Microsoft 2013 Annual Report Download - page 2

TO OUR SHAREHOLDERS, CUSTOMERS, PARTNERS AND EMPLOYEES:
This is a unique letter for me – the last shareholder letter I will write as the CEO of the company I love. We have always
believed that technology will unleash human potential and that is why I have come to work every day with a heart full of
passion for more than 30 years.
Fiscal Year 2013 was a pivotal year for Microsoft in every sense of the word.
Last year in my letter to you I declared a fundamental shift in our business to a devices and services company. This
transformation impacts how we run the company, how we develop new experiences, and how we take products to market
for both consumers and businesses.
This past year we took the first big bold steps forward in our transformation and we did it while growing revenue to $77.8
billion (up 6 percent). In addition, we returned $12.3 billion (up 15 percent) to shareholders through dividends and stock
repurchases. While we were able to grow revenue to a record level, our earnings results reflect investments as well as
some of the challenges of undertaking a transformation of this magnitude.
With this as backdrop, I’d like to summarize where we are now and where we’re headed, because it helps explain why I’m
so enthusiastic about the opportunity ahead.
Our strategy: High-value activities enabled by a family of devices and services
We are still in the early days of our transformation, yet we made strong progress in the past year launching devices and
services that people love and businesses need. We brought Windows 8 to the world; we brought consistent user
experiences to PCs, tablets, phones and Xbox; and we made important advancements to Windows Server, Windows
Azure, Microsoft Dynamics and Office 365. We are proud of what we accomplished this year and continue to be
passionate about delivering better devices and services more quickly.
To increase innovation, capability, efficiency and speed we further sharpened our strategy, and in July 2013 we
announced we are rallying behind a single strategy as One Microsoft. We declared that Microsoft’s focus going forward
will be to create 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.
Over time, our focus on high-value activities will generate amazing innovation and new areas of growth. What is a high-
value activity? Think of the experiences people have every day that are most important to them – from communicating
with a family member and researching a term paper to having serious fun and expressing ideas. In a business setting,
high-value activities include experiences such as conducting meetings with colleagues in multiple locations, gaining
insight from massive amounts of data and information, and interacting with customers.
Microsoft will enable these types of high-value activities with a family of devices – from both Microsoft and our partners –
as well as with our services.
As we go to market, we will primarily monetize our high-value activities by leading with devices and enterprise services. In
this model, our consumer services such as Bing and Skype will differentiate our devices and serve as an on-ramp to our
enterprise services while generating some revenue from subscriptions and advertising. Enterprise services continue to be
an area of great strength, growth and opportunity as businesses of all sizes look to Microsoft to help them move to the
cloud, manage a growing number of devices, tap into big data and embrace new social capabilities.