Microsoft 2013 Annual Report Download - page 14

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DISTRIBUTION, SALES, AND MARKETING
We market and distribute our products and services primarily through the following channels: OEMs; distributors and
resellers; and online.
OEMs
We distribute software through OEMs that pre-install our software on new PCs, tablets, servers, smartphones, and other
intelligent devices that they sell to end customers. The largest component of the OEM business is the Windows operating
system pre-installed on computing devices. OEMs also sell hardware pre-installed with other Microsoft products, including
server and embedded operating systems and applications such as our Microsoft Office suite. In addition to these
products, we also market our services, such as our Windows SkyDrive service, through OEMs.
There are two broad categories of OEMs. The largest OEMs, many of which operate globally, are referred to as “Direct
OEMs,” as our relationship with them is managed through a direct agreement between Microsoft and the OEM. We have
distribution agreements covering one or more of our products with virtually all of the multinational OEMs, including Acer,
ASUS, Dell, Fujitsu, HTC, Hewlett-Packard, LG, Lenovo, Nokia, Samsung, Sony, Toshiba, and with many regional and
local OEMs. The second broad category of OEMs consists of lower-volume PC manufacturers (also called “system
builders”), which source their Microsoft software for pre-installation and local redistribution primarily through the Microsoft
distributor channel rather than through a direct agreement or relationship with Microsoft.
Distributors and Resellers
Many organizations that license our products and services through enterprise agreements transact directly with us, with
sales support from solution integrators, independent software vendors, web agencies, and developers that advise
organizations on licensing our products and services (“Enterprise Software Advisors”). Organizations also license our
products and services indirectly, primarily through large account resellers (“LARs”), distributors, value-added resellers
(“VARs”), OEMs, system builder channels, and retailers. Although each type of reselling partner reaches organizations of
all sizes, LARs are primarily engaged with large organizations, distributors resell primarily to VARs, and VARs typically
reach small-sized and medium-sized organizations. Enterprise Software Advisors typically are also authorized as LARs
and operate as resellers for our other licensing programs, such as the Select Plus and Open licensing programs
discussed under “Licensing Options” below. Some of our distributors include Ingram Micro and Tech Data, and some of
our largest resellers include CDW, Dell, Insight Enterprises, and Software House International.
Our Microsoft Dynamics software offerings are licensed to enterprises through a global network of channel partners
providing vertical solutions and specialized services. We distribute our retail packaged products primarily through
independent non-exclusive distributors, authorized replicators, resellers, and retail outlets. Individual consumers obtain
these products primarily through retail outlets, such as Wal-Mart, Dixons, and Microsoft Stores. We distribute our
hardware products, including Surface, Xbox, and PC accessories, through third-party retailers and Microsoft Stores. We
have a network of field sales representatives and field support personnel that solicits orders from distributors and
resellers, and provides product training and sales support.
Online
Although client-based software will continue to be an important part of our business, increasingly we are delivering
additional value to customers through cloud-based services. We provide online content and services to consumers
through Bing, MSN portals and channels, Microsoft Office Web Apps, Office 365, Windows Phone Marketplace, Xbox
LIVE, Outlook.com, Skype, and Windows Store. We also provide to business users commercial cloud-based services
such as Exchange Online, Microsoft Dynamics CRM Online, Windows Azure, Windows Intune, and Office 365 consisting
of online versions of Office, Exchange, SharePoint, Lync, and Yammer. Other services delivered