Microsoft 2014 Annual Report Download - page 9

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8
Competition
The Windows operating system faces competition from various software products and from alternative platforms and
devices, mainly from Apple and Google. We believe Windows competes effectively by giving customers choice, value,
flexibility, security, an easy-to-use interface, compatibility with a broad range of hardware and software applications,
including those that enable productivity, and the largest support network for any operating system.
Competitors to the versions of Office included in D&C Licensing include global application vendors such as Apple and
Google, numerous web-based competitors, and local application developers in Asia and Europe. Apple distributes
versions of its pre-installed application software, such as email, note taking, and calendar products, through its PCs,
tablets, and phones. Google provides a hosted messaging and productivity suite and distributes its productivity services
through the Android and Chrome operating systems. Web-based offerings competing with individual applications can also
position themselves as alternatives to our products. We believe our products compete effectively based on our strategy of
providing powerful, flexible, secure, and easy to use solutions that work across a variety of devices.
Windows Phone operating system faces competition from iOS, Android, and Blackberry operating systems. Windows
Phone competes based on differentiated user interface, personalized applications, compatibility with Windows PCs and
tablets, and other unique capabilities.
Computing and Gaming Hardware
The principal products and services provided by the Computing and Gaming Hardware segment are: Xbox gaming and
entertainment consoles and accessories, second-party and third-party video game royalties, and Xbox Live subscriptions
(“Xbox Platform”); Surface devices and accessories; and Microsoft PC accessories.
The Xbox Platform is designed to provide a unique variety of entertainment choices through the use of our devices,
peripherals, content, and online services. We released Xbox 360 and Xbox One in November 2005 and November 2013,
respectively.
Surface devices are designed to help organizations, students, and consumers to be more productive, offering accessories
and compatibility with peripherals. Surface devices were first released in October 2012. Our latest Surface device, the
Surface Pro 3, was released in June 2014.
Competition
Our Xbox Platform competes with console platforms from Sony and Nintendo, both of which have a large, established
base of customers. The lifecycle for gaming and entertainment consoles averages five to ten years. Nintendo released
their latest generation console in November 2012. Sony released their latest generation console in November 2013.
We believe the success of gaming and entertainment consoles is determined by the availability of games for the console,
providing exclusive game content that gamers seek, the computational power and reliability of the console, and the ability
to create new experiences via online services, downloadable content, and peripherals. In addition to Sony and Nintendo,
we compete with other providers of entertainment services through online marketplaces. We believe the Xbox Platform is
effectively positioned against competitive products and services based on significant innovation in hardware architecture,
user interface, developer tools, online gaming and entertainment services, and continued strong exclusive content from
our own game franchises as well as other digital content offerings.
Surface devices face competition from computer, tablet, and other hardware manufacturers, many of which are also
current or potential partners and customers.
Phone Hardware
The principal products and services provided by the new Phone Hardware segment are Lumia Smartphones and other
non-Lumia phones, which we began manufacturing and selling with the acquisition of NDS on April 25, 2014.
Competition
Our phones face competition primarily from Samsung and Apple, as well as many other mobile device manufacturers. We
believe our phones will compete by being tailored for virtually every demographic and geography worldwide, offering
unique industrial design and imaging technologies at high and low ranges of price points, and by incorporating Microsoft’s
digital work and digital life experiences.