Client offerings consist of premium edition and standard Windows operating systems. Premium offerings are those that include additional functionality and are sold at a price above our standard versions. Premium offerings include Windows XP Professional, XP Media Center Edition, XP Tablet PC Edition, Vista Business, Vista Home Premium, and Vista Ultimate. Standard Windows operating systems include Windows XP Home and Windows Vista Home Basic. Client revenue growth correlates with the growth of purchases of PCs from OEMs that pre-install versions of Windows operating systems because the OEM channel accounts for approximately 80% of total Client revenue. The differences between unit growth rates and revenue growth rates from year to year are affected by changes in the mix of OEM Windows operating systems licensed with premium edition operating systems as a percentage of total OEM Windows operating systems licensed (“OEM premium mix”), changes in the geographical mix, and changes in the channel mix of products sold by large, multi-national OEMs versus those sold by local and regional system builders.
Fourth Quarter
Client revenue increased primarily reflecting licensing of Windows Vista. OEM revenue increased $424 million or 15% driven by 11% growth in OEM licenses from increased PC unit shipments while revenue from commercial and retail licensing of Windows operating systems grew $37 million or 7%. During the quarter, the OEM premium mix increased 17 percentage points to 72% driven by the demand for Windows Vista Home Premium. Continued PC shipment growth also contributed to the increase in revenue. Based on our estimates, total worldwide PC shipments from all sources grew approximately 11% to 13% driven by demand in both emerging and mature markets.
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Full Fiscal Year
Client revenue increased primarily reflecting licensing of Windows Vista. OEM revenue increased $1.46 billion or 13% driven by 13% growth in OEM license units while revenue from commercial and retail licensing of Windows operating systems increased $422 million or 21%. During the year, the OEM Premium Mix increased 16 percentage points to 68%. Based on our preliminary estimates, total worldwide PC shipments from all sources grew 10% to 12% driven by demand in both emerging and mature markets.
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http://www.microsoft.com/msft/earnings/FY07/earn_rel_q4_07.mspx
http://www.microsoft.com/msft/speech/FY07/AnalystMtg2007.mspx
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