Apple reported more FY2025 sales than Microsoft reported revenue: $416.161 billion versus $281.724 billion. That is a useful measure of reported scale, not a like-for-like comparison: Apple’s fiscal year ended September 27, 2025, while Microsoft’s ended June 30, 2025, and Apple reports product categories while Microsoft reports broader business segments. Their models also extend well beyond the shorthand of “hardware versus software”: Microsoft combines subscriptions, cloud services, licensing, advertising, gaming, and devices; Apple combines hardware sales with Services.
How do Microsoft and Apple make money?
The companies monetize different mixes of products and services, and organize their financial reporting differently. Microsoft describes revenue from cloud-based solutions, content and services, software products and support, online advertising, and devices. Apple’s cited FY2025 table groups net sales by product category and Services. Those categories are not equivalent to Microsoft’s operating segments.
| Company | FY2025 reporting measure | Reporting period | What the disclosure groups together |
|---|---|---|---|
| Microsoft | $281.724 billion revenue | Year ended June 30, 2025 | Three business segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. |
| Apple | $416.161 billion net sales | Fiscal year ended September 27, 2025 | Product categories, including iPhone, Mac, iPad, and Wearables, Home and Accessories, plus Services. |
Apple labels its top line “net sales,” while Microsoft reports “revenue.” Both amounts are in US dollars. Because the fiscal years end almost three months apart and the reporting groupings differ, the figures show reported annual scale rather than perfectly matched periods or comparable business units. Microsoft FY2025 annual report; Apple FY2025 fourth-quarter results.
How does Microsoft make money?
Microsoft’s FY2025 reporting divides the business into three segments. The segment totals show both the breadth of the business and where operating income was reported; the growth figures below are company-reported year-over-year rates for FY2025.
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Productivity and Business Processes
This segment includes Microsoft 365 commercial and consumer products and cloud services, LinkedIn, and Dynamics products and cloud services. It generated $120.810 billion in FY2025 revenue and $69.773 billion in operating income. Microsoft reported growth of 14% in Microsoft 365 Commercial products and cloud services, 11% in Microsoft 365 Consumer products and cloud services, 9% in LinkedIn, and 15% in Dynamics products and cloud services.
Intelligent Cloud
Intelligent Cloud includes public, private, and hybrid server products and cloud services. It generated $106.265 billion in FY2025 revenue and $44.589 billion in operating income. Server products and cloud services grew 23%, with Azure and other cloud services up 34%. Microsoft attributed cloud growth to demand across its portfolio.
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More Personal Computing
This segment combines Windows and devices, gaming, and search and news advertising. It produced $54.649 billion in revenue and $14.166 billion in operating income in FY2025. Xbox content and services grew 16%; search and news advertising grew 20% excluding traffic acquisition costs; Windows OEM and Devices grew 3%. The different growth rates make clear why describing Microsoft only as a cloud company misses meaningful parts of its business.
Microsoft Cloud and the cost of scaling
Microsoft reported $168.9 billion of Microsoft Cloud revenue in FY2025, up 23% year over year. Its definition includes Microsoft 365 Commercial cloud, Azure and other cloud services, the commercial portion of LinkedIn, and Dynamics 365; it is not a separate operating segment. Microsoft 365 Commercial cloud revenue rose 15%, while Azure and other cloud services revenue rose 34%. Microsoft’s annual report also says its Microsoft Cloud gross margin percentage decreased to 69% as the company scaled AI infrastructure, partly offset by Azure efficiency gains. Cloud and AI engineering investment also contributed to higher operating expenses. The growth is therefore accompanied by infrastructure costs, not free of them.
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How does Apple make money?
Apple’s FY2025 sales table places iPhone first, with Services the second-largest category. The figures describe sales by category; they do not disclose category-level operating income, subscriber economics, or a complete explanation of why sales changed.
| Apple FY2025 category | Net sales |
|---|---|
| iPhone | $209.586 billion |
| Services | $109.158 billion |
| Mac | $33.708 billion |
| iPad | $28.023 billion |
| Wearables, Home and Accessories | $35.686 billion |
| Total net sales | $416.161 billion |
iPhone accounted for about half of Apple’s FY2025 net sales, based on the disclosed category amounts. Services was the second-largest category, but the sales table does not establish its margins or identify the drivers of its growth. Apple’s CEO Tim Cook described the September quarter as including both a record iPhone quarter and an all-time Services revenue record; that statement concerns the quarter, not the full fiscal year. Apple’s results announcement.
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What Apple’s App Store figures do—and do not—show
In a January 12, 2026 update about 2025, Apple said the App Store had over 850 million average weekly users globally. Apple also reported that developers had earned more than $550 billion on the App Store since its 2008 launch. These company-reported activity and cumulative developer-earnings figures are not Apple Services revenue and do not, by themselves, prove what caused Services sales to grow.
Apple separately said the App Store ecosystem facilitated $1.3 trillion in developer billings and sales in 2024, with more than 90% going directly to developers with zero commission paid to Apple. Developer billings and sales are not equivalent to Apple revenue: the ecosystem figure includes commerce not monetized by Apple. Apple also reported that Apple TV total hours viewed in December 2025 were up 36% year over year and that Apple Pay generated more than $100 billion in incremental merchant sales. Those are company-reported service indicators, not audited breakdowns of Services sales. Apple’s January 2026 Services update.
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Which company is bigger?
By the annual top-line figures in the cited FY2025 filings, Apple reported the larger amount: $416.161 billion in net sales compared with Microsoft’s $281.724 billion in revenue. The comparison needs three qualifications: the fiscal years ended on different dates, the accounting labels differ, and Apple’s product categories cannot be directly matched to Microsoft’s operating segments.
The profit figures also cannot be compared category by category from these disclosures. Microsoft reported operating income for each segment, while Apple’s cited category table reports net sales by category. Microsoft reported total FY2025 operating income of $128.528 billion and net income of $101.832 billion; its revenue rose 15% and operating income rose 17% from FY2024. Those company-wide figures do not make Microsoft segment margins directly comparable with Apple’s category sales.
What drives growth at each company?
Microsoft: cloud growth across a diversified portfolio
Azure and other cloud services were Microsoft’s fastest highlighted growth driver in the supplied FY2025 segment disclosures, rising 34%. Microsoft 365 Commercial cloud grew 15%, and Microsoft Cloud overall grew 23%. Productivity products, LinkedIn, Dynamics, gaming, advertising, and Windows also contributed growth at different rates, so no single segment description captures the entire picture.
Microsoft chairman and CEO Satya Nadella characterized the period as an AI platform shift in the FY2025 shareholder letter. That is the company’s strategic framing; the financial evidence also shows the cost side, including lower Microsoft Cloud gross margin percentage while AI infrastructure scaled.
Apple: iPhone scale, with Services as a major second category
Apple’s FY2025 category mix shows iPhone as its largest sales source and Services as a substantial second category. The January 2026 engagement figures offer context about activity around Apple’s services, but they are not a year-over-year Services revenue bridge and should not be treated as proof of the causes of category growth.
Quick Recap
How to read the comparison
- Compare the business models, not just the top line: Microsoft earns from cloud consumption, subscriptions, software licensing and support, advertising, gaming, and devices. Apple sells hardware and Services, with iPhone the largest disclosed category.
- Keep reporting units separate: Microsoft’s three segments combine multiple businesses; Apple’s sales categories are products and Services, not equivalent segments.
- Keep financial figures distinct from ecosystem indicators: Apple’s App Store user, developer-earnings, and ecosystem-billings figures describe activity, not Apple revenue.
- Read growth alongside investment: Microsoft’s cloud expansion coincided with pressure on Microsoft Cloud gross margin percentage as AI infrastructure scaled.
- Do not infer unsupported comparisons: The figures here do not provide a matched-period customer-retention, lifetime-value, or Apple category-profitability comparison.
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