Greetings, and welcome to the Microsoft second quarter fiscal year 2014 earnings conference call. [Operator instructions.] It is now my pleasure to introduce your host, Chris Suh, General Manager of Investor Relations for Microsoft. Thank you, Chris. You may begin.

Thank you, operator. On our website, microsoft.com/investor, is our financial summary slide deck, which is intended to follow our prepared remarks and provides a reconciliation of differences between GAAP and non-GAAP financial measures. As a reminder, we will post today's prepared remarks to our website immediately following the call, until the complete transcript is available. Today's call is being webcast live and recorded. If you ask a question, it will be included in our live transmission, in the transcript, and in any future use of the recording. You can replay the call and view the transcript at the Microsoft Investor Relations website until January 23, 2015. During this call, we will be making forward-looking statements, which are predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ because of factors discussed in today's earnings press release, in the comments made during this conference call, and in the Risk Factors section of our Form 10-K, Form 10-Q, and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements. Before I hand the call over to Amy, please keep in mind that all growth comparisons we make on the call today will relate to the corresponding period of last year. Also, unless specified otherwise, all impacted numbers for the current quarter have been adjusted for the cumulative effect of last year's revenue deferrals and recognition related Windows, Office, and Xbox video games. As a reminder, with our new segment reporting structure, we have consolidated adjustments of this nature into “corporate and other” to provide better comparability of operating results. You can find details of the adjustments and a reconciliation of differences between GAAP and non-GAAP financial measures in our financial summary slide deck. And with that, I will turn it over to Amy.

Thank you, Chris. Good afternoon and thank you all for joining us today. As I look back on the quarter, I am pleased with the results, as we exceeded our expected revenue growth while continuing to maintain our focus on improved execution and cost management. Our devices and consumer segment had a very good quarter and grew 13%, with a successful holiday. Our commercial segments had another great quarter, and grew 10%, to over $12 billion, as we continue to deliver on our differentiated cloud strategy. We performed well this quarter, and you see it in our financial results. This holiday, we continued to make significant progress in the consumer space, headlined by Xbox One, which launched in 13 markets and sold in 3.9 million units in just over five weeks. According to NPD Group figures, Xbox One was the leading console in the U.S. for the month of December, which was its first full month in market. When adding in Xbox 360, which held the third spot, Xbox led the U.S. market, with 46% share in December. We are excited by this enthusiastic response from our loyal customers, and are working to increase the availability of Xbox One. With Surface, demand continued to grow, benefitting from improved execution at retail and favorable reviews of the new Surface devices. Sequentially, both units and revenue more than doubled this quarter, with customers recognizing Surface’s differentiated value proposition as one device for everything in their life. We feel good about the progress we have made over the past couple of quarters, and are enthusiastic about the overall opportunity ahead with Surface. The Windows ecosystem as a whole is also making important progress. Earlier this fall, we launched Windows 8.1, which enabled smarter, faster, and more personalized devices, and our OEM partners are…

Thanks, Amy. First, I’m going to review our overall results, and then I’ll move on to the detail by reporting segment. We had a successful holiday quarter, and our broad, diversified portfolio helped us deliver record revenue in Q2. Total revenue was up 11% to $24.5 billion, and without the impact of foreign exchange, revenue would have been higher by $196 million, or 1 percentage point. Cost of goods sold increased 46%. This increase was primarily due to costs associated with the new Xbox and Surface products, which launched this quarter, and also growth in [unintelligible] infrastructure supporting our consumer and commercial offerings. Even as we invest in our devices and services initiatives, gross margin was flat at $16.2 billion. Operating expenses grew 3%, which was below our guidance, and we continue to focus on prioritizing spend for strategic growth initiatives. Operating income and earnings per share both declined 4% to $8 billion and $0.78 respectively. This quarter, we returned $4.3 billion of cash to shareholders in buybacks and dividends, our highest amount in the last 12 quarters. I’m now going to talk through the performance of each of our reporting segments. In our devices and consumer segment, revenue grew 13%. Within this, the licensing segment, which primarily includes Windows OEM, consumer Office, and Windows Phone, declined 6%, reflecting the overall PC and device market trends. We continue to see similar dynamics to the previous quarter. Total Windows OEM revenue declined 3%. As Amy described, the 12% growth in Windows Pro was offset by 20% declines in Windows non-Pro. Excluding the impact of China, where we continue to draw down inventory levels, Windows non-Pro revenue declined 14%. Office attach, including our cloud offerings, was up again this quarter. Traditional consumer Office licensing revenue declined 24%. However, we estimate that approximately…

Thanks, Chris. Before I get into our expectations for the quarter, let me quickly touch on Nokia. We continue to expect that the deal will close this quarter, but are still in the process of securing all regulatory approvals and meeting closing conditions. So all guidance provided here assumes no impact from Nokia. Assuming the deal closes this quarter, we will include Nokia in our guidance starting in the fourth quarter. Looking ahead to the third quarter, we are expecting a similar macro-environment to what we saw this quarter. As such, many of the dynamics from the second quarter will likely continue into the third. With that, let’s get into the outlook, starting with devices and consumer. In licensing, we expect revenue to be $4.1 billion to $4.3 billion. This range reflects similar dynamics to what we saw in the second quarter, with business PCs growing, strong Pro mix, and headwinds in consumer PCs. In hardware, we expect revenue to be $1.9 billion to $2 billion. This reflects continued post-launch momentum with Surface 2, Surface Pro 2, and Xbox One, with the upcoming launch of the Xbox exclusive game, Titanfall. And in devices and consumer other, we expect revenue to be about $1.8 billion. Moving on to commercial, in what is a seasonally slower quarter, we are confident in our ability to continue to be the vendor of choice, with our productivity and infrastructure offerings. In commercial licensing, we expect revenue to be $10.4 billion to $10.6 billion. In commercial other, we expect revenue to be about $1.8 billion, reflecting continued momentum in our commercial cloud business. We expect COGS to be $6.1 billion to $6.3 billion next quarter. This range primarily reflects variability associated with our hardware business. Moving on to operating expenses, we expect opex to grow 5%…

Thanks, Amy. And with that, we’ll move on to Q&A. Operator, please go ahead and repeat your instructions.

[Operator instructions.] Our first question comes from the line of John DiFucci with JP Morgan Chase.

Obviously nice upside on the hardware business with Surface and Xbox. But my question is on the licensing business. So bear with me a little bit here. You had both licensing businesses, devices and consumer, and commercial licensing, they were both better than expected, at least by about $100 million each. At the same time, deferred revenue was shy by something like $250 million. But there’s some conflicting things, and I’m just trying to get my head around this. Contracted not billed, Amy, you pointed out was really strong. You saw a big jump, by somewhere around $2 billion sequentially. And you also saw some nice traction in the commercial cloud services. It more than doubled, assuming it’s small. So here’s my question. With all that happening, is there a shift happening with your on-premise corporate business to more transactional versus ratable contracts that would sort of help to offset the financial implications as you shift to cloud services on the corporate side? Is that what’s happening with all these movements?

I really appreciate the question, because it’s going to let me help expand on a couple of dynamics, which I think are at work here. So now I’m going to ask you to bear with me, with a little bit of a long answer. Let me start by your comments, I think, around the overall commercial licensing bucket. I’m going to expand to include, as you did, the overall commercial business, both cloud and licensing. There are a number of metrics that I tend to look at together as opposed to individually, to think about how we did in the quarter. You touched on one, unearned, which grew 12% this quarter, which is quite good. The second is bookings, which grew 12% in the quarter, which is very good. Renewal rates, which were in line across our products. And finally, the CNB balance, the contracted not billed balance, being up sequentially $2 billion, as you point out, is very big. If you think about those together as a group, those data points are very important because together, I think you said a couple hundred short on unearned, with those data points together, I would say there’s no shortage in terms of commercial licensing and commercial other strength all up. As you know, contracted but not billed tends to be at the end of the quarter. We’ve signed a bunch of contracts that we can’t bill for until the very beginning of the next. Think about that as business done in quarter. You’ll see that come into the unearned balance, frankly, in Q3, as well as into adjusted. So that dynamic answers really the first question, and the part of the question you asked. That’s sort of a separate piece. Then you said, well, some of the dynamic could be explained by some strong transactional business in the quarter. And I would actually separate these things, because the first was good and the second was better than we thought. Office non-annuity, or transactional, did a little better than we thought in quarter as well, and so that’s a good point that we didn’t bring out, that that is another component of the 10% all up commercial growth. Now, so, I guess my answer is, I agree with your transactional comment, but I disagree that it’s probably that it’s a component of a “shortfall in unearned.” I would say both are actually quite good.

That’s fairly helpful, but just a clarification on the contracted not yet billed. And yes, contracts get signed at the end of the quarter. So you’re saying that the big jump primarily was because they just hadn’t been billed yet. I could see if you were just signing longer term deals, that you’re going to bill annually, but that’s not what’s happening? Either one could happen.

That’s right. If something was actually billed at the end of the quarter, it goes into unearned. Contracted but not billed is actually that the contract was signed, but that because the billing won’t quite take place until after the end of the fiscal quarter, it ends up in contracted but not billed as opposed to unearned.

Typically, your contracts are three years, but are we seeing any extension on the average contract length?

No. That’s not one of the impacts.

Our next question comes from the line of Mark Moerdler with Sanford C. Bernstein.

Two quick questions. The first one is can you give us any sense of how much of the Office 365 and the Home Premium could be generated by net new users as compared to simply the move over of existing users?

Here’s how I think about the value proposition, because I can’t really say, these are sales through retail and [unintelligible] generally, whether it’s a net new user or not. What I can say is that attach overall went up in the Office consumer business, which I would say is, and could be, a sign that some of those are net new. And I would hope that to be the case. The value proposition of Office 365 Home Premium really does expand the footprint. It allows for multiple users, it has cross-platform capabilities with Office for Mac, it’s got mobile capabilities as well, and allows for easier trial. So it does sort of lower many of the barriers to experience and try the product. So while I can’t point and say there’s an exact number that is a new user, I can certainly say with attach going up, that dynamic is helpful.

The second quick question is on the Windows side, we’ve seen obviously an improvement on the numbers on here. Do you believe that’s being driven purely by an improvement going on on the market, it’s the Windows 7 refresh accelerating as we get closer to the day? Any sense of what the drivers are, both on the consumer and the enterprise side as to why we’re seeing the pickup?

I covered it a little bit in my comments, but it’s probably worth spending a little bit more time. Let me start with the business market. I think there really are three factors that I would point to, particularly in the business environment. And the first one may also help on the consumer side. The overall macro spending environment is better. It’s a little better than we thought, and in businesses we’re seeing it, you’re seeing it in some of the IT spend forecasts you all put out. They’re being raised, and I think that has an impact. The second is I think our partners have done a very good job expanding the types and availability of new and interesting hardware. That brings people to the store, and I think it’s an encouraging sign. And finally, as you asked, is the end of life of XP. That has been an impact, and we expect it to continue to be, as we said, in Q3. But I wouldn’t point to simply one of the factors as being the reason, but it is a combination of those factors.

Our next question comes from the line of Phil Winslow with Credit Suisse.

Just have a question back on that Windows volume licensing side. You kind of touched on it earlier, but you saw 10% growth year over year this quarter versus 6% last quarter. So you continue to have very healthy growth. One of the questions I’ve been getting from some clients is A) what’s driving that, and B) as we get closer and actually pass the official end of life of XP, how do you think that’s going to affect the growth in Windows licensing beyond that point?

I’m going to take the opportunity to make your question two questions. One, to just talk about Windows volume licensing overall, and secondly, allow me to talk a little bit about the places that you can see the impact of Windows XP in the current quarter. And I think that will help as you think about Q3 going forward. In volume licensing, you’re right, it did grow 10% in Q2. And we do believe we are seeing some of the benefits of that growth is the end of life of Windows XP. But it’s also reflective of the value many of our bigger customers are seeing in upgrading to the enterprise version of Windows. The enterprise SKU includes things like Direct Access, Windows to Go, Corporate Image, App Blocker, and those really are differentiating. And they really do matter to many CIOs. So I think specifically on VL, while end of life on XP is one component, it’s certainly not the only component. Now, if I expand your question to sort of - and I think in a way Mark asked about it too - is the end of life of XP. One place that we’ve talked about it was Windows, and how does it play into the business PC growth. The second we talked about was volume licensing. And the third was actually talked about in John’s question, with Office and some transactional strength. Some of the strength that we saw in Office transactionally really can be linked back to the end of life of XP. As people refresh a PC, and if they’re buying Pro, those people often are Office customers, and so if they tend to buy on a transactional basis, we also see some impact through Office. I think you can tie that back to some of the outperformance we saw in the quarter as well.

Our next question comes from the line of Heather Bellini with Goldman Sachs.

Amy, I wanted to ask if you could share with us how you see the gross margin profile of the company changing, as you continue with your journey to be a devices and services company. And as you look out to when the transition is complete, and I know you probably don’t know when exactly that’s going to occur, how do we think about what it will look like?

This is one of those questions that I think is best taken in a bit of a chunk. First of all, I think if you look at our commercial segment, I’ll do it all up, because I think it’s relatively easy with that breakdown. In general, and you saw it this quarter, even if we continue to invest in the infrastructure to support our cloud conversion of our commercial customers to Azure and Office 365 and CRM Online, our actual gross margin remains flat, which means we’re increasing our utilization and growing gross margin in the commercial cloud business as we continue to see traction. Over time, I continue to believe our commercial business, in the absolute, moving to the cloud is a net positive, as I talked about before, to overall profit, including the increasing amount of gross margin we make as a company. So, I think this quarter was 83%-ish, so that, I would take as a separate bucket from our devices and consumer business. And there, what’s interesting is we have a couple of business models there, with different gross margin profiles. And you’re actually seeing the impact of some of that in this quarter. Xbox, as we know, especially with new consoles like the One, tends to be gross margin negative on the front. This is a heavy quarter for that over time, for the attach. First, second, third party games and other services, the margin profile with any console [unintelligible] changes. But it’s never going to be an 83% gross margin. It’s just a different business, even for the market leader, and even successfully generating cash and returns. That is different from other businesses we also have in D&C. So I think the important thing that I tend to focus on as I go through all these businesses is continued margin improvement within the business, continued efficiency within the business, and continued focus on the absolute profit within each of those areas. And then the mix then becomes more of a math equation, as we continue to grow the overall amount of cash and profit the company generates.

Our next question comes from the line of Brent Thill with UBS.

Just back on contracted not billed, you had four quarters of over $21 billion and then jumping up obviously north of $23 billion. That jump that happened, can you just help us understand the buckets that made that jump this quarter? Is there an easier way to think through where that actually came from?

Yes and no, of course. Let me say, contracted but not billed is related to the number of expirations we have in the quarter. Chris and I both talked about, we did have a lot of expirations in the quarter. When those tend to fall at the end, it can impact the actual magnitude, the actual number of expirations, and then the timing of when those fall in the quarter can also impact how it’s recognized. And that’s why I never really look at it separately from unearned, bookings, and renewals together. Because timing is one thing, that’s why I tend to put them in a bucket and say, together it’s a good and healthy trajectory.

And just real quick, on the multiyear agreements, you mentioned healthy renewals. Any color you can add to the re-up on the size of what you’re seeing in general across some of those bigger multiyear agreements?

I think in general it reflects the same trends we’ve been seeing across our broad portfolio. You see it across Windows, Office, and Server. If you look at our KPIs, I think that points out that it’s pretty broad based. So I don’t think there is any on particular area I would call out. It’s really more about platform health and commitment.

Our next question comes from the line of Walter Pritchard with Citigroup.

Question on the consumer retail side. This is the first year I think you’ve had a full retail store presence. You also, I believe, had some presence in some of the Best Buys with sort of mini stores in there. And I’m wondering what your takeaway is from the holiday season, and if those efforts you think were part of the reason why you had a pretty successful season, especially on the PC side, and what that experience suggests that you should do in future in terms of retail store buildout and general investment around retail.

When we talk about improved retail execution, I really think that’s a partnership, as you said, with retailers, with our OEMs, and with our efforts to really improve both the devices, the assortment, and the experience of buying in the PC aisle. So I do feel good about the investments we’ve made there, and we’ve made them, I think, thoughtfully, and continue to keep a focus on cost and expense as we do that. So do I think it had an impact? I do. But I really think the broader impact was investments and commitments we had with our partners to also improve the retail buying experience.

Our next question comes from the line of Keith Weiss with Morgan Stanley.

I wanted to dig into gross margins in the quarter, because by my estimates, you guys outperformed guidance for gross margin that you gave in the quarter, despite the fact that you saw significant outperformance in D&C hardware, which, as you were saying, especially for something like Xbox One, which is just out of the gate, you had expectations of being very low, if not negative gross margins. Can you help us understand a little bit of where that gross margin outperformance came from? Was any of it in D&C hardware, getting better yields, better gross margins, on those products, and your expectations? And if not, where did the outperformance come from?

I’m glad you asked that question. With our outperformance, as you pointed out in D&C hardware, we did actually see increased COGS related to that. However, that was offset by some COGS improvements and savings we saw across other areas, as we continue to focus on efficiency and execution. And so you’re right, we did see COGS grow with hardware, but we were able to find savings elsewhere as we focused on improved execution.

Our next question comes from the line of Rick Sherlund with Nomura Securities.

Congratulations on the margins, cost management, and execution, and also Amy, I think we all appreciate your very substantive answers to the questions. Just a follow up to an earlier question on the contracted but unbilled. We’re seeing VMware that they had a surge of three-year contracts coming out of the recession, and a lot of those are coming back for renewal now. Is that what you were suggesting, is you’ve got an unusually large volume of contracts coming up for renewal?

Yes. In many ways, you’ve seen this over covering our company for a while. Expirations can be chunkier. That’s not a year statement. This quarter we had a big expiry base. I wouldn’t characterize it as abnormally large, but the timing is a bit related to three years ago, and the timing of some of the contracts. So it’s probably a consistent driver.

And last quarter we talked a bit about are there any metrics you can help us to understand better what the effect of your revenues is from the shift to the cloud. I think on Office, it’s more of a net delta that I think you said it hurts you about $150 million in the previous quarter. Is there any way you can give us a sense for what the net impact is on the business from the shift to the cloud?

I talked about this a little bit. The place where you can see the most direct impact is in the consumer Office business. We talked about the business, on a traditional license basis, being down 24 points. But our estimate is approximately 16 points of that decline is accounted for by the shift to Office 365 Home Premium. So that gives you sort of a good estimation of the direct impact we’re seeing, particularly on the consumer side.

That implies it would only be down about 8%, were it not for the shift to the cloud?

That’s one way to look at it, yeah. The net number would be about 8%.

Our next question comes from the line of Ed Maguire with CLSA.

I wanted to ask about phone, because you had not discussed Windows Phone on the call so far. Just how it’s tracking based on your expectations, whether you are planning to continue to invest with non-Nokia OEMs? And also, whether any of your expectations or investment plans for the integration with Nokia have changed in any meaningful way since you announced the deal?

It’s a good point. We didn’t have a chance to discuss the phone results. We did see growth in Windows Phone, both in the licensing and in the mobile phone IP revenues. Both grew this quarter. And we continue to see the growth in many of the places we’ve seen historically, so unsubsidized markets, as well as with entry level smartphone devices. So I think many of those dynamics haven’t really changed. Do I have any updates to how to think about Nokia? Other than we continue to expect it to close in the quarter, I don’t. We mostly remain focused on working hard to get to the point where we’re working together as one team to drive that business forward.

Our next question comes from the line of Kash Rangan with Merrill Lynch.

I appreciate the fact that you’re trying to improve the margins in each of the commercial and consumer businesses, but the margin differential between these two businesses still is a pretty wide one. It looks like the consumer business is growing. The three dynamics I can see are, the margin differential is too wide. You’ve tried to improve that, the margin is still wide. The consumer business trend-wise is growing faster than commercial. And third is that you have this shift to the cloud. So unless you do something like an Adobe or Autodesk, where you force the transition to happen very quickly, there’s the risk that you get a lot of growth, which is fantastic, and there’s a lot of progress to share, but the margin inflection point could be delayed for several years. I think that was one of the questions that was spurred behind, presumably, Heather’s question. That’s what I’m trying to get at. So how long are you going to get this shift to results in a way that we may not see the earnings growth rate, but we may have to wait until some point in time? Or are you at the point where you can actually force the shift to happen much quicker?

The way I think about it is we have a broad portfolio, and we address customers of all types, and in many ways, our biggest goal is to meet the needs of our customers, whether they be CIOs or consumers. And setting our business model to support the products and the adoption curve that we want needs to be married with the adoption curve and timing of our customers. I feel like we’ve done a very good job of balancing the pace of that. I’ve been encouraged by the pace of adoption of many of our cloud services. You heard premium numbers today, as well as talking about the commercial cloud. And so for me, it’s hard to say, is there too big of a delta. It’s really about managing each of these things toward absolute growth and absolute improvement, and having customer adoption. So I probably just have a different perspective on that than you have.

Our next question comes from the line of Ross MacMillan with Jefferies.

Amy, you said that Office 365 Home Premium was more than 15% of total consumer Office licenses sold. And I wonder, if you think about your commercial business, and we either think about it as a percentage of total Office 365 or as a percentage of maybe what’s traditionally been transactional, whether you have a similar metric in terms of percentage of total Office licenses sold.

That’s a good question. You know, we only recently started selling the Office client in our volume licensing agreement through a subscription. So that is actually good feedback for us to think going forward about talking about the Office specific business that way. Because in general we think of Office 365 as being a broad set of assets, including Exchange, SharePoint, Lync, and Office in the commercial business, and we haven’t really talked about it, given the newness of the model and the enterprise as being as meaningful as it has been in the consumer. The shift is far faster there, on the client.

Yeah, I just think that would be helpful, especially if you think about it with respect to your traditional commercial transactional business. Maybe if I could slip in one other one, just to go back on the contracted not billed. I just want to be clear in my own mind, because I’ve heard two things. One thing I heard you say was we had stronger transactional business late in the quarter, but I also heard you say that there were frankly more renewals on multiyear that would have resulted in that balance going up, especially if those were late in the quarter. So am I right to think it’s those two factors that are at play here, both stronger transactional and a larger pool, if you will, of multiyear renewals? And is it relatively evenly balanced between the two?

Actually, transactional execution in the quarter is recognized all in quarter. That’s not annuity. It doesn’t go to either the unearned balance or the contracted not billed balance. So that’s not an impact that results in a change to the unearned or CNB. The latter, which is the absolute size of the expiration base, frankly could or couldn’t impact CNB. It can impact things like unearned growth, but it also can impact CNB, depending on if it is contracted in quarter, but not billed until after the end of the quarter.

Our next question comes from the line of Brad Reback with Stifel.

Amy, in the Q it talks about the Surface still losing money, even at the almost $900 million run rate of revenue in the quarter. Can you give us any sense of what kind of volume you need for that business to have the scale to make some money?

You know, when we launched Surface just a year ago, our goal was really to create a product that showcased what can happen when you innovate in hardware, in the service, and in the software. And as you know, we’ve learned a lot over the course of this journey. And we have to make more meaningful progress. But I think for us we’ve remained focused, as we launch the second version of Surface, to stay focused on both price points and gross margin, and I think we’ve made a big leap from v1 to v2, and I’m looking forward to making leaps as we go forward in our product roadmap. But I do think it’s more to think about it as a goal we absolutely have, as we continue to innovate the line.

Our next question comes from the line of Gregg Moskowitz with Cowen & Company.

Amy, despite the healthy gross margins, your Xbox platform revenue grew $1.2 billion year over year, but your related cost of goods sold went up by $1.6 billion. And I realize there may be additional costs related to launch, but just wondering if you could talk to expected profitability levels for Xbox for the balance of fiscal ’14.

We’ll continue to be in launch mode for Xbox One, especially many people are excited about the launch of Titanfall in March, and we’ll continue to add and expand markets over the course of the year. So I would continue to think about our investment in being the leading next-generation console as certainly extending.

And our last question comes from Brendan Barnicle with Pacific Crest Securities.

Amy, you mentioned briefly in your comments some of the strength you’d seen in SQL Server, and that seems to be taking market share. You highlighted a couple of the features, but what do you think is driving that market share gain? And a similar question over on the server side, where you seem to have better server numbers than what we’ve seen in units? And what would be accounting for that additional strength?

You’re right, I only pointed out a few of the value propositions of SQL Server. And actually, dating back years, the real value proposition of SQL has been the breadth of its offerings: analytics, reporting, and core database functionality. And so over the years, I think the balance of those things, and continuing to add and innovate at very good value, has continued to be appealing. And as we move forward and add some cloud capabilities to our hybrid model, and continue to add features into the premium levels, when you’re the established, and I think in many ways unit leader, then you can focus on continuing to move up the stack, adding value, and increasing your premium mix. And the team has really done a terrific job of doing that, so it’s nice to be asked, so that I can talk about it. And I mentioned it briefly, Systems Center is another where we’ve gained share in virtualization, and I think we’re quite proud of the progress we’ve made, especially in that area, and that’s enabled a lot of growth as well. So I actually appreciate the question. It’s good to be able to talk so positively about those assets.

Okay, so that wraps up the Q&A portion of today’s earnings call. Just a quick reminder that Build, our developer conference, will kick off the morning of April 2 in San Francisco. We encourage investors to watch the keynotes live via webcast. We’ll also look forward to seeing many of you in the coming months at various investor conferences. For those of you unable to attend in person, these events will generally be webcast, and you’ll be able to follow our comments at the Microsoft.com/investor website. Please contact us if you need additional details. Thanks again for joining us today, and take care.

Thank you, everyone.