Microsoft 2012 Annual Report Download - page 9

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• Bing, our Internet search engine that finds and organizes the answers people need so they can make faster,
more informed decisions;
• Skype, which allows users to connect with friends, family, clients, and colleagues through a variety of devices;
and
• the Azure family of platform and database services that helps developers connect applications and services in
the cloud or on premise. These services include Windows Azure, a scalable operating system with computing,
storage, hosting, and management capabilities, and Microsoft SQL Azure, a relational database.
We also conduct research and develop advanced technologies for future software and hardware products and services.
We believe that we will continue to grow and meet our customers’ needs by delivering compelling, new, high-value
solutions through our integrated software, hardware, and services platforms, creating new opportunities for partners,
improving customer satisfaction, and improving our service excellence, business efficacy, and internal processes.
OPERATING SEGMENTS
We operate our business in five segments: Windows & Windows Live Division, Server and Tools, Online Services
Division, Microsoft Business Division, and Entertainment and Devices Division. Our segments provide management with a
comprehensive financial view of our key businesses. The segments enable the alignment of strategies and objectives
across the development, sales, marketing, and services organizations, and they provide a framework for timely and
rational allocation of development, sales, marketing, and services resources within businesses. Additional information on
our operating segments and geographic and product information is contained in Note 21 – Segment Information and
Geographic Data of the Notes to Financial Statements.
Windows & Windows Live Division
Windows & Windows Live Division (“Windows Division”) develops and markets PC operating systems, related software
and online services, and PC hardware products. This collection of software, hardware, and services is designed to
empower individuals, companies, and organizations and simplify everyday tasks through seamless operations across the
user’s hardware and software and efficient Web browsing. User demand for mobility is increasing; as a result, we are
working to increase the number of scenarios and devices that Windows enables.
Windows Division revenue growth is largely correlated to the growth of the PC market worldwide, as approximately 75%
of total Windows Division revenue comes from Windows operating system software purchased by original equipment
manufacturers (“OEMs”), which they pre-install on equipment they sell. In addition to PC market volume changes,
Windows revenue is impacted by:
• PC market changes driven by shifts between developed markets and emerging markets, consumer PCs and
business PCs, and among varying forms of computing devices;
• the attachment of Windows to PCs shipped and changes in inventory levels within the OEM channel; and
• pricing changes and promotions, pricing variation that occurs when the mix of PCs manufactured shifts from
local and regional system builders to large, multinational OEMs, and different pricing of Windows versions
licensed.
Principal Products and Services: Windows 7 operating system; Windows Live suite of applications and web
services; and PC hardware products.
The next version of our operating system, Windows 8, will be generally available on October 26, 2012. At that time, we will
begin selling the Surface, a series of Microsoft-designed and manufactured hardware devices.