There are very few pure-play software companies.

Microsoft is simply alone in its class as a large, pure-play, shrinkwrap software company. Adobe might come close.

IBM, Oracle, SAS, PWC, Deloitte, McKinsey, PeopleSoft, and many other firms bundled software with at the very least consulting services. IBM, along with Sun, HP, Digital, and other vendors sold (or leased) both hardware and software, along with consulting services.

Smaller software companies have existed, but have been notoriously fickle.

Novell existed as a network services company, doing well for a while, but ultimately faltering.

EDS is probably the closest thing to a precursor to today's SaaS / XaaS companies, and was ultimately in the services business and bought by HP IIRC.

I've been looking at this question for nearly two decades, and the most substantive conclusion I've come to was that Microsoft was a unicorn, a lone star, a singleton. And yet everyone's tried to emulated them. Or at least did until Google came along and cracked a different market.

I would have used Microsoft as an example of a former software company that has started banking on hardware (Xbox, Surface, Nokia)

AFAIK the vast bulk of Microsoft's revenue continues to come from software: OS, Office, and Server products. I've not seen a breakdown for some time.

Microsoft have been trying to get out of this for quite some time. Back when I worked for a very large revolving credit transactions processor, the stated goal was to get into the online payments game (this nearly 20 years ago now). Microsoft Passport was among the products aimed at this effort, which ultimately failed, attributed by many at the time with the lack of trust any other business had at getting in bed with Microsoft standing on their revenue stream.

This list of billion dollar lines of business at Microsoft was generated in 2013 but let's go with the safe assumption that from 2013 they doubled down on the software components (which they did) and kind of lukewarm accepted the other parts of the business:

Windows (which also, up until now, included Surface, which contributed $853 million to the total in fiscal 2013)

Windows Server

Windows Azure

Office (client)

Xbox

SQL Server

System Center (client and server both, so includes Windows Intune)

SharePoint

Visual Studio

Dynamics (CRM and ERP)

Online Advertising (search and display both) Office 365

Client-access license (CAL) suites (formerly known as desktop access)

Enterprise Services (including consulting)

Enterprise communication business (Exchange plus Lync)

[http://www.zdnet.com/article/microsofts-16-billion-dollar-bu...]

Not too bad, eh?

Azure and Office 365 have to be an even bigger portion of this now than then. The number of companies moving to Office 365 for their Exchange and Office usage is enormous. Millions and millions of seats, at $5-10 per month per seat (or more), adds up quickly.

Aren't those products loss leaders for the purpose of eventually making money off of software (games fall in this category)/consulting services?

That is a good point. Google is also a hardware company, they just didn't sell any of it until recently (App Engine/Cloud).

Google generate revenue through advertising, and more of that by locking up the advertising networks and market than through user data.

They also have exceptionally good technical execution on backbone infrastructure. I'm impressed by how good they are, I really am. As well as at not fucking up upgrades to software that runs on top of that.

But their understanding of, and attitudes toward, end users really, really, really stinks. Perhaps not massively worse than the rest of the industry, but certainly no better.