Microsoft 2011 Annual Report Download - page 27

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27
Research and development expenses include payroll, employee benefits, stock-based compensation expense,
and other headcount-related expenses associated with product development. Research and development
expenses also include third-party development and programming costs, localization costs incurred to translate
software for international markets, and the amortization of purchased software code and services content.
Fiscal year 2011 compared with fiscal year 2010
Research and development expenses increased primarily due to a 5% increase in headcount-related expenses
and the capitalization of certain software development costs in the prior year.
Fiscal year 2010 compared with fiscal year 2009
Research and development expenses decreased, primarily reflecting decreased third-party development and
programming costs and the capitalization of certain Microsoft Office system software development costs. These
decreases were offset in part by the capitalization of certain software and development costs related to Windows
7 product development in the prior year.
Sales and Marketing
(In millions, except percentages) 2011 2010 2009
Percentage
Change 2011
Versus 2010
Percentage
Change 2010
Versus 2009
Sales and marketing $ 13,940 $ 13,214 $ 12,879 5% 3%
As a percent of revenue 20%
21% 22% (1)ppt (1)ppt
Sales and marketing expenses include payroll, employee benefits, stock-based compensation expense, and other
headcount-related expenses associated with sales and marketing personnel and the costs of advertising,
promotions, trade shows, seminars, and other programs.
Fiscal year 2011 compared with fiscal year 2010
Sales and marketing expenses increased primarily as a result of increased advertising and marketing of the Xbox
360 platform, Windows Phone, and Windows and Windows Live, a 5% increase in headcount-related expenses,
and increased fees paid to third party enterprise software advisors.
Fiscal year 2010 compared with fiscal year 2009
Sales and marketing expenses increased, primarily reflecting increased advertising and marketing of Windows 7
and Bing and increased sales force expenses related to Windows 7.
General and Administrative
(In millions, except percentages) 2011 2010 2009
Percentage
Change 2011
Versus 2010
Percentage
Change 2010
Versus 2009
General and administrative $ 4,222 $ 4,063 $ 4,030 4% 1%
As a percent of revenue 6%
7% 7% (1)ppt 0ppt
General and administrative expenses include payroll, employee benefits, stock-based compensation expense,
severance expense, and other headcount-related expenses associated with finance, legal, facilities, certain
human resources and other administrative personnel, certain taxes, and legal and other administrative fees.
Fiscal year 2011 compared with fiscal year 2010
General and administrative expenses increased primarily due to a 12% increase in headcount-related expenses
and new Puerto Rican excise taxes, partially offset by prior year transition expenses associated with the inception
of the Yahoo! Commercial Agreement.