Don Dodge on The Next Big Thing

Does Google have its head in the clouds?

Yesterday the New York Times said "Google Ready To Rumble With Microsoft", referring to Google's foray into online Office Apps. Today a survey from NPD says 73% of PC users have never heard of Google Apps, and another 21% have heard of them but never used them. Just one half of one percent said they use web based apps instead of desktop software.

Google CEO Eric Schmidt was asked by the New York Times if he really believed that 90% of all computing would be done in the cloud. Schmidt's response?

“In our view, yes,” Mr. Schmidt says. “It’s a 90-10 thing.” Inside the cloud resides “almost everything you do in a company, almost everything a knowledge worker does.”

The NPD survey supports what Microsoft's Jeff Raikes said in response to Google's claim;

“It’s, of course, totally inaccurate compared with where the market is today and where the market is headed,”

It is fair to say that Google has its head in the clouds. (pun intended) That is a fine place to be if you are a web search company, but that is not where office productivity software is now, or will be anytime in the near future. Google's arrogance will be its undoing. Their total reliance on internal Google engineers while ignoring customer feedback, and their lack of experience in direct sales and customer support, will not work in the business software world.

Duncan Riley at TechCrunch is singing the Google song. He proclaims "Majority of Americans on Google Docs" and says "...given the online alternatives there is little doubt that the number making the switch to online apps will continue to grow."

Joe Wilcox at eWeek takes the other view with the provocative headline "R.I.P.- The Web 2.0 Office Suite" The eWeek article included this pie chart of survey responses.

 

The eWeek article goes on to say; "The scant adoption makes some sense of Microsoft's Office Live Workspace, which went into broad beta last week. The service clearly is designed to be an adjunct to Office desktop software rather than a Web-based alternative. If NPD's numbers are indicative of real-world usage, Microsoft hasn't much to worry from Google Docs and Spreadsheets or other online alternatives. Maybe too many people make too much about the Web 2.0 threat to Office. "

Mary Jo Foley of ZDnet gets it right when she says;

To me, the way that Microsoft is addressing the so-far small number of users who want Web-based productivity software is disruptive. Microsoft isn’t listening to the venture capitalists and A-list bloggers who are ridiculing the Redmondians for not discontinuing immediately any more client-based Office development and turning Office into a Web-based product.

Instead, Microsoft is doing what the majority of productivity-suite users currently want, by adding a Web-collaboration element to Office with Office Live Workspace. At the same time, Microsoft also is sowing the seeds for a Web-based consumer office suite with the Notes and Lists components of Office Live Workspace. If and when there’s enough customer demand for such a product, Microsoft won’t be starting from scratch to build a Web-based suite.

Not rushing headlong into a bubble-licious market doesn’t equal denial. Sometimes resisting peer/pundit pressure can be pretty disruptive, too….

As I said yesterday, Microsoft has played the role of market disrupter before against IBM and the mainframe software crowd. Microsoft has adapted to many market shifts and disruptions over the past 20 years.

Microsoft has a long history in enterprise software and office productivity applications. Microsoft has done a great job listening to customers and even anticipating their needs. The recent announcements from Office Live and the investments in massive data centers signal where Microsoft is going.

Software plus Services as opposed to Software as a Service. Microsoft is giving customers the best of both worlds; powerful desktop software, complimented by web based services. It may not make headlines with the Web 2.0 crowd, but it is the best path for customers who want the best of both worlds.

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Google vs. Microsoft = Microsoft vs IBM 30 years ago

This battle of the titans has been brewing for 5 years or more. It is inevitable. Not because of animosity between the companies, but because of underlying business and technology trends driven by new customers and technology advances. There are lots of examples of this happening in many different industries. Think Toyota vs. Ford 30 years ago, or Microsoft vs. IBM.

The New York Times has a story today "Google Gets Ready To Rumble With Microsoft". The NYT interviews Google CEO Eric Schmidt, and one quote sums up the Google view that the future of computing is web based applications and services hosted in "the cloud" on the web.

To explain, Mr. Schmidt steps up to a white board. He draws a rectangle and rattles off a list of things that can be done in the Web-based cloud, and he notes that this list is expanding as Internet connection speeds become faster and Internet software improves. In a sliver of the rectangle, about 10 percent, he marks off what can’t be done in the cloud, like high-end graphics processing. So, in Google’s thinking, will 90 percent of computing eventually reside in the cloud?

“In our view, yes,” Mr. Schmidt says. “It’s a 90-10 thing.” Inside the cloud resides “almost everything you do in a company, almost everything a knowledge worker does.”

Jeff Raikes, President of Microsoft's Business Division, responds by saying;

“It’s, of course, totally inaccurate compared with where the market is today and where the market is headed,” says Jeff Raikes, president of Microsoft’s business division, which includes the Office products. TO Mr. Raikes, the company’s third-longest-serving executive, after Mr. Gates and Mr. Ballmer, the Google challenge is an attack on Microsoft that is both misguided and arrogant. “The focus is on competitive self-interest; it’s on trying to undermine Microsoft, rather than what customers want to do,” he says.

Henry Blodget, former Wall Street analyst and currently of Silicon Alley Insider, casts the debate as the classic "Innovators Dilemma", made famous by Harvard's Clayton Christensen. Henry distills the essence of 'The Innovators Dilemma" and the situation between Google and Microsoft in a few short paragraphs;

Disruptive technologies do not destroy existing market leaders overnight. They do not get adopted by the entire market at the same time. They do not initially seem to be "better" products (in fact, in the early going, they are often distinctly "worse.") They are not initially a viable option for mainstream users. They do not win head-to-head feature tests. Initially, they do not even seem to be a threat.

Disruptive technologies begin by providing a cheaper, more convenient, simpler solution that meets the needs of the low-end of the market.  Low-end users don't need all the features in the Incumbent's product, so they rapidly adopt the  simpler solution. Meanwhile, the Incumbent canvasses its mainstream customers, reassures itself that they want the feature-rich products, and dismisses the Disruptor as a niche player in an undesirable market segment.

But then the Disruptor improves its products, adding more features while keeping the convenience and low cost. Now the product appeals to more mainstream users, who adopt it not because it's "better" but because it's simpler and cheaper. Seeing this, the Incumbent continues adding ever more features and functionality to its core product to try to maintain its value proposition for higher end customers. And so on. Eventually, the Incumbent's product overshoots the needs of the mass market, the Disruptor grabs the mainstream customers, and, lo and behold, the technology has been "disrupted."

It is important to remember that Microsoft has played the role of "Disruptor" in the past, and learned a lot along the way. Jeff Raikes and Ray Ozzie totally get it. The people in charge of Office and Live get it. .

Microsoft has a carefully planned strategy to provide customers with the best of both worlds; packaged software for applications that require lots of graphics and computing power, complimented by web based services for easy access and group collaboration. Microsoft calls this "Software plus Services", and it is important because the user experience is seamless and synchronized no matter where you are. Microsoft has invested billions in huge data centers to support this vision.

On the business side there is another delicate balance. Microsoft Office is a $15 Billion dollar business. Balancing that business with advertising supported web services, or monthly subscriptions, will happen gradually over time.

Another important thing to remember is that this isn't a "winner take all" scenario. This is a huge market and there is room for different solutions and business models. Look at IBM. They are still a very large and successful company 30 years after they were "disrupted" by Microsoft.

Ultimately the customers decide who wins. Great companies adapt to changes in the marketplace. Lazy companies cling to their "tried and true" business models in the face of disruptive forces. Microsoft is a great company...so is Google. Both will be successful in their own way...and the customer wins either way. That is the American way!

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Open vs Closed Networks, the future of 700 MHz wireless spectrum

There is a big battle brewing over control of the 700 MHz wireless spectrum that the US government will auction off in January. The winner of the battle will determine if cell phone wireless networks remain closed, or will be opened up to anyone like the Internet. This is a high stakes game, probably costing $7 to 10 Billion. However, US wireless carriers collected $95 Billion in revenues.

The Wall Street Journal reports that Google is seriously considering making a bid and building out a wireless network. Microsoft has declined to bid, and instead will work with carriers and manufacturers by providing Windows Mobile operating system.

What is special about this spectrum? The 700 Mhz wireless spectrum was formerly used by UHF TV stations, so it is very powerful and capable of transmitting long distances, even through walls and barriers. Most of us grew up in the cable TV generation so you may not remember when TV was broadcast over the air and picked up by an antenna at your house. Back then the  VHF channels (1-13) were used by the major networks and affiliates, and UHF channels (14-69) were used by public TV and smaller private stations. With the advent of cable TV, and now full digital TV in 2009, the 700 Mhz UHF spectrum is no longer used. The auction will be for the spectrum used by channels 52 through 69.

More powerful and cheaper to deploy - The 700MHz spectrum is more powerful than the current cell phone spectrum and can go through walls much easier. It is cheaper to deploy because the spectrum is more powerful so it requires fewer transmitters and towers, making it 50% to 70% less expensive to build out a nationwide network.

Open versus Closed? Everyone has a different definition of open, but what it boils down to here is the difference between the Internet (open) and the cell phone network (closed). 

Cell phone networks are closed. Verizon, Sprint, or AT&T control the networks. They decide which hardware manufacturers (Motorola, Nokia, Samsung, etc) can work on their network, and which applications (maps, games, music, etc) can be used on their network. The wireless carriers control their "walled garden", make all the rules, and collect most of the money.

The Internet is open to anyone who wants to launch a business and will carry any content; web pages, video, music, etc.

It is pretty obvious why there are millions of businesses and applications on the Internet and very few on cell phone networks.

Open doesn't mean free - The Internet backbone is owned by the major land line telecommunications companies. They own the fiber optic lines and networks, and some of the Network Access Points (NAP's). They sell usage of their bandwidth to Internet Service Providers (ISP's) like AOL, NetZero, and others. The ISPs in turn charge you each month for Internet access.

Who pays for the Internet? Both consumers and businesses pay in both directions, downloading and uploading. Most consumers pay a flat rate per month, around $50, for unlimited use, mostly downloading. Businesses pay more based on bandwidth usage, both uploading and downloading. Web based businesses pay a LOT more based on their bandwidth usage. You can imagine a business like YouTube serving millions of video streams pays a lot for the bandwidth they use. So consumers are paying a flat rate for what they download and businesses are paying for bandwidth in both directions.

Why aren't cell phone networks open like the Internet? In some European and Asian countries the cell networks are open. In those cases the governments made the spectrum available for free or at very reduced rates, and mandated that the networks be open to any business.

What is the FCC doing? The US government (FCC) is trying to have it both ways. They want to collect billions of dollars by auctioning off the spectrum, but they also want some of it to remain "open". The rules of the spectrum auction require the winning bidder to allow any device or application to access the network at "wholesale" rates, provided the winning bid meets the reserve price of $4.6 Billion. Google has already committed to bidding at least $4.6B, so that means the reserve will be met and the open rules will prevail.

Who will win? Everyone. Consumers win because they will have lots of choices. Entrepreneurs in hardware, software, and e-commerce win because they will be able to launch all kinds of new products and services. The winning bidder will win because they will own the future of the wireless business. That winning bidder could even be one of the "closed" network owners. Think about how they will juggle two very different business models; walled garden versus open networks. It will be interesting to see how the losing bidders respond to the open alternative. Competition always brings out the best.

The auction will be held on January 28, 2008. It could be a historic date for the wireless communications industry.

Microsoft Enterprise Search - Freemium for the enterprise

Microsoft announced a new free enterprise search product Search Server 2008 Express. It has the same core search functionality as the regular enterprise search products,  and no restrictions on size or number of documents. The goal of the program is to reach the almost 6 million businesses in the United States that don't use an enterprise search solution.

Mary Jo Foley at ZDnet has an excellent review. Here is a quote from the story;

Search Server 2008 Express offers just about all of the same functionality as the full Microsoft Search Server and SharePoint Server products, Microsoft officials said. The Express SKU shares the same core search engine as Microsoft’s other two server-based enterprise-search offerings — Office SharePoint Server 2007 and Search Server (the rebranded standalone enterprise-search product formerly known by the ungainly name of “Microsoft Office SharePoint Server 2007 for Search”). It uses the same centralized administration console and new federated-search functionality. And Search Server 2008 Express will offer the same connectors to third-party document-management, ERP and other business software as do SharePoint Server and Search Server. And even though it’s going to be a free product, Express Server 2008 won’t limit the number of documents that can be indexed.

Enterprise search has been around a long time...even before consumer web search. But the technology has lagged because most enterprise search vendors have focused on a very narrow set of databases, applications, or document stores. They might be very good at searching a FileNet document repository but unable to do anything with a SharePoint repository.

Search Everything - Microsoft Enterprise Search has tackled this problem and now allows you to search just about everything from one search box. Microsoft uses the Open Search Standard to access lots of data sources. Here is a short list of some of the sources;

News: Live.com News, Yahoo News, Google News, Wired, The Register

Information Resources: MSDN, TechNet, Wikipedia, Encyclopedia Britannica, Yahoo

Media: Flickr, Yahoo Images, YouTube, PodScope

Blogs: Technorati, Google Blog Search

Microsoft Enterprise Search also has a long list of connectors to other data repositories that will include all documents in those applications. Here are just a few of them;

• BusinessObjects
• Cognos
• EMC Documentum
• Endeca
• OpenText
• SAS

Freemium in the enterprise? - Freemium is a common business model in the consumer space, but in the enterprise? Yes, Search Server 2008 Express is a free product with some up-sell opportunities. This is an amazingly full function product with no size limitations. The additional features for sale is truly "value add" functionality. Here is how Mary Jo Foley explains it;

The Express SKU won’t provide the high-availability and load-balancing capabilities of the other two Microsoft enterprise-search products, however, officials said. It also won’t deliver the people and expertise search and Business Data Catalog connectivity that SharePoint Server does. The Express SKU is designed to be simple enough to able to be set up to start searching and indexing in 30 minutes, the Softies said.

This is a bold move by Microsoft that will make enterprise search available to any business of any size...for free. The theory is that getting those 6 million U.S. businesses using enterprise search will result in more sales for the traditional Microsoft search server products.

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The kinder and gentler Microsoft

Microsoft has changed a lot in the past 5 years.  In fact, new employees, hired in the last 5 years, out-number all employees hired previously. Ray Ozzie, who I worked with at Groove Networks, has taken over for Bill Gates as Chief Software Architect for all of Microsoft.

Dan'l Lewin, who I work for now, leads Strategic and Emerging Business at Microsoft. Dan'l was one of the early employees at Apple, and a co-founder of Next with Steve Jobs. Dan'l joined Microsoft in 2001 and now heads the Silicon Valley campus with over 2,000 employees.

Microsoft is working hard to build partnerships with VCs, startups, and entrepreneurs by sharing information and helping them succeed. Microsoft is also making its Silicon Valley campus available to outside organizations for meetings and conferences.

Today the San Jose Mercury News ran a story about Microsoft's investment in Facebook, and Silicon Valley's changing perception of Microsoft as a positive force and partner. It is nice to see a good story about the positive things we do. Here is a snippet from the story;

The Facebook deal adds to the remarkable evolution of Microsoft's relationship with Silicon Valley. Reputations die hard, but Microsoft is now embraced as a participant in the valley's business culture as never before. Three years after it paid $1.6 billion to settle antitrust and patent litigation with Sun Microsystems, Microsoft is credited with developing closer relationships to other companies, venture capitalists and entrepreneurs.

With about 2,000 employees and growing, Microsoft's campus in Mountain View is hardly a little satellite operation, and includes such key groups as Internet television and digital games.

Microsoft's involvement in the valley extends beyond business. The company and its employees have become a leading supporter of valley charities, as well as institutions such as the Tech Museum of Innovation in San Jose.

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Microsoft quarterly earnings and stock price up

Microsoft (MSFT) reported strong results for the September quarter with revenues up 27%. This is the third quarter in a row with revenue growth of 20% or more. Larry Dignan at ZDnet says " Can't we give Microsoft some props?". Paul Graham and others have suggested "Microsoft is Dead" which triggered my reply "Since when does growing $4 Billion a year = dead?".

How about $8 Billion revenue growth? Let me revise that. Microsoft will grow by about $8 Billion this year, from $51B last fiscal year to a projected $59B this year. That is over 15% annual growth on a very large base. Let me put $8B of growth into perspective. Just the growth ($8B) is more than the total revenues of Yahoo (YHOO), and more than Adobe, BEA, Facebook, Youtube, and MySpace combined.

The Big Three - Again this quarter the big three business units contributed most of the revenue and profit. Multiply these numbers by 4 quarters to get an idea of the size of these businesses;

• Windows Client (desktop) $4.1B
• Microsoft Business Division (Office) $4.1B
• Servers & Tools $2.9B
• Entertainment (xBox, Halo) $1.9B
• Online Services $671M

There were several key milestones this quarter. Microsoft acquired aQuantive ($6B) to make a big move into online advertising. Halo 3 had the biggest launch in entertainment history. Microsoft made a $240M investment in Facebook. And, Microsoft Entertainment and Devices division turned a profit this quarter.

Yes, Larry, I think it is OK to give Microsoft some props. TechMeme has a good collection of stories on Microsoft's earnings announcment.

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Microsoft acquires stake in Facebook - Techmeme has 151 stories

Microsoft will pay $240M for a 1.6% stake in Facebook valuing the company at about $15 Billion. TechMeme has 151 news reports covering every possible aspect of the story. When is the last time you remember seeing 151 stories about Microsoft at the top of TechMeme?

Sending a message - This investment, in my view, is about setting a tone for the company, and sending a strong message to advertisers, publishers, employees, and investors, that Microsoft is serious about being a leader in on line media. The investment sends a message to every Microsoft employee that we will invest aggressively, try new things, and push the business into new areas. Don't underestimate the value of this message. It emboldens the entire company to get aggressive, stretch the boundaries, think outside the box. The message has ripple effects outside the company.

This isn't about valuation. Some will argue that Microsoft paid too much for a small 1.6% stake. Time will tell. But, that isn't really the point. Think about the strategic value of being the exclusive provider of advertising to a premium property like Facebook. Think about the possibilities for future cooperation on things like search, instant messaging, games, email, video, music, etc.

Strategic value - Investing to gain strategic advantage is an interesting and subtle art. There are lots of angles, future possibilities, and financial intricacies. Think about this. Which would you do; invest $1.5B for 10%, or $240M for 1.6%? Both value the target company at $15B, so you might ask what is the difference? Ask yourself this question "Do I get more strategic value or influence with $1.5B than with $240M?" My guess is that you get the same amount of influence, access to decisions and people, with $240M as you do with $1.5B. So, why not reduce your cash outlay and risk by only investing $240M?

Partnerships always start small, in areas of mutual interest. Once partners become comfortable working with each other new areas of cooperation will become obvious. How much is that worth? I don't think anyone knows now, but time will tell.

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Google, Verizon & Microsoft on 700MHz wireless spectrum auction

The battle for the 700 MHz wireless spectrum has begun. It is both a business and political battle, while the issues are very technical. The US governement is holding an auction in January to sell off the most valuable wireless spectrum ever available, raising as much as $10 Billion dollars. It is a once in a lifetime opportunity for several reasons. The 700 MHz issue was raised at the CTIA conference.

More powerful and cheaper to deploy - The 700MHz spectrum is more powerful than the current cell phone spectrum, can go through walls much easier, and it is cheaper to deploy. Because the spectrum is more powerful it requires fewer transmitters and towers, making it much less expensive to build out a nationwide network. We are talking 50% less, ore eveen 70% less.

Why is this political? The government decides what gets auctioned, when, and under what rules. The incumbent wireless carriers (Verizon, AT&T, etc) want to own the spectrum and use it the same way they currently do for other cell phone spectrum. Google and others want in on the action, and want to change the rules of the game.

Why is Google interested? Google wants to buy the spectrum for up to $5 Billion dollars and make it available in much the same way that the Internet is available today. Everyone can access it, but you do need to pay. Here is how The Register describes Google's intentions;

"Google doesn't want to run its own wireless network. It wants to sell spectrum to third-party ISPs, hoping to finally create some competition in the broadband internet market. That's the broadband market as a whole, not just the wireless market. Remember, the likes of AT&T and Verizon control not only the airwaves, but all those wired lines as well."

What will Microsoft do? Microsoft is interested in seeing the Windows Mobile OS on as many cell phones as possible. Microsoft is a software platform company, not a wireless infrastructure company. In response to a question at the CTIA conference, eWeek reported that Steve Ballmer said

"No, we don't have plans to participate in the spectrum auction," said Ballmer, to audience applause. "We may be broader in what we do than any company, but we have a core competency. And we think the telecom industry has a core competency. It takes a real expertise to set up networks, to invest in capital expenditures, to provide customer service 24/7—that is a core competency. What would it buy us to own a piece of the spectrum? It would probably alienate us."

How much will it cost? Buying the wireless spectrum will cost at least $5 Billion. It will cost another $4 Billion or so to build out the network infrastructure, transmitters, etc. Then it will cost another $1 Billion or so to build the network services and control infrastructure. So, we are talking at least $10 Billion to make this spectrum available to the public. With that much invested any company will need a pretty good business model to get a return on investment. This is a complicated issues with lots of business and political ramifications. TechMeme has aggregated lots of stories on the subject.

John Doerr of Kleiner Perkins has been working hard to make this wireless spectrum available to anyone...just like the Internet. If you look at the rate of innovation on the Internet compared to the rate of innovation on the cell phone network you can see why this is important. US government regulation and monopoly ownership of the wireless spectrum is the single biggest reason why the US lags behind the rest of the world in cell phone technology and usage. Maybe the rules do need to change.

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Microsoft will acquire 20 companies a year

Steve Ballmer said today that Microsoft will acquire 20 companies a year for the next 5 years ranging from $50 Million to $1 Billion. In fact, Microsoft has been very active on the acquisition front for the past several years. Wikipedia keeps a fairly accurate and up to date list of Microsoft acquisitions.

Todd Bishop at the Seattle Post Intelligencer put together this graph of recent acquisitions. Note that both the number of deals and dollar value is going up. In fact, this year will mark the first time in Microsoft's history where more was spent on acquisitions than on internal R&D. Of course, one acquisition, aQuantive, accounts for about $6 Billion of the total acquisition spend. The aQuantive deal is not included in the chart above.

Venture Beat reported that Microsoft has only acquired 4 companies this year. The numbers vary by fiscal year and calendar year. Just for the record it is currently 13 companies this calendar year and there is still a lot of time left. Here is a list from Wikipedia of the 13 companies;

Jellyfish.com October 2007 - Online discount shopping site.

Parlano August 2007 - maker of MindAlign - enterprise group chat

AdEcn July 2007 - Advertising Exchange Platform

Stratature June 2007 - Unified Master Data Management Solution

Dundas June 2007 - Charting controls for SQL Server

Engyro June 2007 - Interoperability software for Systems Center

aQuantive, Inc May 2007 - Advertising network and agency

SoftArtisans OfficeWriter May 2007 -Reporting authoring in Microsoft Office. People and technology acquisition, but not the whole company. 

ScreenTonic SA, May 2007 - Mobile advertising solutions

devBiz Business Solutions, March 2007 Web interface for Microsoft Team Foundation Server

Tellme Networks, Inc., March 2007 - Voice recognition, IVR services

Medstory, Inc, February 2007 - Health care search technology

Secured Dimensions, January 2007 - Secured Software Provisioning

Steve mentioned that the sweet spot for acquisitions is around $100 million, but Microsoft will acquire small companies of 5 or 10 people, all the way up to huge acquisitions of thousands of people and billions of dollars. Take a look at the list above...it is hard to generalize in terms of size, technology, or dollar vlaue.

Steve also mentioned that Microsoft will make acquisitions of "open source" based companies or products built with Java. Microsoft will not let technology decisions get in the way of acquisitions that make sense.

Another example of Microsoft's willingness to work with companies not wed to the Microsoft platform is the recent partnership announcements with Atlassian and Newsgator.

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Atlassian and Newsgator bring Web 2.0 to Sharepoint

Today at the Web 2.0 Conference, Atlassian announced their Sharepoint Connector for Confluence, and Newsgator announced Newsgator Social Sites for Sharepoint.

Richard MacManus from Read/Write Web has a good interview with the CEO of Atlassian. Robert Scoble has a video interview as well. Dan Farber covers both Atlassian and Newsgator in his story. Dennis Howlett, one of the Enterprise Irregulars, adds context to the story.

These announcements are interesting for several reasons.

• It is a great example of how Microsoft works with partners to create great solutions for customers.
• It shows that Microsoft will do this even when the partner product competes with our own functionality.
• Microsoft will do it with a company like Atlassian that is "open source" and built in Java. It is all about meeting customer needs.

Sharepoint is the fastest growing server product from Microsoft. As Dan Farber points out "By integrating with Atlassian and NewsGator Microsoft is building out SharePoint as a richer Enterprise 2.0 collaboration platform. For developers like Atlassian and NewsGator, SharePoint is an attractive proposition–Office SharePoint Server generated over $800 million for Microsoft’s FY 2007, an increase of over 35 percent compared to the previous year."