natural gestures and touch, and Microsoft Robotics Studio, our revolutionary software development kit for the robotics industry. It also is evident in more established products such as the 2007 Microsoft Office system, where the new Office Ribbon interface is transforming the way people use productivity software. 

 

The foundation for innovation at Microsoft is a work force that consists of the top talent from around the world. In a time of intense competition for talent in our industry, 2007 was one of the best recruiting years in company history. Around the globe, we hired great people for technical, sales, marketing, and support roles, and added new research and development facilities so we can continue to attract the world’s best and brightest. Equally important, we are making industry-leading investments in career development and workplace enhancements so our employees have the right tools and incentives to drive the company forward. 

 

Building New Competencies in Consumer Technology and the Services Transformation 

 

One essential difference between Microsoft and any other company in this industry is our willingness to enter new markets and embrace disruptive business trends. Seventeen years ago, we began to diversify our company by expanding beyond the desktop and entering the enterprise server software market. Today, server software is a $11.18 billion business for Microsoft. 

 

This kind of long-term commitment and vision has enabled Microsoft to create an impressive portfolio of desktop and enterprise products that have seen strong growth during the past five years. Since fiscal 2002, for example, Microsoft SQL Server™ revenue has grown by an annual average of 28 percent, Microsoft Dynamics—which 



became a $1 billion business in 2007—has grown 27 percent, and Microsoft Office SharePoint® Server has grown by 67 percent. 

 

Now we are focused on diversifying once again as we pursue opportunities in consumer technology. To build on the strength we have in the consumer marketplace with Windows Vista, the 2007 Microsoft Office system, Xbox 360™, Microsoft Windows Live™, Windows Mobile, and Zune, we are focused on delivering products that are compelling and cutting edge in terms of design as well as features and functionality. As part of our emphasis on success in consumer technologies, we are also working to define the next era of consumer electronics. In the past, consumer electronics was a hardware-centric business; today, the real innovation in consumer electronics devices lies in the software that powers them. This is creating new opportunities for us to deliver end-to-end experiences that no other company can match. 

 

Underlying our opportunities in consumer technologies, and in all of our businesses, is a companywide commitment to fully embrace software plus services. Software plus services enables us to combine the advantages of Internet-based services—software that resides on the Internet, is downloaded quickly for each use, and is accessed through a Web browser—with the power of desktop and server software. Software plus services represents the single biggest opportunity across every one of our businesses. Our