with the power and reliability of Windows 2000, offer versatility and affordability unrivaled by any of our competitors.  They also represent significant new opportunities to enhance Microsoft’s revenue stream.

Microsoft Office revenue was strong as major enterprise accounts continued to adopt the world’s most popular productivity suite.  The growing deployment of Windows 2000 on the desktop is expected to further stimulate sales of Office 2000.  New technologies that integrate Web services directly into the Office user experience, as well as tools that enable users to more efficiently store, access and analyze crucial business information, are being developed for future versions of Microsoft Office.  Office.NET will offer a powerful productivity and communications service designed to meet the needs of 21st century knowledge workers.  Use of Microsoft’s Visio® and Microsoft Project applications is also continuing to grow and empower knowledge workers in important new ways.

Fiscal year 2000 was a defining year for MSN.  In June, the MSN network of Internet services became the #1 worldwide Internet destination for consumers.  In the United States, MSN grew significantly faster than Yahoo! or AOL.  With MSN services available in 33 international markets and 17 languages, it is the #1 site among consumers in many countries around the world.  Our MSN Internet Access business grew by more than 50 percent.  Key to this remarkable growth is MSN best-of-breed services, including MSN Hotmail®, the world’s largest e-mail system with more than 67 million active accounts; MSN Messenger Service, our instant messaging service with more than 18 million users; MSN Search, the second most popular search service on the Web; and MSN eShop, which experienced a significant increase in holiday traffic last year.



Investments in Tomorrow

One of the keys to Microsoft’s success over our first 25 years is the long-term view we have taken toward the development of technologies such as Windows, Office, MSN and other products.  In the coming year, we will continue to focus on promising new technological advances in a number of key fields.



Television

Digital and enhanced television products and services represent a significant growth opportunity for Microsoft and one that will give consumers more choice and control over when and what they watch, richer participation with TV programming, and convenient access to the Internet and family and friends.  Microsoft is investing in three areas:



Working with television service operators – including AT&T in the United States, UPC in Europe, Rogers in Canada, and Towngas/iCare in Hong Kong – to deploy enhanced TV to more than 15 million subscribers via the Microsoft platform;

Joining with DIRECTV, Thomson, and Sony to produce UltimateTV, a one-box, one-service enhanced TV solution that will include two digital tuners to enable background recording, and a 40-gigabyte hard drive capable of recording 35 hours of TV programming.

Continuing to grow the WebTV® service, which now has more than 1 million subscribers who can participate in new ways with their favorite TV shows, vote in live polls, receive up-to-the-minute news