Jim Allchin (who will retire following the launch of Windows Vista); the Microsoft Business Division led by Jeff Raikes as president; and Microsoft Entertainment & Devices Division, where Robbie Bach serves as president. Kevin Turner joined the company as chief operating officer. All of these leaders possess great levels of business experience and technology expertise, combined with a passion for excellence and innovation. 

 

Also during 2006, Bill Gates announced that in 2008 he will reduce his workload at Microsoft to part time. At that time, he will remain as chairman of the company and continue to play a vital role as an advisor on key development projects. To prepare for this transition, two of our top technical leaders—and two of the industry’s leading technical visionaries—will take on new responsibilities. Ray Ozzie assumed Bill’s title of chief software architect and is working with Bill on technical architecture and product oversight. Craig Mundie, named chief research and strategy officer, is working with Bill on the company’s research and product incubation efforts. 

 

Thanks to these changes, our leadership team is stronger than it has ever been, and our organizational structure is aligned for great execution in the coming years. 

 

Enabling People-Ready Businesses 

 

At our core, we are a software company. But our defining mission is to help people and businesses realize their full potential. We believe that the right software helps companies become people-ready businesses where employees are empowered and inspired to use technology to solve problems, collaborate with colleagues, serve customers, and seize new opportunities. From the infrastructure innovations in SQL Server 2005 to the enhanced business process integration of new Microsoft Dynamics solutions, many of our product releases in 2006 were designed to provide people with tools and resources they need to drive business success. 

 

Product releases in the coming year will strengthen our ability to deliver on our people-ready vision. Windows Vista, the 2007 Office system, and Exchange 2007 will provide powerful new capabilities that enable people to create new levels of business value, fueling further growth for Microsoft. 

 

 A Focus on Long-Term Success 

 

Throughout our 30-year history, Microsoft has achieved success by taking a long-term approach to technology. This has enabled us to deliver ground-breaking products that have truly changed the world. 

 

The success of this approach was seen across our businesses in 2006 as we brought many new products to market and added new customers in many segments. In the Platforms & Services Division, the launch of new versions of SQL Server and Visual Studio propelled the Server and Tools business to a 15 percent increase in revenue. The Client group saw revenue grow by 9 percent. 

 

In the Business Division, the launch of Microsoft Dynamics GP 9.0, Dynamics CRM 3.0, Dynamics SL 6.5, and Dynamics AX 4.0 helped drive the Business Solutions group past $900 million in revenue. Meanwhile, our Information Worker business grew 5 percent to $11.76 billion. 

 

The Entertainment and Devices Division saw strong