Microsoft's Comment on Sales, Marketing and Customers
We distribute software through OEMs that pre-install our software on new PCs,
tablets, servers, smartphones, and other intelligent devices that they sell
to end customers. The largest component of the OEM business is the Windows operating
system pre-installed on computing devices. OEMs also sell hardware pre-installed
with other Microsoft products, including server and embedded operating systems
and applications such as our Microsoft Office suite. In addition to these products,
we also market our services through OEMs and service bundles such as Windows
with Bing or Windows with Office 365 subscription.
There are two broad categories of OEMs. The largest OEMs, many of which operate
globally, are referred to as “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 of the multinational OEMs, including Acer, ASUS, Dell, Fujitsu, HTC, Hewlett-Packard,
LG, Lenovo, Samsung, Sony, Toshiba, and with many regional and local OEMs. The
second broad category of OEMs consists of lower-volume PC manufacturers (also
called “system builders”), which source their Microsoft software
for pre-installation and local redistribution primarily through the Microsoft
distributor channel rather than through a direct agreement or relationship with
Microsoft.
Many organizations that license our products and services through enterprise
agreements transact directly with us, with sales support from solution integrators,
independent software vendors, web agencies, and developers that advise organizations
on licensing our products and services (“Enterprise Agreement Direct Advisors”,
or “EDAs”). Organizations also license our products and services
indirectly, primarily through license solutions partners (“LSPs”),
distributors, value-added resellers (“VARs”), OEMs, system builder
channels, and retailers. Although each type of reselling partner reaches organizations
of all sizes, LSPs are primarily engaged with large organizations, distributors
resell primarily to VARs, and VARs typically reach small-sized and medium-sized
organizations. EDAs typically are also authorized as LSPs and operate as resellers
for our other licensing programs, such as the Select Plus and Open licensing
programs discussed under “Licensing Options” below. Some of our
distributors include Ingram Micro and Tech Data, and some of our largest resellers
include CDW, Dell, Insight Enterprises, and Software House International.
Our Microsoft Dynamics software offerings are also licensed to enterprises through
a global network of channel partners providing vertical solutions and specialized
services. We distribute our retail packaged products primarily through independent
non-exclusive distributors, authorized replicators, resellers, and retail outlets.
Individual consumers obtain these products primarily through retail outlets,
such as Wal-Mart, Dixons, and Microsoft retail stores. We distribute our hardware
products, including Surface, Xbox, phones, and PC accessories, through third-party
retailers and Microsoft retail stores. Our phones are also distributed through
global wireless communications carriers. We have a network of field sales representatives
and field support personnel that solicits orders from distributors and resellers,
and provides product training and sales support.
