Gates defends loss-making units

Bill Gates isn't concerned about the money Microsoft's four loss-making units are losing - it's all part of the plan.

Just days after revealing for the first time profit and loss figures for the software giant's seven units - also showing just how much of a cash cow the company's operating system and desktop applications units are - Gates defended the newer divisions.

He told the FT at this week's Comdex Fall trade event: "Of the businesses that we are investing in, [the losses are] all very intentional. It is not like we thought we'd be making money on Xbox at this point, or on business solutions, or mobile, or MSN."

For the most recently reported quarter, Microsoft's client division (mostly made up of the Windows operating system business) made $2.48bn on revenues of $2.89bn and its information worker division turned in profits of $1.88bn on $2.3bn of sales.

Margins were not quite as meaty at the server software division but it is clear how much these established businesses - the subject of the anti-trust proceedings over the past five years - have carried the newer areas.

Gates went on to say markets where Microsoft is losing money are mainly not yet mature enough to cover initial R&D and other investment. However, it is fair to assume Microsoft thinks that time will come.