Microsoft 2011 Annual Report Download - page 2

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2
TO OUR SHAREHOLDERS, CUSTOMERS, PARTNERS, AND EMPLOYEES:
We’ve always believed that technology creates opportunities for people and organizations to achieve their
dreams. This belief continues to drive us towards new inventions and new markets so we can impact the lives of
billions of people around the world. The products and services this belief has inspired fueled our success in fiscal
year 2011 and gives us confidence in what’s ahead.
In fiscal year 2011, we delivered record financial performance by growing revenue 12 percent to $69.9 billion.
Thanks to our continued discipline and focus on managing costs and expenses, operating income grew at an
even higher rate – 13 percent, to $27.2 billion. In addition, we returned $16.9 billion to shareholders through stock
buybacks and dividends, a 10 percent increase over the previous year.
The best way to understand our results and the opportunities that lie ahead is to look at three areas:
• product innovation and momentum
• strategic partnerships and acquisitions
• big bets for the future
Product Innovation and Momentum
Microsoft continues to be the company that businesses look to for the software they need to boost productivity
and operate with efficiency, effectiveness, and intelligence. Throughout fiscal 2011, we saw business spending
increase and strong demand for Windows 7, Office 2010, SharePoint, Exchange, Lync, Microsoft Dynamics,
Windows Server, System Center, and SQL Server. Windows 7 and Office 2010 continue to sell at record rates. At
the end of fiscal year 2011, more than 400 million Windows 7 licenses and 100 million Office 2010 licenses had
been purchased by businesses and consumers.
The rate of businesses moving to the cloud continues to accelerate. For many businesses, moving to the cloud is
a journey, not a sudden transformation. They are moving to the cloud on their terms and often use hybrid
solutions that include the cloud and their existing datacenter investments. The Windows Azure Platform allows
businesses to connect existing investments and develop new applications reducing the time from concept to
deployment with little upfront cost. Customers find our approach unique because we ultimately enable them to
choose what’s right for them.
In June, we launched Office 365 – a new service where Office meets the cloud. Office 365 offers collaboration for
businesses of all sizes – from the smallest neighborhood store to the largest global enterprise. It represents a
culmination of the work we’ve been doing in the enterprise cloud space for more than 5 years. Because it is a
subscription based cloud offering, with a variety of different service plans, businesses can choose the right plan
for their needs, and get access to the best collaboration and productivity tools anywhere including Office,
SharePoint, Exchange and Lync – a new technology that unites video and voice calls, instant messaging, and
Web conferencing. Of the small businesses using Office 365, 80% have never purchased Exchange, SharePoint
or Lync before and customers using Office 365 are reporting up to a 50% overall IT cost savings realized through
increased efficiency. With hundreds of millions of businesses around the world striving to prosper and grow, we
believe Office 365 can be an engine of growth for these businesses and us.
Beyond the cloud, we also made significant strides with our consumer offerings against very tough competition.
In November, we launched Kinect for Xbox 360 – called “the fastest-selling consumer electronics device” in
history by Guinness World Records. Kinect creates a new form of entertainment by changing the way people
interact with games, movies, and music simply by speaking and moving. Then in May, we announced how we’ll
continue the evolution of Xbox from a gaming console into an entertainment hub by increasing our content
partnerships 10 fold and bringing live television to Xbox in the United States this holiday season. With millions of
content choices, a new entertainment challenge arises – discovery. So, we also announced that we’ll bring voice
search to Xbox, using Bing and Kinect – simply say a movie, TV show, song or game and Xbox will find it.
Bing made strong strides this year. It’s redefining the way people find information and make decisions – Bing
Internet search share grew over 30% in the United States during fiscal 2011, to 14.4 percent. It has also played a
key role in making other products better like Windows, Windows Phone and soon Xbox.
We also introduced the new Windows Phone. Based on a fundamentally new, modern design, this phone gives
people an easier, quicker and more delightful experience. We are proud of the new Windows Phone and are
thrilled with the feedback from our customers – nine out of ten say they would recommend it to a friend. We
continued to innovate quickly on Windows Phone, and just eight months after the first version we delivered a
major update that will be available this fall.