Seven Core Businesses Explained

To better explain its business to outsiders and communicate where it sees its largest future opportunities, Microsoft will begin to report its revenues and operating profit or loss in seven core product lines. This clearer reporting method is designed to build investor confidence by revealing where Microsoft earns its money and to justify the company’s investments in new business areas. It also helps Microsoft managers think about how they fit into the overall business and ensure that they are focused on generating revenue. However, although the reporting change clarifies Microsoft’s areas of focus, it does not indicate any major change in how Microsoft develops, markets, or sells its products.

Ballmer Explains Seven Priorities

In Dec. 2000, spurred by Microsoft’s first earnings warning in 12 years, CEO Steve Ballmer sent a memo to all Microsoft employees asking them to cut costs and focus on “serv[ing] customers well in our seven core businesses,” which he outlined as productivity applications, Windows, enterprise servers and tools, MSN, small business applications, devices, and the .NET platform. (See “PC Slump Prompts New Priorities, Investment Strategies” on page 24 of the Jan. 2001 Update.)