Microsoft's Comment on Supply Chain
We develop most of our products and services internally through four primary engineering
Applications and Services Engineering Group, focuses on broad applications and
services core technologies in productivity, communication, search, and other information
Cloud and Enterprise Engineering Group, focuses on development of Microsoft’s
back-end technologies like datacenter, database, and our specific technologies
for enterprise IT scenarios and development tools. This group also engineers
datacenter development, construction, and operation.
Devices Engineering Group, focuses on all hardware development and supply chain,
including Xbox consoles, Surface devices, Lumia Smartphones, other non-Lumia
phones, Perceptive Pixel products, and accessories.
Operating Systems Engineering Group, focuses on Microsoft’s operating
systems for consoles, mobile devices, PCs, and back-end systems. Studios and
Universal Store, the core cloud services for marketplaces, membership, and commerce
platform, are also in this group.
Internal development allows us to maintain competitive advantages that come
from product differentiation and closer technical control over our products
and services. It also gives us the freedom to decide which modifications and
enhancements are most important and when they should be implemented. We strive
to obtain information as early as possible about changing usage patterns and
hardware advances that may affect software design. Before releasing new software
platforms, we provide application vendors with a range of resources and guidelines
for development, training, and testing. Generally, we also create product documentation
We protect our intellectual property investments in a variety of ways. We
work actively in the U.S. and internationally to ensure the enforcement of copyright,
trademark, trade secret, and other protections that apply to our software and
hardware products, services, business plans, and branding. We are a leader among
technology companies in pursuing patents and currently have a portfolio of over
55,000 U.S. and international patents issued and over 40,000 pending. While
we employ much of our internally developed intellectual property exclusively
in Microsoft products and services, we also engage in outbound and inbound licensing
of specific patented technologies that are incorporated into licensees’
or Microsoft’s products. From time to time, we enter into broader cross-license
agreements with other technology companies covering entire groups of patents.
We also purchase or license technology that we incorporate into our products
or services. At times, we make select intellectual property broadly available
at no or low cost to achieve a strategic objective, such as promoting industry
standards, advancing interoperability, or attracting and enabling our external
development community. In conjunction with the NDS acquisition, we received
an initial 10-year non-exclusive license to certain Nokia patents. We also agreed
to license Nokia’s mapping services and granted Nokia reciprocal rights
to use our patents for their mapping and location services.
While it may be necessary in the future to seek or renew licenses relating to
various aspects of our products and business methods, we believe, based upon
past experience and industry practice, such licenses generally could be obtained
on commercially reasonable terms. We believe our continuing research and product
development are not materially dependent on any single license or other agreement
with a third party relating to the development of our products.