Microsoft at Year’s End: Broad Range of Products and Services Introduced in 2004; Advances in Services, Software and Tools Slated for 2005

REDMOND, Wash., Dec. 14, 2004 — Technology innovation is a marathon for companies the size and scale of Microsoft. By consistently investing in their products and technologies, these companies and their customers are rewarded with incremental yet significant product advances over time, along with the “legs” to sometimes make sprints forward.

Microsoft’s measured-race plan produced both types of innovation in 2004. The company’s annual investment in research and development — US$6.8 billion in FY2004 — produced significant incremental advances in a broad range of the company’s products and services over the past year — from innovative new digital entertainment offerings to security enhancements for its flagship software products. It also spurred a few giant leaps forward, including the groundbreaking new Xbox game, Halo 2.

The coming year promises significant advances and new offerings in a similarly diverse number of Microsoft products, including online consumer services, software and servers for every size of business, software development tools and the next version of Microsoft Windows.

More so than any time in the past, these new releases have been shaped by and tailored to the specific needs of the customers they serve. Microsoft has in recent years looked to new and expanded user and partner groups for direction, and added new features to its products to receive anonymous, voluntary feedback instantly and directly from millions of users.

At a Digital Entertainment Anywhere event in Los Angeles in October 2004, Microsoft Chairman and Chief Software Architect Bill Gates demonstrates Microsoft Windows XP Media Center Edition 2005.

To provide additional insight into how Microsoft is working to advance its products and services and transform the computing experience, PressPass has assembled a guide to some of the company’s key accomplishments in 2004 and to some of the likely Microsoft news journalists can anticipate in the coming year, including:

  • Enhancements to Windows Server 2003 and several new enterprise-scale servers

  • MSN Web and Desktop Search to help people find precisely what they’re looking for on their desktop or on the Web

  • Further steps in the development of the next version of the Microsoft Windows operating system, code-named” Longhorn

  • The Sender ID Framework and other advances to make e-mail and other computing experience safer and more trustworthy

To jump directly to a specific section of this article, click on any of the following subheadings:

  • Rich Entertainment Experiences Wherever Consumers Want Them

  • Expanded Online Services Make Web More Useful for Consumers

  • Business Imperatives Addressed with New, Enhanced Enterprise Servers

  • Empowering Information Workers and Small Businesses

  • Enabling Developers Through Connected Systems

  • Continued Progress towards Trustworthy Computing

Rich Entertainment Experiences Wherever Consumers Want Them

Digital entertainment arrived in 2004. Everybody from gadget lovers to consumers who still struggle to program their VCR began — in record numbers — to take advantage of the growing array of digital entertainment options. During the year, the total amount of music on the hard drives of consumers grew to more than 10 billion tracks, and portable music players became the hottest devices of the year. Nearly 40 million U.S. households now have digital cameras, and 100 million digital video recorder devices (excluding PCs) were installed in homes worldwide.

Microsoft helped broaden the market for digital entertainment in 2004. Working alone and with its technology partners, the company sought to make digital entertainment less complicated and to expand choices in both content and devices — allowing people to enjoy digital entertainment anywhere around the home or on the go.

In October, Microsoft Chairman and Chief Software Architect Bill Gates introduced the foundation of these new experiences: Windows XP Media Center Edition 2005 , which offers new ways of enjoying movies, photos, music, and live and recorded television — including, for the first time, high-definition TV. New designs from hardware partners such as Dell, HP, Gateway, Sony, Toshiba and others expand the form factor, with traditional desktop models as well as new designs for the living room. Research from the Yankee Group predicts that 25 percent of all PCs will be Media Center PCs by 2007.

The company also introduced Media Center Extender products that offer Media Center content to other rooms through set-top boxes or an Xbox software title, while digital audio receivers from D-Link, Roku and OmniFi, based on Windows Media Connect , allow people to play music stored in their digital libraries or from subscription services and online stores around the house. Portable Media Centers from Samsung, iRiver and Creative let people take their digital entertainment anywhere — around the home or on the go. These portable devices can store and play music, videos, movies, photo collections, recorded TV shows and even subscription content.

The PlaysForSure program takes the guesswork out of buying a broad range of devices — from small flash-based players to hard-disk units — and finding compatible digital media to play on them. Devices from Dell, Creative, Samsung, Rio, Virgin Electronics and others that display the PlaysForSure logo are guaranteed to work with more than a dozen online music and video retailers available within Windows Media Player 10.

These digital entertainment experiences also extend to mobile phones and PDAs, through the introduction of Windows Media Player 10 Mobile , which works on devices such as the Audiovox SMT5600 Smartphone, the Dell Axim X50 Pocket PC and the HP iPAQ RX3000.

All these devices are now available through Windows Marketplace , a new easy-to-use shopping and download site for customers to discover and experience the breadth and depth of the products available for their Windows PC.

In 2004, MSN announced the final availability of MSN Music , a music download service with more than 1 million songs from all the major labels, as well as more than 3,000 independents. People in search of others sources of downloadable digital entertainment have a growing array of options in the Digital Media Mall in Windows Media Player, which currently provides direct access to a dozen online music and movie services from a variety of providers, including Napster, MusicMatch, CinemaNow and Major League Baseball.

Also swelling in 2004 was Xbox. The year’s fastest-growing console gaming platform, Xbox headed into the holiday season with strong retail demand expected to drive exceptional sales through the end of the year. In November, the release of “Halo 2” marked the single biggest event in entertainment history. The game’s first-day take topped $125 million, doubling the opening-day revenue for any Hollywood blockbuster film. During its first month on store shelves, “Halo 2” sold more than 5 million copies, surpassing its predecessor’s 3-year take.

Strong Xbox growth continued online as well. In the two years since its debut, the online gaming service Xbox Live has signed more than 1 million paying subscribers — half the time it took AOL, HBO and TiVO to reach that same subscriber base. Products such as Xbox Live Arcade continue to broaden the Xbox demographic by featuring classic arcade favorites such as “Bejeweled” and “Ms. Pac Man” that appeal to diverse gamers of all ages.

The digital entertainment products and services that debuted in 2004 helped lay the groundwork for 2005 and the company’s commitment to providing the broadest range of entertainment experiences, simple and convenient access to their digital entertainment and providing more of the digital entertainment experiences consumers increasingly want.

Over the coming year, Microsoft aims to bring this vision to a far broader audience by introducing new products and services from partners, and by educating consumers on how to expand the digital entertainment experience throughout the home and on the go. The company also plans to expand the capabilities and options available for personalizing digital experiences to the needs and lifestyle of individual consumers.

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Expanded Online Services Make Web More Useful for Consumers

People could do more, have more fun and keep in touch with friends and family easier and in more ways on MSN in 2004 — and they’ll have additional options in 2005. MSN Music was just one of the new services that debuted in 2004. In January, Microsoft’s online network also launched MSN Premium , a new all-in-one online service designed for broadband Internet users, along with a new-look MSN homepage and MSN Video, a streaming-video service that offers consumers free access to a large selection of news, sports and entertainment content.

MSN debuted a test version of its new online search service in November. The new MSN Search includes an index of more than 5 billion Web documents, as well as tools to tailor searches to a person’s geographic location or customize search results by emphasizing or de-emphasizing certain search criteria, such as specific sites or domains, countries, regions, or languages. Another option is direct answers to questions — such as “What is the capital of Turkey?” Answer: “Ankara” — from Microsoft Encarta.

The beta version of MSN Search is available in the United States at , and worldwide in 26 markets and 11 languages from local MSN Web sites. A full version of the service is scheduled to debut in 2005.

MSN also updated and expanded its free communications services. A major upgrade to MSN Hotmail, the world’s most popular no-charge, Web-based e-mail service, extended no-charge e-mail anti-virus protection to the service’s 170 million users worldwide. MSN also increased inbox storage to 250 megabytes for free to customers in multiple markets.

A beta version of MSN Messenger 7.0 offers the instant messaging (IM) service’s 145 million users worldwide new ways to express themselves online and personalize their instant messaging experience with new features such as a “Nudge,” an alert that shakes the contact’s conversation window with an audible notification, or a “Wink,” animated pictures that include sound and that can be virtually “thrown” onto the screen of a contact’s IM window.

Also new was MSN Spaces , a new service that debuted in beta version in 14 languages and 26 markets worldwide earlier this month. MSN Spaces makes it easy to create and maintain a personal Web site, extending the power and benefits of blogging to millions of Internet users, regardless of their level of technical know-how. The service works in tandem with MSN Messenger and MSN Hotmail, automatically notifying a person’s online contacts when his or her Space has new content.

Complete versions of MSN Messenger 7.0 and MSN Spaces will arrive in 2005.

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Business Imperatives Addressed with New and Enhanced Enterprise Servers

Microsoft responded to the pressing needs of IT professionals by adding significant new components and capabilities to its family of enterprise-scale business servers in 2004. Over the coming year, the company will deliver further enhancements to the management, storage, security and high-end computing capabilities of Windows Server 2003.

In 2004, Microsoft extended the capabilities of Windows Server 2003 throughout the Windows Server System by establishing shared engineering criteria for all Windows Server products. Development efforts focused on delivering new and enhanced ways to manage enterprise IT systems and workloads.

Microsoft continues to focus on delivering the most innovative and cost efficient server platform and solutions to our customers and partners with Windows Server 2003. 2004 was an important year where Microsoft continued to receive positive feedback as well as increased support, migration and adoption from partners and customers. Most recently Microsoft was pleased to announce that the first Release Candidates for Windows Server 2003 Service Pack 1 and Windows Server 2003 x64 editions and Window XP Professional x64 Edition are available to customers for testing and evaluation. Both technologies will be available in the first half of 2005.

Microsoft released the first private beta of Windows Server 2003 code-named “R2,” with invitations sent out to approximately 1,000 customers to participate. Microsoft expects to have a beta of “R2” available for broader customer testing in the first half of 2005. “R2” is scheduled for release in the second half of 2005, and will offer increased capabilities to customers in the areas of simplified management of branch servers, streamlined access management across security boundaries and more efficient storage management.

In November, Microsoft released Microsoft Operation Manager (MOM) 2005, a notable milestone on the road to the Dynamic Systems Initiative, Microsoft’s vision for automating management of Windows’ environments. The latest version of MOM, Microsoft’s premier tool for event and performance management of the Windows Server System, provides the ability for businesses of all sizes to monitor Windows servers and applications and identifying system problems before they occur.

Key to MOM 2005 are its management packs. These use modeling of server and application health and configuration to provide customers’ support staff with the knowledge and task automation they need to keep IT systems based on the Windows operating system available and tuned to optimum performance.. Microsoft and a large number of ISV, IHV, application and integration partners offer dozens of management packs for applications, including Exchange Server 2003, SQL Server 2000 and BizTalk Server 2004. MOM’s use of models reflects Microsoft’s DSI vision for proactive, knowledge-driven systems management. Longer term, models will be applied to manage all aspects of system behavior, using SDM, an underlying XML schema.

In addition, the release of Microsoft Virtual Server 2005 was a significant milestone in providing developers and IT professionals a more agile and cost effective method for testing and developing software, implementing server-consolidation scenarios and re-hosting legacy applications.

At TechEd 2004, Microsoft announced the availability of Exchange Server 2003 Service Pack (SP) 1, building upon the benefits of Exchange Server 2003 by

increasing messaging security and providing additional tools to assist with deployment, systems management and end-user productivity. The release of the Exchange

Intelligent Message Filter (IMF) anti-spam technology offered customers an advanced server-side message filter designed to combat the influx of unsolicited commercial e-mail, also known as spam or junk e-mail. Microsoft continued to drive customer investment in Exchange Server 2003 with the release of the Exchange Server Best Practices Analyzer, a free support tool that automatically produces a “health check” report. The analyzer exposes critical and non-default server configurations, providing server administrators an “engineer-in-a-box.”

Introduced in September 2004 and scheduled for release during the second half of 2005, Microsoft Data Protection Server (DPS) enables customers to recover their files in minutes versus hours. DPS is currently backed by over 40 ISVs, OEMs and IHVs. Also scheduled to launch in 2005 is the Microsoft Windows Simple SAN Program , helping Windows customers reduce the cost and complexity of their storage infrastructures by allowing customers to easily install, deploy and manage networked storage, as well as cost-effectively consolidate their existing Direct Attached Storage (DAS) to Windows-based Simple SANs. Customers are already using Windows-based Simple SAN solutions today.

Also in 2005, enterprises will be able to perform advanced password management tasks — such as synchronize employee passwords across all connected systems and reset passwords via a Windows client PC — with Microsoft Identity Integration Server SP 1 , which was released to manufacturing in November and is scheduled for release in early 2005. Another new management tool slated for final release during the first half of 2005, Windows Update Services will let system administrators more easily assess, control and automate the deployment of Microsoft software updates, helping keep their Windows-based PCs and services more secure and to minimize downtime.

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Empowering Information Workers and Small Businesses

Following up on a spate of significant releases in 2004, Microsoft Business Solutions has new products and updates planned for the coming year to better serve its customers, the more than 40 million small and mid-size companies and divisions of large enterprises around the world. Mid-year 2005, FRx Software , a part of Microsoft Business Solutions, will launch Forecaster 7.0 , a budgeting and planning application that gives mid-market organizations and divisions of large companies immediate control of the budgeting and planning process. Forecaster helps improve overall business performance by ensuring the right business decision makers have the information they need to monitor business operations and conditions and respond to new business challenges and opportunities.

In the first quarter of 2005, Microsoft Business Solutions CRM will offer promotions and special pricing for partners and small business customers interested in taking advantage of Microsoft Windows Small Business Server and Microsoft CRM. These opportunities will help reduce the cost of purchasing and implementing Microsoft CRM for small businesses, so they can deploy and realize the combined benefits of the Microsoft platform and Microsoft CRM, a joint solution that gives employees easy, one-stop access to their customer, sales and service information.

The group also plans announcements around Microsoft Business Solutions Axapta and ISV partnerships, for multinational organizations that plan to centralize operations, as well as the Microsoft Retail Management System 2.0. This point-of-sale solution enables retailers to manage a wide range of store operations and customer marketing tasks, including point-of-sale operations, inventory control, customer and employee management, pricing, sales and promotions.

In the coming year, the group will continue to explore opportunities in new business areas such as radio frequency ID technology (RFID).

Microsoft also continued to enhance and introduce new offerings for the Microsoft Office System during 2004. July saw the debut of Microsoft Office 2003 Service Pack 1 (SP1) , which offered reliability and performance improvements, along with significant enhancements to two of the Office System’s newest programs, Microsoft Office InfoPath and Microsoft Office OneNote. Based on feedback since the programs debuted last year, Microsoft increased the integration of OneNote with Office 2003 Editions and mobile devices, allowing people to create, organize and share digital notes more effectively. Also, InfoPath now offers more control of digital signatures, enhanced e-mail attachment and form sharing and automatic conversion to handwritten digital notes into typed text within the program.

Microsoft also announced plans for a new edition of Microsoft Office designed for small business management. Slated for release in fall 2005, the new edition combines the Microsoft Office 2003 Professional Edition with the newly announced Microsoft Office Small Business Accounting product and the next version of Microsoft Office Outlook with Business Contact Manager, to provide small businesses the software resources necessary to manage sales, marketing and financial processes in a single, integrated suite.

During 2004, Microsoft industry partners signed up to deliver 2,300 Microsoft Office System-based solutions for customers — in excess of 400 more than were available at launch in 2003. Similarly, the number of developers trained to build, customize and use Microsoft Office System solutions has more than tripled, exceeding 70,000 developers today. Microsoft helped make it easier for partners to extend their offerings to the Microsoft Office System by introducing Microsoft Office Information Bridge Framework, a set of resources that reduce the time to market, simplify maintenance and deployment and increase the flexibility of their solutions.

In 2004, Microsoft’s Real Time Collaboration Business Group worked with top industry players to offer businesses an unmatched online communication and collaboration experience. Alliances with MCI, British Telecom and Polycom allowed Microsoft to expand the reach of its real-time collaboration tools, while agreements with MSN, AOL and Yahoo! paved the way for security-enhanced connectivity between Microsoft Office Live Communications Server 2005 and the three major public instant messaging (IM) networks.

This year also saw the release to manufacturing of Live Communications Server 2005, which offers advanced functionality for enterprise IM, presence awareness, federation, remote user access and increased scalability. Also, a new real-time messaging client, code-named ” Istanbul,” was unveiled.

The group will continue to build on the Office System platform in 2005 by delivering innovative collaboration solutions that bring together the benefits of Web conferencing, secure IM and presence awareness. Scheduled for release next year, “Istanbul” will offer information workers an online communications hub that integrates their IM, extensible presence, PC based voice/video and telephony. A major service upgrade to Microsoft Office Live Meeting will also be announced during the year.

In 2004, Microsoft expanded a number of resources and initiatives to increase the value of Microsoft Office System for information workers. The Tools for Your Job Web site debuted, offering an easy-to-use collection of tools — demos, templates, tips and articles — for people working in a wide variety jobs. The site addresses the occupation-specific needs of more than 20 diverse job categories, ranging from accountants and project managers to real estate agents and corporate attorneys. New occupations and content are added regularly. Professionals from within each field and familiar with the issues for each industry create the site’s content. Visitors can download and customize a wide variety of forms and templates, as well as get tips or ideas on how to approach a specific task and quickly incorporate it into their daily work.

Microsoft also extended its efforts to better understand the needs of information workers and uncover ways for them to be more productive with an online assessment called the Microsoft Office Personal Productivity Challenge. Housed on the Office Experience Web pages, the challenge helps information workers measure their personal productivity with questions about how they manage time, collaborate and use basic technology tools.

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Enabling Developers through Connected Systems

The past year saw great progress in Microsoft’s vision for connected systems — software that reduces IT complexity and total cost of ownership (TCO) while also increasing flexibility by unlocking business information and facilitating quicker decision making. Built on Web services standards, these integrated Microsoft .NET applications allow businesses to extend their existing IT investments by connecting their organizations, customers, partners and employees, along with providing employees access to important information, whenever and wherever it is needed.

The adoption of Microsoft .NET this year by influential IT industry companies such as Sun Microsystems and a rapidly growing number of businesses validated Microsoft’s efforts to promote these standards. Among the high-profile converts to .NET are large-scale Web sites such as eBay and, which have begun to use Web services to integrate systems across their computing platform.

Microsoft continues to be a leader in developer productivity, and a new wave of products slated for release in this year, all a part of Visual Studio 2005 , will further help developers “do more with less” and enable them to write next-generation software using managed code and Web services.

.NET Framework 2.0 provides a dependable foundation for constructing Windows, Web- and mobile device-based applications that integrate by design and deploy efficiently throughout the enterprise. New classes in the Framework will give developers more efficient access to frequently-used components such as printers, the file system and the registry. Also, advances to Windows Forms and the ASP.NET classes will reduce code in common scenarios by up to 70 percent.

The Visual Studio 2005 Team System expands the Visual Studio product line to offer productive, integrated and extensible lifecycle tools that facilitate communication between members of development teams and reduce the complexity of the application development lifecycle. Visual Studio 2005 Team System includes tools for business users, project managers, architects, developers, testers, and operations managers enabling teams to drive better collaboration across the IT lifecycle.

The new Visual Studio Express products expand the Visual Studio product line to offer lightweight, easy to use tools for novices, hobbyists, enthusiasts, and students to build dynamic Windows applications and Web sites. The Express products are designed specifically for the needs of nonprofessional developers, and include built-in learning and evaluation tools as well as tutorial guidance and sample applications.

The release of Visual Studio 2005 will be synchronized with SQL Server 2005 , code-named “Yukon,” which tightly integrates the .NET Framework common language runtime (CLR) with the database engine. This will greatly enhance the experience for developers as they build data-driven applications with SQL Server. Delivering SQL Server 2005 will be the primary focus of the SQL Server team during 2005, which will include incorporating customer feedback through Beta 3 and incremental Community Technical Previews. This next release of Microsoft’s flagship database will focus on enhancing key areas such as enterprise data management, developer productivity and business intelligence.

Along with SQL Server 2005, the team will release SQL Server 2005 Express Edition , a free, easy-to-use and redistributable database engine. This product leverages the SQL Server 2005 engine and is considered the next version of the Microsoft SQL Server Desktop Engine (MSDE). SQL Server 2005 Express Edition is the fastest way for novice developers to learn, develop and deploy lightweight data-driven applications.

To support customers who are not ready to move to SQL Server 2005 immediately, the team will also deliver SQL Server 2000 Service Pack 4 and SQL Server 2000 Reporting Services Service Pack 2. These service packs will provide the most up-to-date technology enhancements and security fixes for current version of the product.

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Continued Progress towards Trustworthy Computing

In 2004, Microsoft furthered its commitment to the Trustworthy Computing initiative, a long-term collaborate effort to help deliver secure, private and reliable computing experiences for everyone.

In August, Microsoft released Windows XP Service Pack 2 with Advanced Security Technologies to provide proactive protection for Windows XP against hackers, viruses and other security risks. SP2 is a significant step toward Microsoft’s goal of making PCs more resilient in the face of evolving threats and our goal of making Windows XP more secure by default. More than 140 million copies of Windows XP SP2 have been distributed around the world so far. The updates and enhancements in Windows XP SP2 focus on three main areas: stronger security settings; increased manageability and control; and improved and more secure experiences via updates for key drivers, support for new technologies and security updates for key features. All are intended to offer a better end-user experience.

In 2005, Microsoft will deliver the first beta for its next generation Windows operating system, code-named ” Longhorn .” It will continue to improve security for Windows users by making it easier for them to get their computers clean and stay safe. In addition to improved security, “Longhorn” will make it easier for businesses to deploy and maintain Windows. “Longhorn” will also deliver an integrated search solution for the operating system that will make it easier for business organizations to find and manage their mission critical data such as documents and email. For the consumer, “Longhorn” will help to find the things that matter to them most, like favorite songs, treasured photos or any document or e-mail on their computer or across any computer in the home.

Processes and awareness of new developments and procedures are a key part of an overall security strategy, and in 2005 Microsoft will continue its efforts to help customers through prescriptive guidance, education, training and responsiveness to cyberthreats. Since October 2003, Microsoft has provided training to over 600,000 IT professionals and developers on security best practices through security summits, TechNet seminars, free, localized E-learning clinics, monthly security webcasts, the Security Guidance Center and other resources on

Microsoft’s monthly security webcasts featuring Mike Nash, corporate vice president of the Security Business and Technology Unit, provide valuable information to business and technical decision makers as well as the IT professionals in their organizations. The security Web casts, which debuted in November 2003, were revamped this fall into a new, industry-focused series called Security360 . Industry experts from outside and within Microsoft join the discussion on a different security topic each month — such as malicious software, information risk management and social engineering — and a checklist of next steps is provided to help customers be more secure.

This fall, Microsoft released the Security Risk Management Guide (SRMG) , which delivers clear, actionable guidance to help organizations plan, establish, and maintain a successful security risk management process. The company also released an Information Workers’ Security Handbook to provide information workers with the needed background information on how computer networks work and the specific security risks they face, as well as real-world actions they can take to better secure their own computers and help preserve the security of their organization’s network.

For consumers, Microsoft is working on a worldwide education campaign with computer manufacturers, retailers, ISPs and other partners to create broader awareness of best practices to protect their PCs — installing anti-virus software, using an Internet firewall, and using the Automatic Update features in Windows to automatically download the latest Microsoft security updates.

In 2005, Microsoft will continue to provide ongoing security guidance for developers and IT professionals at , and for consumers at . The company will continue to respond to customer needs for a consistent monthly security update cycle, building higher-quality updates, providing additional customer resources and improved communication of security information.

Microsoft continued to advance its Security Development Lifecycle (SDL) efforts in 2004 and plans to continue expanding the SDL process to also incorporate privacy and reliability. The SDL, a more formally defined process for building more secure software, reflects the knowledge and best practices learned from security efforts over the past few years across all phases of the software development lifecycle, and is a mechanism to help ensure Microsoft’s continued accountability. The SDL will guide the development of future software designed to connect to the Internet, process sensitive or personal information or for enterprise use.

Throughout 2004, the Microsoft Security Response Center has responded to customer needs for a consistent monthly security update cycle, building higher quality updates, providing additional customer resources and improved communication of security information. In 2004, the company achieved 320-percent growth in the use of Windows Update and 400-percent growth in the use of Automatic Update features. Roughly 120,000 servers connect to Microsoft every day to check for new content using Software Update Services.

Early this year, Microsoft began releasing “threat cleaner” tools for certain known viruses and worms such as Blaster, MyDoom, Sasser and Download.Ject. Nearly 40 million customers have already downloaded and used these tools. The company also announced the public availability of the Security Bulletin Advance Notification Program to provide all customers with advanced general information on monthly security updates.

In early 2004, Microsoft released the Rights Management Add-on (RMA) for Internet Explorer , providing a way for users of supported Windows operating systems to view — but not alter — files with restricted permission. The tool is being embraced by customers across all industries who are finding great value in the information protection RMS offers in conjunction with Office 2003 applications. In 2005, the company expects to make broadly available a service pack that offers numerous customer benefits including ability to operate in air-gapped networks, and enhanced support for smart-card authentication and tighter group-policy integration.

Microsoft Internet Security & Acceleration (ISA) Server 2004, the latest version of this firewall, VPN and Web-caching security product, officially launched at the Microsoft Worldwide Partner Conference in July. The product’s improvements include a full-featured, application-layer-aware firewall that protects organizations of all sizes from attacks by both external and internal threats. Building on this foundation, a broad array of partner relationships with OEM partners including HP, Celestix and Network Engines offers hardware solutions that provide customers even greater choice. Microsoft will release ISA Server 2004 Enterprise Edition in the first half of next year.

As well, the Trustworthy Computing Initiative’s privacy mandate requires the company to develop products and services that people trust with their most important information and to maintain business processes that protect and use customer information in ways that customers expect. Most noticeable to customers are privacy-related technologies Microsoft has introduced to reduce spam, thwart online scams and control access to private information and documents. Microsoft also has expanded its privacy-related consumer education and collaboration with governments and privacy organizations. In October, the International Association of Privacy Professionals (IAPP), the world’s largest association for individuals in the profession of privacy, honored Microsoft with one of its 2004 HP Privacy Innovation awards.

Microsoft remains committed to helping protect e-mail as an essential communications tool. The company is working with its own customers and across the industry to maintain confidence in email and its many benefits, and to protect users’ privacy against unwanted communication such as spam and phishing.

During 2004, as much as 60 percent of the spam sent to the inboxes of Microsoft e-mail products and services was blocked by Smart Screen filtering technologies, introduced in late 2003 by Microsoft’s Safety Technology & Strategy group. The company’s ongoing collaboration with industry and government to fight spam also yielded considerable progress in 2004, including the publication of e-mail best practices for internet service providers (ISPs) and the development and advancement of authentication technologies such as the Sender ID Framework to help identify legitimate senders of e-mail.

Looking ahead to 2005, the group is driving increased implementation of the Sender ID Framework in MSN, Hotmail and other products, and further efforts to provide technology tools that guard customers against fraudulent “phishing” attacks. At the same time, enforcement efforts against spammers continued throughout 2004, and the company will continue to work with industry partners, government and law enforcement worldwide to vigorously pursue spammers, cyber-criminals and “phishing” scammers.

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