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22
Reportable Segments
The segment amounts included in MD&A are presented on a basis consistent with our internal management
reporting. Segment information appearing in Note 22 – Segment Information and Geographic Data of the Notes to
Financial Statements is also presented on this basis. All differences between our internal management reporting
basis and accounting principles generally accepted in the United States (“U.S. GAAP”), along with certain corporate-
level and other activity, are included in Corporate and Other. Operating expenses are not allocated to our segments.
We have recast certain prior period amounts to conform to the current period presentation, with no impact on
consolidated net income or cash flows.
On April 25, 2014, we acquired substantially all of Nokia Corporation’s (“Nokia”) Devices and Services business
(“NDS”). NDS has been included in our consolidated results of operations since the acquisition date. We report the
financial performance of the acquired business in our Phone Hardware segment. Prior to the acquisition of NDS,
financial results associated with our joint strategic initiatives with Nokia were reflected in our Devices and Consumer
(“D&C”) Licensing segment. The contractual relationship with Nokia related to those initiatives ended in conjunction
with the acquisition.
Our reportable segments are described below.
Devices and Consumer
Our D&C segments develop, manufacture, market, and support products and services designed to entertain and
connect people, increase personal productivity, help people simplify tasks and make more informed decisions online,
and help advertisers connect with audiences. Our D&C segments are:
• D&C Licensing, comprising: Windows, including all OEM licensing (“Windows OEM”) and other non-
volume licensing and academic volume licensing of the Windows operating system and related software;
non-volume licensing of Microsoft Office, comprising the core Office product set, for consumers (“Office
Consumer”); Windows Phone operating system, including related patent licensing; and certain other
patent licensing revenue.
• Computing and Gaming Hardware, comprising: 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 (“Surface”); and Microsoft PC accessories.
• Phone Hardware, comprising: Lumia phones and other non-Lumia phones, beginning with our acquisition
of NDS.
• D&C Other, comprising: Resale, consisting of transactions in our Windows Store and Xbox marketplace;
search advertising; display advertising; Office 365 Consumer, comprising Office 365 Home and Office 365
Personal; Studios, comprising first-party video games; Mojang; non-Microsoft products sold in our retail
stores; and certain other consumer products and services not included in the categories above.
Commercial
Our Commercial segments develop, market, and support software and services designed to increase individual,
team, and organizational productivity and efficiency, including simplifying everyday tasks through seamless
operations across the user’s hardware and software. Our Commercial segments are:
• Commercial Licensing, comprising: server products, including Windows Server, Microsoft SQL Server,
Visual Studio, System Center, and related Client Access Licenses (“CALs”); Windows Embedded; volume
licensing of the Windows operating system, excluding academic (“Windows Commercial”); Microsoft
Office for business, including Office, Exchange, SharePoint, Skype for Business, and related CALs
(“Office Commercial”); Microsoft Dynamics business solutions, excluding Dynamics CRM Online; and
Skype.
• Commercial Other, comprising: Enterprise Services, including Premier Support Services and Microsoft
Consulting Services; Commercial Cloud, comprising Office 365 Commercial, other Microsoft Office online
offerings, Dynamics CRM Online, and Microsoft Azure; and certain other commercial products and online
services not included in the categories above.