Microsoft 2006 Annual Report Download - page 3

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PAGE 2
To our shareholders, customers, partners, and employees:
Fiscal 2006 was a year of significant achievement and transformation for Microsoft. During 2006, we celebrated the thirtieth
anniversary of our founding, reached new records for revenue and operating income, and laid the foundation for future growth
through key changes in our organizational structure and leadership. Fueled by strong demand for new and existing products, our
revenue in 2006 grew by $4.49 billion, an 11 percent increase, to $44.28 billion. Operating income reached a record $16.47
billion. We also returned $23 billion to shareholders through dividends and by repurchasing our stock.
The past year saw the successful launch of major products including Xbox 360™, Microsoft® SQL Server™ 2005, Visual Studio®
2005, Microsoft Dynamics™ CRM 3.0, and BizTalk® Server 2006. Meanwhile, we continued to prepare for the most important
series of product releases in Microsoft history as we readied Windows Vista™, the 2007 Microsoft Office system, and Exchange
Server 2007 for launch in 2007.
We also strengthened our commitment to Internet services as we unveiled Windows Live™ and Office Live, our two Internet-
based software services offerings. Throughout the year, we rolled out new Windows Live and Office Live services and we
continue to invest in the development of new technologies and products that will help ensure that we are a leader in the
Internet services revolution.
During 2006, we maintained our focus on research and development, investing $6.6 billion—more than any other company in
our industry. Past investment in R&D paid off in the form of new products and technologies that are helping us redefine the next
generation of information technology. Along the way, we received our 5,000th patent.
In 2006, we also made a number of strategic acquisitions, including FrontBridge Technologies, a provider of security-enhanced
managed messaging services; Teleo, which develops voice over Internet protocol (VoIP) software; mobile search technology
provider MotionBridge; and Massive, a pioneer in delivering advertising within video games.
Through our commitment to research and development, and our passion for pursuing innovations that enable our customers to
achieve business success and realize their potential, we are in a great position to strengthen growth and increase innovation as
we pursue new and expanding opportunities in business solutions, mobile computing, communication, entertainment and more.
Leadership and Organizational Excellence
Great leadership and a strong, agile organization are essential to Microsoft’s future success. During 2006, we took important
steps to ensure that the company has the deep roster of leaders and the organizational structure it needs to spur continual
innovation and growth. In 2006, we realigned the company into three divisions: the Microsoft Platforms & Services Division led
by co-presidents Kevin Johnson and Jim Allchin (who will retire following the launch of Windows Vista); the Microsoft Business
Division led by Jeff Raikes as president; and Microsoft Entertainment & Devices Division, where Robbie Bach serves as
president. Kevin Turner joined the company as chief operating officer. All of these leaders possess great levels of business
experience and technology expertise, combined with a passion for excellence and innovation.
Also during 2006, Bill Gates announced that in 2008 he will reduce his workload at Microsoft to part time. At that time, he will
remain as chairman of the company and continue to play a vital role as an advisor on key development projects. To prepare for
this transition, two of our top technical leaders—and two of the industry’s leading technical visionaries—will take on new
responsibilities. Ray Ozzie assumed Bill’s title of chief software architect and is working with Bill on technical architecture and
product oversight. Craig Mundie, named chief research and strategy officer, is working with Bill on the company’s research and
product incubation efforts.
Thanks to these changes, our leadership team is stronger than it has ever been, and our organizational structure is aligned for
great execution in the coming years.
Enabling People-Ready Businesses
At our core, we are a software company. But our defining mission is to help people and businesses realize their full potential. We
believe that the right software helps companies become people-ready businesses where employees are empowered and
inspired to use technology to solve problems, collaborate with colleagues, serve customers, and seize new opportunities. From
the infrastructure innovations in SQL Server 2005 to the enhanced business process integration of new Microsoft Dynamics
solutions, many of our product releases in 2006 were designed to provide people with tools and resources they need to drive
business success.
Product releases in the coming year will strengthen our ability to deliver on our people-ready vision. Windows Vista, the 2007
Office system, and Exchange 2007 will provide powerful new capabilities that enable people to create new levels of business
value, fueling further growth for Microsoft.