Microsoft 2011 Annual Report Download - page 10

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10
Tools also builds standalone and software development lifecycle tools for software architects, developers, testers,
and project managers. Server offerings can be run on-site, in a partner-hosted environment, or in a Microsoft-
hosted environment.
Our cloud-based services comprise a scalable operating system with computing, storage, and management
capabilities and a relational database, which allow customers to run enterprise workloads and web applications in
the cloud. These services also include a platform that helps developers connect applications and services in the
cloud or on premise. Our goal is to enable customers to devote more resources to development and use of
applications that benefit their business, rather than to the management of on-premise hardware and software.
Server and Tools offers a broad range of enterprise consulting and product support services (“Enterprise
Services”) that assist customers in developing, deploying, and managing Microsoft server and desktop solutions.
Server and Tools also provides training and certification to developers and information technology professionals
for our Server and Tools, Microsoft Business Division, and Windows & Windows Live Division products and
services.
Approximately 50% of Server and Tools revenue comes primarily from multi-year volume licensing agreements,
approximately 30% is purchased through transactional volume licensing programs, retail packaged product and
licenses sold to OEMs, and the remainder comes from Enterprise Services.
Principal Products and Services: Windows Server operating systems; Windows Azure; Microsoft SQL
Server; SQL Azure; Windows Intune; Windows Embedded; Visual Studio; Silverlight; System Center
products; Microsoft Consulting Services; and Premier product support services.
Competition
Our server operating system products face competition from a wide variety of server operating systems and
applications offered by companies with a range of market approaches. Vertically integrated computer
manufacturers such as Hewlett-Packard, IBM, and Oracle offer their own versions of the Unix operating system
preinstalled on server hardware. Nearly all computer manufacturers offer server hardware for the Linux operating
system and many contribute to Linux operating system development. The competitive position of Linux has also
benefited from the large number of compatible applications now produced by many commercial and non-
commercial software developers. A number of companies, such as Red Hat, supply versions of Linux.
We compete to provide enterprise-wide computing solutions with several companies that offer solutions and
middleware technology platforms. IBM and Oracle lead a group of companies focused on the Java Platform
Enterprise Edition. Commercial software developers that provide competing server applications for PC-based
distributed client/server environments include CA Technologies, IBM, and Oracle. Our Web application platform
software competes with open source software such as Apache, Linux, MySQL, and PHP, and we compete
against Java middleware such as Geronimo, JBoss, and Spring Framework.
Numerous commercial software vendors offer competing software applications for connectivity (both Internet and
intranet), security, hosting, database, and e-business servers. System Center competes with server management
and server virtualization platform providers, such as BMC, CA Technologies, Hewlett-Packard, IBM, and VMWare
in the management of information technology infrastructures. SQL Server competes with products from IBM,
Oracle, Sybase, and other companies in providing database, business intelligence and data warehousing
solutions. Our products for software developers compete against offerings from Adobe, IBM, Oracle, other
companies, and open-source projects. Competing open source projects include Eclipse (sponsored by CA
Technologies, IBM, Oracle, and SAP), PHP, and Ruby on Rails, among others.
The embedded operating system business is highly fragmented with many competitive offerings. Key competitors
include IBM, Intel, and versions of embeddable Linux from commercial Linux vendors such as Metrowerks and
MontaVista Software.
Our cloud-based services offerings also have many competitors. Windows Azure faces competition from Amazon,
Google, Salesforce.com, and VMWare. SQL Azure faces competition from IBM, Oracle, and other open source
offerings. For Enterprise Services, we compete with a large group of diverse companies, including multinational
consulting firms and small niche businesses focused on specific technologies.
We believe our server products, cloud-based services and Enterprise Services provide customers with
advantages in innovation, performance, total costs of ownership, and productivity by delivering superior
applications, development tools, and compatibility with a broad base of hardware and software applications,
security, and manageability.