Hood outlined how other revenue streams were almost balancing the decline in consumer Windows licenses, using another chart that showed increasing advertising income from the Bing search engine and a much smaller contribution from PC games. Over the last two years, Hood claimed, Windows' CAGR (compound annual growth rate) was -16%; when Bing and games were added in the CAGR climbed to -1%.
Her point? Bing advertising, which has increased as a percentage of the accounting whole, and to a lesser extent games, have largely made up for the declining revenue of Windows licenses.
"What this chart does is take the revenue from those key franchises and adds them together to show that the mix of our consumer monetization has already pivoted, and has the opportunity to pivot and grow further," said Hood while describing the chart.
Hood did not include revenue from the Windows app store -- perhaps because it would have been minuscule at this point -- but Microsoft clearly expects it to be significant after the debut of Windows 10's new unified market, which will include traditional desktop applications as well as apps for mobile devices.
Hood's illustration was in part an accounting magic show -- moving revenue from one place to another for demonstration purposes -- but it also showed Microsoft's thinking about its consumer Windows revenue plans in the most detail so far. In particular, it revealed why Microsoft has embedded Bing and the Cortana assistant so deeply into Windows 10.
"Windows as a service" has at times been interpreted as a strategy that would ultimately make the operating system a subscription of some sort; Hood said nothing about that last week, instead pointing to add-on revenue as the plan.
But at another point in the meeting, Kevin Turner, Microsoft's chief operations officer, made a comment that hinted a subscription was, if not in the immediate future, something the company may covet. "With Windows as a service, you can only dream about what the capability might be over the long term there as we develop that and it matures," Turner said, talking about the shift from a focus on licenses to one on "annuity conversion."
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