Refresh the road ahead first 4 chapters

2
Copyright © 2018 Redmond Partners, Michiel van Vliet. All rights reserved. No part of this
publication may be reproduced or transmitted in any form or by any means, electronic or
mechanical, including photocopy, recording or any information storage and retrieval system,
without permission in writing from the copyright owners. Cover design by Sarah van Vliet.

3
Content
Acknowledgements....................................................................................................................... 6
Introduction .................................................................................................................................. 7
Why the title of the book? ............................................................................................................ 9
How the book is organized.......................................................................................................... 10
Methodology............................................................................................................................... 12
Chapter 1. Vision, Mission & Strategy......................................................................................... 13
The Bill Gates era .................................................................................................................... 13
The Steve Ballmer era ............................................................................................................. 13
The Satya Nadella era: Worldview and mission...................................................................... 13
Satya Nadella putting his mark on Microsoft.......................................................................... 17
July 2015 – June 2016: Organizing the financial reporting around the Three Ambitions....... 18
July 2016 – June 2017: Consolidation & Refinement.............................................................. 22
July 2017 – Microsoft´s Paradigm Shift................................................................................... 23
Windows becoming the edge of the cloud: ............................................................................ 24
The Four Platforms.................................................................................................................. 25
In summary for fiscal year 2018.............................................................................................. 26
Beyond the Cloud.................................................................................................................... 26
Conclusions ............................................................................................................................. 27
Lessons for Partners................................................................................................................ 27
Chapter 2. Microsoft´s Business Model Changes........................................................................ 29
Ballmer Era I: Selling Software ................................................................................................ 29
Ballmer Era II: Devices, Consumer and Commercial ............................................................... 33
The Satya Era: All about Cloud & Services .............................................................................. 34
Conclusions ............................................................................................................................. 37
Chapter 3. Co-opetition............................................................................................................... 39
The early years ........................................................................................................................ 39
Competition in the Gates era.................................................................................................. 41
Competition in the Ballmer era............................................................................................... 41
Competition in the Nadella era............................................................................................... 42
With whom does Microsoft compete? ................................................................................... 43
How does Microsoft compete?............................................................................................... 45
How competing has changed under Nadella .......................................................................... 45

4
Competing at the field level.................................................................................................... 46
Competing in the cloud world................................................................................................. 47
Competing in the AI world ...................................................................................................... 48
Conclusions. ............................................................................................................................ 49
Chapter 4. The Microsoft Culture ............................................................................................... 51
A personal experience............................................................................................................. 51
The famous stack ranking system ........................................................................................... 52
The Nadella Effect ................................................................................................................... 53
Day to day work culture.......................................................................................................... 55
Conclusions ............................................................................................................................. 56
Chapter 5. How Microsoft organizes........................................................................................... 57
Chapter 6. The Microsoft Partner Strategy................................................................................. 58
History..................................................................................................................................... 58
Chapter 7. The survey results...................................................................................................... 59
Chapter 8. The partner models................................................................................................... 60
Introduction ............................................................................................................................ 60
Chapter 9. Required knowledge to partner with Microsoft. ...................................................... 61
Chapter 10. Define your strategy................................................................................................ 62
Chapter 11. Operationalize ......................................................................................................... 63
Chapter 12. Best Practices & Challenges in working with Microsoft.......................................... 64
Chapter 13. Useful resources...................................................................................................... 65
Acronyms..................................................................................................................................... 66
About the author......................................................................................................................... 68
Appendix 1: Steve Ballmer staff memo July 2013....................................................................... 70
Appendix 2: Satya Nadella email to employees on aligning engineering to strategy................. 71
Appendix 3: Stephen Elop burning platform Memo................................................................... 72
Appendix 4: Microsoft Revenue and Operating income per business group 2005 – 2014 ........ 73
Appendix 5: How does Microsoft monetize Windows in a cloud world..................................... 74
Appendix 6: Bill Gates´s 1995 Internet Tidal Wave memo ......................................................... 75
Appendix 7: Microsoft total headcount since 2001.................................................................... 76
Appendix 8: Detailed Survey Questions...................................................................................... 77
Appendix 9. Survey Participants.................................................................................................. 78
Appendix 10. Interview Participants........................................................................................... 79
Appendix 11. Microsoft Competencies overview ....................................................................... 80

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Appendix 12: Planning Services offerings ................................................................................... 81
Appendix 13: A Partner2Partner maturity model framework. ................................................... 82
References:.................................................................................................................................. 82

6
Acknowledgements
I would like to thank the Microsoft partners that have participated in this adventure. Honestly
when I started the project I had no idea how easy or difficult it would be to get other partners
to open up about their companies, their business models, their best practices and bad
practices and their relationship with Microsoft.
All interviewees have been very open. I think that this is the new breed of partner. A partner
who is open to working with other partners, thinks win-win, understands where Microsoft is
going, understands his or her place in the ecosystem but also a partner that is constructively
critical with Microsoft.
I would also like to thank Microsoft. Although this book is independently written from
Microsoft I would not have been able to write it without Microsoft and the partner channel it
has created over forty years. It is probably one of the best or maybe THE best partner channel
in the world and many competitors are envious of Microsoft having such a partner channel.
If anywhere in this book, I am critical of Microsoft please see that as an act of ´tough love´ 1
I
am one of Microsoft´s biggest fans but also one of its biggest critics but with an aim of making
sure that Microsoft continuously improves.
I would like to thank Ignacio Sestafe who reviewed the manuscript of the book and provided
thoughtful feedback.
Special thanks go out to Olivia Trilles. Our initial plan was to work on the book together but the
growth at Olivia’s company and the workload that came with writing this book made her
decide early on to stay in the background. Olivia was instrumental in helping me design the
original survey and in connecting with relevant ISVs to interview. This is why in the book you
will see me use we from time to time instead of I.
I would also like to thank my family, Claire, Sarah and Thomas. I am already a busy person and
added an additional workload with this book. There were many weekends, evenings and early
mornings that could have been spent with loved ones but were instead spent on creating this
book.
1
https://en.wikipedia.org/wiki/Tough_love

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Introduction
The idea to write this book originated during Microsoft´s Inspire event in July 2017, formerly
called the Microsoft Worldwide Partner Conference. Microsoft just announced a new
organizational structure and I decided to write an article on LinkedIn analyzing the
reorganization and what it would mean for partners.
In less than two weeks’ time, I had over 20.000 views and more than 5.000 of those came
directly from Microsoft employees. There had been many rumors and there was much secrecy
around the reorganization. Other partners at the conference suggested that I write a book to
help them, so during my holidays in August 2017 instead of reading books, as I normally do, I
started writing one.
The latest book you can find on engaging with Microsoft dates to 2009.2
Originally the subtitle
of this book was a ´practical´ guide to successful business partnering with Microsoft but I soon
figured out that what was needed for this book to be useful was to create something that
would not be completely out of date in one fiscal year. Therefore, I have tried to stay away
from short term and very timebound tips and tricks as much as possible and have tried to take
the long view.
Additionally, I wanted to write a book for partners without it being a marketing outlet for
Microsoft. I hope that because I am personally living and driving the transformation at the
company I work at as a CEO this might give some additional credibility compared to what you
can get from other sources.
Microsoft wants you to transform as a partner and they explain the why and sometimes the
what, however they come short on the how as very few field people in Microsoft have lived
through what it takes to transform as a company. Transformation is hard, painful, and costly.
You will see several examples in this book. Some partners had to reduce their staff by over 50
percent to transform, others built completely new businesses.
This book will help you understand how to build or transform your business together with
Microsoft. This book is intended to be helpful both to companies that want to start to work
with Microsoft and existing partners that want to improve the outcomes of their business
working with Microsoft. For existing partners, it is important that I dive into how things were
before just to put some of the changes into perspective. I hope that for the new partners this
doesn´t become too complex or boring.
One specific call out I would like to make is that this is not just a book for alliance or channel
managers. If you want to be successful in a partnership, you cannot abdicate the strategy and
the management of that partnership to the alliance person. It needs to be a top down and
bottom up approach. This book is for CEO´s, CMO´s, Practice managers, CTO´s and partner
roles. Everybody in your organization that has something to do with Microsoft can benefit
from reading this book.
One of the feedbacks I expect is that there is too much detail in this book. Why can´t Microsoft
just assign me a single point of contact that can help me with my engagement? Interestingly
2
Thinking of...Maximising Your Investment as a Microsoft Partner Ask the Smart Questions- Julie
Simpson and Andy Trish. ASIN: B00FOTG7Z4

8
enough Microsoft has just done away with that end-to-end single point of contact in their
fiscal year 18 and our view is that that will not change in FY19.
If you want to be successful with Microsoft, you must understand in detail the Microsoft
strategy, organization, culture, roles, incentives, and scorecards. You must understand the
Microsoft way of doing things.
I hope you enjoy the book and feel free to connect on LinkedIn https://www.linkedin.com/in/-
mvv-/ or on Twitter @michielvvliet.
The aim is to make updates to the book anytime Microsoft is making major changes in
strategy, business models, Go to Market models or organizational structures which will
normally happen early July when Microsoft starts its new fiscal year.
Happy Reading!
Michiel van Vliet
Madrid, July 2018.

9
Why the title of the book?
Microsoft has had three CEO´s and two of them have written books. I have a physical copy of
The Road Ahead by Bill Gates on my bookshelf and read the book probably a year after the
revised version came out in 1996. Bill made a lot of predictions, some of which came true,
some didn´t or not in the way Bill predicted. Anyway, the book made an impression on me at
the time.
Satya Nadella´s Hit Refresh came out in October 2017. As in this book I will go back in time to
discuss Microsoft´s roots and explain the transformation of Microsoft I found it appropriate to
make that show up in the title of the book.
The books couldn´t be more different and reflect the change that has taken place at Microsoft.
The Road Ahead was all about technology and future. Hit Refresh is about technology and
future but also about purpose, culture, soul, empathy, empowerment and the responsibility to
make sure the future will be better for everyone.
As Dylan sang in 64 ´The Times They Are a-Changin´

10
How the book is organized
The book is organized in four building blocks.
− Analyze and understand the Microsoft strategy and market trends
− Partner business transformation status and trends
− Strategize
− Operationalize
Not really rocket science you might say and that is hopefully true. Visually this is reflected in
figure 1 below.
Figure 1 Microsoft Partner Business execution framework
Analyze and understand the Microsoft strategy and market trends
This part is about trying to understand where Microsoft is going and where the world is going.
Understanding the Microsoft long term company strategy. Chapters 1 to 3 will go into things
like vision, mission, strategy, business model and how and with whom Microsoft competes.
Understanding the Microsoft medium and short-term strategy execution vehicles like
competencies, licensing and channel incentives (chapter 9).
Understanding the Microsoft partner strategy (chapter 6).
Partner business transformation status and trends
In chapter 7 and 8 by reflecting on what the interviewed partners are doing, how they are
changing and by 15 more in-depth case reviews you will hopefully get a better view of what
partners are doing on their transformation journey. We will provide a framework as well which
we called the Microsoft Partner Business Characteristics Model.

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Strategize
In Chapter 10 part we will try to provide you with some answers to answer these questions:
− What am I going to be?
− Where am I going to play?
− What will be my value add and differentiation?
− How do I get there?
− At what cost?
Operationalize
Then in chapter 11 we will define a little framework and give guidance to how to
operationalize your strategy with Microsoft. This framework, Plan, Execute and Govern will
draw from chapter 4, The Microsoft Culture, chapter 5, How Microsoft organizes, chapter 9,
Required knowledge to partner with Microsoft and chapter 12, Best Practices & Challenges in
working with Microsoft.
For people that just want to understand how to work with Microsoft and that don´t feel the
urge to dive into the past to understand the ´why´, we suggest that you do the following:
Chapter 1 through 9 read only the conclusions and lessons for partners.
Chapter 10, 11 and 12 you should read completely.

12
Methodology
For the research for the book a mix of public resources and official Microsoft resources were
used. As Microsoft is a publicly quoted company, there is a wealth of information available.3
I started writing this book before Satya published Hit Refresh in October 2017.4
I was initially
worried to see if I would be far off point which was not the case luckily. Hit Refresh has given
me increased insight into some of the ´why´s´ behind some of the events described in the
book. You will see Hit Refresh references pop up a lot in the footnotes.
The approach I took for selecting the companies for the interviews was a mix of people I knew
through my network, companies that have active members in the IAMCP boards worldwide
and I contacted the 2017 global Inspire partner award winners.
I also tried to go as wide as possible from different business models to different geographies. I
have interviewed companies that can be classified as ISVs, Dynamics partners, Telco´s, small
systems integrators to very large systems integrators, managed services providers and
distributors.
I started with a detailed written survey of 69 questions, which 56 individuals answered. As
some people preferred not to do live interviews I ended up doing 40 live interviews.5
Our
participants come from 19 different countries.6
About half of the participants are CEO´s.
The interviews took place from December 2017 through February 2018. I recorded all
interviews and had them automatically transcribed. Then I tried to find patterns and best
practices. The conclusions are of course more qualitative than quantitative and should be
taken for what they are, individual best practices of companies that are successful in the
Microsoft ecosystem, augmented by my own analysis. My conclusions are not prescriptive.
3
By doing all this background research I have discovered that listening to the quarterly earnings
releases, reading the annual reports and the 10K SEC filings gives a very good idea of where Satya is
taking the company. Satya´s modus operandi is to launch concepts and ideas and then to iterate and
improve upon his storytelling which then gets refined over time through interactions with other people.
4
https://www.amazon.com/Hit-Refresh-Rediscover-Microsofts-
Everyone/dp/0062652508/ref=sr_1_1_twi_har_2?ie=UTF8&qid=1526804742&sr=8-
1&keywords=hit+refresh
5
If we go through similar oriented reports sponsored by Microsoft and executed by global market
research companies, we find that the amount of survey respondents is higher but the number of live
interviews done in generally is lower and doesn´t have an as wide a geographic scope.
6
Microsoft has a certain tendency to over populate their partner research with US and UK based
companies. Our research is skewed towards Europe with 25 of the 40 interviewees having their base in
Europe.

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Chapter 1. Vision, Mission & Strategy
Microsoft has had various visions, mission statements and strategies over the years. In this
chapter, we will give an overview and we will explain the changes and why this is important.
The Bill Gates era
April 1975 – Jan 2000
Depending on your age, you might still remember one of Microsoft´s first mission statements,
a PC on every desk and in every home.7
This was all about democratizing computing for the
masses, from consumers to Small and Medium Business to large corporations.8
The Steve Ballmer era
Jan 2000 - February 2014
During the Ballmer era, the Microsoft mission was to enable people and businesses
throughout the world to realize their full potential.
With the reorganization that Ballmer started in July 2013, Microsoft moved to creating a
family of devices and services for individuals and businesses that empower people around
the globe at home, at work and on the go, for the activities they value most.
In 2013, Microsoft became a devices and services company.9
This was an important change.
Microsoft at the time was a software company. The issue with software was that the world
was changing to a new form of monetizing software. Advertising based (Google), integrated
through hardware (Apple), or sold as a service (Salesforce). It became more and more difficult
to sell software via licenses and maintenance fees. Under Ballmer Microsoft was on a course to
a mixed business model of being like Google, Apple and Salesforce monetizing through
advertising, volume first party hardware (Nokia, Surface) and SaaS models (0365).
The Satya Nadella era: Worldview and mission
Being the Productivity and Platform Company for the Mobile first and Cloud first world
The world view in 201410
7
Nadella in Hit Refresh, his book that came out in Oct 2017, refers to this mission statement more as a
goal than a mission statement “A computer on every desk and in every home, which Bill and Paul had
introduced forty years earlier as the company’s mission, was actually more of a goal—an inspiring one
for its era”
8
You will see Satya Nadella use the word democratizing quite a lot. The latest incarnation is in
democratizing AI for the masses.
9
See appendix 1 for the full Steve Ballmer memo explaining the July 2013 reorganization. This is a long
memo, but it explains how Steve Ballmer started many of the changes that Satya Nadella is credited
with early on in his tenure.
10
This part draws heavily on Satya Nadella´s 2014 World Wide partner conference presentation
including the quotes. https://news.microsoft.com/speeches/satya-nadella-wpc-2014-keynote/

14
How did the Microsoft mission change under Nadella? Microsoft moved from being a devices
and services company under Ballmer to being the productivity and platform company for the
mobile first and cloud first world under Nadella.11
Microsoft defines its mission in 2014 as follows: “we will be the Productivity and Platform
company for this Mobile-first and Cloud-first world. We will empower every person and every
organization on the planet to do more and achieve more. And we will accomplish this by
building incredible digital work and life Experiences, supported by our cloud operating system,
the device operating system and hardware platforms.”12
A common mistake that people made at the time was calling Microsoft´s mission Mobile first,
Cloud first. Satya has always stated that Mobile first, Cloud first is a World View. The mission
was being the productivity and Platform Company.13
Satya Nadella: “I am grounded on two things. One is what is the worldview that is driving us
forward and to me it is about thriving in this new paradigm of mobile first cloud first on which
I have a pretty explicit point of view because when we say mobile first it is actual the
mobility of the individual, not the device.”
Nadella continued: “If I had to take the uber view of categories we compete in the two things I
want us to be great at and leading: be the best in the world when it comes to productivity
broadly defined, individual productivity, team productivity, business process productivity.
That is why we do everything from individual tools in Office to business process in CRM and
ERP.14
We think of it as a continuum, the category definitions that exist will change in time.
The second one is getting these platforms right. Platforms mean consistency for the user, the
consistency in the control plane for IT and the developer opportunity and getting that
equation right. That is what we really want to be great at.”15
Let´s dissect the four words of the 2014 mission statement.
11
In Hit Refresh chapter 3, New Mission, New Momentum Nadella explains the journey of how he came
to establish this mission.
12
Taken from the 2014 10-K (https://www.microsoft.com/en-us/Investor/sec-filings.aspx)
13
Nadella in Hit Refresh, chapter 3: “Worldview is an interesting term, rooted in cognitive philosophy.
Simply put, it is how a person comprehensively sees the world—across political, social, and economic
borders. What are the common experiences we all share? The question I had been asking before
becoming CEO, why do we exist, forced me to change my tech worldview, and, similarly, now every
leader at Microsoft was changing theirs as well. We no longer lived in a PC-centric world. Computing
was becoming more ubiquitous. Intelligence was becoming more ambient, meaning computers could
observe, collect data, and turn that feedback into insights. We were seeing an ever-increasing wave of
digitization of our life, business, and our world more broadly. This was made possible by an ever-
growing network of connected devices, incredible computing capacity from the cloud, insights from big
data, and intelligence from machine learning. I simplified all of this and encouraged Microsoft to
become “mobile-first and cloud-first.” Not PC-first or even Phone-first.”
14
CRM = Customer Relationship Management, ERP = Enterprise Resource Planning
15
Excerpt from an interview with Satya at Gartner symposium in October 2014

15
Productivity
Productivity has historically been associated with Microsoft Office. Office is a de facto standard
with a very large penetration globally. Office survived all kind of attacks from open source
equivalents but then Google successfully attacked more and more of Microsoft´s Office
installed base. This, plus the increasing difficulties in getting enterprise customers to renew the
software assurance on Office to move to newer versions of on premise Office, led to one of the
cash cows of Microsoft being under severe attack. 16
What did not help either is that the old software business model of building additional
functionality and your customers will buy, stopped working. SaaS competitors provided
functionality that customers used and wanted to pay for. No longer were users interested in
having lots of additional functionality in a software suite when they were not even using 20
percent of the existing functionality. The value proposition and business model of Office had to
change.
So how did Satya position productivity in 2014? “it means putting people at the center of
everything. It means to enable every individual to get more out of every moment of their live
while harmonizing the interests of individuals, IT and developers. We want to make these
digital work and life experiences shine. We want to make computing more personal”.
Platform
In 2014 Microsoft positions the platform as an operating system for all human activity, a digital
graph, centered on people. Microsoft wants to build experiences ubiquitously which means
that every home screen out there, every device out there is going to have multiple Microsoft
icons and each one of them is an entry point into the Microsoft digital ecosystem.
There are going to be two platforms, one for cloud (Azure) and one for devices (Windows). 17
Windows is going to have consistency of user experience for screens of all sizes. It is going to
have consistency because of universal windows apps for developers and because Microsoft
wants to aggregate all of windows into one ecosystem, one store, one commerce system, one
discovery mechanism.
Cloud first
In 2014 Microsoft talks about the Cloud Operating System and about building an enterprise
infrastructure backbone for IT. Microsoft wants to run a hyper scale cloud service with many
datacenters in many countries and will make that server infrastructure available for others to
build their cloud.18
Microsoft is positioning itself at the intersection of hyper scale, enterprise
grade experience and fully-fledged hybrid cloud.
Microsoft had to come up with a differentiated value proposition versus Amazon Web Services
(AWS), which already at the time was the leading cloud vendor. From that same Gartner
16
Software Assurance (SA) is basically Microsoft´s maintenance fee. Microsoft describes it as a
comprehensive program that includes a unique set of technologies, services, and rights to help you
deploy, manage, and use Microsoft products efficiently. The main benefit is that it gives you the right to
upgrade to new versions for free during the time that you pay SA.
17
During the next couple of years, you will see Satya defining more than two platforms.
18
This vision finally came to fruition in June 2017 with the launch of Azure stack.

16
interview with Satya: “And then when we talk about the cloud even there we have a different
point of view in the sense that it is not that there is just one datacenter that we will operate
for the worlds compute storage and network but how does distributed computing truly
remain distributed.”
The Azure strategy has evolved from being strong in Microsoft/Windows-only environments,
to truly embracing multiple vendors/platforms/operating systems. This was reflected in a
name change from Windows Azure to Microsoft Azure, making it highly relevant in multi-
platform environments. 19
Mobile first
It was clear at that time that Microsoft was losing the race in mobile devices, so Microsoft had
to come up with a different strategy around mobility. Microsoft enhanced mobile first with
Mobility first. Mobile first was not about one form factor. It was about multiple devices. Satya:
“You are going to have devices in your pocket, you are going to wear stuff, you will move
between devices during the day. You may start a task in one place and finish it in another
place. All your documents, all your preferences have to roam. It is all about mobile scenarios
not about one device form factor.”
So how did the mobile device strategy change from Ballmer to Nadella? Ballmer wanted to
create first party devices and monetize those like Apple. Satya wanted to use Microsoft
created ´first party´ devices to show how the Microsoft software can shine and at the same
time rely on other OEMs to build phones on the Microsoft platform. Satya´s strategy was to
give away the phone OS to other third parties and to sign up many new OEMs.
Microsoft moved from wanting to emulate Apple, Google and Salesforce in one single business
model to emulating Salesforce and AWS with a bit of Google and a bit of Apple.20
In addition,
Microsoft did no longer want to win every battle. Instead, Microsoft has been opening up to
multiple OS´s and ecosystems and started to bring what is best of Microsoft to those
ecosystems.
From an organization point of view Satya inherited the then just implemented new structure
under Ballmer. As stated in the 2014 annual report: “During the first quarter of fiscal year
2014, we changed our organizational structure as part of our transformation to a devices and
services company. Therefore, beginning in fiscal year 2014, we reported our financial
performance based on our new segments: Devices and Consumer (“D&C”) Licensing, D&C
Hardware, D&C Other, Commercial Licensing, and Commercial Other.”
In the shareholder letter that year, Satya speaks about commercial cloud run rate. Run rate is
extrapolating the revenue of your last month by multiplying it by 12. This is not the same as
19
Satya describes in Hit Refresh chapter two, that after a road trip to Silicon Valley where he and Scott
Guthrie met with several startups they understood that they needed to provide first-class support for
Linux. That same day they made the decision to change the name of Windows Azure to Microsoft Azure.
20
With hardware more as a showcase for what can be done with the Microsoft software, except for
Xbox where Microsoft does high volume first party hardware.

17
twelve months historic revenue and it paints a much brighter picture if your business is on a
growth trajectory.21
Satya Nadella putting his mark on Microsoft
July 2014 – June 2015.
Fiscal year 2015 was Satya´s first full fiscal year at the helm. Some refinements in strategy
were the regrouping of the reporting structure around three interconnected ambitions;
Reinvent productivity and business processes, Build the intelligent cloud platform and Create
more personal computing.22
For many years, Microsoft reported numbers in a way that was aligned with how the company
was organized. There were five groups: Microsoft Business Division (MBD), Windows, Server &
Tools (STB), Online Services (OSD) and Entertainment & Devices. Then Ballmer reorganized to
become a devices and services company and created a reporting structure that clearly called
out devices and consumer on the one hand and commercial on the other hand. Satya inherited
this going into FY2014. Then in FY2015, Satya organized the strategic imperatives of the
company around these three interconnected ambitions.
Satya Nadella: “Microsoft, since its founding, has stood for individual and organizational
empowerment. What is different about our company when compared with the industry is that
we make things that help other people make things. We also help them make things happen.
We are well poised to ignite a new revolution in which digital technologies democratize
access to people across economic strata, organizations of all sizes, entrepreneurs,
researchers and students everywhere. This is empowerment. To deliver on this promise of
empowerment, we have galvanized around three interconnected ambitions that will, in turn,
drive our segment financial reporting this fiscal year.” 23
1) Reinvent productivity and business processes. “We are helping customers be even more
effective with their individual time, while bringing together the power of teams and entire
organizations to drive business outcomes and success.”
“We are building an array of productivity, communications, collaboration and business process
applications so that they are optimized for what our users want to achieve rather than being
bound to any current product category definitions.”
2) Build the intelligent cloud platform. “Microsoft is building a cloud platform that enables the
world’s applications to become intelligent using the next-generation infrastructure, data and
developer services.”
21
Hit Refresh chapter 3: “We needed employees and partners on board for the transformation ahead,
and we needed Wall Street to be with us as well. Amy Hood, our CFO, understood the culture change we
needed to navigate. She also became the crucial partner I needed for precise attention to quantitative
detail across the business. Ahead of my first financial analyst meeting, Amy helped to translate the
mission and ambitions into language and goals investors needed to hear. She helped, for example,
shape the goal to build a $20 billion cloud business, something investors grabbed on to and tracked
quarter after quarter. It took us from a defensive frame amid falling PC and phone share to an offensive
mindset. We went from deflection to ownership of our future.”
22
Microsoft's fiscal year starts in July.
23
2015 10-K

18
“We are unique in that we are the only company building out a hyper-scale public cloud
while also meeting customer needs for private cloud and hybrid solutions. Our servers are
the leading edge of this intelligent cloud, and this is important because there are going to be
many legitimate reasons for people wanting digital sovereignty. We believe this is the future of
true distributed computing infrastructure, designed to meet the needs and complexities of the
real world.”
3) Create more personal computing. “Our ambition is to make your Windows experience,
whether at home or at work, more natural, more mobile, and more trusted. Whether using our
devices for productivity, gaming, browsing or anything else, we want to move customers from
needing, to choosing, to loving Windows. With the launch of Windows 10, we’re just at the
start of a new era of computing that’s more personal, focused on the mobility of human
experiences across devices. “24
Aligning structure to strategy
In June 2015, Satya aligned the engineering groups with the three interconnected ambitions
making the following changes:
Aligning windows development, X-box and all the mobile devices under one group led by Terry
Myerson to focus on Windows as an integrated ecosystem. Before all these were separate
groups reporting to the Windows, X-box and the Microsoft Devices Groups (MDG). 25
Integrating the Dynamics products under Scott Guthrie. Dynamics had always been a separate
organization since Microsoft bought Great Plains and Navision in the early 2000´s. By putting
Dynamics under Cloud & Enterprise, Satya also signaled a potential change to Dynamics as
more of a platform play and less of a closed ERP and CRM play.26
Integrating the office team with search and online advertising creating the Applications and
Services Group (ASG) led by Qi Lu.
Satya reduced seven engineering groups into three more interconnected groups.27
July 2015 – June 2016: Organizing the financial reporting around the Three
Ambitions.
On September 29, 2015, Microsoft announced changes to the way it reported its financial
results in order to be more aligned with the three interconnected ambitions. The new
reporting structure aligned with how Satya organized the business and how Microsoft thinks
more about ecosystem monetization than pure licenses or hardware sales. However, cloud
24
Fiscal year 2015 10-K. Highlights from the author.
25
See the full Nadella memo in appendix two.
26
Something that became apparent with the launch of Dynamics365 in 2016. Also keep in mind that
Satya used to lead the Dynamics business all up before leading Bing and Server & Tools.
27
With these changes, Satya also made a statement on who his most important lieutenants were. The
three new leaders were relatively unknown. At the same time Stephen Elop (Nokia and devices
business), Kirill Tatarinov (Dynamics), Eric Rudder (advanced technology) and Mark Penn (Chief Strategy
Officer) left the company.

19
and on premise were brought together and so was commercial and consumer revenue. From
that moment on it was harder to see the real cloud revenue performance. In addition,
Microsoft stopped reporting on gross margin per business unit and consumer revenue.28
Closing Nokia
Microsoft announced that it was buying Nokia in September 2013, a week after Ballmer
announced that he would be leaving Microsoft. Nokia was the only large manufacturer that
had strategically decided to produce only Windows OS based Phones. Nokia had on the one
side competition from Apple and on the other side from the Android ecosystem. The only
Android handset manufacturer that made any profits at the time was Samsung.29
It seemed like a logical choice for Elop, the Nokia CEO and former Microsoft executive, to take
Nokia over to the Microsoft ecosystem. Gartner and IDC estimated at the time a 20 percent
Windows phone market share in the future.30
The Windows phone was the most efficient phone for productivity if you were already fully in
the Microsoft ecosystem. What killed the Windows phone was the lack of apps. Not enough
apps meant not enough people were buying the phone. Not enough people buying the phone
made it less interesting for app developers. This was a classic chicken and egg situation.
Microsoft spent a lot of money to get apps created but in some cases key app developers and
first party app ISVs would not create the app for Windows phone even paid by Microsoft as
they did not see the business justification.
By mid-2013, Nokia was not doing very well financially and there were even rumors that Nokia
was thinking of switching to Android as the OS for their phones. The only defensive option that
Steve Ballmer had was buying Nokia for $7B in June 2013. Apparently, the Microsoft board
was not happy with this and neither was Bill Gates.31
28
The interesting thing with Microsoft´s gross margin percentage is that it has been going down for the
last couple of years. This is because of the secular shift of the IT market from license sales to cloud
subscription which changes the profitability in the early years until you reach a point of economies of
scale, the steep decline in windows OEM sales and the fact that hardware has a much lower margin than
software. See more in chapter 2.
29
Elop is famous for his burning platform memo he wrote when he joined Nokia. As Elop stated in his
memo: “The battle of devices has now become a war of ecosystems, where ecosystems include not only
the hardware and software of the device, but developers, applications, e-commerce, advertising, search,
social applications, location-based services, unified communications and many other things. Our
competitors aren’t taking our market share with devices; they are taking our market share with an
entire ecosystem. This means we’re going to have to decide how we either build, catalyze or join an
ecosystem.”
30
For a contrary opinion see: http://communities-dominate.blogs.com/brands/2013/11/nokia-under-
elop-his-3-years-performance-review-worst-ceo-of-all-time-all-the-facts-in-pictures.html
31
Satya Nadella says the following on that episode in Hit Refresh: “The press criticized the idea and the
Microsoft board was resistant. Over the summer, while still in negotiations to buy Nokia outright, Steve
Ballmer asked the members of his leadership team, his direct reports, to vote thumbs-up or thumbs-
down on the deal. He wanted a public vote to see where the team was on the matter. I voted no. While I
respected Steve and understood the logic of growing our market share to build a credible third
ecosystem, I did not get why the world needed a third ecosystem in phones, unless we changed the
rules.” Hit Refresh Chapter 3.

20
Ballmer had to threaten to leave the company for the board to approve the Nokia acquisition.
Rumors have it that this was the last drop for the board and let to the ousting of Ballmer.
Closing Nokia was the biggest statement Satya could make in breaking with the Ballmer era.32
The first big acquisition, Linkedin
On June 13, 2016, Microsoft and LinkedIn announced that they had entered into a definitive
agreement under which Microsoft acquired LinkedIn in an all-cash transaction valued at $26.2
billion. As this was the first very large acquisition under Nadella, we will dive into the reasons
for Microsoft buying Linkedin.
Accelerating cloud revenue- LinkedIn at the time was on a trajectory to generate around five
billion dollar of pure cloud revenue with a double-digit growth rate. Several articles at the time
mentioned the Microsoft board being under pressure to move to the cloud quicker. Buying
LinkedIn would temporarily silence the critics that felt the transformation was not happening
quickly enough.33
A defensive move. Salesforce was trying to buy LinkedIn. Salesforce is a clear leader in the
CRM Space. If all the information that LinkedIn has on professionals, the networks, all the data
- LinkedIn calls this the LinkedIn graph - would be available to Salesforce then Microsoft would
never be able to get closer to the number one spot. Now this information can be made
available in Dynamics CRM.34
O365 integration. With Office in the cloud, Microsoft has a wealth of information on
documents, people and networks. Microsoft can relate people-to-people, people to
documents, documents to people etc. Microsoft calls this the office graph. Together with
LinkedIn Microsoft will also dominate this kind of network outside the firewall and will be able
to add a lot of intelligence to productivity in the workspace.35
32
In fiscal year 2015 Nokia was creating an operating loss of at least 2B$ for Microsoft (author´s
analysis)
33
Rumors have Microsoft making a failed attempt to buy Salesforce for $55B but Benioff, Salesforce´s
CEO, apparently wanted $70B. Microsoft´s run rate in the cloud at the time was about $10B.
34
LinkedIn is a closed system and shares very little information with partners through API´s. This is the
value of LinkedIn but interestingly enough Microsoft has just been ordered to allow third parties to
screen scrape LinkedIn https://www.theverge.com/2017/8/15/16148250/microsoft-linkedin-third-
party-data-access-judge-ruling#ampshare=https://www.theverge.com/2017/8/15/16148250/microsoft-
linkedin-third-party-data-access-judge-ruling
35
“This year Microsoft and LinkedIn announced our agreement to join forces to connect the world’s
professional cloud and the world’s professional network – creating new experiences and new value for
users. Together we will have a transformative effect through our shared ambition to reinvent ways for
professionals to be more productive. With more than 1.2 billion Office users and 433 million LinkedIn
members, our combined data graphs will forever change how Sales, HR, and other professionals get
work done. Meetings will get better when Cortana can draw on your professional network to connect
the dots so you stay one step ahead. Your online newsfeed will become more intelligent as the
professional cloud and network tailor information to what’s going on at work, upcoming meetings, and
projects underway. This acquisition will grow our total addressable market by creating a vibrant network
that brings together a professional’s information in LinkedIn’s public network with the information
created in Office 365 and Dynamics 365.” From the 2015 shareholder letter

21
In his 2015 shareholder letter, for the first time Satya started mentioning highlights which are
focused on cloud, usage and consumption.36
Themes that you will see coming back are commercial cloud and run rate. In addition, Satya
started to mention ubiquitous computing and ambient intelligence.
Moreover, this is the first time Microsoft describes the framework it uses to talk about digital
transformation: engaging customers, empowering employees, optimizing operations and
transforming products.
Satya further elaborates on this framework in Hit Refresh:
“In today’s era of digital transformation, every organization and every industry are potential
partners. We estimate the value of these transformations over the coming decade to be about
$2 trillion. Companies are focused on ensuring that they stay relevant and competitive by
embracing this transformation and we want Microsoft to be their partner.”37
“To do so, there are four initiatives every company must make a priority. The first is engaging
their customer base by leveraging data to improve the customer experience. Second, they
must empower their own employees by enabling greater and more mobile productivity and
collaboration in the new digital world of work. Third, they must optimize operations,
automating and simplifying business processes across sales, operations, and finance. Fourth,
they must transform their products, services, and business models.”
Reading Microsoft´s 2015 shareholder letter one could already understand where Microsoft
was going. Below some edited excerpts.
Productivity and Business Processes
“We’re not simply building individual tools, but rather designing an intelligent fabric based on
four principles – collaboration, mobility, intelligence, and trust. People still do important
work as individuals, but collaboration is the new norm, so we build our tools to empower
teams.”
“Intelligence is an amazing force multiplier. To be successful amid the explosion of data,
people need analytics, services, and agents that use intelligence to help them manage their
scarcest resource – time.”
Intelligent Cloud
36
From the 2015 shareholder letter: Commercial cloud annualized revenue run rate exceeded $12.1
billion, up more than 50 percent year-over-year. More than 70 million people use Office 365 commercial
every single month. Revenue from, Azure, grew triple digits, with usage of key computing and database
workloads more than doubling year-over-year. Windows 10 is now active on more than 400 million
devices around the world and over 197 billion hours of usage. This is the fastest adoption rate of any
prior Windows release. Bing has leveraged this incredible usage to become profitable with search
advertising revenue up 17 percent. Xbox Live monthly active users grew 33 percent year-over-year to 49
million.
37
Hit Refresh Chapter 5: Friends or Frenemies? Build Partnerships Before You Need Them

22
“Every organization needs new cloud-based infrastructure and applications that can convert
vast amounts of data into predictive and analytical power through the use of advanced
machine learning, analytics, and cognitive services. The combination of Azure’s infrastructure
and data services makes it possible for businesses to build digital transformation applications
that better engage customers, optimize operations, and transform products and business
models.”
“We are building our server products to become the edge of our cloud, supporting true hybrid
computing. We enable customers to build a cloud platform that spans their own data centers
and the public cloud.”
“We clearly are now one of the two enterprise cloud leaders. It’s not just infrastructure driving
this growth, but also the intelligence we infuse into applications. Customers are using
Microsoft’s industry-leading data management, machine learning, analytics, and cognitive
services to infuse intelligence into their applications.
More Personal Computing
“This was the year of reinventing Windows and delivering a renewed vision of one of the
world’s most successful operating systems. We launched Windows 10 with a new concept – to
enable Windows as a service.”
Investing in the Future
“Earlier in this letter I described the transformational opportunities that lie ahead, particularly
in the realm of digital intelligence. We’re growing today’s core businesses and technologies,
incubating for the future and investing in long-term computing breakthroughs. Within our
research labs we’re hard at work on advanced machine learning and artificial intelligence.”
July 2016 – June 2017: Consolidation & Refinement
The 2017 fiscal year was a year of consolidation and refinement. The most important change
was Microsoft expanding its artificial intelligence (AI) efforts with creation of new Microsoft AI
and Research Group in September 2016.38
38
Edited excerpts from the press release: Microsoft has formed the Microsoft AI and Research Group,
bringing together Microsoft’s world-class research organization with more than 5,000 computer
scientists and engineers focused on the company’s AI product efforts. Microsoft is dedicated to
democratizing AI for every person and organization, making it more accessible and valuable to
everyone and ultimately enabling new ways to solve some of society’s toughest challenges. Today’s
announcement builds on the company’s deep focus on AI and will accelerate the delivery of new
capabilities to customers across agents, apps, services and infrastructure. Microsoft is taking a four-
pronged approach to its initiative to democratize AI: Agents. Harness AI to fundamentally change
human and computer interaction through agents such as Microsoft’s digital personal assistant Cortana.
Applications. Infuse every application with intelligence. Services. Make these same intelligent
capabilities that are infused in Microsoft’s apps —cognitive capabilities such as vision and speech, and
machine analytics — available to every application developer in the world. Infrastructure. Build the

23
Other highlights in fiscal year 2017:
• The Windows 10 Creators Update trying to move Windows into the realm of creators
moving in on the space that Apple has owned for the last decades.
• Further embracing of the open source community by Microsoft joining the Linux
Foundation and welcoming Google to the .NET community
• Launch of lower cost tethered mixed reality headsets, which are more like VR headsets
with position tracking.
• More cross platform partnering with Box and Microsoft announcing to partner for
cloud content management with Azure and Adobe and Microsoft announcing
availability of joint offerings to transform customer experiences.
• A new game console with Xbox One X.
• Microsoft Teams rolling out to Office 365 customers worldwide.
July 2017 – Microsoft´s Paradigm Shift
From mobile first, cloud first to intelligent edge and intelligent cloud
Since 2014 Satya Nadella had been talking about The Mobile first, Cloud first world. At Inspire
2017 Microsoft shifted the paradigm to the Intelligent cloud and the Intelligent edge and at
the same time increased their total addressable market to 4.5T$.39
Edited excerpts from Satya Nadella´s speech at Inspire:
“We've been talking about this mobile-first cloud-first world for the last multiple years. And
we see a real rapid shift to a new paradigm that we describe as the intelligent cloud and the
intelligent edge.”
“This intelligent cloud and intelligent edge era is going to be defined by three key
characteristics. The first is that every experience that you build is going to be multi-device and
multi-sense. You're no longer going to be bound, in terms of your computing experiences, to a
single device. Nor are you going to be bound to a single input/output mechanism. You may
start with touch on one screen, speech on another device, inking on another device. And so
the user experience itself is becoming richer, multi-device, multi-sense.”
“The second profound shift is the infusion of AI. AI is intrinsic in every application experience
you build. Think about this, an autonomous car is going to generate 4 gigabytes of data per
second. When you have that type of data that's being generated at the edge, compute will go
to that data, because data has gravity. This is happening not just in a car. It's happening in
every smart factory floor, smart city, hospital, any edge device and any edge place. And so AI
world’s most powerful AI supercomputer with Azure and make it available to anyone, to enable people
and organizations to harness its power.
39
Inspire is the new name for the Microsoft worldwide partner conference or WPC. This gathering
happens each July and around 15.000 people from the partner community come together to hear the
latest on Microsoft strategy, products and to network with Microsoft employees and other partners.

24
itself is being distributed, because AI is about reasoning, using compute power over all this rich
data to create intelligence.”
“To manage all of this complexity we need a new efficient frontier for how we develop
applications, distribute applications, manage applications. That's what the server-less
revolution is all about, containers, micro-services, server-less, these are technologies that are
going to be more profound than virtualization ever was. These three shifts are going to define
the era of intelligent cloud and intelligent edge. “
“Think about how every product, every service is going to have digital COGS associated with it.
It's no longer just building an information system that keeps track of your products and
services; the product and the service itself is digital.“40
“And the way we are going to capture that opportunity is to collectively come together to
address the needs of these four digital transformational outcomes. We've talked about these
four outcomes the last couple of years: empowering employees; engaging customers;
optimizing operations; and changing the very product or service and business model.”
“We will bring all of what we do across Microsoft into four solution areas: modern workplace;
business applications; applications and infrastructure; data and AI. These four solution areas
act as the ingredients in every one of these digital outcome projects, digital outcome
endeavors of our customers.”
Windows becoming the edge of the cloud:
In March 2018 Satya made one of the most important statements on the future of Microsoft. 41
The Windows and Devices group ceased to exist, and Windows engineering was broken up into
the O365 Engineering group and the Cloud & Enterprise Engineering group. Windows is
becoming more of a supporting platform for the cloud. 42
Rajesh Jha who already led O365 engineering will now also lead a new team focused on
experiences and devices. As Satya states in his memo “The purpose of this team is to instill a
unifying product ethos across our end-user experiences and devices. Computing experiences
are evolving to include multiple senses and are no longer bound to one device at a time but
increasingly spanning many as we move from home to work and on the go. These modern
needs, habits and expectations of our customers are motivating us to bring Windows, Office,
and third-party applications and devices into a more cohesive Microsoft 365 experience.”
Some of these signals could already be seen. The creation of Microsoft365 in July 2017 already
signaled that Microsoft was using the strength of O365 to pull through Windows.43
The Cloud and Enterprise engineering team under Scott Guthrie became the Cloud and AI
platform team. “The purpose of this team is to drive platform coherence and compelling value
40
COGS = Cost of Goods Sold. The author´s guess is what Satya means is that every product will have a
digital component.
41
https://news.microsoft.com/2018/03/29/satya-nadella-email-to-employees-embracing-our-future-
intelligent-cloud-and-intelligent-edge/
42
As part of this change, Terry Myerson is leaving Microsoft.
43
Microsoft started pulling EMS, Enterprise Mobility and Security, itself a suite of separate products,
into O365 first with the Secure Productive Enterprise offering, using the O365 strength to sell EMS. Now
Microsoft added Windows 10 to this with Microsoft365.

25
across all layers of the tech stack starting with the distributed computing fabric (cloud and
edge) to AI (infrastructure, runtimes, frameworks, tools and higher-level services around
perception, knowledge and cognition).”
Two important callouts to make here are that Jason Zander will lead the Azure team and will
integrate the Windows platform team. Windows is becoming subordinate to Azure.
The other call out is that it seems Microsoft wants to accelerate AI by moving part of the AI
team from Harry Shum´s AI & Research team into the Cloud and Enterprise team that now
becomes Cloud & AI.44
The Four Platforms
During the Build conference in May 2018 Satya went deeper on the new worldview by focusing
on the advances in intelligent edge. “We started talking about intelligent edge in 2017. Twelve
months later it is everywhere. The platform advances are pretty amazing, but it is developers
pushing these platform advancements. To see the intelligent edge go from a sort of a
conceptual frame to this real thing that is shaping the cloud is stunning.” 45
“The world is becoming a computer. Computing is being embedded in every person place and
thing. Every walk of life. In our homes, in our cars, in our work, in our stadiums, in our
entertainment centers. Every industry is being transformed, from precision agriculture to
precision medicine, from autonomous cars to autonomous drones, from personalized retail to
personalized banking. Think about the sheer computing power that is getting distributed and
how that computing power is being used to collect data, fuse sensor data, reason over that
data, create the rich experiences throughout our live. It is stunning. That is the opportunity
that we have. It is in some sense endless.”
An interesting evolution is that not only Microsoft´s mission is aligned to empower others,
Nadella now also closely aligns the success of customers to Microsoft´s success via its products
and business model. “We are focused on building technology so that we can empower others
to build more technology. We have aligned our mission -empower every person and every
organization on the planet to achieve more - the products we build and our business model so
that your success is what leads to our success. There has to be complete alignment.”
44
Another mention is the group that is being created around Alex Kipman, AI Perception & Mixed
Reality (MR): This team brings together all speech, vision, MR and additional perception capabilities into
one team. In Hit Refresh Satya explains one of Microsoft´s big bets as Mixed Reality. He dedicates a
couple of pages to Alex Kipman. “Alex defined a new career quest for himself: I am going to make
machines that perceive the real world.” Perception—not a mouse, keyboard, and screen—would be the
protagonist of his story. Machines that perceive us became his “why.” The “how,” the blueprint, became
to build a new computing experience designed around sensors that can perceive humans, their
environment, and the objects around them. This new computing experience must enable three kinds of
interactions: the ability to input analog data, the ability to output digital data, and the ability to feel or
touch data—something known as haptics.” Hit Refresh page 147.
45
Build is Microsoft´s annual developer conference

26
Nadella does this against on the one hand a backdrop against how Facebook and Google are
using customer data as a main driver of their business model and on the other hand against
AWS, with Amazon competing more directly with entire industries.
Build 2018 was very focused on two platforms, Azure and Microsoft365, but Nadella also
mentioned the two other platforms: Microsoft gaming and Dynamics365.46
The other key technology that got a lot of attention was artificial intelligence. There are a lot of
technological breakthroughs, but Nadella describes that wat matters is translating these
breakthroughs into frameworks, tools and services and to put them in the hands of developers
so that they can take AI and have impact in every industry and every application. Microsoft is
committed to commoditizing AI. That requires scaling AI across both the cloud and the edge
and having the most productive toolchain to be able to create AI and customize AI. Microsoft is
also committed to openness when it comes to frameworks and infrastructure.
In summary for fiscal year 2018
• The world view changes from mobile first, cloud first to intelligent edge and intelligent
cloud
• Intelligent edge and intelligent cloud are defined by three characteristics: multi device
and multi sense experience, the infusion of AI and the serverless revolution.
• The opportunity will be captured through four digital transformational outcomes:
empowering employees; engaging customers; optimizing operations; and changing the
very product or service or business model.
• Four solution areas that will act as the ingredients for each of these digital
transformation outcomes: Modern Workplace, Business Applications, Applications and
Infrastructure and Data & AI.
• Cloud is the platform and Windows is subordinate to the cloud.
Beyond the Cloud
Satya has given us a glimpse of where Microsoft is heading in the future in his book Hit
Refresh. Microsoft is looking at its investment strategy from a ´three horizons´ perspective.
The first horizon is about growing today´s core business and technologies; the second about
incubating new products and ideas for the future; and the third is about investing in long-term
break-troughs.
Horizon one entails quarter-by-quarter, year-by-year innovations in all of Microsoft´s
businesses. Horizon two includes some nearer-term platform shifts, such as new user
interfaces with speech or digital ink, new applications with personal assistants and bots, and
Internet of Things experiences for everything from factories to cars to home appliances.
46
Nadella has mentioned three platforms in the past, Azure, O365 (now M365) and D365. This is the
first time he openly mentions the fourth as Microsoft gaming. He also mentions a new term, namely
Power Platform: “With Dynamics we launched the power platform. PowerBI, Flow and PowerApps
which accesses the extensibility frameworks of Microsoft graph, the extensibility framework or
Dynamics as well as Microsoft365. And it is embeddable by every SaaS ISV.”

27
However, it is horizon three where Microsoft is placing big bets: Mixed reality, artificial
intelligence and quantum computing.47
Conclusions
Satya Nadella started his vision for Microsoft with a ten-page document that he created for the
board during thanksgiving in 2013.48
In that document, he refers to more ubiquitous computing, ambient intelligence, cloud and
edge computing. Things you see come back later in Microsoft´s mission, vision, strategy,
business models and products.
In our view what Nadella has brought to Microsoft is clarity, simplification and consistency.49
He launches concepts and ideas. Those concepts and ideas then pop up in speeches,
interviews, quarterly earnings calls and annual shareholder letters. He iterates on these
concepts and you see the refinement with each iteration. These concepts then become
strategy. Then structure follows strategy by organizing the Microsoft organization around the
strategic imperatives and then finally other supporting processes get adapted to support the
strategy and structure.
This consistency means that by studying what Nadella says you can foresee where Microsoft is
going over the next couple of years. One of the reasons we have gone extensively into some of
the things Nadella has said in 2014 and 2015 is that you can already deduct where Microsoft is
going. There is no surprise. For the author the focus over the next couple of years is on Cloud,
Big Data and AI. Mixed Reality will remain more of a niche and Quantum Computing is a search
for the Holy Grail with a large payback for those who get there first. In order to do AI you need
to have your data estate in order and the cloud facilitates this.
Lessons for Partners
To understand where Microsoft is going do your homework. Study and read what Nadella says
as this will give you a view a couple of years out. Contrast this with what local Microsoft
employees tell you. They might have studied and read less than you.
47
Hit Refresh chapter 6: “With mixed reality we are building the ultimate computing experience, one in
which your field of view becomes a computing surface and the digital world, and your physical world
become one. Artificial intelligence powers every experience, augmenting human capability with insights
and predictive power that would be impossible to achieve on our own. Finally, quantum computing will
allow us to go beyond the bounds of Moore’s Law by changing the very physics of computing as we
know it today, providing the computational power to solve the world’s biggest and most complex
problems. MR, AI, and quantum may be independent threads today, but they are going to come
together. We’re betting on it.”
48
Hit Refresh Chapter 3.
49
Nadella in Hit Refresh refers to a Jeff Weiner statement. (Jeff is the CEO of LinkedIn): “consistency
over time is trust”. On clarity he states: “This is one of the foundational things leaders do every day,
every minute. In order to bring clarity, you’ve got to synthesize the complex. Leaders take internal and
external noise and synthesize a message from it, recognizing the true signal within a lot of noise. I don’t
want to hear that someone is the smartest person in the room. I want to hear them take their
intelligence and use it to develop deep shared understanding within teams and define a course of
action.”

28
Cloud is still important and is going hybrid. But the next big thing is AI. In order to do AI
customers need their data estate in order. The AI tidal wave will pull through a lot of data
projects. Compute goes where the data is.
So invest in cloud yesterday, in big data and AI today. Mixed reality is still a niche. If you invest
here, you are ahead of the general curve and only very specialized partners will make money in
the short term.

29
Chapter 2. Microsoft´s Business Model Changes.
Microsoft describes what it offers to the market like this:
“We develop, license, and support a wide range of software products, services, and devices
that deliver new opportunities, greater convenience, and enhanced value to people’s lives.”
“Our products include operating systems; cross-device productivity applications; server
applications; business solution applications; desktop and server management tools; software
development tools; video games; and training and certification of computer system integrators
and developers. We also design, manufacture, and sell devices, including PCs, tablets, gaming
and entertainment consoles, other intelligent devices, and related accessories that integrate
with our cloud-based offerings. We offer an array of services, including cloud-based solutions
that provide customers with software, services, platforms, and content, and we provide
solution support and consulting services. We also deliver relevant online advertising to a global
audience.”50
Microsoft sells software, services and devices. They sell this to businesses and consumers. As
you can see, there are many different business models mixed here.
Let us try to dissect all those one by one.
Ballmer Era I: Selling Software
Since taking over from Gates in fiscal year 2000 until he changed the strategy of Microsoft to
becoming a Devices and Services Company the business model for Microsoft was based on
selling software with some residual services and devices.
Selling software.
Software is expensive to develop.51
Once developed however, your marginal cost to produce
an extra item is very low, as you only need to give out an additional license key.52
Successful
software companies have very high gross margins. The other beautiful part of the model is
upfront payments and maintenance fees which in general hover around 20 percent. 53
Gross margins have always been highest for Windows, then for Office and then for the Server
products. This has to do with the sales model. Windows has three sales motions. The first
motion is selling Windows to OEM manufacturers that pre-install Windows on PC´s that they
50
From the 2017 10-K document http://view.officeapps.live.com/op/view.aspx?src=https://c.s-
microsoft.com/en-us/CMSFiles/MSFT_FY17_10K.docx?version=c33e3c7b-17ce-cd84-7e64-
217cc6253359
51
As an example, during fiscal years 2017, 2016, and 2015, Microsoft´s research and development
expense was $13.0 billion, $12.0 billion, and $12.0 billion, respectively. These amounts represented
14%, 14%, and 13% of revenue respectively.
52
If purchased online. There are costs involved in producing packaged software sold via retail.
53
Microsoft contrary to other vendors has to be very careful on how to incent customers to buy
maintenance because of all the historical baggage of bundling products, see chapter 3.

30
sell. Very few large customers with very high volumes makes for a low sales overhead.54
The
second motion is the Windows enterprise business selling Windows enterprise with Software
Assurance.55
The third motion is selling packaged Windows boxes via retail.
The Office sales motions in order of importance were first the enterprise sales motion, then
´Office attach´ to OEM PC´s and then packaged Office via retail or online.
For Server products, the sales cost is higher as you must sell complex products to businesses
which requires longer sales cycles with more resources.
A structural problem Microsoft always has had to cope with is illegal use of its software
specifically on the consumer side.56
On the business side, part of this incorrect use is caused by
the sheer complexity of the Microsoft licensing terms. A much-used instrument in the
Microsoft field during years or quarters when it was hard to make the numbers was to have
audits done at the client (or the friendly description Software Asset Management
engagements). A positive consequence of the cloud model is that illegal use will become nearly
impossible for customers using Microsoft cloud services.
Selling Services
Selling services for Microsoft during the Ballmer era meant search, online advertising, x-box
related services and Microsoft consulting services. Microsoft consulting services was counted
for under the Server & Tools product group and has never reached more than 5% of all up
revenues.57
Advertising was a big play together with search and Microsoft spent $6B to buy Aquantive in
2007 which was mainly a display advertising technology company in response to Google
buying Doubleclick.58
Then Microsoft decided to focus mostly on search and search advertising
54
From Microsoft´s 2017 10-K: “We distribute our software through OEMs that pre-install our software
on new devices and servers they sell. The largest component of the OEM business is the Windows
operating system pre-installed on devices. There are two broad categories of OEMs. The largest
category of OEMs are direct OEMs as our relationship with them is managed through a direct agreement
between Microsoft and the OEM. We have distribution agreements covering one or more of our
products with virtually all the multinational OEMs, including Acer, ASUS, Dell, Fujitsu, Hewlett-Packard,
Lenovo, Samsung, Toshiba, and with many regional and local OEMs. The second broad category of OEMs
are system builders consisting of lower-volume PC manufacturers, which source Microsoft software for
pre-installation and local redistribution primarily through the Microsoft distributor channel rather than
through a direct agreement or relationship with Microsoft.”
55
Enterprises have to buy PC´s with preinstalled Windows which they can then upgrade to the Windows
enterprise version under Software Assurance.
56
Current estimates of illegal use range from 62% (Asia Pacific) to 19% (North America). www.bsa.org
57
Author´s estimate
58
In its 2010 10-K Microsoft describes it advertising business as follows: “The Online Services Division
(“OSD”) consists of online information offerings such as Bing, MSN portals and channels, as well as an
online advertising platform with offerings for both publishers and advertisers. We earn revenue
primarily from online advertising, including search, display, and advertiser and publisher tools. On
December 4, 2009, we entered into a definitive agreement with Yahoo! whereby Microsoft will provide
the exclusive algorithmic and paid search platform for Yahoo! Web sites. We believe this agreement will
allow us over time to improve the effectiveness and increase the value of our search offering through
greater scale in search queries and an expanded and more competitive search and advertising
marketplace.”

31
with Bing and wrote off $6.3B in 2012 on the Aquantive purchase.59
X-box related services has
to do with the online Xbox properties like Xbox LIVE services.
Selling Devices
Devices for Microsoft has historically been peripherals like mice and keyboards and Xbox
related hardware. Then Zune came into the picture to try to compete with the iPod. Selling
and servicing hardware is a complex business compared to selling software. You need to
purchase parts, integrate, do logistics, provide warranty etc. This is not something Microsoft
was used to manage at a large scale.
Business model profitability
To understand how profitable the Software sales business model was we have looked at the
Microsoft numbers from 2005 to 2013.60
The reason we took this period is twofold. First, it is
the longest period that the reporting has been done for a consistent grouping of businesses
(Windows Client, Business group, Server & Tools, Online Services and Entertainment &
Devices). Second, this is a subset of the period Steve Ballmer was at the helm.
Figure 2 Microsoft all up revenue and operating income 2005 -2013 in M$
In the nine-year period Windows generated revenue of $147B with an operating income of
$99.9B, a 68 percent margin. Office generated $171B with an operating income of $111B, a 65
percent margin. Server & Tools generated $127B with an operating income of $46B, a 36%
59
https://www.geekwire.com/2012/writedown-microsoft-squandered-62b-purchase-ad-giant-
aquantive/
60
See appendix 4 for the detailed numbers

32
margin. Entertainment & Devices generated $67B of revenue with a margin of $53M. The big
money looser was online services with a revenue of $17B and $6B of losses.61
If you look at the risk profiles probably, the least risky is the Server & Tools business, then the
Windows business and then the Office business. For customers it is hard to change databases
to another vendor, a client OS you would not easily change in the enterprise and Office is the
least risky thing to change. Both Online services and Entertainment & Devices are much riskier.
Online services because there is a large incumbent (Google) and because this depends on
advertising budgets which depend on marketing budgets which depend on economic cycles.
Xbox is even a riskier business model. You must spend billions on R&D for several years to
deliver a gaming console with a closed ecosystem that very soon after launch you sell for what
it costs to produce. Here the model is to have the key games ideally on your platform only and
you monetize through games. Part of having the key games is producing them yourself which
has the risk profile of trying to produce Hollywood blockbusters.
Figure 3. Microsoft all up revenue per year 2005 - 2013
Looking at the revenue one can see that Office has been the largest revenue contributor since
2005. However, if you look at operating income (see figure 4) one can see that Windows has
been the biggest contributor until 2010 (except for 2009) and then you see the decline starting
in Windows caused by the secular shift of activity to mobile platforms. People where buying
less and less PC´s and those that were being used where used for a longer time than the
61
However, Microsoft credits the online services business for having created the infrastructure, the
assets and engineering chops to run a cloud at hyper scale level, the same way AWS credits the Amazon
retail business and Google the search business. Nadella confirms this in Hit Refresh.

33
standard four years.62
What made the decline in revenue less steep for Microsoft were the
enterprise clients on three-year contract cycles.
Other secular shifts that were going on were the emergence of cloud and a tendency of
businesses not renewing Office licenses as, on the one hand people became feature tired and,
specifically on the consumer side there were other good enough alternatives out there.
Cloud revenue was still low. Microsoft had been investing in the Azure cloud since 2008 and
BPOS (later renamed to O365) since 2009 however, the field salesforce was hesitant to sell the
cloud alternatives. This had to do with sales incentives that were not prioritizing selling cloud
at the time.
Figure 4: Microsoft all up operating income per year 2005 - 2013
Ballmer Era II: Devices, Consumer and Commercial
Ballmer´s view at the time was that the two most successful companies that were reaping the
profits in the market where Apple and Samsung, so he wanted to start emulating their
business models. In 2013, Microsoft became a devices and services company.
Ballmer started a reorg focused on creating ´One Microsoft´. The original product groups were
reorganized into four engineering areas: OS, Apps, Cloud and Devices. Dynamics was kept
separate. 63
The financial reporting structure changed to be in line with the new strategy. Therefore,
beginning in fiscal year 2014, Microsoft reported its financial performance based on new
segments: Devices and Consumer (“D&C”) Licensing, D&C Hardware, D&C Other, Commercial
62
Gartner Says 2016 Marked Fifth Consecutive Year of Worldwide PC Shipment Decline
http://www.gartner.com/newsroom/id/3568420
63
Microsoft has historically been struggling with scaling Dynamics revenue. Microsoft bought Great
Plains and Navision in the early 2000´s but Dynamics never reached more than $2B in revenue which is a
small percentage of Microsoft all up revenue. The field sales force for Dynamics has remained separate
until fiscal year 16.

34
Licensing, and Commercial Other. This was a big change and made it difficult to compare
numbers with previous years.
From reporting performance on the five historic business groups (Windows, Office, Server &
Tools, Entertainment & Devices, Online) Microsoft moved all of this around to report basically
on two segments, Devices & Consumer on the one hand and Commercial on the other. This
was the first time since over a decade that Microsoft called out consumer as a key market
segment.64
Until then the only serious consumer franchise was Xbox.
Windows and Office ended up split in D&C and in Commercial. Advertising and Office 365
consumer ended up in D&C other category. Azure and O365 commercial ended up in the
commercial other category.
Microsoft reported the numbers this way in 2014 and in 2015. Although Satya took over from
Ballmer in February 2014, adjusting the financial structure, in line with his three
interconnected ambitions did not happen until fiscal year 2016.
The Satya Era: All about Cloud & Services
2014-2017
Satya inherited a financial reporting structure that was not in line with his vision for Microsoft.
Microsoft was still the Windows and Office Company. PC´s sales had been falling for years as
secular shifts to mobile computing ate into Microsoft´s most profitable business model. AWS
was the only serious player in cloud computing. As cloud was quickly becoming the paradigm
for the future, Microsoft coined the term Cloud Run Rate.
Cloud run rate is taking your last month’s revenue and multiplying by 12. Microsoft´s cloud run
rate included O365, Azure, EMS, and Dynamics 365. As Satya mentions in Hit Refresh “It took
us from a defensive frame amid falling PC and phone share to an offensive mindset. We went
from deflection to ownership of our future.” It was also a clear sign internally and externally
that Microsoft was taking the shift to cloud computing seriously.
In all the three interconnected ambitions, it is about how fast Microsoft is moving to the cloud.
In productivity and business processes, it is about Office 365 and LinkedIn. In the intelligent
cloud platform, it is about Azure and even in the more personal computing segment Windows
is moving to a as a service model and Microsoft is looking at extended ways to monetize
Windows.65
Closing Nokia let to a decrease in revenue for Microsoft but to an increase in operating
income.
64
Although Microsoft started out having success with consumers or hobbyists in the early years, they
soon became a business customer oriented company. Remember Microsoft owned properties like
Encarta, Microsoft Bookshelf and Expedia for example.
65
See appendix five. How does Microsoft monetize Windows in a cloud world?

35
Figure 5: Microsoft Revenue, Operating Income and Net Income 2001-2017
Microsoft´s reported run rate for its commercial cloud was $4.4B, $9.4B, $12.1B and $18.9B
from 2014 to 2017. This makes Microsoft one of the biggest enterprise cloud players in the
world. Microsoft generated about $15B of cloud revenue in 2017, which was 17 percent of the
all up revenue.66
Compare this to born in the cloud companies like Facebook or Google which are over 95
percent of cloud revenue or full enterprise cloud companies like Salesforce or Adobe which are
over 90 percent as well. Even Oracle and IBM are claiming similar percentages of cloud-based
revenue as Microsoft. In 2017 Microsoft was the number two enterprise cloud company
behind AWS but with less than a quarter of its total revenue in the cloud.
Cloud margins
Delivering cloud services has a lower gross margin than selling software as you must provide all
the underlying infrastructure and services. Between the different segments, Productivity and
Business processes (PBP) has a higher cloud margin than intelligent cloud (Azure). As Azure is
growing faster than PBP the gross margins will go down over time. Microsoft is compensating
this via selling higher value Azure services. Then there is the scale component. At a certain
level of scale, the cloud business gross margins tend to go up.67
The FY 2017 all up gross margin for Microsoft was 64 percent, the commercial cloud gross
margin was an average of 50 percent over the four quarters.
Q4 2017 was the last time that Microsoft called out its annualized commercial cloud run rate.
In Q1 2018 Microsoft started calling out commercial cloud revenue at $5.0B and states the
66
The Q4 2017 earnings call was the first time that Amy Hood mentioned the all up commercial cloud
revenue. Until then Microsoft only spoke about run rate.
67
This is what happened at Amazon with AWS which is now the biggest profit contributor to Amazon.

36
FY2017 numbers per quarter at $3.2B, $3.4B, $3.8B and $4.5B respectively. This makes for a 56
percent growth over a rolling 12 months period.

37
Quarter Revenue B$ GM%
12Months
growth
FY17 Q1 3,2 49%
FY17Q2 3,4 48%
FY17Q3 3,8 51%
FY17Q4 4,5 52%
FY18Q1 5 57% 56,3%
FY18Q2 5,3 55% 55,9%
FY18Q3 6 57% 57,9%
Table 1. Microsoft Cloud Revenue
It is interesting to notice that Microsoft´s cloud and AWS are similar in size and growing at the
same rate.68
Microsoft also seems to be doing a good job on increasing the cloud margins.
Conclusions
Of the three business segments, Productivity and Business Processes, Intelligent Cloud
segment and More Personal Computing, the biggest revenue contributor is still More Personal
Computing, then Productivity and Business Processes, and then Intelligent Cloud.
More Personal Computing is in a down market that will go down structurally. In Productivity
and Business Processes Microsoft is converting on premise-installed base to the cloud.69
Intelligent Cloud is where the real battle for market share happens.
Simplifying Microsoft´s strategic imperatives: Microsoft needs to protect, as long as possible,
the more personal computing segment. Strategically Microsoft now has gravitated towards
O365 as a pull for Windows by creating Microsoft365. Microsoft needs to convert the Office
installed base as quickly as possible to the cloud to defend its market share from others like
Google and Slack. Microsoft still has a large addressable market in the SMB space for O365.70
However, the real battle for new market share is in the Azure space. That is where for the last
couple of years the focus of Microsoft has been, Azure, Azure and Azure. Microsoft must do
this against a backdrop of decreasing gross margin percentage due to a higher cloud mix,
which has a lower gross margin percentage than selling software licenses although there is
now an upward trend in cloud gross margins.
68
Although all of Amazons growth is accretive. Part of Microsoft´s cloud growth is cannibalizing on
premise business.
69
Amy Hood made an interesting comment during the presentation of the FY 17 results; “for the first
time, Office 365 Commercial revenue surpassed revenue from our traditional licensing business.”
70
Bitglass in a 2018 study on cloud puts the O365 penetration in companies under 500 employee at 49.6
percent versus over 73 percent for companies above 500 employees.
https://pages.bitglass.com/FY18BR-CloudAdoption_LP.html

38
Lessons for Partners
Microsoft is all about the cloud now but there are different clouds and depending on how
much help Microsoft needs you will feel a different level of interest from Microsoft.
With O365 Microsoft is the clear market leader and Microsoft feels that it doesn´t need a lot of
help.71
The large white space is in SMB but if you only focus on O365 you will not get a lot of
attention from Microsoft. If you focus on Microsoft365 you will get a bit more attention as it is
the new SKU that they want to make successful.72
Dynamics365 is relatively new. Microsoft has many Dynamics partners that know the on-
premise world but not a lot that know the cloud world very well. As a long-term Dynamics
partner you need to convert to cloud now. There is also an interesting opportunity for new
partners to get into this business due to the increased integration of Dynamics365 and O365.
Azure is THE cloud and Azure is where the big battle happens for Microsoft. Here there are
different strategies and workloads. Microsoft is still very interested in getting customers that
are not using Azure to use Azure. However, more and more you will see Microsoft pushing
higher value add Azure services like Media Services, Data & Analytics, Enterprise Integration,
IOT and AI & Cognitive services instead of Compute, Networking and Storage. As a partner, you
must move beyond the basic Azure workloads.
Cloud also means consumption so as a partner you will need to have a clear strategy on how
you drive consumption of Microsoft cloud services in your accounts.
71
Research done by Bitglass on cloud adoption of 135.00 companies has O365 adoption going from 7,7%
in 2014 to 34,3% in 2016 to 56,3% in 2018. https://pages.bitglass.com/FY18BR-CloudAdoption_LP.html
72
SKU is Stock Keeping Unit, in general used to describe a product reference.

39
Chapter 3. Co-opetition
In this chapter, we will discuss both Microsoft´s competition and how Microsoft competes. We
will also look at some of the partnering strategies. To explain how Microsoft competes we
need to take you back to the origins of the personal computer.
The early years
1975- 1998
Apple had a head start to IBM with the launch of the Apple II in 1977. Apple surpassed any
competitors by being the platform that had the most useful applications.73
One such killer app was VisiCalc, a spreadsheet program. VisiCalc alone seemed to motivate
people to buy an Apple II. Apple´s strength had grown over the years due to a large amount of
Independent Software Vendors (ISVs) that had created dedicated applications for the Apple II.
This was a powerful defensive asset for Apple when in 1981 IBM entered the market with the
IBM PC.
Apple had a proprietary go to market approach which the computer industry had used for
decades. IBM on the contrary separated hardware from software because of an antitrust case
some years earlier. IBM offered two options for the operating system: CP/M from DRI and MS-
DOS from Microsoft, which was based on a clone of CP/M that Microsoft had bought, and IBM
sold under the name of PC-DOS. CP/M was priced a factor 10X more expensive than PC-DOS
and quickly fell behind PC-DOS.74
IBM decided to use generic components, which made cloning the IBM PC feasible. After
Phoenix computers build a comparable program to the IBM BIOS75
, other companies started
building IBM PC clones. This presented Microsoft with a chance to win additional customers
for MS-DOS.
ISVs were drawn to the PC opportunity because of the potential high volumes and a more
homogeneous application environment. Businesses and end users were drawn to the PC
because they were becoming accessible and affordable. In 1983, IBM PC´s outsold Apple by
three to one. IBM made MS-DOS the de-facto standard on its PC´s in 1986 by pre-installing it.
PC technology took off. Bill Gates is credited for seeing early on, where the market would be
going and for democratizing the PC industry.
Microsoft released Microsoft Windows, a graphical extension for MS-DOS in 1985. Microsoft
introduced its office suite, Microsoft Office in 1990. The software bundled separate office
productivity applications, such as Microsoft Word and Microsoft Excel. Both Office and
Windows became dominant in their respective areas.
73
Joachim Kempin: Resolve and Fortitude: Microsoft's ''SECRET POWER BROKER'' breaks his silence. The
first part of this chapter draws heavily from his book.
74
This was a strategic decision of Bill Gates who was after market penetration and unit volume.
75
Bios: Basic Input Output System an IBM PC needed to manage peripherals.

40
The US Government
The U.S. government's interest in Microsoft began in 1992 with an inquiry by the Federal Trade
Commission over whether Microsoft was abusing its monopoly in the PC operating system
market.76
A settlement was reached on July 15, 1994, in which Microsoft consented not to tie
other Microsoft products to the sale of Windows but remained free to integrate additional
features into the operating system.
In 1994, the U.S. Department of Justice Antitrust Division filed a Competitive Impact Statement
that stated "Beginning in 1988, and continuing until July 15, 1994, Microsoft induced many
OEMs to execute anti-competitive "per processor" licenses. Under a per processor license, an
OEM pays Microsoft a royalty for each computer it sells containing a particular
microprocessor, whether the OEM sells the computer with a Microsoft operating system or a
non-Microsoft operating system. In effect, the royalty payment to Microsoft when no
Microsoft product is being used acts as a penalty, or tax, on the OEM's use of a competing PC
operating system”.
In 1995, Microsoft launched Windows 95, which came bundled with the online service MSN
and Internet Explorer, a web browser. In October 1997, the Justice Department filed a motion
in the Federal District Court, stating that Microsoft violated an agreement signed in 1994 and
asked the court to stop the bundling of Internet Explorer with Windows. 77
1998 -2001: Trial, Judgement, Appeal & Settlement
The trial against Microsoft began on May 18, 1998, with the U.S. Department of Justice and the
Attorneys General of twenty U.S. states suing Microsoft for illegally obstructing competition in
order to protect and extend its software monopoly. In October 1998, the U.S. Department of
Justice also sued Microsoft for violating a 1994 consent decree by forcing computer makers to
include its Internet browser as a part of the installation of Windows software.
Judge Thomas Penfield Jackson issued his findings of fact on November 5, 1999, which stated
that Microsoft's dominance of the x86-based personal computer operating systems market
constituted a monopoly, and that Microsoft had taken actions to crush threats to that
monopoly, impacting Apple, Java, Netscape, Lotus Software, RealNetworks, Linux, and others.
On June 7, 2000, the court ordered a breakup of Microsoft as its "remedy". According to that
judgment, Microsoft would have to be broken into two separate units, one to produce the
operating system, and one to produce other software components. 78
The DOJ announced on September 6, 2001, that it was no longer seeking to break up Microsoft
and would instead seek a lesser antitrust penalty. Microsoft decided to draft a settlement
proposal allowing PC manufacturers to adopt non-Microsoft software.
On November 2, 2001, the DOJ reached an agreement with Microsoft to settle the case. The
proposed settlement required Microsoft to share its application programming interfaces with
third-party companies and appoint a panel of three people who would have full access to
Microsoft's systems, records, and source code for five years in order to ensure compliance.
76
Wikipedia. https://en.wikipedia.org/wiki/United_States_v._Microsoft_Corp.
77
Wikipedia. https://en.wikipedia.org/wiki/Microsoft
78
Wikipedia https://en.wikipedia.org/wiki/United_States_v._Microsoft_Corp.

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