Microsoft Volume II
Acquired
Microsoft's Enterprise Agreements and OEM Business Model
The key to enterprise for Microsoft is backward compatibility, promising to support modifications and software versions used by enterprises. In 2007, 40% of Microsoft's revenue came from multi-year enterprise agreements, and an additional 15% from single-year agreements. The OEM business model was transformational for Microsoft as it provided a gross margin of 75% compared to 29% from box software sales. Selling through OEM channels allowed for scalability and increased profits without additional effort. By 2007, 85% of Microsoft's business came from enterprise sales of EA or OEM, showcasing the strategic importance of these models.
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