Microsoft 2011 Annual Report Download - page 12

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12
Europe. Apple may distribute certain versions of its application software products with various models of its PCs
and through its mobile devices. Corel and IBM have measurable installed bases with their office productivity
products. Google provides a hosted messaging and productivity suite that competes with Microsoft Office,
Microsoft Exchange, and Microsoft SharePoint, including its FAST enterprise search technology. The
OpenOffice.org project provides a freely downloadable cross-platform application that also has been adapted by
various commercial software vendors to sell under their brands. Web-based offerings competing with individual
applications can also position themselves as alternatives to Microsoft Office system products.
Our Microsoft Dynamics products compete with vendors such as Infor and Sage in the market focused on
providing business solutions for small and mid-sized businesses. The market for large organizations and divisions
of global enterprises is intensely competitive with a small number of primary vendors including Oracle and
SAP. Additionally, Salesforce.com’s on-demand CRM offerings compete directly with Microsoft Dynamics CRM
Online and Microsoft Dynamics CRM’s on-premise offerings.
As we continue to create additional functionality and products, we compete with additional vendors, most notably
in content management and enterprise search, collaboration tools, unified communications, and business
intelligence. These competitors include Cisco, Google, IBM, Oracle, and SAP. We believe our products compete
effectively based on our strategy of providing flexible, easy to use solutions that work well with technologies our
customers already have.
Entertainment and Devices Division
Entertainment and Devices Division (“EDD”) develops and markets products and services designed to entertain
and connect people. The Xbox 360 entertainment platform, including Kinect, is designed to provide a unique
variety of entertainment choices for individuals and families through the use of our devices, peripherals, content,
and online services. Mediaroom is designed to provide live, recorded, and on-demand television programming
regardless of your location or device. Windows Phone is designed to bring users closer to the people,
applications, and content they need, while providing unique capabilities such as Microsoft Office and Xbox LIVE
functionality.
Nokia strategic alliance
On April 21, 2011, Microsoft and Nokia entered into definitive agreements to form a strategic alliance to jointly
create new mobile products and services and to extend established products and services to new markets.
Microsoft will license to Nokia and Nokia will adopt Windows Phone as Nokia’s primary smartphone platform.
Microsoft will receive a running royalty at a competitive rate from Nokia for the Windows Phone platform, with
minimum commitments reflecting the large volumes Nokia expects to ship. We will also provide Nokia with
developer tools to accelerate developer support for Windows and Windows-related platforms. Microsoft and Nokia
will collaborate on joint developer outreach and application sourcing. Microsoft’s Windows Marketplace
infrastructure will support a new Nokia-branded application store. Participants in the Windows Phone ecosystem
will be able to take advantage of Nokia’s billing agreements with operators in markets worldwide.
Nokia will deliver mapping, navigation, and location-based services to the Windows Phone ecosystem and will
deliver a core set of mapping services for a broader set of Microsoft’s map-based offerings. Microsoft’s Bing and
adCenter will power search and advertising on Nokia’s devices and services. Nokia will innovate and customize
on the Windows Phone platform, contributing its expertise on hardware, design, and language support and will
help bring Windows Phone to a broader range of price points, market segments and geographies. Microsoft will
make annual payments to Nokia, in recognition of the unique nature of Nokia’s agreement with Microsoft and the
contributions that Nokia is providing.
The agreements recognize the value of intellectual property portfolios and put in place mechanisms for
exchanging rights to intellectual property. As part of these arrangements, Nokia will receive payments including
consideration to be paid as part of a mutual release.
Principal Products and Services: Xbox 360 gaming and entertainment console, Kinect for Xbox 360,
Xbox 360 video games, Xbox 360 accessories; Xbox LIVE; Mediaroom; and Windows Phone.