of products and grow successful businesses. Accountability to shareholders by continuing to invest in growth opportunities for the future, while staying focused on managing our business today. 

The Digital Decade 

Over the past 20 years the personal computer has transformed the way people work, communicate, learn and play. It has stimulated productivity and collaboration in the workplace, connected people around the world, and become a powerful and affordable tool for learning and entertainment. 

Yet even greater technological advances are just ahead. XML Web Services will open up new possibilities in e-commerce, business planning, and customer service. Document and workflow management will become simpler and more comprehensive. Technologies such as the advanced speech and handwriting- recognition capabilities of the next-generation Tablet PC will transform the workplace for knowledge workers. Inexpensive, high-capacity disk drives, powerful audio and video capabilities and easy-to-use digital cameras will make the PC an entertainment and information hub for the home. 

More than 500 million PCs are already in use around the world, and another 130 million or more will be purchased in calendar 2001 – more than the number of TVs that will likely be purchased this year. Increasingly, the PC is moving to the center of an ever-expanding network of smart, connected devices – from mobile phones to televisions and handheld devices, even household appliances. There has never been a more exciting time in the history of our industry. 

The coming digital decade will be a time of enormous opportunity: for consumers, for the technology industry, and for Microsoft as we realize the vision of empowering people through great software – any time, any place and on any device. 

Management’s Discussion and Analysis of Results of Operations and Financial Condition 

RESULTS OF OPERATIONS FOR 1999, 2000, AND 2001 

Microsoft develops, manufactures, licenses, and supports a wide range of software products for a multitude of computing devices. Microsoft software includes scalable operating systems for servers, personal computers (PCs), and intelligent devices; server applications for client/server environments; knowledge worker productivity applications; and software development tools. The Company’s online efforts include the MSN network of Internet products and services and alliances with companies involved with broadband access and various forms of digital interactivity. Microsoft also licenses consumer software programs; sells hardware devices; provides consulting services; trains and certifies system integrators and developers; and researches and develops advanced technologies for future software products. 

Management’s Discussion and Analysis contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors discussed below under “Issues and Uncertainties.” 

Revenue 

The Company’s revenue growth rate was 29% in fiscal 1999, 16% in fiscal 2000, and 10% in fiscal 2001. Revenue growth in fiscal 2001 was driven