Microsoft 2006 Annual Report Download - page 4

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A Focus on Long-Term Success
Throughout our 30-year history, Microsoft has achieved success by taking a long-term approach to technology. This has enabled
us to deliver ground-breaking products that have truly changed the world.
The success of this approach was seen across our businesses in 2006 as we brought many new products to market and added
new customers in many segments. In the Platforms & Services Division, the launch of new versions of SQL Server and Visual
Studio propelled the Server and Tools business to a 15 percent increase in revenue. The Client group saw revenue grow by 9
percent.
In the Business Division, the launch of Microsoft Dynamics GP 9.0, Dynamics CRM 3.0, Dynamics SL 6.5, and Dynamics AX 4.0
helped drive the Business Solutions group past $900 million in revenue. Meanwhile, our Information Worker business grew 5
percent to $11.76 billion.
The Entertainment and Devices Division saw strong growth as well. With 5 million units sold to date, Xbox 360 is the fastest-
selling video game console ever. It helped drive revenue in the Home and Entertainment business to $4.26 billion, from $3.14
billion in 2005. Mobile and Embedded Devices, which saw revenue increase 44 percent, was our fastest-growing division in
2006.
A Strategic Foundation for Growth
In the year ahead—and the years to come—we expect many of our long-term investments to show a significant return in areas
ranging from online advertising to digital communications, entertainment, and Internet television, even as our more mature
businesses continue to generate significant revenue growth. To help ensure that our investments translate to growth and
profitability, we are focusing on our opportunities in three specific ways:
Strengthening core businesses: Windows Client, Information Worker, and Server and Tools remain our largest businesses.
The 2007 releases of new versions of Windows and Office will drive continued growth for each of these groups. With Windows
Vista, growth will come from new PC shipments, upgrades across our installed base, and the availability of new premium
versions. The launch of the 2007 Office system and Exchange 2007 will help us grow as the market for business software and
services expands.
We also expect growth in the world’s developing countries as their economies develop and they adopt global standards for
intellectual property protection. In fiscal 2006, nearly 60 million PCs were sold with pirated versions of Windows. Our Windows
Genuine Advantage program and agreements with PC manufacturers in China are just two examples of our commitment to
ensuring that we realize the full value of our intellectual property. Meanwhile, innovative payment options like FlexGo, which
enables people to finance their computer use on a pay-as-you-go basis, will help us reach new consumers in emerging markets
around the world.
Succeeding in adjacent businesses: In 2007, we will deliver a wave of new products, services, and technologies that will
position us to take advantage of a wide range of high-growth opportunities. One example is unified communications, our vision
for bringing together telephony, e-mail, instant messaging, mobile devices, and Web conferencing, in order to streamline the
way we communicate at work. To help make this vision a reality, in June 2006 we created the Unified Communications Group in
the Business Division. New enterprise information management tools will help knowledge workers create, find, use, and share
business information quickly and effectively. These technologies promise to have a profound impact on productivity, creativity,
and collaboration, and we believe they will have a significant impact on our future growth.
In addition, we’ll offer new security capabilities, improved management products, and new development tools. By bridging the
gap between business processes and business practices, Microsoft Dynamics products position us to meet the fast-growing
demand for better business process management systems. We recently entered the high-performance computing business. And
we have new offerings and initiatives in industries such as life sciences and manufacturing.
Entering new markets: We are excited by a number of important new opportunities that lie before us. With Xbox 360 and Xbox
Live®, our online gaming and entertainment service, we are redefining how people create, deliver, and experience
entertainment. We are also poised to see our long-term investment in Internet television begin to bear fruit as leading
broadband service providers around the world prepare to deploy IPTV Edition, our digital television technology. Meanwhile, the
number of customers using the Windows Mobile® and Windows embedded platforms is growing rapidly.
Leading the Software Services Transformation
Internet-based services are transforming the way people create, deploy, manage, and use information technology. We are
deeply committed to playing a leadership role through our efforts to create the services platform for the next generation of
applications, communications, and commerce. Across the company, software services are at the core of all of our development
efforts.