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ERIC RUDDER Good afternoon. I hope you guys understand our investment now in MSN Virtual Earth a little bit better, and how we're using it to track Steve. Welcome back from lunch, and for those of you on the Web, I hope you had a chance for a break.

I'm here to talk today about server and tools business, the growth we've had in '05, the growth that we're going to have in '06, and beyond. And Steve kind of laid out a framework for growth, and growth through innovation. I'll talk on some of the product highlights that we had in '05, and some of the short-term and longer-term schematic results around our server and tools portfolios as well.

We really had a great year in fiscal '05 financially. And I think a large part of it was really due to strong product leadership in the portfolio, really led by Windows Server, and the Windows Server family, and then the rest of the Windows Server System family, and the server applications Exchange, SQL Server, and BizTalk all having fantastic years.

We've had great continued development momentum. I'll share some statistics with you. You know that's something we were keenly focused on, more and more developers using .NET, create the solutions, create the pool for all the server products to be deployed, that was very healthy. And I'll share some results, not just on what developers are doing and what they're using as their primary tools, but also on how we're doing in application deployment in key segments, the work that we're doing around community and with the product quality, and with the improvements we've made to security, I think led to some fantastic gains in customer satisfaction. I'll share with you some more changes we're going to make to our support policies, and products overall that will continue to drive improved customer satisfaction. I'll talk about the innovation pipeline for what's coming with server and tools, and I'll share with you a little bit about why I think we've been successful in '05 and '06 and beyond. And a large part of that is, I think, our strategy has really remained consistent throughout the past several years. And I really think the consistent strategy helps us really execute, and we've had great execution.

I talk about the revenue results and how good they are. We haven't really recorded server and tools as a segment all that long. But if you kind of look at some of the internal numbers, it really was about 10 years ago that server and tools only passed the billion-dollar mark overall. And about five years ago, we passed the $5 billion mark. And this year we're kind of nipping at the heels of $10 billion. And if you look at the growth overall, we grew server and tools more than $1.3 billion in fiscal year '05, about 16 percent. That's really a fantastic achievement.

And, as I mentioned before, I think the real driver of it was the strong product leadership that we have. Windows Server: We've made a tremendous amount of progress migrating our installed base. We now think there's more than 80 percent of the NT4 installed base that's actually come onto Windows Server. I think we'll actually shift our migration efforts towards Windows 2000 to 2003 in the next year, and we've not just sold into the product portfolio. We also know that our usage of key Windows products and product features is getting deeper as well.

One of the key metrics that we survey is Active Directory usage, and we know that we increased more than 30 points in midmarket and enterprise. And this is really healthy for us because it lays the foundation for some of our other businesses such as Exchange, growing in some of the security and identity workloads that are coming, maintaining the user, deploying RMS, and some of the other new product offerings and efforts, as well. So this is good news for Windows Server by itself, but good news for the portfolio of products, as well.

SBS, our Small Business Server, continues to do fantastically well. Our unit shipments actually increased by 40 percent this year. It's now a quarter-of-a-billion-dollar business. I think we're going to continue to grow at a super rate in SBS, and I think we'll take some of the learning and some of the success we've had about really building Windows Server and targeting it toward specific segments, not just for small business, but for some of the other key segments as well.

We announced at our partner conference that we're doing a version for midmarket. We've got an effort under way, code-named “Central,” to really make sure that we build the right Windows Server product for each customer segment, and that's something I'm super excited about.

Our management business, led by MOM, Microsoft Operations Manager, and SMS, or Systems Management Server, under the System Center umbrella, really had a great year, performing well. We actually passed the $400 million mark. I'm still confident that we're on track to build another billion dollar business around management. And I think if you look at where we've come from, we've gone from a zero percent share in monitoring just in a few years to about 20 percent of enterprise share in monitoring. That's a tremendous achievement, and our managed software distribution, our SMS usage for software distribution and applet tracking in the enterprise may actually pass the halfway mark, which is another good indicator of things to come.

Of course, if SMS is healthy, it makes it easier to deploy not just server and tools products, but Office and Windows upgrades as well. So I think it's a key product for us. It's one of those things—we delight customers and make it easier to keep their infrastructure up to date. It also helps our business. And we were able to expand SMS out to also reach out to managed devices as well. We've had good uptake of that feature as well.

With developers Visual Studio had another fantastic year. We actually crossed the three-and-a-half-million mark with professional .NET developers. As many of you may know, we've actually kind of broadened the product portfolio of Visual Studio, targeting all the way from the low end with students and hobbyists, kind of competitive in that Linux space, making sure that every developer has a copy of .NET and is trained in writing .NET solutions. We introduced the low-end version we call Visual Studio Express, so we have Visual C# Express, Visual Basic Express, and Web Developer Express. These products are still in their beta phases, but we actually had more than a million downloads of Visual Studio, which is quite healthy for a developer tool. I think it will really help us in our competition with open source.

SQL Server, Exchange: I talked about the fantastic year that they had. SQL on a tremendous base actually had a 20 percent growth in revenue, which is quite an accomplishment. We continue to outsell IBM and Oracle combined, overall. In terms of units we're outselling Oracle in the enterprise. We're outselling IBM in the enterprise, and I'll share some of those revenue metrics. I think going forward we will do a great job increasing not only our unit share, but our revenue share in the database market as well.

With Exchange, I think people have known we've been the market leader for a long time, but this year we finally got recognized by Gartner in print as actually having the market leading position of new licensed revenue. That was a nice accomplishment. We're seeing tremendous interest from those customers migrating to Exchange, and that really helped us grow the Exchange business by more than 10 percent this year.

BizTalk is another family that we've kind of grown up from nothing to now being one of the top players in the integration server market. We actually have close to 5,000 customers deployed and running BizTalk solutions in site. This is a product with kind of a long-scale cycle because you kind of build line-of-business applications, long-architecture-cycle integration. I think we're kind of getting through that and sort of hitting our stride. We saw actually 35 percent revenue growth on a healthy unit growth rate as well. So I'm really proud of the product performance and the work that the team is doing.

I promised I'd share a little bit about developer momentum. This is a slide now that I've shown at the last three, I think, financial analyst days. As people know, we kind of got a late start in the game. Java actually shipped before .NET. There were some developers using Java. We had a great launch of Visual Studio at inception. And Java usage had kind of remained flat over the past year, or past few years actually, while Visual Studio has actually increased.

In fiscal '05, according to the Dev Tracker results—we spend a lot of money on tracking developer behavior—Java again remained about flat. We actually crossed the midway threshold with 53 percent of professional developers actually using .NET. So that was good. Of course, as developers use .NET, they write solutions, they get deployed. This is another slide I've shared for a long time about the behavior of the biggest accounts, the Fortune 100, and last year I decided to add a global metric of the Global 100, and the penetration was pretty good in the U.S., even better on a worldwide basis. And in 2005 you start to see those .NET solutions, all those developers building, writing, managing infrastructure, getting them out.

We now have more than 90 percent penetration both in the Fortune 100 and in the Global 100 usage of .NET applications. So in terms of really breaking through the enterprise barrier, mission critical, is Microsoft ready for the enterprise? Yes, we're ready for the enterprise, and our customers know it, and I think our business will show that going forward.

We have seen great improvement in customer satisfaction. I think part of that is because of the great work that our team and other teams at Microsoft have done, really engaging with the community. In part that's done by blogs; people know that we have more than 1,000 blogs of individuals working at Microsoft on MSDN and TechNet. People sponsor user groups and engage in lots of different ways. They have adopted ISV buddies and partners, and people have really found lots of cool ways to engage folks. And it has really also changed how we do product development.

We started shipping what we call CTP, Community Tech Previews. People have helped us design the product, pick what features should be improved, what features maybe we shouldn't do at all, and help ensure the quality. And I think it's one of these things that as our customers get more involved and we build better products, they feel like they're part of the process. It's really helped us with both developers and IT professionals, and we've seen significant increases in customer satisfaction.

Microsoft.com is a tremendous marketing asset for the company, and we've really invested a lot in personalization this year. If you're an IT professional and you want a specific view about how you think Microsoft.com should look to you, you may not want to see all the consumer offerings—how should search behave when we know you're an IT pro versus a consumer? If you're a developer who uses C# exclusively, can we bring up code samples that are only C# code samples rather than every text hit? Those types of features now are becoming alive on Microsoft.com and making a big difference, both with their satisfaction of the site and with their satisfaction with Microsoft overall. If you think about it, that's a large part of how key customer segments such as developers really engage with us through MSDN, or how an IT pro engages with us through TechNet. So that's super important to us.

Software assurance—we continue to enhance the program. It's important to make sure that we're ready not just with the products, but with the overall complete offering of service and support. We'll be enhancing software assurance quite significantly this year as well. We announced some of those changes at Tech•Ed, and we continue to get good feedback on the changes we've made. I talked a little bit about the product quality; in part, that's done with our customers. And in part it's because of how we've changed our software development practices around the security initiative. And as these products start to come to market, they're better quality, more secure, and I think our customers appreciate that quite a bit.

This morning Steve opened by sharing our growth innovation framework with you, and it's really growing the foundational businesses, building on top of those successful businesses, and expanding out, and then of course delivering software services, which we think hold tremendous opportunity.

I'll go through some of the key highlights for Server and Tools, and I'll touch on how we think we're going to grow the core. I'll go through our innovation product, and I'll touch on how we think services can complement the Server and Tools business and offer some new revenue streams as well.

Of course it all starts with Windows Server. When we think about the business, we think about winning customers, driving customer satisfaction, and how we're going to grow the business overall. And of course Windows Server is in quite a competitive marketplace with Linux. I think we think hard about Windows Server in making sure it's best of breed in each workload. People use Windows Server for very different things. They run databases on it, they run security software on it, they run their firewalls on it. They run it as an applications server. They run packaged software on it. We've got about 20 different workloads that we've defined and scenarios of how people use Windows Server, and we are committed to making sure that Windows Server is best of breed in every workload.

We have some areas today, as Steve shared with you, where we think we're behind. Technical computing is one where I think Linux has been out in front a little bit. We're quite focused. We're very excited about the beta release of the Compute Cluster Edition. We've got a few tap partners that are basically our early adopter customers. The feedback is very good. The ISVs in key industries—energy, pharma, automotive—are super excited about it, and we are going to make share gains in high-performance workload.

I think another workload that we're incredibly focused on is the Web workload. Steve shared that with you, and that's a place where I think product improvements and working with hoster community and others will lead to both better customer satisfaction for those that decide to host their workloads and of course better businesses as we gain share.

It's important to realize that the Windows Server business isn't just Windows fighting head on with Linux or UNIX or NetWare or other competitors. It really is the entire Windows Server system portfolio. And that's a place where we bring integrated innovation to life in making Windows and SQL Server better together and making Windows and Exchange better together. And when you complement that with Windows SQL Server and Excel doing business intelligence scenarios, or Windows Exchange and Outlook doing communication scenarios, being better together really delivers some good customer value.

And again on this theme about building the right product for the right customer: What we're doing in the midmarket is something that I'm quite excited about.

It's not just about features—you know, those are super important—but I really think our mission, and in some way driving customer satisfaction, is to really radically simplify IT. It's still too hard to be an IT professional today. I think that's why products like SBS resonate quite deeply. It's why we've invested so much in our management. It's why we're going to continue to invest in things like the midmarket solution. And I think as we simplify and as we deliver quality and lead with things like security, I think we're going to be able to do quite well.

We know the business is going to grow all by itself, just by following the growth of the Server market; Steve talked about that this morning. But of course I expect us to grow faster than just the hardware market. I expect us to gain share in key workloads. And of course we're going to continue to go after UNIX migrations. You see replatforming of key applications from Oracle on top of SQL Server. There's still some NetWare share to go after. And as the product continues to prove its mission-critical abilities again and again and again, we are seeing increased interest from key customers saying it's about migrating mainframe and miniloads, especially as some of the IBM hardware comes to its end-of-life policy. So overall good framework for growth to build on.

Exchange, as I mentioned before, had quite a good year. You saw a little bit about how hot “Office 12” is going to be. We're very excited about the synergy we're going to have between Exchange and Office, and I think our customers will kind of adopt the two in tandem as they think about messaging. And of course we've got great synergy with Windows Mobile. You're going to see some super-cool hardware in Pieter's talk, and working together with Exchange, I think we'll have a nice push device, and that's something I'm super excited about in terms of winning customers over.

We also did an acquisition a few weeks back of FrontBridge. That's hosted services for communications we call hosted hygiene services. So this customer makes one very simple change to their mail record on a Web, their mail is actually delivered to FrontBridge, we strip out any viruses, we strip out spam, and then we deliver it on premise. And while we have the mail, there's all sorts of value-added services we can add. We can do archiving; we can do compliance work. So the opportunity to add value with services—not necessarily replacing the server, but complementary value streams—is quite significant, and I think you'll see us first grow in that area with Exchange. But we're looking at how to complement hosted services to all of the server businesses, and it's something that we think holds great practice for the future.

We know that customers really appreciate our helping them keep up to date; facilitating compliance with Sarbanes-Oxley or Basel II or your favorite standard is important. And really the role that Exchange is starting to play isn't just around messaging; it's making sure that customers have an integrated communications backbone, and that's in combination with products like Live Communications Server. It's enhancing the unified messaging capabilities of Exchange, and I think customers are really going to appreciate having one place where they can schedule things, get in touch with folks, see status of events. And when you can combine the integrated communications backbone with some of the new workflow capabilities that are coming in SharePoint, I think that's something that will really resonate with customers and with end users, and it will drive the demand cycle for folks to upgrade.

We know that there's an opportunity to grow the business, just by upgrading our installed base. I think there's a good opportunity for Server and Tools overall as we sell Exchange. That's a great opportunity for us to sell our Antigen product for security. It's a great opportunity for selling MOM, and attaching that with each Exchange Server. So overall getting those sockets in place with Exchange will increase our revenue opportunity. We know there's some competitive share to go get with Notes. You'll see us actually invest to go get some more Notes share this year. And, as I mentioned, I think the new services uptake is really an untapped revenue stream for us.

Finally, there's SQL Server. And with SQL Server 2005—this product is now in its final community tech preview; we're getting ready to launch soon—we really have focused on three key areas. One is absolutely making sure we're ready for any mission-critical scenario. We published at Tech•Ed our great TPCC results, our great TPCH results. We joined the million-transaction-per-second club. We've got the failover and mirroring and the sub-five-second response time that people need. And SQL Server really is ready for the enterprise.

The business intelligence features that we put in with the new reporting services, the end-user report attachments, and the synergy that we get with Office, with Excel, are clearly going to help us overall. And the fact that it comes in one integrated package—easy to deploy, easy to administer—I think will resonate quite well.

And the focus that we've put on making not just developers productive in terms of writing applications, but making DBAs productive in terms of how they manage hundreds of databases or consolidate database workloads, will be greatly appreciated by our customer base as well. I think this ability to deliver a complete data platform from soup to nuts in one integrated offering is quite appreciated.

And the fact that we've improved interoperability—we've now done our JDBC driver—means UNIX clients and Java applications will be able to talk to SQL Server, and it enables us to address a larger portion of the market overall. That's something we're quite excited about.

We did buy a small company this year, called DB Best, that actually focuses on Oracle migration. We think there's a good opportunity to go pick up some share there, and I am sure we can continue to grow both our unit and our revenue leadership.

One thing that I wanted to mention is you may have seen some ads with people talking about database TCO and claiming that they're actually matching us in terms of price points. And, as you can see, SQL Server now is 25,000 per processor. Sure enough, the other vendors have sort of matched us—IBM is also 25,000 per processor, Oracle in its own special way has matched us at 40—but let's not play games in terms of math.

But when you look at what you really need to complete the solution, manageability is not an option—maybe if you already have a couple hundred consultants on site or your product is completely unbreakable. High availability is not an option. Business intelligence is not an option. It's not fair to a customer to charge them to put the data in, then charge them again to take the data out.

And if you look at some of the prices that really drive the database market, by the time you compare equivalent functionality in SQL Server 2005 with the competition, there's quite a price difference.

And apart from that, if you look at the trends going on in the industry around multicore, the price difference gets exaggerated even more. And here I think we've kind of held firm on multicore—we're not going to charge for each core. IBM has decided, on their high-end systems, they are going to charge for core. Oracle initially said that a new core machine would be twice the price, and then they said, no we'll count each processor as three-quarters, but they'll round up. So if you take the two cores and you add three-quarters to three-quarters, you get 1.5 and you round up and you get two, which kind of sounds to me like two, which is where they were. You can see there's the price advantage that SQL has is really there. So I think the overall advantage we have with a great product and with great total cost of ownership is going to serve us quite well.

Of course, we've complemented the SQL Server product with great tools. Visual Studio 2005 is something we're super excited about it. It is the only tool suite in town that allows people to develop applications for clients, for servers, to write Web services, and for applications that target devices, all in a single integrated IDE. We have the best tools on the market that enable people to deliver their solutions with the fastest time on the market. I think developers are incredibly sensitive to time to market, so they're working through the applications backlog.

We have industry-leading modeling functionality, with software factors and domain-specific languages. Companies really want us to help them enable the shift toward service market architectures. I think they'll really appreciate what we've done in Visual Studio 2005 there. We've worked very hard on having common schemas between developers and IT professionals, so you can say things like, hey, in my data center I only allow the Web to run a certain way, and the developer can actually see that at design time and make sure at design time that they're working together.

I'll talk a little bit more about management, about how these scenarios can come together, but I think in the server and tools business, we're incredibly well positioned to deliver on some key customer scenarios that really none of our competitors are.

When you think about a developer writing a solution and deploying a lot of business applications, you want to monitor that application, make sure there's no problems. Well, we have MOM there. If there is a problem with that application, you'll see it in the MOM console. You can actually take that alert from the MOM console and deliver it into the Visual Studio Team System. You can assign it to a developer; a developer figures out what the problem is, feeds the MOM data right there, can actually take it, publish it automatically, and redeploy it using one-click publishing. If the application goes into production with the fix, we can actually clear the log out of the IT pro side on the MOM issue to see it's fixed. That type of integration is only enabled by a common schema and an approach that we take to satisfying the entire company, not just key segments, and that type of integration I think will give us a unique advantage.

We'll also be expanding our tools for Web development, not just professional developers, but for designers as well. And I think that the way we work with designers is something that's quite exciting. I'll talk a little bit more about that when I talk about the application pipeline.

There clearly is now an opportunity for growth here. If you think about the developer market today and the application life-cycle market today, Visual Studio can target only 53 percent of the market. With bringing this tool suite to market that kind of has a soup-to-nuts offering and the complete enterprise life cycle, that's 47 percent more of our addressable market share. I think when you take a look at some of the prices on the next slide, you'll see we are going to gain share and I think we are going to shape that industry up. And of course we have a broader portfolio. All right, we target all the way from the student to the highest enterprise—the designer and the developer and everything in between. But between that broader portfolio and the great features and the great productivity, I know we can grow the Visual Studio business.

This is an area where I think people are under some misconceptions as well because people think, Visual Studio, why would anybody pay? Just go to Web tools, and free, you know, what's the benefit? Well, it turns out tools really aren't free. The IDE may be free. But when you look at what people need for advanced modeling tools, what people need in terms of Web stimulation and Web test tools, it turns out they're not free. It turns out that, in fact, you know, IBM charges quite a bit more money for their Rational suite and if you look at kind of depth of breed across the job sector they're not equivalent. But when you really start to look at the testing, monitoring market and testing scale, you know, products today, like Rational, like Mercury, are much greater in terms of cost overall. These are typically sold in 500-unit packs, so if you've got a medium-scale enterprise application, the price disparity is huge and heaven forbid you're building an Internet banking application where you really need to test the difference between what we're offering and what Mercury's offering. It's quite dramatic.

And if you think that developers often need check-in, check-out, change management tools, we offer Team Foundation Server—also at a much lower price point—with integrated project management. And so if you look at, again, you know, building on top of that, again because it's included. IBM will charge you again for a project console, Mercury will charge you again for a project console, and there are plenty of other tools that developers need and, I could keep building this up, but I kind of ran out of room on the PowerPoint slide and I think I made the point overall. It's not just about downloading the Eclipse shell. It is about delivering developer productivity. It is about delivering the best tools. It is about making sure that people can write the best quality applications, and I think Visual Studio has quite an advantage there.

As I mentioned, we'll be bringing these together and launching SQL Server and Visual Studio also with BizTalk 2006. We'll have events around the world. We'll be launching—our main event is in San Francisco on November 7th. Between the 50 countries that we hit and the probably close to 100 events we'll do, we will touch more than 150,000 developers in person at events if all goes well. So I think we'll have a super launch; it looks good for the business overall.

I thought it would be great to actually share with you, not just a little bit about the road map, but also about how folks take these products and what they do with them, and how they bring them together in fruition. And some of you may know I was actually living in Paris this year. Le Pompier was just outside of my apartment, and we actually worked together to develop a solution for the Paris firefighters, bringing together SQL Server and Visual Studio, and I'd like to share with you the application that they built. So if we could roll the video that would be great.

(Video segment.)

Yeah, I think that's really important. I mean, it's live at Microsoft, it's really partly—it's great driving the business, but really making a difference in people's lives is what we're all about.

And making sure that people have the right infrastructure in place so that they can deploy key applications is really kind of what drove us to get into the management business. And as I said, we're at 400 million now, so we've got a little bit more work to do to double it, to grow to a billion-dollar business, but I think we can do that; in part because of the DSI, the Dynamic Systems innovation vision that I described, having common schema working across the enterprise, working across developers. In part I think it's because we're delivering complete enterprise management solutions in terms of software distribution or asset management or application and IT monitoring.

I think the work that we've done around reducing cost and complexity really resonates well with the CIO and IT pro community and the work that we've done really to make sure that we've done a great job with interoperability, so people can now take our management tools and monitor our events. They can decide, hey, I want to pump it up to a Tivoli console or I want to pump it up to an OpenView console. Or people can decide the inverse—hey, I want to use Microsoft on top because it's got a great UI. Can I take Tivoli events and program them inside?

We actually have something called the MCF, the Management Connectivity Framework, that allows us to do that. And because we've led in the establishment of Web services standards around WS-Management, I don't even think we're going to need connectors in the future. In fact, people who have come to Tech•Ed have actually seen Steve on stage demo with Sun interoperability around WS-Management.

So that type of interoperability, the number of devices coming online, I think will really enable us to grow the business.

There's clearly a broad opportunity for us to attach to Windows Server, to SQL, to BizTalk, and as we're more successful in our server and tools portfolio, I think our management success will grow along with it.

And here, too, we'll use the same strategy of building the right product for the right segment. So we've introduced workgroup versions of our management tools today for people that manage smaller shops. And we are scaling up to enterprise editions of our tools in the future, so I think it's a common strategy across our product line.

Security is another area where I think there is some good opportunity for growth. People know we acquired Sybari this year and their Antigen product line. That offers best-of-breed protection for both individuals and companies. You'll be seeing our security portfolio expand as a company with OneCare for consumers all the way up to enterprises. It is an integrated product family, which is important, because if you think about it, Microsoft has responsibility to deliver solutions for desktop, for servers, and for protecting the entire network infrastructure as well.

This is an area where, as we benefit our business, our customers benefit at the same time because they really want secure and resilient architectures in place in their infrastructure.

The work that we've done this year around our security initiative in terms of really getting out there touching IT pros, training, making sure we work with the partner community, teaching people how to do audits, teaching people how to make sure they have a well-managed infrastructure in place, has been incredibly well received and has been good for us overall.

I think we will have excellent field synergy with the new products that we acquire, with our sales force, and this is an area where you should expect us to bring more products to market over time as well.

I mentioned I would share a little bit about the portfolio and the innovation that's coming to market in '06. And if you look here, there are a couple key areas. First is really expanding out that management. I talked about System Center and its growth. We'll have a new product we call System Center Reporting Manager, which gives IT managers a much better view of what's actually going on.

We actually will data-warehouse information about MOM and SMS and bring them together in new ways. So, for example, you do queries taking your MOM information and your SMS information like, hmm, which are more reliable, my IBM servers or my HP servers? You query the MOM log, you query your asset management, you bring that together in the data warehouse, and then when the hardware salesmen are in front of you, you kind of negotiate the best price by showing them that data.

We'll also expand into new categories like backup and data protection with System Center Data Protection Manager. That product actually, if all goes well, should actually ship by the end of this week, so we should hit the ground running for fiscal year '06.

We'll continue to grow our BizTalk family of middleware with a new breed of connectors and adapters. One that we're quite excited about is our RFID adapter, not just as a revenue opportunity for Server and Tools but complementing the work we do in MBS. We'll have a solution with Axapta for warehouse management that pulls through some more SQL, pulls through some more Windows Server, and, of course, helps the MBS business as well.

We mentioned before that we're doing a new suite for designers; we're going to call that Microsoft Expressions Studio. We'll have some very cool tools that combine the best of Vector, some very cool tools for animation, and I think when people see the types of Web applications that people are going to be able to create on “Longhorn” and with WinFX technologies on Windows XP, I think people are going to be super excited about that, and that's all upside for us today because we don't really play there.

So 2005, we're off to a great start with Windows Server and 64-bit. People know we have an update coming to that, which we call R2, and that adds features for branch management and print consolidation, some security enhancements and lots of other good features.

Of course, we've got the big launch with SQL Server, Visual Studio, and BizTalk coming together. People will see us make continued progress in our existing portfolio, so you'll see Commerce Server update, you'll see HIS, our management, MOM, all these other products will come to market in 2006. And then, of course, the big wave around “Longhorn Server” will take place in 2007.

We ship the first beta of “Longhorn Server” this week. You'll continue to see us deliver Community Technical Previews and betas of Windows Server throughout the year, and it's something we're super excited about.

I hope you see that we really have been consistent from year to year and really focusing on driving revenue and usage in balance, making sure that we do a great job bringing integrated innovation to our customers and delivering real business value. We are making sure we continue to do a great job engaging with enterprise customers and growing in our enterprise maturity, really reaching out and building the right products and the right set of services and offerings for small and medium business. We are loving our customers, doing a great job around customer satisfaction, strengthening the developer IT and partner communities—without our partners we're nothing—and, of course, attracting the best talent to Server and Tools and to Microsoft.

And speaking of best talent, that's my time. I'm actually going to introduce Doug Burgum, who runs the MBS business for us. Thanks a lot. (Applause.)

END

Due to the varying sound quality and subject matter of tapes, the information in this transcript may contain inaccuracies.