peers to help us better understand their needs and help them with their issues. And we are making Windows development more accessible to a wide range of programmers, including students, novices, hobbyists, and other nonprofessionals.



We are creating new opportunities for developers and independent software vendors (ISVs) by expanding the platform for their applications beyond Windows. We will help ISVs develop add-ons and applications for Office and other products, such as those from Microsoft Business Solutions.



We are proactively communicating with ISVs about our own application development plans so that they can choose their best opportunities, and we are extending our co-marketing and selling with ISVs. Helping ISVs find customers and vice versa can be a real advantage for us, our partners, and our customers.



Simplicity, value, understanding

One of our primary objectives in innovating the integrated platform is to provide simpler, more compelling, complete, and targeted customer experiences. We are adding more capabilities to existing products, and segmenting our product offerings to deliver the simplest, most valuable package of our technologies, at the right price, for specific customer sets such as small businesses, students, home users, and information workers at home.



The right mix of our technologies, offered as services in the right set of segmented offers, will dramatically enhance the value delivered to customers.



Many customers and partners have said they would appreciate our innovations more if they knew Microsoft and its people better. We are encouraging our developers to participate more in the communities around their products, and we are communicating more broadly about our work in important areas such as security, privacy, and rights management.



Executives, too, are spending even more time listening to customers— not just to technology managers, but to IT users, developers, and even schoolkids.



We also have increased our advertising budget, communicating in ways that illuminate the amazing work we and our partners do, and explaining our mission to help people realize their potential.



Excellence in people and processes

As a company whose primary assets are intellectual property, we are constantly focused on attracting and retaining the people who create it, the top talent in our industry. We had great success last year as we expanded our recruitment and career-development efforts in core areas such as product development, marketing, finance, sales, and operations.



Because Microsoft’s success depends entirely on the great ideas of our employees, we are committed to continuing to provide a diverse workplace where people feel at home, have an opportunity to develop their skills, and find new and interesting opportunities.



In July, we took steps to enhance employee compensation. We are no longer issuing employee stock options, but instead granting stock awards that vest over several years. This will offer employees more stable equity compensation, and will better align employee and shareholder interests.



While we continue to invest for the future, we also continue to search for ways to reduce