Microsoft 2003 Annual Report Download - page 14

MSFT 2003 FORM 10-K
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Part I, Item 1
PART I
ITEM 1. Business
GENERAL
Microsoft Corporation was founded as a partnership in 1975 and incorporated in 1981. Our mission is to enable people and businesses throughout the world to
realize their full potential, and our vision is empowering people through great software – any time, any place, and on any device. We develop, manufacture,
license, and support a wide range of software products for a multitude of computing devices. Our software products include scalable operating systems for servers,
personal computers (PCs), and intelligent devices; server applications for client/server environments; information worker productivity applications; business
solutions applications; and software development tools. We provide consulting services and product support services and we train and certify system integrators
and developers. We sell the Xbox video game console, along with games and peripherals. Our online businesses include the MSN subscription and the MSN
network of Internet products and services.
Microsoft also researches and develops advanced technologies for future software products. A significant portion of our focus is on our .NET architecture.
Using common industry standards based on Extensible Markup Language (XML), a universal language for describing and exchanging data, our goal is to enable
seamless sharing of information across many platforms and programming languages, and over the Internet, with XML Web services. In addition, we have
embarked on a long-term initiative called Trustworthy Computing that aims to bring an enhanced level of security, privacy, reliability, and business integrity to
computer systems.
PRODUCT SEGMENTS
We revised our product segments for fiscal year 2003. Our seven product segments are Client, Server and Tools, Information Worker, Microsoft Business
Solutions, MSN, Mobile and Embedded Devices, and Home and Entertainment.
Changes in our segments are designed to provide management with a comprehensive financial view of our key businesses; promote better alignment of
strategies and objectives among development, sales, marketing, and services organizations; provide for more timely and rational allocation of development, sales,
and marketing resources within businesses; focus strategic planning efforts on key objectives and initiatives; and give business owners more autonomy in detailed
planning.
See Note 21 of the Notes to Financial Statements for financial information regarding segment reporting. Prior year segment information has been restated to
conform to the seven new segments.
Client
Client segment includes Windows XP, Windows 2000, and other standard Windows operating systems. Windows XP extends the personal computing experience
by uniting PCs, devices, and services, while enhancing reliability, security, and performance. Windows XP Home Edition is designed for individuals or families and
includes capabilities for digital photo, music, video, home networking, and communications. Windows XP Professional includes all the features of Home Edition,
plus remote access, security, performance, manageability, and multilingual features to help users improve productivity and connectivity. Windows XP was the
successor to Windows 2000.
Client has overall responsibility for product delivery, engineering and technical architecture for the Microsoft Windows operating system, and new media
technology, as well as our relationships with manufacturers of personal computers and non-PC devices, including multinational and regional original equipment
manufacturer (OEM) accounts. The segment includes sales and marketing expenses focused on business development efforts for the Windows platform, as well
as integration of our technologies and products into non-PC devices.
Server and Tools
Server and Tools segment consists of server software licenses and client access licenses (CALs) for Windows Server, SQL Server, Exchange Server, and other
servers. It also includes developer tools, training, certification, Microsoft Press, Premier product support services, and Microsoft consulting services. Microsoft
server products offer a comprehensive range of solutions designed to meet the needs of developers and IT professionals, and are designed to flexibly run the
programs and solutions that enable information workers to obtain, analyze, and share information quickly and easily. Microsoft servers provide capabilities ranging
from messaging and collaboration to database management and ranging from e-commerce to mobile information access.
Windows Server 2003 is a multipurpose operating system capable of handling a diverse set of server roles in either a centralized or a distributed fashion. SQL
Server is a Web-enabled database and data analysis package, providing core support for XML and the ability to query across the Internet. Microsoft Exchange
delivers a reliable, scalable, and manageable infrastructure with 24×7 messaging and collaboration. Systems Management Server delivers cost-effective, scalable
change and configuration management for Windows–based desktop and server systems. Small Business Server is a network solution that includes the Windows
2003 Server network operating system and is designed to help small businesses. Developer tools focus on coordinating the overall programming model for the
client and server, creating tools for the .NET platform, and fostering synergies between Windows and the Windows Server System offerings.
Server and Tools segment includes the integrated product development and marketing that delivers Microsoft Windows Server System products. In addition,
the segment provides information about the extended Microsoft platform through a variety of content offerings, such as web-based training for developers and IT
managers. Through this segment, we offer a broad range of consulting services for advanced technology requirements, including custom solutions services,
enterprise application planning, architecture and design services, and proof-of-concept services. We also provide product support services aligned to our
enterprise customers. The Server and Tools segment includes our Enterprise and Partner Group, which is responsible for enterprise sales