SecProbe.io

June 20, 2013

Via E -mail
Frank Brod
Corporate Vice President, Finance and Administration
Microsoft Corporation
One Microsoft Way
Redmond, WA 98052 -6399

Re: Microsoft Corporation
 Form 10-Q for the Quarterly Period Ended March 31, 2013
Filed April 18, 2013
File No. 000 -14278

Dear Mr. Brod :

We have reviewed your filing an d have the following comments.  In some of our
comments , we may ask you to provide us with information so we may better understand your
disclosure.

Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advising us when you will provide the requested
response.   If you do not believe our  comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.

After reviewing any amendment to your filing and the information you provide in
response to these comment s, we may have  additional comments.

Financial Statements

Notes to Financial Statements (Unaudited)

Note 12 – Income Taxes, page 23

1. You indicate that tax contingencies and other tax liabilities increased due to transfer
pricing developments in certain f oreign tax jurisdictions.  Explain the nature and effect of
these transfer pricing developments.  In addition, tell us what consideration was given to
enhancing your disclosure to indicate the possible impact on your effective tax rate if
certain tax juris dictions are taxed at a higher rate as a result of these developments.
Further, consider disclosing the amount of foreign income before taxes for each tax
jurisdiction that has a lower tax rate than your statutory tax rate.

Frank Brod
Microsoft Corporation
June 20, 2013
Page 2

 Management’s Discussion and An alysis of Financial Condition and Results of Operations

Overview, page 31

2. You indicate that “your solutions allow [y] our customers to use both the cloud and their
on-premise assets .”  Please explain to us how you recognize revenue for these types of
hybrid arrangements.  Explain how you determine the timing and amount of revenue to
allocate to each unit of accounting.  In addition, indicate whether the arrangement fee is
cancelable if certain units are not delivered and whether any of the units are es sential to
the functionality of other units included in an arrangement. Ensure that your revenue
recognition policy in future filings addresses these types of arrangements and includes the
disclosures in ASC 605 -25-50.  Provide us with any proposed changes  to your disclosure.

3. Although you discuss in detail in this section material opportunities for the growth of
your business, there is comparatively little discussion of the risks and challenges that you
face.  Advise what consideration you have given to ex panding your overview to address
in detail the challenges you face in the short and long term and the actions that
management is taking to address them.  For example, consider addressing the effect on
your Windows business of the transition to a new era of  computing devices.  Consider
discussing such matters as the competitive environment and the methods of competition,
the willingness of original equipment manufacturers of new computing devices to use
your Windows 8 platform and the challenges you will fac e in transitioning your hardware
and software ecosystem to this evolving market.  In this regard, we refer to your third
quarter earnings call on April 18, 2013 and disclosure under the risk factor subcaption
“We face intense competition a cross all markets …” on page 50.

Results of Operations, page 33

4. In your discussion of the results of operations, you often refer to two or more sources as
factors or events that explain a material change.  For each of your segments, tell us what
consideration you gave to quantifying the amount of each of the factors or events
identified and to analyzing how those factors are reflecting a trend.  For example, tell us
what consideration you gave to providing an analysis that discusses why you were able to
increase revenue in  the Windows Division while the x86 PC market has declined
significantly in this quarter.  In this regard, we note that in prior filings you have stated
that the Windows Division revenue is largely correlated to the PC market worldwide ,
however, this state ment is not included in this Form 10 -Q.  Further, consider disclosing
the amount of revenue earned from Window 8 and Window 7 as part of your discussion
of the trends in the x86 PC market.  Consider also quantifying revenue earned from the
sale of Surface tablets, including the number of units sold.  In addition, tell us whether
any portion of the $1.1 billion in Windows Upgrade revenue earned this quarter was
recognized due to the upgrade right expiring.  Refer to Item 303(a)(3) of Regulation S -K,
Section III.D of SEC Release 33 -6835  and Section III. B of SEC Release 33 -8350 .

Frank Brod
Microsoft Corporation
June 20, 2013
Page 3

 Microsoft Business Division, page 37

5. We note from your discussions in the overview section and during your third quarter
earnings call on April 18, 2013 that the launch of the new vers ion of Office represents a
fundamental shift in your model to subscriptions.  Since this model appears to be
impacting the timing of revenue recognition, consider providing an analysis of the effects
of changing to this model for Office software and any other products.  Discuss the impact
this trend will have on your revenues by separately disclosing the amount of revenue that
is being recognized upfront and ratably.  We refer you to Item 303(a)(3)(ii) of Regulation
S-K, Section III.D of SEC Release 33 -6835  and Section III. B of SEC Release 33 -8350 .

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable  Exchange Act rules require.   Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

 In responding to our comments, p lease provide  a written statement from the company
acknowledging that:

 the company is responsible for the adequacy and accuracy of the disclosure in the filing;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Co mmission from taking any action with respect to the filing; and

 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

You may contact Melissa Walsh, Staff Accountant , at (202) 551 -3224  if you have
questions regarding comments on the financial statements and re lated matters.  If you have any
other questions, please contact Matthew Crispino, Staff Attorney, at (202) 551-3456 .  If you
require further assistance, do not hesitate to contact me at (202) 551 -3488 .

Sincerely,

 /s/ Stephen Krikorian

Stephen Krikorian
Accounting Branch Chief