed revenue in its Windows Client division, which makes the PC operating system responsible for much of the company’s past success.
To be sure, Windows remains hugely profitable, bringing in more than half of Microsoft’s $4.4 billion in quarterly operating income. And the situation was caused in part by the economy’s impact on PC sales. The server division benefits from long-term licensing deals with corporations, a more reliable revenue stream.