of information workers, improve communication and collaboration in work groups, aid business intelligence, and streamline processes for small and mid-sized businesses. To sustain the growth of our Server and Tools business amid competition from other vendors of both proprietary and open source software, our goal is to deliver products that provide the best platform for network computing – software that is easiest to deploy and manage, and that is most secure – with the lowest total cost of ownership. 

We continue to invest in research and development in existing and new lines of business, including business solutions, mobile computing, communication, entertainment, and other areas that we believe may contribute to our long-term growth. We also invest in research and development of advanced technologies for future software products. We believe that delivering innovative and high-value solutions through our integrated platform is the key to meeting customer needs and to our future growth. 

We believe that over the last few years we have laid a foundation for long-term growth by delivering innovative products, creating opportunities for partners, improving customer satisfaction with key audiences, and improving our internal business processes. Our focus in fiscal year 2008 is building on this foundation and executing well in key areas, including continuing to innovate on our integrated software platform, responding effectively to customer and partner needs, and continuing to focus internally on product excellence, business efficacy, and accountability across the company. 

Key market opportunities include: 

 

•	Consumer technology.    We are focused on delivering consumer software products that we believe are compelling in terms of design and features. We are also working to define the next era of consumer electronics through innovating software that powers today’s consumer devices. 

 

•	Software plus services.    The ability to combine the power of desktop and server software with the reach of the Internet represents an opportunity across every one of our businesses. We believe our software plus services approach will enable us to deliver new experiences to end users and new value to businesses. 

 

•	Expanding our presence on the desktop and server.    Through our ability to deliver additional value in security, messaging, systems management, and collaboration, and new technology for high performance computing, unified communications, healthcare, and business intelligence, we believe we are well-positioned to build on our strength with businesses of all sizes. The expansion of our Unlimited Potential program provides the foundation for our efforts to reach the five billion people around the globe who do not have access to PCs and digital technology today. 

 

Summary of Results for Fiscal Years 2007, 2006, and 2005 

 

 

Fiscal year 2007 compared to fiscal year 2006 

 

Revenue growth was driven primarily by licensing of the 2007 Microsoft Office system and Windows Vista, increased revenue associated with SQL Server, Windows Server, and Visual Studio, and increased Xbox 360 console sales. Foreign currency exchange rates did not