The type or namespace name 'Xrm' does not exist in the namespace

When we start learning about server side extension in CRM 2011, we typically start building a console application and try out CRUD operations consuming CRM web services by referencing sample codes from CRM SDK. So, we normally create a console application, reference the required DLLs from the SDK\bin folder and use those CRM namespace in the code file.
When you try to build the solution, you may get the following error if you don't leave all the settings by default since the console project has been created.

The type or namespace name 'Xrm' does not exist in the namespace 'Microsoft' (are you missing an assembly reference?)

All you have to solve this problem is right click the project, select Properties and change the Target Framework from “.NET Framework 4 Client Profile” to “.NET Framework 4”.

Now, you can start coding and carry on your console application.