Microsoft Corporation - Page 8




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              Petitioner created its software products at its Redmond                 
         facilities.  It took 25 to several hundred persons to develop a              
         computer software product (i.e., Microsoft Windows or Microsoft              
         Excel).                                                                      
              Petitioner’s product development, which could take up to 3              
         years, involved three phases: (1) Product planning, during which a           
         functional specification and final schedule were prepared (3-12              
         months); (2) product development, during which the source code was           
         completed (and was further revised in the next phase) (6-12 months);         
         and (3) product stabilization, during which a gold master was                
         produced and the software product was released for duplication (3-8          
         months).                                                                     
         D.  Production of Masters for Export                                         
              From an American-made gold master, petitioner’s product release         
         services group (PRS) in Redmond produced master copies of the                
         software and related documentation for distribution to petitioner’s          
         Canyon Park facility, the foreign OEM’s, and the CFC’s.  These               
         masters contained object code for computer programs and related data         
         files.  Petitioner’s PRS duplicated the masters on various media,            
         depending upon the size of the particular software product and the           
         distribution channel.                                                        
              Petitioner’s products used magnetic tape for masters provided           
         to the foreign OEM’s.  Specifically, during the years in issue, PRS          
         provided masters to the foreign OEM’s on .25-inch magnetic tapes,            






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