experiences and services;

•	Ignite customer enthusiasm and tell the Microsoft story; and

•	Build our talent pool and increase productivity.



Integrated innovation

We believe that customers will find enormous value in a truly integrated, affordable software platform that takes the complexity out of computing. We are positioning Microsoft to deliver on the promise of this vision. In FY04, the company plans to invest $6.8 billion in R&D innovation.





To continue to strengthen our value proposition, we are focused on the following objectives:



•	Continue to advance the development of an end-to-end technology platform that seamlessly integrates hardware and software from the enterprise to the desktop to wireless mobile devices;

•	Address security, manageability, and reliability;

•	Provide high-value and easy-to-use technologies that support customer scenarios “right out of the box”—with little or no customization;

•	Continue to support and grow a worldwide ecosystem of complementary hardware, software, and services partners;

•	Achieve strong integration between our products and services, and applications on other systems, through standards 

of interoperability and XML Web services; and

•	Ensure that we protect and derive value from the intellectual property we create.



A great example of the kind of value we see in integrated innovation is Windows XP Tablet PC Edition. Released last fall, it combines all the power of Windows XP with true mobility and advanced ink and speech tools for a more dynamic and flexible computing experience. Today, there are 40 computer makers that offer versions of the Tablet PC, and independent software vendors have created exciting applications for it.



Another great example is Windows Server 2003, the flagship of our integrated platform for business, which helps organizations be more agile, productive, and secure. It incorporates important new security and reliability features, and advances in management, applications platform and information worker support, not to mention a #1 ranking in scalability.



Exchange Server 2003, released June 30, offers new levels of integration in server and client capabilities, enabling organizations to easily create and manage business communications both in the office and on the road. Microsoft Office 2003, to be released this fall along with new applications in the Office System, will fundamentally change how people communicate, collaborate, and manage their information.



As we look to the future, Longhorn, the next generation of Windows, is our big investment in driving a new wave in computing, including a new applications platform, new end-user functionality and services, and major advances in deployment, upgrading, management, reliability, security, and performance.



We are excited about opportunities to innovate for customers with a consistent approach in other areas—in new products, services, and solutions, and in innovations to Windows and Office. An example is our new Microsoft Business Solutions CRM, which provides mid-sized businesses with powerful tools to build profitable customer relationships, improve sales, and deliver efficient service.



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