Microsoft 2006 Annual Report Download - page 11

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BUSINESS DESCRIPTION (CONTINUED)
Competition. Our competition varies based upon the size and geographic location of the customer for whom we are
competing. We compete with well-known vendors such as Intuit and Sage in the market focused on providing solutions for small
and mid-sized businesses. The market for large organizations and divisions of global enterprises continues to be intensely
competitive with a small number of primary vendors including Oracle and SAP. Additionally, these large enterprise-focused
vendors are repositioning some of their business applications to focus on small and mid-sized businesses. We believe our
products compete effectively with these vendors based on our strategy of providing integrated, adaptable solutions that work
like and with Microsoft technologies our customers already have.
MSN. MSN provides personal communications services, such as e-mail and instant messaging, and online information
offerings such as MSN Search, MapPoint, and the MSN portals and channels around the world. MSN also provides a variety of
online paid offerings. MSN manages many of its own properties, including health, autos, and shopping. MSN also creates
alliances with third parties for many channels, including CareerBuilder.com, Expedia.com, Foxsports.com, Match.com, and
MSNBC.com.
MSN generates revenue primarily from advertisers on MSN, from consumers and partners through subscriptions and
transactions, and from MSN narrowband Internet access subscribers. In fiscal year 2006, we launched MSN adCenter – our
internally developed advertising platform – in certain international markets and throughout the U.S. where it now serves 100
percent of paid search traffic on our online properties. We believe MSN adCenter will enable us to increase both display and
search advertising revenues by reducing our reliance on third parties for delivering ads. In fiscal year 2006, we announced
Windows Live™, a set of Internet services and software designed to improve the users’ connected experience and we released
Windows Live Messenger to consumers in 58 countries.
Products. MSN Search; MapPoint; MSN Internet Access; MSN Premium Web Services (consisting of MSN Internet Software
Subscription, MSN Hotmail Plus, MSN Bill Pay, and MSN Radio Plus); Windows Live; and MSN Mobile Services.
Competition. MSN competes with AOL, Google, Yahoo!, and a wide array of Web sites and portals that provide content and
online offerings of all types to end users. We compete with these organizations to provide advertising opportunities for
merchants. MSN also competes for narrowband Internet access users with AOL, Earthlink, and other ISPs for dial-up Internet
access in the United States. Due to the continuing trend of consumers migrating from narrowband to broadband Internet
access, we expect our narrowband Internet access subscriber base to continue to decline as we de-emphasize this portion of
our business. The Internet advertising industry has grown significantly over the past several years, and we anticipate that this
trend will continue. Competitors are aggressively developing Internet offerings that seek to provide more effective ways of
connecting advertisers with audiences through enhanced functionality in communication services, improvements in information
services such as Internet search, and improved advertising infrastructure and support services. We have developed our own
algorithmic search engine to provide end users with more relevant search results, a broader selection of content, and expanded
search services. To support the growth of our advertising business, we also are investing in our communication services,
technology, operations, and sales efforts. We will continue to introduce new products and services, including the Windows Live
set of services that are aimed at attracting additional users through improvements in the user online experience. We believe
that we can compete effectively across the breadth of our Internet services by providing users with software innovation in the
form of information and communication services that help them find, discover, and experience what they want online and by
providing merchants with effective advertising results through improved systems and sales support.
Mobile and Embedded Devices. Mobile and Embedded Devices develops and markets products that extend the Windows
platform to mobile devices such as PDAs and phones, and to embedded devices. Microsoft’s vision for mobile devices is rooted
in the convergence of the computing and wireless industries, which we believe creates new opportunities to improve
communication and information access for customers. We see software as a key differentiator in making smart devices and
wireless data services valuable to customers through rich experiences such as mobile messaging, location-based services,
media, and speech recognition. We are working closely with mobile operators and with hardware and software partners to
accelerate the development and availability of smart devices and services, and to provide a broad range of choices for
customers. The segment is also responsible for managing our company-wide sales and customer relations with device
manufacturers and other communication-sector customers, which includes network service providers and media and
entertainment companies. Windows Embedded is a suite of operating systems, tools, and technologies that are specifically
designed for today’s advanced embedded devices.
Products. Windows Mobile software platform; Windows Embedded device operating system; and Windows Automotive.