Microsoft 2007 Annual Report Download - page 62

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PAGE 61
The types of products and services provided by each segment are summarized below:
Client – Windows Vista, including Home, Home Premium, Ultimate, Business, and Enterprise Starter Edition;
Windows XP Professional and Home; Media Center Edition; Tablet PC Edition; and other standard Windows
operating systems.
Server and Tools – Windows Server operating system; Microsoft SQL Server; Microsoft Enterprise Services;
product support services; Visual Studio; System Center products; Forefront Security products; Biz Talk Server;
MSDN; and TechNet, among others.
Online Services Business – 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.
Microsoft Business Division – Microsoft Office; Microsoft Project; Microsoft Visio; Microsoft Office SharePoint
Server; Microsoft Exchange Server; Microsoft Exchange Hosted Services; Microsoft Office Live Meeting;
Microsoft Office Communication Server; Microsoft Office Communicator; Microsoft Tellme Service; Microsoft
Dynamics AX; Microsoft Dynamics CRM; Microsoft Dynamics GP; Microsoft Dynamics NAV; Microsoft Dynamics
SL; Microsoft Dynamics Retail Management System; Microsoft Partner Program; and Microsoft Office Accounting.
Entertainment and Devices Division – Xbox 360 console and games; Xbox Live; Zune; Mediaroom; numerous
consumer software and hardware products; Windows Mobile software platform; Windows Embedded device
operating system; and Windows Automotive.
Because of our integrated business structure, operating costs included in one segment may benefit other
segments, and therefore these segments are not designed to measure operating income or loss directly related to
the products included in each segment. Inter-segment cost commissions are estimated by management and used
to compensate or charge each segment for such shared costs and to incent shared efforts. Management will
continually evaluate the alignment of product development organizations, sales organizations, and inter-segment
commissions for segment reporting purposes, which may result in changes to segment allocations in future
periods.
Assets are not allocated to segments for internal reporting presentations. A portion of amortization and
depreciation is included with various other costs in an overhead allocation to each segment and it is impracticable
for us to separately identify the amount of amortization and depreciation by segment that is included in the
measure of segment profit or loss.
Reconciling amounts include adjustments to conform with U.S. GAAP and corporate-level activity not
specifically attributed to a segment. Significant internal accounting policies that differ from U.S. GAAP relate to
revenue recognition, income statement classification, period-end cut-off timing, and accelerated amortization for
depreciation, stock awards, and performance-based stock awards. In addition, certain revenue and expenses are
excluded from segments or included in corporate-level activity including certain legal settlements and accruals for
legal contingencies.