Category: Microsoft news

Microsoft news, features, events, and press materials

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From Apollo to ESO: Exploring the universe, celebrating a spirit of discovery

Fifty years ago this month, the crew of Apollo 11 made history when they touched down and set foot on the moon. It was a voyage of discovery that built upon centuries of progress to unlock the secrets of the heavens – a quest that continues to this day in the Chilean desert at the European Southern Observatory, or ESO. In this edition of Today in Technology, Microsoft President Brad Smith and Sr. Communications Director Carol Ann Browne learn how observational technology has evolved from Galileo’s telescopes to computers that must process enormous amounts of data.

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Norwegian Air Shuttle empowers its pilots with Surface Pro

Unlike conventional subscriber identity module (SIM) cards, which are used to authenticate a user’s identity with a mobile service provider, an eSIM is permanently embedded in a device, eliminating the need to acquire physical SIM cards from a carrier. “We saw that this device was able to take advantage of eSIM technology, which is uncharted territory in our industry,” says Olsen. “We’ve envisioned this for a long time because it’s easy to lose physical SIM cards. And with the eSIM and Microsoft Intune, we can send up to 20 SIM profiles to one client so that we can find the right profile for the region where we’re flying and quickly activate it.” In addition, because the eSIM is non-removable, there are no issues in matching the various physical SIM card sizes to devices.

A tough job
EFB devices need to be tough. Flying through sub-zero temperatures in Norway during a brutal winter one day and landing in the searing heat of Dubai the next, demands a device that can stand up to temperature extremes. Even in a climate-controlled cockpit, devices are subjected to direct sunlight and cold because of their placement.

These devices must also remain stable and reliable regardless of exposure to rapid decompression. Among the requirements that are mandated by various regulatory bodies, including the United States Federal Aviation Administration (FAA), EFB devices must also have fail-safe power sources. For Olsen, Microsoft provides an advantage, as it maintains a dedicated lab for meticulous device testing. “Microsoft provides decompression testing for devices that are used as EFBs,” he explains. “Rather than testing the devices myself, I get all the relevant results directly from Microsoft.”

Lighting the way
Screen brightness is a vital factor in an always-on cockpit environment. Pilots need a responsive, easily-adjustable screen to match fast-changing conditions. EFB data must be easily visible in bright sunlight or during the gloomy darkness of a night flight. “It’s really amazing to see the difference of the Surface Pro LTE screen in different light conditions,” Olsen states. “When you’re working with 2,500 pilots, you’ll always have extremes of opinion in what lighting level works best, so the ease of adjusting the screen is essential.”

Beyond brightness, another important screen factor is its sensitivity and accuracy. Crews use Surface Pro with LTE Advanced in tablet mode, so touch sensitivity is paramount, and Norwegian Air Shuttle calibrates screen sensitivity on devices every two to three months. Unlike previous devices, Olsen finds that the touch sensitivity of the Surface Pro with LTE Advanced doesn’t fade over time—an important factor for crews who may be flying in turbulent weather and require instant screen responsiveness without taking time to recalibrate or repeat an action when every second counts.

Johan Gauermann, Deputy Director of Flight Operations at Norwegian Air Shuttle states that “Our team of pilots really appreciate the value of our EFB Application in combination with the global LTE Connectivity of the Surface Devices. We train thousands of pilots, and they become effective Surface users quickly. The bright display at high altitudes and responsive touch screen work for everyone.”

Synchronising EFBs around the world
Ensuring that all devices around the world are updated is also extremely important. The Norwegian team is working to perfect the next advancement in its device strategy—using Windows Autopilot Deployment to load Windows 10 and manage updates with self-service provisioning. Olsen looks forward to shipping Surface Pro with LTE Advanced devices around the globe, using Windows Autopilot to ensure that each device is configured to his exact specifications. “We’re taking our EFB provisioning to a new level with the possibilities we see in current Microsoft solutions,” he says. “Wherever I send the device, I can be sure that through the Intune portal and Windows Autopilot, it will be set up exactly as we want: all the settings, eSIM profiles, and software.”

With hundreds of planes to provision with EFB devices and the requirements for consistently high performance, Norwegian Air Shuttle puts a premium on reliability. Olsen looks for well-made devices that will last, and he doesn’t compromise on performance. The capabilities of Surface Pro with LTE Advanced was, according to him, the icing on the cake:

“We tested devices that were far more expensive,” he describes. “Price isn’t an issue for the right device. Only one device provided the best value—the performance we need at a reasonable cost that ticked every box on the list, plus LTE. We anticipate a huge benefit within the next year when our entire fleet is equipped with Surface Pro LTE.”

For more information, please visit Microsoft Customer Stories.

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Microsoft makers recreate iconic Apollo 11 hatch for 50th anniversary of historic moon landing

But unlike aerospace shops with enormous equipment, the lab houses machines for prototyping computer devices, which were too small to cut the hatch as a single piece. Breaking down and designing separate pieces was one of many puzzles to solve, especially as the scope of the project ballooned with additional requests.

In addition to making the 65-pound hatch replica, the team designed and welded a 140-pound steel stand, encased in plywood, to display the hatch when completed. The team integrated 211 brass inserts into the hatch, so Savage and other builders would be able to attach parts faster during the live assembly. Savage’s team also asked the lab to supply descriptive plaques, which the lab quickly made with a waterjet and ultraviolet printer in-house just in time.

Much of the logistical work landed on Jay Trzaskos, a model maker and prototyping architect who iterated on the design challenge over many late nights and early mornings to meet a long list of goals. The hatch had to be light enough for easy handling, but durable enough to support the weight of added parts. It had to be accurate in measurement to the real hatch – including size and location of every insert – and beautiful with no visible seams or rough edges.

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The team used a high-density plastic tooling board, specifically sized so each section of the hatch could fit in the lab’s CNC machines. It also designed the display stand to comply with the Americans with Disabilities Act for the Smithsonian.

“So a lot of work went into this, a lot more than we thought it was going to be,” Haley said.

Trzaskos, a longtime NASA fan who studied mechanical and aerospace engineering, didn’t mind. On the day he learned of Progress Egress, he happened to be wearing a NASA shirt and commemorative Apollo 11 sneakers when he glanced at a model of the Columbia on a co-worker’s screen, instantly recognized it and bobbed with excitement.

“To be able to say I worked on something connected with the Smithsonian is huge,” said Trzaskos, whose grandfather had worked on Apollo guidance systems. “But just looking at the Apollo missions and what the engineers accomplished, it’s inspiring. Saying ‘something is difficult’ wasn’t an option. You have to push to be successful and find the most elegant solution within the timeline.”

Two men look at prototypes
Adam Savage (right) with John Haley at Microsoft’s Advanced Prototyping Center in Redmond, Washington.

Based on his designs, lead model maker Eric Roth and other machinists constructed eight pieces that would become the hatch. For Roth, it was a fun job in a fun place, a grown-up toyland brimming with state-of-the-art 3D printers, laser cutters, fabric splitters, industrial waterjet machines, and wire and form electrical discharge machines. Project Egress was a chance for Roth to stretch his passion for building.

“I was always making things as a kid,” he said. “I was given a budget of one Scotch tape roll a day and easily went through it with all the paper-tape-string things I made. I saw ‘Tron’ and the next day, I had string and taped paper things running everywhere.”

After assembly, model maker and finisher Thomas Randall hand-sanded the hatch and painted the front the same color as Microsoft’s Surface silver, evoking the Mylar thermal coating of the Columbia’s heat shield. He then pounded in all 211 brass inserts. The project appealed to Randall’s industrial design background and passion for large-model rocketry, rooted in a childhood with parents who built and launched rockets with car batteries on dates. He liked challenges.

“Project Egress perfectly ties into what we do every day in our jobs,” Randall said. “We iterate on an idea and make it work.”

The components from other makers turned out to be one of the biggest challenges. The team didn’t know the weight of the components, but wanted to ensure the hatch was stable for Savage and his team to assemble on stage.

Man in industrial mask spray-paints hatch replica in a lab
Bryan Adams sprays water-based paint on the hatch replica in the APC paint lab.

The APC group studied historical documents and estimated the weight of over 300 potential attachments, including screws, to be about 160 pounds. Trzaskos then modified the display stand design in CAD (computer-aided design) to safely lower the model’s center of gravity. Randall measured the inserts’ pull strength – the weight the screws can hold before failure – and found they can hold thousands of pounds.

“This is not only about providing something that’s going to look great, but making the experience as easy and seamless as possible,” said Trzaskos.

Empty Columbia command module photographed against black background
Apollo 11 command module Columbia was part of the first-ever manned lunar landing. Photo by Eric Long, National Air and Space Museum, Smithsonian Institution.

When Savage visited the APC in May, he loved the lab’s powerhouse capabilities for rapid prototype iterations that merge beauty and function, from next-gen headphones to the pioneering “zero-gravity” hinge of Surface Studio.

“This is one of the most intense and delightful playgrounds I’ve ever stepped into,” he said on his podcast, “Still Untitled: The Adam Savage Project.” Creator of Tested and the show “Savage Builds,” the former “Mythbusters” host met many of the APC’s industrial designers, mechanical engineers, model makers, toy designers, sculptors, welders and artists who comprise the 60-member group.

black high-top sneakers with Apollo 11 Eagle patch
Model maker and prototyping architect Jay Trzaskos has three pairs of NASA sneakers, including these Apollo 11 Vans.

“The energy of people doing a job they love and who feel valued is impossible to overestimate,” he said.

Microsoft model makers often draw inspiration from side projects, including a robotic hand they helped a young engineer make for a 10-year-old girl missing her right arm. For the Apollo 11 celebration build, the hatch itself symbolized a feat of engineering that was deeply motivating. Able to swing outward in five seconds, the “unified hatch” emerged in the aftermath of the Apollo 1 fire that killed three astronauts who couldn’t open the original three-part hatch design in time to escape.

“It’s the perfect story of human ingenuity,” Trzaskos said. “It’s a story of how much can we persevere and come together to meet a goal. That’s what we do – adapting and working together to solve problems to create the best product that reaches and inspires everybody.”

Originally published on July 16, 2019. Updated on July 19, 2019. 

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OpenAI forms exclusive computing partnership with Microsoft to build new Azure AI supercomputing technologies

Multiyear partnership founded on shared values of trustworthiness and empowerment, and an investment of $1 billion from Microsoft, will focus on building a platform that OpenAI will use to create new AI technologies and deliver on the promise of artificial general intelligence

Sam Altman, CEO of OpenAI (left), and Microsoft CEO Satya Nadella
Sam Altman, CEO of OpenAI (left), and Microsoft CEO Satya Nadella

SAN FRANCISCO and REDMOND, Wash. — July 22, 2019 — Microsoft Corp. and OpenAI, two companies thinking deeply about the role of AI in the world and how to build secure, trustworthy and ethical AI to serve the public, have partnered to further extend Microsoft Azure’s capabilities in large-scale AI systems. Through this partnership, the companies will accelerate breakthroughs in AI and power OpenAI’s efforts to create artificial general intelligence (AGI). The resulting enhancements to the Azure platform will also help developers build the next generation of AI applications. The partnership covers the following:

  • Microsoft and OpenAI will jointly build new Azure AI supercomputing technologies
  • OpenAI will port its services to run on Microsoft Azure, which it will use to create new AI technologies and deliver on the promise of artificial general intelligence
  • Microsoft will become OpenAI’s preferred partner for commercializing new AI technologies

The companies will focus on building a computational platform in Azure of unprecedented scale, which will train and run increasingly advanced AI models, include hardware technologies that build on Microsoft’s supercomputing technology, and adhere to the two companies’ shared principles on ethics and trust. This will create the foundation for advancements in AI to be implemented in a safe, secure and trustworthy way and is a critical reason the companies chose to partner together.

Over the past decade, innovative applications of deep neural networks coupled with increasing computational power have led to continuous AI breakthroughs in areas such as vision, speech, language processing, translation, robotic control and even gaming. Modern AI systems work well for the specific problem on which they’ve been trained, but getting AI systems to help address some of the hardest problems facing the world today will require generalization and deep mastery of multiple AI technologies. OpenAI and Microsoft’s vision is for artificial general intelligence to work with people to help solve currently intractable multidisciplinary problems, including global challenges such as climate change, more personalized healthcare and education.

“The creation of AGI will be the most important technological development in human history, with the potential to shape the trajectory of humanity,” said Sam Altman, CEO, OpenAI. “Our mission is to ensure that AGI technology benefits all of humanity, and we’re working with Microsoft to build the supercomputing foundation on which we’ll build AGI. We believe it’s crucial that AGI is deployed safely and securely and that its economic benefits are widely distributed. We are excited about how deeply Microsoft shares this vision.”

“AI is one of the most transformative technologies of our time and has the potential to help solve many of our world’s most pressing challenges,” said Satya Nadella, CEO, Microsoft. “By bringing together OpenAI’s breakthrough technology with new Azure AI supercomputing technologies, our ambition is to democratize AI — while always keeping AI safety front and center — so everyone can benefit.”

About OpenAI

OpenAI’s mission is to ensure that artificial general intelligence benefits all of humanity. The OpenAI Charter describes the principles that guide it as it executes on this mission.

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, rrt@we-worldwide.com

OpenAI Media Relations, press@openai.com

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://news.microsoft.com. Web links, telephone numbers and titles were correct at time of publication but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://news.microsoft.com/microsoft-public-relations-contacts.

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We’re opening a flagship store in the UK because London is hard to beat, says top Microsoft executive Chris Capossela

Microsoft chose to open its first European flagship store in London because the city is “hard to beat,” one of the company’s top executives has revealed.

Chris Capossela, Chief Marketing Officer, visited the store with UK CEO Cindy Rose ahead of its launch on July 11, and he said there were “very few locations in the world” that are as appealing as the UK capital.

The first physical retail store for Microsoft in the UK is located on Oxford Circus and covers 22,000 square feet over three floors.

Capossela (above) said it contains many one-of-a-kind features, including a full-sized McLaren Senna sports car that doubles as a Forza Motorsport 7 experience, a Gaming Lounge, a Community Theatre featuring free workshops all-year-round and an entire floor dedicated to helping businesses and organisations use technology.

“Around 86 million people pass through Oxford Circus every year,” he said. “That’s hard to beat. London is also an incredibly diverse city, so we can serve lots of different customers here; it’s a very pan-European city.

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A girl uses a Microsoft Surface device in the Flagship London Store

” data-medium-file=”http://www.sickgaming.net/blog/wp-content/uploads/2019/07/were-opening-a-flagship-store-in-the-uk-because-london-is-hard-to-beat-says-top-microsoft-executive-chris-capossela-3.jpg” data-large-file=”http://www.sickgaming.net/blog/wp-content/uploads/2019/07/were-opening-a-flagship-store-in-the-uk-because-london-is-hard-to-beat-says-top-microsoft-executive-chris-capossela.jpg” class=”size-full wp-image-75143″ src=”http://www.sickgaming.net/blog/wp-content/uploads/2019/07/were-opening-a-flagship-store-in-the-uk-because-london-is-hard-to-beat-says-top-microsoft-executive-chris-capossela.jpg” alt=”A girl uses a Microsoft Surface device in the Flagship London Store” width=”5578″ height=”3719″ srcset=”http://www.sickgaming.net/blog/wp-content/uploads/2019/07/were-opening-a-flagship-store-in-the-uk-because-london-is-hard-to-beat-says-top-microsoft-executive-chris-capossela.jpg 5578w, http://www.sickgaming.net/blog/wp-content/uploads/2019/07/were-opening-a-flagship-store-in-the-uk-because-london-is-hard-to-beat-says-top-microsoft-executive-chris-capossela-3.jpg 300w, http://www.sickgaming.net/blog/wp-content/uploads/2019/07/were-opening-a-flagship-store-in-the-uk-because-london-is-hard-to-beat-says-top-microsoft-executive-chris-capossela-4.jpg 768w, http://www.sickgaming.net/blog/wp-content/uploads/2019/07/were-opening-a-flagship-store-in-the-uk-because-london-is-hard-to-beat-says-top-microsoft-executive-chris-capossela-5.jpg 960w” sizes=”(max-width: 5578px) 100vw, 5578px”>

A girl uses a Microsoft Surface device in the Flagship London Store

“There are very few locations in the world that feature all the different parts that make up what Microsoft is. The early adoption of technology in the UK has been very impressive. That’s important when the company is thinking about what investments to make and where to make them. This flagship would not be in London if we didn’t have a very strong commercial business in this country. We thought very deeply about this.”

The central London flagship store has a modern feel, with lots of space and wood and glass surfaces. Visitors will be greeted on the ground floor by a large video wall and Surface devices on tables, with the McLaren on their right and the HoloLens mixed-reality headset to their left. A wooden spiral staircase or lifts will take them to the Gaming Lounge on the first floor, where they can play the latest Xbox and PC titles in high-quality gaming chairs and professional pods, purchase third-party laptops and accessories and get tech support, trainings, repairs and advice from the Answer Desk. All visitors can create their own personalised Surface Type Cover with Surface Design Lab, featuring a range of designs that can be etched directly onto the cover. They can also take photos in the Selfie Area.

The enterprise area on the second floor is a place to support, train and grow businesses no matter where they are on their digital transformation journey. From small companies and educational institutions to enterprise customers, the Product Advisors and Cloud Technical Experts will help customers discover, deploy and use Microsoft 365 and other resources to solve business challenges such as AI, data security, collaboration and workplace efficiencies. This floor also contains an area for hosting events, as well as meeting rooms and a Showcase space for demonstrating how customers, including Carlsberg and Toyota, are digitally transforming.

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Surface devices in Microsoft’s London Store

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Anyone buying a Surface at the Store can get a designed etched onto the cover

It is also the most accessible store Microsoft has ever opened, with buttons to open doors, lower desks to help those in wheelchairs and Xbox Adaptive Controllers available for gamers with restricted movement.

The 150 Store Associates welcoming visitors speak a total of 45 languages, and selected members of the team can also communicate in British Sign Language. John Carter, Senior Store Manager at the store, said the staff are a mix of ages, genders, ethnicities and abilities, and had all gone through six weeks of training to “deliver our customer-obsessed culture” from when the doors open at 11am on July 11.

Rose also announced that Microsoft is donating £1 million to three charities – UK Youth, Raspberry Pi Foundation and The London Community Foundation – to help them continue to teach digital skills to disadvantaged young people and to support grass-roots community groups in Westminster with digital and employability skills.

“I’m excited about this donation because it’s going to give these charities the opportunity to have even more of an impact across the UK. We are also auctioning 10 limited edition Surface devices designed by British retailer Liberty London, with all proceeds going to gaming charity SpecialEffect, which helped develop the Xbox Adaptive Controller.”

Cindy Rose, Microsoft UK CEO, with gamer Vivek Gohil
Cindy Rose, Microsoft UK CEO, with gamer Vivek Gohil

Talking about the journey to this week’s opening, she added: This has been a three-year labour of love for me. During my Microsoft job interview [in 2016] I remember discussing the need for a Microsoft retail store in London. That’s how long I’ve been thinking about this and planning it. I feel like that part of the jigsaw is now complete.

“What I love most about this flagship is that it’s so much more than just a shopping experience. It is a destination where we can engage with local community to bring our mission to life. Whether it’s teaching kids to code, training educators on how to use tech in the classroom, or showing small businesses and large enterprises how we can help digitally transform their organisation, this store will be the best place to experience all that’s possible with Microsoft.”

Capossela, who said it is “really important for us to have a place that people can walk into and experience Microsoft,” agreed that the store will appeal to every type of customer.

“I want all our stores to have a Microsoft vibe, be very colourful, human and approachable,” he said. “These are the things we want our brand to stand for. The London flagship has some special experiences. I feel very lucky that we have found a space as good as Oxford Circus in London.”

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Meaningful innovation: Human ingenuity, powered by AI

This week, I’ve had a great time in the 110-degree heat in Las Vegas at our Inspire and Ready conferences (well, maybe not enjoying the heat so much). I’ve had the opportunity to share the role of innovation and the power of artificial intelligence with partners and employees from every corner of the globe. This is a really exciting time to be at the forefront of the AI revolution, and it’s been great to be involved in discussions about the profound effect AI is having on how we live and work.

Making the most of AI in business

Making AI real, and delivering tangible impact from it, is something we must work together to achieve. Our partners play a critical role in making the most of the opportunities that are only possible through AI. All week, I’ve heard stories of our partners embracing the power of AI to differentiate their services and extend their capabilities to create new business opportunities for themselves and great business outcomes for their customers.

For example, there’s Xanterra – a customer-experience-driven business that hosts 26 million visitors all over the world. Their goal is to provide world-class service and personalization for their well-traveled guests, many of whom are repeat customers at their different global properties. Xanterra’s challenge was that their properties weren’t connected, creating a gap between the high-touch experiences the company delivers and the need to personalize those experiences for guests. Our partner, RedPoint Global, used Microsoft AI to help Xanterra create a detailed profile of each and every customer by connecting data from more than 100 different sources. Now, they use this information to anticipate their guests’ needs more effectively and generate relevant, customized offers to each. Because of this, the Xanterra team increased their revenue with each touchpoint, elevated the guest experience and is sending customer communications more efficiently.

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So how can we help unlock more opportunities for people to use AI? Our new Microsoft Azure AI Accelerate Program is helping our partners take advantage of the opportunities AI can bring to their business. It focuses on helping grow ecosystems and bridge adoption barriers to create more value for everyone. We’re also making it easier for partners to access AI Business School by connecting each learning path into the Partner Training Center. In addition, we are publishing the AI Business School in a Box in the Partner Marketing Center, a set of unique assets to enable partners to lead AI engagements with confidence.

Making the most of AI in society: AI for Good

While the opportunity that AI presents for our customers and partners is huge, the potential for AI to positively benefit society through ingenuity, vision and scale is even bigger. Microsoft’s AI for Good initiative already has more than 300 grantees across 63 countries. All of them are using AI to tackle some of our greatest challenges that go beyond business — including climate change, humanitarian crises and enabling greater accessibility for the more than 1 billion people across the world living with a disability.

One of my favorite stories, and one that I was honored to share at Microsoft Inspire this week, is the incredible work of Wild Me, one of the program’s grantees. They’re using the power of Microsoft AI to track individual animals to monitor the health of entire species in support of conservation efforts. As a result, they’ve been able to identify 10 times more whale sharks than ever before in human history. It’s truly awe-inspiring and vital work.

Wild Me’s story is one of many showing how AI is positively impacting society and transforming the world we live in. Building upon our commitment to use tech to make a positive impact on society, we just announced our newest AI for Good program dedicated to the preservation and enrichment of cultural heritage. Through our AI for Cultural Heritage program, we’re partnering with the people preserving places of historical and cultural significance for future generations – such as the work by nonprofit organization Iconem, which is using AI to digitally re-create at-risk locations in areas of conflict. The program will also help communities preserve languages that are at risk of being lost, such as the Yucatec Maya and Querétaro Otomi in Mexico. Because of this, more people across the world will be able to enjoy historical artifacts – as exemplified by our recent partnership with the Metropolitan Museum of Art, making its collection of 1.5 million works of art that spans 5,000 years more accessible to everyone.

The innovations from the grantees we’re working with through our AI for Good initiative reflect our belief in the use of AI to inspire and nurture breakthrough ideas that have meaningful impact and can solve some of the world’s greatest problems.

I’m humbled by the work of our partners and grantees, and being at Inspire reminds me just how fortunate I am to help and work alongside them as they create what’s next and do really powerful things with AI. Technology is just one part of the story, and empowering people to shape and transform the world and do good are at the center of it. By encouraging our partners and users to create their own meaningful innovations, we’re working together to embrace change and find solutions to all sorts of challenges – whether they’re business or societal ones.

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‘Gears 5’ Versus Multiplayer Tech Test goes live

It’s finally here – The Gears 5 Versus Tech Test goes live today to give players their first taste of Versus multiplayer action. Starting at 10 a.m. PDT today, COG hopefuls can enlist in the Boot Camp training mode and then jump right into Arcade, the new game type designed for over-the-top fun where characters become heroes with their own unique abilities, loadouts and playstyles.

Gears veterans will want to check out fan-favorite King of the Hill, the updated competitive game type Escalation and a mini-Tour of Duty, a series of challenges that grant sweet Tech Test exclusive rewards that will carry over into Gears 5.  No matter your level of Gears familiarity, Gears 5 offers a game type for you.

[youtube https://www.youtube.com/watch?v=AHJGsbywMFY?version=3&rel=1&fs=1&autohide=2&showsearch=0&showinfo=1&iv_load_policy=1&start=3&wmode=transparent&w=1020&h=574]

Access to the Tech Test is included with your Xbox Game Pass membership or as part of your Gears 5 pre-order (whether as a separate 5×5 code from a participating retailer or bundled in your digital pre-order). Eligible players can download the game app now and matchmaking will begin at 10 a.m. PDT today. Matchmaking will run through July 22 at 10 a.m. PDT and will be active again from July 26 at 10 a.m. PDT until July 29 at 10 a.m. PDT. To download, simply search for “Gears 5” in the Xbox or Windows Store to pull up the Tech Test on your Xbox One or Windows 10 PC. If you’re an Xbox Game Pass member, you will see the Tech Test available to download in “Recently added” section of the Game Pass library. Online multiplayer will require Xbox Live Gold on console or an Xbox Game Pass Ultimate membership. For players on Windows 10 PC, we have the below chart that outlines minimum and recommended specs for the Tech Test:

Boot Camp

Within the Tech Test, players will find Boot Camp, the perfect way to practice your skills and learn new mechanics before joining the fight in Gears 5. Boot Camp takes you through all the basics, from cover movement to executions, in easy-to-repeat sections perfect for new players and returning veterans alike. Whether you’re learning the ropes or just refreshing your memory, Boot Camp offers an intuitive training mode to ensure you’re ready for primetime in the Tech Test.

[youtube https://www.youtube.com/watch?v=eJ_AzLHaUJc?version=3&rel=1&fs=1&autohide=2&showsearch=0&showinfo=1&iv_load_policy=1&wmode=transparent&w=1020&h=574]

Arcade

Arcade is a brand-new type of Versus experience that encourages approachable gameplay for all types of players. Arcade is the ultimate jump-in/jump-out mode featuring classic characters such as Kait and Marcus each with their own distinct abilities and weapon upgrades. For more details on the Arcade experience, check out the above trailer or jump into the action yourself this weekend.

King of the Hill

The classic King of the Hill action you know and love is back in full force in Gears 5. Battle for supremacy and prove your dominance with a team or solo as you compete to capture and hold territories.

Escalation

If you’re looking for the ultimate competitive experience from Gears 5, Escalation offers thrilling, objective-based play requiring a combination of individual skill, teamwork and strategy. With the introduction of limited respawns, an overhauled weapon system and updated player spawning, Escalation in Gears 5 is more tactically rich and competitive than ever before. So grab some friends, experiment with new strategies and watch each other’s backs this weekend.

Thanks for your support and we look forward to seeing you online! Be sure to visit www.gears5.com and follow @GearsofWar on Facebook and Twitter to keep up-to-date with the latest on Gears 5 ahead of launch on September 10.

Gears 5 will release on September 10 for Xbox One, Windows 10 PC and Xbox Game Pass. Early access starts on September 6 for Xbox Game Pass Ultimate members and Gears 5 Ultimate Edition purchasers. Pre-order details can be found on the Microsoft Store.

Xbox Game Pass provides a curated library of over 100 great games for one low-monthly price, with new games added all the time including the latest titles from Xbox Game Studios on the day they launch. The service is available across console and PC, with Ultimate members receiving access to all the benefits of Xbox Live Gold, as well as access to titles across both platforms.

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How AI is changing the world of manufacturing

Henry Ford’s assembly line revolutionized manufacturing in the 20th century. The transformation driven by AI in the 21st century will be just as dramatic. 

“The Future Computed: AI and Manufacturing” is the second book in Microsoft’s The Future Computed series, looking at the impact of AI on society. 

Author Greg Shaw examines the way in which leading manufacturing companies are using AI to build the factories and supply chains of the future. He explores the exciting opportunities around this new technology and also looks at the way the manufacturing industry is again at the forefront of grappling with the challenges of adopting a new technology. In particular, “The Future Computed: AI and Manufacturing” looks at the importance of creating a framework for the ethical and responsible use of AI and ensuring that workers can be trained to take on new tasks.  

[Subscribe to Microsoft on the Issues for more on the topics that matter most.] 

In this video, Shaw explains the themes underlying his research, and hears directly from Çağlayan Arkan, general manager of Microsoft Global Manufacturing, and some of the manufacturing customers at the cutting edge of industrial AI. 

For more on AI innovations at Microsoft follow @MSFTIssues on Twitter.

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Microsoft Cloud powers record fourth quarter results

Microsoft Cloud Powers Record Fourth Quarter Results

REDMOND, Wash. — July 18, 2019 — Microsoft Corp. today announced the following results for the quarter ended June 30, 2019, as compared to the corresponding period of last fiscal year:

·        Revenue was $33.7 billion and increased 12%

·        Operating income was $12.4 billion and increased 20%

·        Net income was $13.2 billion GAAP and $10.6 billion non-GAAP, and increased 49% and 21%, respectively

·        Diluted earnings per share was $1.71 GAAP and $1.37 non-GAAP, and increased 50% and 21%, respectively

·        GAAP results include a $2.6 billion net income tax benefit explained in the Non-GAAP Definition section below

“It was a record fiscal year for Microsoft, a result of our deep partnerships with leading companies in every industry,” said Satya Nadella, chief executive officer of Microsoft. “Every day we work alongside our customers to help them build their own digital capability – innovating with them, creating new businesses with them, and earning their trust. This commitment to our customers’ success is resulting in larger, multi-year commercial cloud agreements and growing momentum across every layer of our technology stack.”

The following table reconciles our financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.

 

Three Months Ended June 30,

 

 ($ in millions, except per share amounts)

Revenue

Operating Income

Net Income

Diluted Earnings per Share

2018 As Reported (GAAP)

$30,085

$10,379

$8,873_

$1.14_

  Net Impact of the Tax Cuts and Jobs Act (TCJA)

–

–

(104)

(0.01)

2018 As Adjusted (non-GAAP)

$30,085

$10,379

$8,769_

$1.13_

2019 As Reported (GAAP)

$33,717

$12,405

$13,187_

$1.71_

  Net Tax Impact of Transfer of Intangible Properties

–

–

(2,567)

(0.34)

2019 As Adjusted (non-GAAP)

$33,717

$12,405

$10,620_

$1.37_

Percentage Change Y/Y (GAAP)

12%

20%

49%

50%

Percentage Change Y/Y (non-GAAP)

12%

20%

21%

21%

Percentage Change Y/Y (non-GAAP) Constant Currency

14%

24%

24%

24%

The current quarter effective tax rate was (5)% and 16% on a GAAP and non-GAAP basis, respectively. GAAP results include a net income tax benefit of $2.6 billion for the fourth quarter of fiscal year 2019 and a net income tax benefit of $104 million for the fourth quarter of fiscal year 2018. These net tax benefits are excluded from our non-GAAP results and explained in the Non-GAAP Definition section below.

Microsoft returned $7.7 billion to shareholders in the form of share repurchases and dividends in the fourth quarter of fiscal year 2019.

“Q4 commercial cloud revenue increased 39% year-over-year to $11.0 billion, driving our strongest commercial quarter ever,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

Revenue in Productivity and Business Processes was $11.0 billion and increased 14% (up 17% in constant currency), with the following business highlights:

·        Office Commercial products and cloud services revenue increased 14% (up 16% in constant currency) driven by Office 365 Commercial revenue growth of 31% (up 34% in constant currency)

·        Office Consumer products and cloud services revenue increased 6% (up 8% in constant currency) and Office 365 Consumer subscribers increased to 34.8 million

·        LinkedIn revenue increased 25% (up 28% in constant currency) with record levels of engagement highlighted by LinkedIn sessions growth of 22%

·        Dynamics products and cloud services revenue increased 12% (up 15% in constant currency) driven by Dynamics 365 revenue growth of 45% (up 48% in constant currency)

Revenue in Intelligent Cloud was $11.4 billion and increased 19% (up 21% in constant currency), with the following business highlights:

·        Server products and cloud services revenue increased 22% (up 24% in constant currency) driven by Azure revenue growth of 64% (up 68% in constant currency)

·        Enterprise Services revenue increased 4% (up 6% in constant currency)

Revenue in More Personal Computing was $11.3 billion and increased 4% (up 6% in constant currency), with the following business highlights:

·        Windows OEM revenue increased 9% (up 9% in constant currency)

·        Windows Commercial products and cloud services revenue increased 13% (up 16% in constant currency)

·        Surface revenue increased 14% (up 17% in constant currency)

·        Search advertising revenue excluding traffic acquisition costs increased 9% (up 10% in constant currency)

·        Gaming revenue declined 10% (down 8% in constant currency) with Xbox software and services revenue down 3% (down 1% in constant currency)

Fiscal Year 2019 Results

Microsoft Corp. today announced the following results for the fiscal year ended June 30, 2019, as compared to the corresponding period of last fiscal year:

·        Revenue was $125.8 billion and increased 14%

·        Operating income was $43.0 billion and increased 23%

·        Net income was $39.2 billion GAAP and $36.8 billion non-GAAP, and increased 137% and 22%, respectively

·        Diluted earnings per share was $5.06 GAAP and $4.75 non-GAAP, and increased 138% and 22%, respectively

·        GAAP results include a $2.6 billion net income tax benefit explained in the Non-GAAP Definition section below

The following table reconciles our financial results reported in accordance with GAAP to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.

 

 

Twelve Months Ended June 30,

 ($ in millions, except per share amounts)

Revenue

Operating Income

Net Income

Diluted Earnings per Share

 

2018 As Reported (GAAP)

$110,360

$35,058

$16,571_

$2.13_

 

  Net Impact of the TCJA

–

–

13,696_

1.75_

 

2018 As Adjusted (non-GAAP)

$110,360

$35,058

$30,267_

$3.88_

 

2019 As Reported (GAAP)

$125,843

$42,959

$39,240_

$5.06_

 

  Net Tax Impact of Transfer of Intangible Properties

–

–

(2,567)

(0.33)

 

  Net Impact of the TCJA

–

–

157_

0.02_

 

2019 As Adjusted (non-GAAP)

$125,843

$42,959

$36,830_

$4.75_

 

Percentage Change Y/Y (GAAP)

14%

23%

137%

138%

 

Percentage Change Y/Y (non-GAAP)

14%

23%

22%

22%

 

Percentage Change Y/Y (non-GAAP) Constant Currency

15%

24%

22%

23%

 

The current year effective tax rate was 10% and 16% on a GAAP and non-GAAP basis, respectively. GAAP results include a net income tax benefit of $2.6 billion and a net income tax charge of $157 million for the twelve months ended June 30, 2019. GAAP results include a net income tax charge of $13.7 billion for the twelve months ended June 30, 2018. These net tax impacts are excluded from our non-GAAP results and explained in the Non-GAAP Definition section below.

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Quarterly Highlights, Product Releases, and Enhancements 

Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.

Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

Webcast Details

Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Frank Brod, chief accounting officer, Keith Dolliver, deputy general counsel, and Michael Spencer, general manager of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on July 18, 2020.

Non-GAAP Definition

Transfer of Intangible Properties. In the fourth quarter of fiscal year 2019, in response to the TCJA and recently issued regulations, we transferred certain intangible properties held by our foreign subsidiaries to the United States and Ireland. The transfers of intangible properties resulted in a net $2.6 billion tax benefit recorded in the fourth quarter of fiscal year 2019, as the value of future tax deductions exceeded the current tax liability from foreign jurisdictions and United States Global Intangible Low-Taxed Income (GILTI) tax.

The TCJA Impact. We recorded a net charge of $157 million during the twelve months ended June 30, 2019 related to the TCJA. We recorded a net benefit of $104 million during the three months ended June 30, 2018 and a net charge of $13.7 billion during the twelve months ended June 30, 2018 related to the TCJA.

We have provided non-GAAP financial measures related to the transfer of intangible properties and the TCJA to aid investors in better understanding our performance. We believe these non-GAAP measures assist investors by providing additional insight into our operational performance and help clarify trends affecting our business. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.


Financial Performance Constant Currency Reconciliation

 

Three Months Ended June 30,

 ($ in millions, except per share amounts)

Revenue

Operating Income

Net Income

Diluted Earnings per Share

2018 As Reported (GAAP)

$30,085_

$10,379_

$8,873_

$1.14_

2018 As Adjusted (non-GAAP)

$30,085_

$10,379_

$8,769_

$1.13_

2019 As Reported

$33,717_

$12,405_

$13,187_

$1.71_

2019 As Adjusted (non-GAAP)

$33,717_

$12,405_

$10,620_

$1.37_

Percentage Change Y/Y (GAAP)

12%_

20%_

49%_

50%_

Percentage Change Y/Y (non-GAAP)

12%_

20%_

21%_

21%_

Constant Currency Impact

$(639)

$(444)

$(250)

$(0.03)

Percentage Change Y/Y (non-GAAP) Constant Currency

14%_

24%_

24%_

24%_

 

 

 

 

 

Twelve Months Ended June 30,

 ($ in millions, except per share amounts)

Revenue

Operating Income

Net Income

Diluted Earnings per Share

2018 As Reported (GAAP)

$110,360_

$35,058_

$16,571_

$2.13_

2018 As Adjusted (non-GAAP)

$110,360_

$35,058_

$30,267_

$3.88_

2019 As Reported

$125,843_

$42,959_

$39,240_

$5.06_

2019 As Adjusted (non-GAAP)

$125,843_

$42,959_

$36,830_

$4.75_

Percentage Change Y/Y (GAAP)

14%_

23%_

137%_

138%_

Percentage Change Y/Y (non-GAAP)

14%_

23%_

22%_

22%_

Constant Currency Impact

$(1,116)

$(505)

$(147)

$(0.02)

Percentage Change Y/Y (non-GAAP) Constant Currency

15%_

24%_

 22%_

23%_

 

Segment Revenue Constant Currency Reconciliation

 

Three Months Ended June 30,

 ($ in millions)

Productivity and Business Processes

Intelligent Cloud

More Personal Computing

2018 As Reported

$9,668_

$9,606_

$10,811_

2019 As Reported

$11,047_

$11,391_

$11,279_

Percentage Change Y/Y

14%_

19%_

4%_

Constant Currency Impact

$(249)

$(229)

$(161)

Percentage Change Y/Y Constant Currency

17%_

21%_

6%_

 


 

Selected Product and Service Revenue Constant Currency Reconciliation           

 

Three Months Ended June 30, 2019

Percentage Change Y/Y (GAAP)

Constant Currency Impact

Percentage Change Y/Y Constant Currency

Office Commercial products and cloud services

14%

2%

16%

Office 365 Commercial

31%

3%

34%

Office Consumer products and cloud services

6%

2%

8%

LinkedIn

25%

3%

28%

Dynamics products and cloud services

12%

3%

15%

Dynamics 365

45%

3%

48%

Server products and cloud services

22%

2%

24%

Azure

64%

4%

68%

Enterprise Services

4%

2%

6%

Windows OEM

9%

0%

9%

Windows Commercial products and cloud services

13%

3%

16%

Search advertising excluding traffic acquisition costs

9%

1%

10%

Surface

14%

3%

17%

Gaming

(10)%

2%

(8)%

Xbox software and services

(3)%

2%

(1)%

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

·        intense competition in all of our markets that may lead to lower revenue or operating margins;

·        increasing focus on cloud-based services presenting execution and competitive risks;

·        significant investments in products and services that may not achieve expected returns;

·        acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;

·        impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;

·        cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;

·        disclosure and misuse of personal data that could cause liability and harm to our reputation;

·        the possibility that we may not be able to protect information stored in our products and services from use by others;

·        abuse of our advertising or social platforms that may harm our reputation or user engagement;

·        the development of the internet of things presenting security, privacy, and execution risks;

·        issues about the use of artificial intelligence in our offerings that may result in competitive harm, legal liability, or reputational harm; and

·        excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;

·        quality or supply problems;

·        the possibility that we may fail to protect our source code;

·        legal changes, our evolving business model, piracy, and other factors may decrease the value of our intellectual property;

·        claims that Microsoft has infringed the intellectual property rights of others;

·        claims against us that may result in adverse outcomes in legal disputes;

·        government litigation and regulatory activity relating to competition rules that may limit how we design and market our products;

·        potential liability under trade protection, anti-corruption, and other laws resulting from our global operations;

·        laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;

·        additional tax liabilities;

·        damage to our reputation or our brands that may harm our business and operating results.

·        exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange;

·        adverse economic or market conditions that may harm our business;

·        catastrophic events or geo-political conditions that may disrupt our business;

·        the dependence of our business on our ability to attract and retain talented employees; and

·        changes in our sales organization that may impact revenues.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.

All information in this release is as of June 30, 2019. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, rrt@we-worldwide.com

For more information, financial analysts and investors only:

Michael Spencer, General Manager, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.


 

MICROSOFT CORPORATION

INCOME STATEMENTS

(In millions, except per share amounts) (Unaudited)

Three Months Ended

 June 30,

Twelve Months Ended

 June 30,

 

2019

 

2018

 

2019

 

2018

Revenue:

Product

 $17,103

 $17,159

 $66,069

 $64,497

Service and other

16,614

 12,926

59,774

 45,863

Total revenue

 33,717

 30,085

 125,843

 110,360

Cost of revenue:

Product

 3,298

 3,517

 16,273

 15,420

Service and other

 7,114

 6,225

 26,637

 22,933

Total cost of revenue

10,412

 9,742

 42,910

 38,353

Gross margin

 23,305

 20,343

 82,933

 72,007

Research and development

 4,513

 3,933

 16,876

 14,726

Sales and marketing

4,962

 4,760

 18,213

 17,469

General and administrative

1,425

 1,271

 4,885

 4,754

Operating income

12,405

 10,379

 42,959

 35,058

Other income, net

191

 301

 729

 1,416

Income before income taxes

12,596

 10,680

 43,688

 36,474

Provision for (benefit from) income taxes

(591)

 1,807

 4,448

 19,903

Net income

 $13,187

 $8,873

 $39,240

 $16,571

Earnings per share:

Basic

 $1.72

 $1.15

 $5.11

 $2.15

Diluted

 $1.71

 $1.14

 $5.06

 $2.13

Weighted average shares outstanding:

Basic

7,655

7,683

7,673

7,700

Diluted

7,730

7,775

7,753

7,794


 

COMPREHENSIVE INCOME STATEMENTS

(In millions) (Unaudited)

Three Months Ended

 June 30,

Twelve Months Ended

 June 30,

 

2019

 

2018

 

2019

 

2018

Net income

$13,187

 $8,873

 $39,240

 $16,571

Other comprehensive income (loss), net of tax:

Net change related to derivatives

(80)

145

(173)

39

Net change related to investments

1,071

(535)

2,405

(2,717)

Translation adjustments and other

(66)

(686)

(318)

(178)

Other comprehensive income (loss)

925

(1,076)

1,914

(2,856)

Comprehensive income

$14,112

 $7,797

 $41,154

 $13,715

 


 

BALANCE SHEETS

(In millions) (Unaudited)

 

June 30,

2019

 

June 30,

 2018

Assets

Current assets:

Cash and cash equivalents

 $11,356

 $11,946

Short-term investments

 122,463

 121,822

Total cash, cash equivalents, and short-term investments

 133,819

 133,768

Accounts receivable, net of allowance for doubtful accounts of $411 and $377

 29,524

 26,481

Inventories

 2,063

 2,662

Other

 10,146

 6,751

Total current assets

 175,552

 169,662

Property and equipment, net of accumulated depreciation of $35,330 and $29,223

 36,477

 29,460

Operating lease right-of-use assets

 7,379

 6,686

Equity and other investments

 2,649

 1,862

Goodwill

42,026

 35,683

Intangible assets, net

 7,750

 8,053

Other long-term assets

 14,723

 7,442

Total assets

 $286,556

 $258,848

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

 $9,382

 $8,617

Current portion of long-term debt

 5,516

 3,998

Accrued compensation

 6,830

 6,103

Short-term income taxes

 5,665

 2,121

Short-term unearned revenue

32,676

 28,905

Other

9,351

 8,744

Total current liabilities

69,420

 58,488

Long-term debt

 66,662

 72,242

Long-term income taxes

29,612

 30,265

Long-term unearned revenue

 4,530

 3,815

Deferred income taxes

 233

 541

Operating lease liabilities

 6,188

 5,568

Other long-term liabilities

7,581

 

 5,211

Total liabilities

184,226

 176,130

Commitments and contingencies

Stockholders’ equity:

 Common stock and paid-in capital — shares authorized 24,000; outstanding 7,643 and 7,677

78,520

 71,223

Retained earnings

 24,150

 13,682

Accumulated other comprehensive loss

 (340)

 (2,187)

Total stockholders’ equity

 102,330

 82,718

Total liabilities and stockholders’ equity

 $286,556

 $258,848

 


 

CASH FLOWS STATEMENTS

(In millions) (Unaudited)

Three Months Ended

 June 30,

Twelve Months Ended

 June 30,

 

2019

 

2018

 

2019

 

2018

Operations

Net income

$13,187

 $8,873

$39,240

 $16,571

Adjustments to reconcile net income to net cash from operations:

Depreciation, amortization, and other

2,924

2,516

11,682

10,261

Stock-based compensation expense

1,190

1,012

4,652

3,940

Net recognized gains on investments and derivatives

(322)

(567)

(792)

(2,212)

Deferred income taxes

(5,723)

(2,389)

(6,463)

(5,143)

Changes in operating assets and liabilities:

Accounts receivable

(10,070)

(9,188)

(2,812)

(3,862)

Inventories

(113)

(572)

597

(465)

Other current assets

(854)

(839)

(1,718)

(952)

Other long-term assets

(865)

550

(1,834)

(285)

Accounts payable

1,264

1,010

232

1,148

Unearned revenue

9,005

8,702

4,462

5,922

Income taxes

3,808

903

2,929

18,183

Other current liabilities

2,436

1,773

1,419

798

Other long-term liabilities

241

(366)

591

(20)

Net cash from operations

16,108

11,418

52,185

43,884

Financing

 

Repayments of short-term debt, maturities of 90 days or less, net

0

0

0

(7,324)

Proceeds from issuance of debt

0

0

0

7,183

Repayments of debt

(1,000)

(681)

(4,000)

(10,060)

Common stock issued

308

255

1,142

1,002

Common stock repurchased

(4,633)

(2,362)

(19,543)

(10,721)

Common stock cash dividends paid

(3,521)

(3,226)

(13,811)

(12,699)

Other, net

160

(25)

(675)

(971)

Net cash used in financing

(8,686)

(6,039)

(36,887)

(33,590)

Investing

 

Additions to property and equipment

(4,051)

(3,980)

(13,925)

(11,632)

Acquisition of companies, net of cash acquired, and purchases of intangible and other assets

(281)

(434)

(2,388)

(888)

Purchases of investments

(15,442)

(32,380)

(57,697)

(137,380)

Maturities of investments

5,154

7,108

20,043

26,360

Sales of investments

7,363

27,024

38,194

117,577

Securities lending payable

0

(8)

0

(98)

Net cash used in investing

(7,257)

(2,670)

(15,773)

(6,061)

Effect of foreign exchange rates on cash and cash equivalents

(21)

16

(115)

50

Net change in cash and cash equivalents

144

2,725

(590)

4,283

Cash and cash equivalents, beginning of period

11,212

9,221

11,946

7,663

Cash and cash equivalents, end of period

$11,356

 $11,946

$11,356

 $11,946


 

SEGMENT REVENUE AND OPERATING INCOME

(In millions)(Unaudited)

 

Three Months Ended

 June 30,

 

Twelve Months Ended

 June 30,

 

 

 

2019

 

2018

 

2019

 

2018

Revenue

 

 

 

 

 

 

 

Productivity and Business Processes

$11,047

 

 $9,668

 

 $41,160

 

 $35,865

Intelligent Cloud

11,391

 

9,606

 

38,985

 

32,219

More Personal Computing

11,279

 

10,811

 

45,698

 

42,276

Total

$33,717

 

$30,085

 

$125,843

 

$110,360

Operating Income

 

 

 

 

 

 

 

Productivity and Business Processes

 $4,344

 

 $3,466

 

 $16,219

 

 $12,924

Intelligent Cloud

4,502

 

3,901

 

13,920

 

11,524

More Personal Computing

3,559

 

3,012

 

12,820

 

10,610

Total

$12,405

 

$10,379

 

 $42,959

 

$35,058

 


 

MICROSOFT CORPORATION

FOURTH QUARTER FINANCIAL HIGHLIGHTS

All growth comparisons relate to the corresponding period in the last fiscal year. Please refer to the reconciliation of our GAAP and non-GAAP financial results in the table provided above for additional information.

SUMMARY

Revenue was $33.7 billion and increased 12%, driven by growth across each of our segments.

Gross margin was $23.3 billion and increased 15%, driven by growth across each of our segments. Gross margin percentage increased, driven by gross margin percentage improvement in More Personal Computing and Productivity and Business Processes, and favorable segment sales mix. Gross margin included a 6 percentage point improvement in commercial cloud, primarily from Azure.

Operating income was $12.4 billion and increased 20%, driven by growth across each of our segments.

Net income was $13.2 billion and increased 49%. Non-GAAP net income was $10.6 billion and increased 21%, excluding the net $2.6 billion income tax benefit in the current year and the net $104 million income tax benefit in the prior year. These net tax benefits are explained in the Income Taxes section below.

Diluted earnings per share was $1.71 and increased 50%. Non-GAAP diluted earnings per share was $1.37 and increased 21%, excluding $0.34 related to the net tax benefit in the current year and $0.01 related to the net tax benefit in the prior year.

Revenue, gross margin, and operating income included an unfavorable foreign currency impact of 2%, 2%, and 4%, respectively.

SEGMENT INFORMATION

Productivity and Business Processes

Revenue increased $1.4 billion or 14%.

·        Office Commercial revenue increased $891 million or 14%, driven by Office 365 Commercial, offset in part by lower revenue from products licensed on-premises, reflecting a continued shift to cloud offerings. Office 365 Commercial revenue grew 31%, due to growth in seats and higher average revenue per user.

·        Office Consumer revenue increased $57 million or 6%, driven by Office 365 Consumer, due to recurring subscription revenue and transactional strength in Japan.

·        LinkedIn revenue increased $371 million or 25%, driven by growth across each line of business.

·        Dynamics revenue increased 12%, driven by Dynamics 365 growth.


 

Operating income increased $878 million or 25%.

·        Gross margin increased $1.2 billion or 16%, driven by growth in Office Commercial and LinkedIn. Gross margin percentage increased, due to gross margin percentage improvement in LinkedIn and Office 365 Commercial, offset in part by an increased mix of cloud offerings.

·        Operating expenses increased $314 million or 8%, driven by investments in LinkedIn and cloud engineering.

Revenue, gross margin, and operating income included an unfavorable foreign currency impact of 3%, 4%, and 6%, respectively.

Intelligent Cloud

Revenue increased $1.8 billion or 19%.

·        Server products and cloud services revenue, including GitHub, increased $1.7 billion or 22%, driven by Azure. Azure revenue growth was 64%, due to higher infrastructure-as-a-service and platform-as-a-service consumption-based and per-user-based services. Server products revenue grew 5%, driven by demand ahead of end of support for SQL Server 2008 and Windows Server 2008, hybrid solutions, and GitHub.

·        Enterprise Services revenue increased $60 million or 4%, driven by growth in Premier Support Services.

Operating income increased $601 million or 15%.

·        Gross margin increased $1.3 billion or 19%, driven by growth in server products and cloud services revenue and cloud services scale and efficiencies. Gross margin percentage was relatively unchanged, with gross margin percentage improvement in Azure offset by an increased mix of cloud offerings.

·        Operating expenses increased $674 million or 23%, driven by investments in cloud and artificial intelligence (AI) engineering, GitHub, and revenue-driven operating expenses.

Revenue, gross margin, and operating income included an unfavorable foreign currency impact of 2%, 2%, and 4%, respectively.

More Personal Computing

Revenue increased $468 million or 4%.

·        Windows revenue increased $368 million or 7%, driven by growth in Windows OEM and Windows Commercial, offset in part by a decrease in patent licensing. Windows OEM revenue increased 9%. Windows OEM Pro revenue increased 18%, ahead of the commercial PC market, driven by healthy Windows 10 demand, strong momentum in advance of Windows 7 end of support, and increased inventory levels. Windows OEM non-Pro revenue declined 8%, below the consumer PC market, driven by continued pressure in the entry level category. Windows Commercial revenue increased 13%, driven by an increase of multi-year agreements that carry higher in-quarter revenue recognition.

·        Surface revenue increased $165 million or 14%, driven by strong growth in our commercial segment.

·        Search advertising revenue increased $184 million or 10%. Search advertising revenue, excluding traffic acquisition costs, increased 9%, driven by higher revenue per search.

·        Gaming revenue decreased $233 million or 10%. Xbox hardware revenue declined 48%, primarily due to a decrease in volume of consoles sold. Xbox software and services revenue declined 3% against a high prior year comparable from a third-party title, offset in part by subscriptions growth. 

Operating income increased $547 million or 18%.

·        Gross margin increased $495 million or 8%, driven by growth in Windows. Gross margin percentage increased, primarily due to a sales mix shift to higher gross margin Windows businesses.

·        Operating expenses decreased $52 million or 2%.

Revenue, gross margin, and operating income included an unfavorable foreign currency impact of 2%, 2%, and 4%, respectively.

EXPENSES

·        Cost of revenue increased $670 million or 7%, driven by growth in commercial cloud.

·        Research and development expenses increased $580 million or 15%, driven by investments in cloud and AI engineering, Gaming, GitHub, and LinkedIn.

·        Sales and marketing expenses increased $202 million or 4%, driven by investments in LinkedIn and GitHub. Expenses included a favorable foreign currency impact of 2%.

·        General and administrative expenses increased $154 million or 12%, driven by higher legal costs and GitHub.

OTHER INCOME, NET

Other income, net, decreased $110 million, driven by lower net recognized gains on investments, offset in part by lower net losses on foreign currency remeasurements and higher interest and dividends income.

INCOME TAXES

The current quarter effective tax rate was (5)% and 16% on a GAAP and non-GAAP basis, respectively, compared to 17% and 18% in the prior year. GAAP results include a net income tax benefit of $2.6 billion related to intangible property transfers for the fourth quarter of fiscal year 2019 and a net income tax benefit of $104 million related to the TCJA for the fourth quarter of fiscal year 2018. These net tax benefits are excluded from our non-GAAP results.

In the fourth quarter of fiscal year 2019, in response to the TCJA and recently issued regulations, we transferred certain intangible properties held by our foreign subsidiaries to the United States and Ireland. The transfers of intangible properties resulted in a net $2.6 billion tax benefit recorded in the fourth quarter of fiscal year 2019, as the value of future tax deductions exceeded the current tax liability from foreign jurisdictions and United States GILTI tax.

CONTRACTED NOT RECOGNIZED REVENUE

Contracted not recognized revenue, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods, was $91 billion as of June 30, 2019, an increase of 25% over the prior year. We expect to recognize approximately 50% of this revenue over the next 12 months and the remainder thereafter. Many customers are committing to our products and services for longer contract terms, which is increasing the percentage of contracted revenue that will be recognized beyond the next 12 months.

 

 

 

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What telephones and television can teach us about the adoption of broadband

New technology can help transform lives and communities all over the world. In the United States, the FCC’s most recent report found that more than 21 million Americans lack broadband access. And Microsoft’s data suggest that as many as 162.8 million people in United States do not use the internet at broadband speeds.

Based on the way older technology was rolled out, waiting for organic rates of adoption to close that digital divide is not an option. Especially when the physical infrastructure required to support wires is concerned.  

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Lessons from the past 

Landlines are an example of a wired technology that was slow to take off. Alexander Graham Bell made the first long-distance telephone call in 1877. But it was not until a century later that the technology reached everyone.   

Cell phones, however, took just 14 years to get to the point where just about everyone in the U.S. had one. More recently, the smartphone made even that achievement look sluggish; within eight years it, too, had reached majority adoption.  

Likewise, it took 25 years for radio to reach near-majority adoption across the U.S. By comparison, cable TV was just above 60% within the same time period. 

The slow adoption of the landline compared to the smartphone – as well as cable TV in relation to color TV and radio – can be seen below.  

Chart showing adoption of the landline compared to the smartphone, cable TV, color TV and radio
Source: Our World in Data

Similarly, the adoption of electricity was slow. Household electricity wasn’t commonplace until the 1920s, and then only in cities. It revolutionized almost every aspect of life in the cities and suburbs. But in rural areas of the U.S., only 10% of the 6 million farms were connected by 1930.

The slow adoption of wired technologies compared to wireless technologies can be seen in this graph. The penetration of wired technologies plateaus at around 70% in the U.S.

Chart showing wired technologies compared to wireless technologies
Source: Our World in Data

Closing the gap

The reasons for slow rates of wire-based take-up are numerous, and include lower population densities and greater distances between dwellings.

Microsoft believes closing today’s digital divide is a priority and that failing to do so risks leaving behind millions of people.

Fast, reliable internet access is now a necessity for everything from accessing educational resources and building a business, to finding a job and accessing better healthcare.

The Microsoft Airband Initiative is one route to closing the gap. It is based on providing coverage via a range of technologies, including TV white spaces – those unused parts of the broadcast frequency.

Ensuring that last 30% adoption is given the support needed is something that can’t be left to the market alone. It calls for a collaborative approach to finding solutions and overcoming barriers.

For more on the Microsoft Airband Initiative, visit www.microsoft.com/en-us/airband/technology. And follow @MSFTIssues on Twitter.