Microsoft 2010 Annual Report Download - page 2

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1
TO OUR SHAREHOLDERS, CUSTOMERS, PARTNERS, AND EMPLOYEES
A year ago in my 2009 annual letter to shareholders, I reflected on the impact of the global recession and the
difficulties that all businesses faced in responding to one of the most challenging economic environments in the past
80 years.
Now, just 12 months later, I’m gratified to report that fiscal 2010 was a year of remarkable accomplishments. We
reported record revenue and earnings per share, showed outstanding momentum across all our businesses,
maintained a disciplined approach to controlling costs, and proved our deep commitment to smart investments in
technology innovation.
As I look back on fiscal 2010, there are three critical areas that lay the foundation for long-term growth and sustained
future success:
1. Our commitment to cloud computing
2. A product portfolio that is stronger than ever
3. Our record-setting financial performance
Leading the Cloud Transformation
Throughout the history of the computing industry, we have seen long stretches of steady incremental improvement,
punctuated by waves of intense transformation and change. Key breakthroughs – the microprocessor in the 1970s,
the graphical user interface in the 1980s, and the Internet in the 1990s – revolutionized the role that information
technology plays in how we manage information, run our businesses and share experiences, bringing dramatic
positive change to the lives of hundreds of millions of people.
Today, with the emergence of cloud computing, we’re in the midst of the next great wave of transformation and
change.
The cloud is revolutionizing computing by linking the computing devices people have at hand to the processing and
storage capacity of massive datacenters, transforming computing from a constrained resource into a nearly limitless
platform for connecting people to the information they need, no matter where they are or what they are doing. This
has profound implications for the way people use technology across their lives to work, learn, communicate, and
have fun.
With our unique position in the industry, it’s not enough just to ride this great wave – we intend to grow it and shape
it. This is why we’ve made a company-wide commitment to Microsoft’s solutions, bringing the benefits of the cloud to
the billion people who use computing today and the billions more who will gain access to digital technology for the
first time in the years ahead. In fiscal 2010, Microsoft invested $8.7 billion in research and development, with most of
that devoted to cloud technologies. Today, roughly 70 percent of Microsoft’s 40,000 engineers work on cloud-related
products and services, and in fiscal 2011 that number will grow to nearly 90 percent.
With the first version of Hotmail®, Microsoft started investing in cloud computing more than 15 years ago. Today, our
consumer cloud technologies and services support hundreds of millions of customers around the globe. More than
300 million people use Windows Live® Hotmail and Windows Live Messenger to send nearly 10 billion messages
every day. This year, our Xbox LIVE® subscription base surpassed 25 million subscribers, a growth of over 20
percent from last year.
On the business side, not only are we offering online versions of our products, such as Microsoft Dynamics® CRM
Online, Microsoft® Office 2010, SharePoint® Online, Exchange Online and Office Communications Online, but we are
delivering entirely new cloud computing platform innovations such as Windows Azure™, SQL Azure™ and Windows
Intune™. The Windows Azure Platform Appliance is a groundbreaking product that will enable service providers,
large enterprises and governments to achieve breakthrough datacenter efficiency through innovative power, cooling
and automation technologies.
Currently, over 10,000 corporate customers have adopted Windows Azure and thousands of business and
government entities representing millions of people have purchased Microsoft’s online productivity services to
improve productivity and reduce costs. Customers include 13 of the top 20 global telecom firms, 15 of the top 20
global banks and 16 of the top 20 global pharmaceutical companies. Together, these technologies, products, and
services enable us to do something no other company can do – deliver cloud solutions that span the complete range
of business needs our customers have.