Microsoft's Product Segments

In their annual report, Microsoft boils itself down into "Business Units," or "Product Segments," which represent its main product line: Client, Server & Tools, Information Worker, Microsoft Business Solutions, MSN, Mobile & Embedded Devices, and Home & Entertainment.

Here's how Microsoft describes these segments to its investors:

­ Client ­- The Microsoft Windows operating system integrates a wide range of applications, services and hardware in a familiar way, enabling people and organizations to use technology with ease and confidence.

Server and Tools - The Server and Tools segment develops and markets Windows Server System products, including Windows Server operating systems.

Information Worker - The Information Worker segment is responsible for developing and delivering software solutions that enable organizations to meet core objectives by empowering their people to transform information into impact.

Image courtesy MSN Just a few of the home and business solutions offered by Microsoft


Microsoft Business Solutions - The Microsoft Business Solutions segment is responsible for developing and marketing offerings to manage financial, customer relationship and supply chain management functions for small and midsize businesses, large organizations and divisions of global enterprises.

MSN - MSN is responsible for delivering online services that seek to empower users by bringing them closer to the people and information that matter most to them.

Mobile and Embedded Devices - The Mobile and Embedded Devices segment is responsible for the development and marketing of products that extend the advantages of the Windows platform to many types of devices, including mobile devices that incorporate voice, personal information management, and media capabilities, and a wide variety of other devices designed to improve people's personal and work lives.

Home and Entertainment - The Home and Entertainment segment is responsible for development, production, and marketing for the Xbox video game system, including hardware, third-party games, games published under the Microsoft label, Xbox and Xbox Live operations, marketing, research, and sales and support. The segment also leads the development efforts of our Home Products Division (HPD) product lines. In addition, it carries out all retail sales and marketing for Microsoft Office (for which it receives an inter-segment commission), the Windows operating systems, Xbox, PC games, and HPD products. It is also responsible for the development, sales, and deployment of Microsoft's TV platform products for the interactive television industry.

Source: 2005 Microsoft Annual Report, Business Description, Page 2: Product Segments

Before interpreting what those segments mean, let's take a look at the kind of revenue Microsoft produced in 2005:

Microsoft is a long way from DOS -- and Windows (part of the MS Business Solutions segment) is still their biggest seller. In fact, Windows gives Microsoft the edge in nearly all of the other segments, with one key exception: Xbox. Video games appear to have a mind of their own, even on the corporate level.

Because Windows is on the majority of PCs in one form or another, Microsoft has an advantage when it seeks to market new products. Whether it's part of an update or advertised on the homepage of your Internet Explorer, Microsoft's new product will probably find its way to you before you hear about its competitor.

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