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Microsoft strategyMicrosoft strategy in South East Europe in South East Europe

Goran RadmanMicrosoft CorporationChairman SEE

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SEE Region

9 countries1. Albania 2. Bosnia & Herzegovina3. Bulgaria4. Croatia5. Macedonia6. Moldova7. Romania8. Serbia & Montenegro

(incl. Kosovo)9. Slovenia

6 Microsoft Subs– Ljubljana (SLO) – 1995– Bucharest (ROM) –

1996– Zagreb (CRO) – 1997– Sofia (BUL) - 1999– Beograd (SMN) – 2002– Skopje (MKD) - 2004

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Microsoft in SEE

Moldova: /Romania: 64 (52;12)Serbia & Montenegro: 35 (14;21)Slovenia: 64 (39;25)

Albania: /Bosnia & Herzegovina: /Bulgaria: 30 (20;10)Croatia: 63 (37;26)Macedonia: 6 (4;2)

Staff by function:SEE and Local Management: 8 (8;0)Sales & Marketing: 140 (84;56)Services: 66 (53;13)F&A: 32 (10;22)SEE Team: 16 (11;5)

Microsoft South East Europe region 262 FTE employees

Staff by country (FTE;vendors/others):

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ICT Market Indicators

Key market indicators

PC installed

base (FY05)(1)

PC shipment (FY05)(1)

IT spend in

US$mio (CY04)(2)

Piracy rate (CY04)(3)

Albania 22.228 6.064 n/a n/a

Bosnia & Herzegovina 130.317 34.913 n/a 90%(1)

Bulgaria 490.000 90.000 307 71%

Croatia 716.531 148.066 601 58%

Macedonia 121.507 23.952 n/a 80%(1)

Moldova n/a n/a n/a n/a

Romania 1.385.925 351.749 816 74%

Serbia & Montenegro 701.622 114.159 381 70%(1)

Slovenia 653.712 112.004 561 51%

Source: (1)Microsoft estimates; (2)IDC, 2005; (3)BSA/IDC, 2005

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SEE Region in Context, 2004SEE Region in Context, 2004

0

5.000

10.000

15.000

20.000

25.000

30.000

Italy Spain Belgium Austria CEE SEE Ireland Portugal Russia

SEE Region is of the Same Size as the Portuguese Market

(US$M) IT Spending

Source: IDC WW Black Book, April 2005Source: IDC WW Black Book, April 2005

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South East Europe’s IT IndustrySouth East Europe’s IT Industry IT as a % of GDP

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

Total IT Spending ($B) IT Tax Revenues (US$B)

YE 2000-2008

Source: IDC IT Economic Impact Study, 2005

2000 2001 2002 2003 2004 2005 2006 2007 20081.1% 1.2% 1.3% 1.4% 1.5% 1.7% 1.7% 1.8% 1.9%

Enduring Low-end TechnologyEnduring Low-end Technology

Networking Equipment

7%

Peripherals13%

Storage3%

Servers8%

IT Services22%

Packaged Software

15%

PCs & TWS32%

SEE Total = $2.7 billionSEE Total = $2.7 billion

Drive Exceptional SpendingDrive Exceptional Spending• Strong Focus on Low-end

Hardware• PCs and Related

Technologies Still with Major Share

• Hardware Investments Will Remain Strong Reflecting Infrastructure Development and State of Smaller Country Markets

• Software & Services Categories Illustrates Highest Growth

Source: IDC WW Black Book, April 2005Source: IDC WW Black Book, April 2005

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Executive SummaryExecutive Summary• Growth in the IT sector is dynamic and will continue on

an upward trajectory through 2008• The software market will grow at 13% average

compound growth rate between now and 2009 • In the next five years, the IT sector will generate over

35,000 new jobs; tax revenues will be $500 million higher in 2009 than 2004

• Approximately 47% of all SEE IT employees are engaged in creating, distributing, or servicing software – for external customers or internal corporate users – and just under 55% of all IT tax revenues come from the software-related sector.

• Over half of 2004 employment and tax revenues stemmed from the vast Microsoft ecosystem.

• For every dollar of Microsoft revenue in the region another $8.65 were generated by other companies selling hardware or software that works on Microsoft operating systems or servicing that software.

Source: IDC IT Economic Impact Study, 2005

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 • Corporate Governance• Competition and Compliance• Contracts, Indemnification and Product Liability• Diversity• Environment• Interoperability• Intellectual Property

.• Child Safety • Content  Regulation (including games) • Computer Crimes (including hacking and viruses) • ID Theft and Phishing • Privacy • Spam • Spyware/Adware

        • Value of Proprietary

Software • Local Software Economy • Innovation • Jobs and Skills (Digital

Inclusion) • Economic Growth and

Development

Microsoft’s Global Citizenship Initiative is focused on mobilizing our resources across the company and around the world, to create opportunities in the communities where we do business, and to fulfill our commitment to serving the public good through innovative technologies and partnerships

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Multi-stakeholder PartnershipsMulti-stakeholder Partnershipsfor SEEfor SEE

PrivatePrivateSectorSector

InternationalInternationalCommunityCommunityAcademiaAcademia

GovernmentGovernment

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SEE E-GOVERNANCE CENTERSEE E-GOVERNANCE CENTER

e-Government policy and institutional capacity e-Government policy and institutional capacity building support through shared expertise, best building support through shared expertise, best practices and standards in public servicespractices and standards in public services

Support for multilateral exchange of IT skills, Support for multilateral exchange of IT skills, competencies and solutionscompetencies and solutions for public administrationfor public administration

Replicate Tallin (Estonia)Replicate Tallin (Estonia) EGC to Bled (Slovenia)EGC to Bled (Slovenia)

e-Governmente-Government

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IT entrepreneurship and innovative SMEs IT entrepreneurship and innovative SMEs support through local incubatorssupport through local incubators

Incubator as source of new IT ideas, Incubator as source of new IT ideas, business solutions knowledge base and best business solutions knowledge base and best practice share-pointpractice share-point

BTC Varaždin (Croatia) asBTC Varaždin (Croatia) as a a model model forfor the the SEE SEE regionregion

e-Businesse-Business

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What is the Local Software Economy (LSE) Initiative?The LSE initiative is designed to help a subsidiary engage with localpolicymakers, industry leaders and influential's on the topic of buildingthe local software economy. The effort helps field teams shape activitiesto support the local software economy, how a robust local softwareeconomy can create opportunities in the broader economy, and how tomessage and appropriate position MS activities.

What’s the focus of the LSE effort?The effort is focused on building strong local software economies, andhelping governments, policymakers and influential's understand how todo so. Microsoft’s commitment to LSE does not promise economicgrowth or development, but does explain how MS contributes to andsupports a robust local software economy.

Local Software EconomyLocal Software Economy

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What: Technology centers offering a comprehensive set of programs and services to foster innovation and grow sustainable local software economies.

Why: To connect people and organizations in the innovation ecosystem and give them access to resources, experts and facilities for collaboration and skills development.

Who: Students, entrepreneurs, academics, professional software developers, startups, IT professionals, industry organizations and local governments.

How: Sixty centers today; 90 centers in 30 nations by the end of 2006.

Outcome: Local centers around the world foster skills and intellectual capital, industry partnerships and innovation.

Business Technology CentresBusiness Technology Centres

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Microsoft Business Technology Center Varaždin, Croatia

• Objective:Microsoft Business-technology Centre has the task to provide the infrastructure and resources to help ISVs create innovative new products and services, bring those products and services to market, and build well-managed competitive businesses around those innovative products and services.

• Functions:1. Learning Centre– 1/3 Technology (above CTEC’s)– 1/3 Operations– 1/3 Business (Sales, MKTG, Export,

Outsourcing, EU Funds,...)2. Testing new applications on “state-of-the-art”

hardware3. “Show Room” for partners and customers

• USAID – Microsoft joint venture project

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MIC BucharestMIC Bucharest• Activity Description

– Microsoft Innovation Centre• Activity Goal/Objective

– Innovation Centre where IT&C companies could come to learn about e-gov solutions and to test their own solutions

• Success Metrics– In Q3 FY07 MIC should deliver the first training classes, which address Microsoft

technologies and e-gov solution and at the end of FY07 at least 5 ISV has to be involved in developing solutions on top of E-gov

• Deliverables/Milestones– Q1 – Partnership with a hardware provider to establish MIC infrastructure– Q2 – MIC Personnel to be trained on Microsoft and e-gov solution– Q3 – Launch of MIC, first PR events, and delivery of first training– Q4 – consolidate ISV community around MIC

• Stakeholders– Zsolt Nagy – Minister– Catalin Marinescu – President IGCTI– Ovidiu Artopolescu – GM MS Romania

• Post-FY07 Funding: – This MIC would be self sustainable in FY08.

© 2004 Microsoft Corporation. All rights reserved.© 2004 Microsoft Corporation. All rights reserved.This presentation is for informational purposes only. Microsoft makes no warranties, express or implied, in this summary.This presentation is for informational purposes only. Microsoft makes no warranties, express or implied, in this summary.