Microsoft's Embedded and Appliance Business Model

Embedded operating systems and tools are just one layer in Microsoft’s business model for appliances and embedded systems. For embedded devices themselves, Microsoft sells embedded operating systems as well as “platforms,” complete operating system builds and application suites for specific device types such as the Pocket PC, “smart” wireless phones, the Microsoft TV set-top box, and server appliances. Microsoft also licenses specific “infrastructure technology” software, such as its Mobile Explorer small-footprint browser and its Windows Media video and audio streaming software, for use on devices running third-party embedded operating systems.

In addition to device software, Microsoft sells server-side software and Web services that support specific device types. It delivers subscription-based services through dedicated devices, such as WebTV delivered through WebTV set-top boxes and (in the future) MSN Internet Access delivered through MSN Companion terminals. It also markets bundles of server software for specific types of service providers, e.g., Internet Cellular Smart Access for wireless providers, and Microsoft TV for cable operators and broadcasters.