Microsoft 2013 Annual Report Download - page 17

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the results of
operations and financial condition of Microsoft Corporation. MD&A is provided as a supplement to, and should be read in
conjunction with, our financial statements and the accompanying Notes to Financial Statements.
OVERVIEW
Microsoft is a technology leader focused on helping people and businesses throughout the world realize their full potential.
We create technology that transforms the way people work, play, and communicate across a wide range of computing
devices.
We generate revenue by developing, licensing, and supporting a wide range of software products, by offering an array of
services, including cloud-based services to consumers and businesses, by designing and selling devices that integrate
with our cloud-based services, and by delivering relevant online advertising to a global audience. Our most significant
expenses are related to compensating employees, designing, manufacturing, marketing, and selling our products and
services, and income taxes.
Industry Trends
Our industry is dynamic and highly competitive, with frequent changes in both technologies and business models. Each
industry shift is an opportunity to conceive new products, new technologies, or new ideas that can further transform the
industry and our business. At Microsoft, we push the boundaries of what is possible through a broad range of research
and development activities that seek to identify and address the changing demands of customers, industry trends, and
competitive forces.
Key Opportunities and Investments
Based on our assessment of key technology trends and our broad focus on long-term research and development of new
products and services, we see significant opportunities to generate future growth.
We invest research and development resources in new products and services in these areas. The capabilities and
accessibility of PCs, tablets, phones, televisions, and other devices powered by rich software platforms and applications
continue to grow. With this trend, we believe the full potential of software will be seen and felt in how people use these
devices and the associated services at work and in their personal lives.
Devices with end-user services
We work with an ecosystem of partners to deliver a broad spectrum of Windows devices. In some cases, we build our
own devices, as we have chosen to do with Xbox and Surface. In all our work with partners and on our own devices, we
focus on delivering seamless services and experiences across devices. As consumer services and hardware advance, we
expect they will continue to better complement one another, connecting the devices people use daily to unique
communications, productivity, and entertainment services from Microsoft and our partners and developers around the
world.
Windows 8 reflects this shift. Launched in October 2012, Windows 8 was designed to unite the light, thin, and convenient
aspects of a tablet with the power of a PC. The Windows 8 operating system includes the Windows Store, which offers a
large and growing number of applications from Microsoft and partners for both business and consumer customers.
Going forward, our strategy will focus on creating a family of devices and services for individuals and businesses that
empower people around the globe at home, at work, and on the go, for the activities they value most. This strategy will
require investment in datacenters and other infrastructure to support our services, and will bring continued