Microsoft 2008 Annual Report Download - page 10

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Products and Services. 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 other products and services.
Competition. Our server operating system products face intense competition from a wide variety of server
operating systems and server applications, offered by companies with a variety of market approaches. Vertically
integrated computer manufacturers such as Hewlett-Packard, IBM, and Sun Microsystems offer their own
versions of the Unix operating system preinstalled on server hardware. Nearly all computer manufacturers offer
server hardware for the Linux operating system and many contribute to Linux operating system development. The
competitive position of Linux has also benefited from the large number of compatible applications now produced
by many leading commercial software developers and non-commercial software developers. A number of
companies supply versions of Linux, including Novell and Red Hat. Server virtualization platform providers, such
as VMware, are another form of competition for the Windows server operating system.
We have entered into business and technical collaboration agreements with Novell and other Linux providers
to build, market, and support a series of solutions to enhance the interoperability of our products with their
virtualization, management, and network security solutions, and to provide each other’s customers with patent
coverage for their respective products.
We compete to provide enterprise-wide computing solutions with several companies that offer solutions and
middleware technology platforms. IBM and Sun Microsystems lead a group of companies focused on the Java 2
Platform Enterprise Edition (J2EE). Commercial software developers that provide competing server applications
for PC-based distributed client/server environments include CA, Inc., IBM, and Oracle. Our Web application
platform software competes with open source software such as Linux, Apache, MySQL, and PHP, and we
compete against Java middleware such as JBoss, Geronimo, and Spring Framework.
Numerous commercial software vendors offer competing commercial software applications for connectivity
(both Internet and intranet), security, hosting, and e-business servers. System Center competes with Hewlett-
Packard, BMC, CA, Inc., and IBM in the management of information technology infrastructures, while our
Forefront line of business security products compete with McAfee, Symantec, and Trend Micro in protecting both
client and server applications. Our products for software developers compete against offerings from Adobe, BEA
Systems, Borland, IBM, Oracle, Sun Microsystems, and other companies. These offerings include open source
projects like Eclipse (sponsored by IBM and Oracle). We believe that our server products provide customers with
advantages in innovation, performance, total costs of ownership, and productivity by delivering superior
applications, development tools, and compatibility with a broad base of hardware and software applications,
security, and manageability.
Online Services Business. The Online Services Business (“OSB”) consists of an on-line advertising platform
with offerings for both publishers and advertisers, personal communications services such as email and instant
messaging, online information offerings such as Live Search, and the MSN portals and channels around the
world. We earn revenue primarily from online advertising, including search, display, and email and messaging
services. Revenue is also generated through subscriptions and transactions generated from online paid services,
from advertiser and publisher tools, digital marketing and advertising agency services, and from MSN narrowband
Internet access subscribers. We continue to launch new online offerings and expect to do so in the future. During
fiscal year 2008, we launched new releases of Windows Live Search, the Windows Live suite of applications and
services, and updated our MSN Video Service. In addition, we launched a new release of adCenter, our
proprietary advertising platform, and also expanded our advertising platform portfolio through acquisitions.
We acquired a number of companies during the fiscal year, the most significant of which was aQuantive, Inc., a
digital marketing business that we expect will play a key role in the future development of our Online Services
Business. We believe the acquisition will help us build and support next-generation advertiser and publisher
solutions for cross media planning, video-on-demand, and Internet protocol television.
Products. Live Search; MSN; MapPoint; MSN Internet Access; MSN Premium Web Services (consisting of MSN
Internet Software Subscription, MSN Hotmail Plus, and MSN Software Services); Windows Live; MSN Mobile
Services; AvenueA Razorfish media agency services; Atlas online tools for advertisers; and the Drive PM ad
network for publishers.
Competition. OSB 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