Worldwide Partner Conference
Remarks by Steve Ballmer, Chief Executive Officer
July 12, 2010
ANNOUNCER: Ladies and gentlemen, please welcome to the stage, and get really, really cloud, Steve Ballmer! (Cheers, applause.)
STEVE BALLMER: Oh cloud! (Cheers, applause.) We've been shouting about "oh cloud" here at the WPC now for about four years, and it's exciting for me to have a chance to kick off WPC 2010 in a year in which I think it's been clear that the opportunity and the transition to the cloud for enterprise and business customers, and for partners around the world is absolutely clear.
And I'm super enthused to see so many of you here today, the largest attendance at the Worldwide Partner Conference ever. I think that speaks to some dimension on the improvements in the economy, but I think it speaks in a lot of dimension to the number of our partners who are moving with us and really embracing the cloud, and really hearing what our customers are saying about the potential that they see to streamline their operations and improve their agility using technologies from the cloud.
And we have a lot of work left to do, we Microsoft and we together, with our 640,000 partners around the globe, but there's no question the path is clear and inevitable. There's no question that Microsoft has chosen to embrace that path together with all of you, and there's no question that we still have more to do to develop the mutual opportunities in the cloud.
I'm going to talk about a lot of things today, and I'm going to center much of what I say in the cloud.
I know there are some other things on your mind, and I'll try to get to all of them, but I want to start off on this Partner Conference where I've started off the last few years, you, your importance and your transition to this world of the cloud.
This last year has been a phenomenal year for Microsoft, all things considered. We certainly started the financial year, as did all of you, coming in the center of the gloom of the financial crisis. And yet throughout the year, through the incredible efforts, the incredible hard work of our partners around the world, we have certainly seen our business accelerate in amazing ways.
And that acceleration is due to you. As a company we remain built entirely on the backs of the relationships that we have with partners. For the success, for your energy, for the investment that you make every day in understanding our technologies and helping our customers I want to start by saying to all of you thank you. Thank you for your work on Windows 7 and what that has done for PC sales and unit volumes. Thanks for your work on Microsoft Office. We've had an incredible reception to the new version of Office, Office 2010, SharePoint, Exchange.
Thank you for what you've done for the Microsoft Online Services. Literally thousands of new enterprise customers in the last several months, through your good and hard work, have signed up and are migrating to Exchange Online and SharePoint Online as we speak.
Thank you for your good work certainly with the new releases of Windows Server and SQL Server. We've had over 670,000 trial downloads of the new release, SQL Server 2008 R2, in just the last two months as many of you and the customers you serve look to build new solutions based around SQL Server.
Thank you for the support of Windows Azure. A year ago, we had nobody, zero people using Windows Azure. Today, there's over 10,000 paying customers, partners and end customers, who are building applications and moving forward with Azure.
And the list doesn't end there. The progress we've made eclipsing 30 percent now with the virtualization market comes through the hard work and efforts and energy of our partners.
So, together we've driven a lot of volume, we've made a lot of business, we've helped a lot of customers around the globe improve their business and emerge stronger from the economic difficulties of the preceding 12 months. And for all of that I want to say thank you, thank you, thank you, and I want to say a thank you in advance, because I'll tell you, there's as much to do or more in the next 12 months as there has been in the last 12 months. To all of you thanks, we really appreciate the partnership. (Applause.)
I'm going to start with the opportunities now for all of us in the cloud. The cloud continues to bring new opportunities.
I had a chance to give a speech that wound up really in my mind framing how we think about the cloud, and what it is enabling us to do, and us to do together with you for our customers. I gave this speech back in about February, March, actually at a university in the United States, and I want to go through those themes for you again. We really focused in on a number of key dimensions of the cloud, and I'm going to run through those, and I want to make sure that each and every one of them, what the transformation is that's coming from the cloud and why we should all be excited about it. The new things we'll be able to do for our customers is clear to all of us.
The first thing I would say for sure, the first dimension, first principle of the cloud is the cloud really will create for all of us, for Microsoft, for our partners, for our customers, the cloud creates new opportunities and new responsibilities.
When we think about the cloud, just in this room, for years there have been classes of customers that were hard for us to serve, small businesses, departments in larger companies, foreign subsidiaries that are very remote from headquarters in the companies that we serve.
For those of you who are software developers, many of you have come to Microsoft and said, "I'm an ISV doing business here in Toronto. How can you help me sell my application to customers in Tokyo, for example?"
The cloud really does give a new set of facilities, marketplace services, distribution services, customization services, that will open up for all of us in this room a set of new markets and a set of new customers.
The cloud enables us, all of us, to help our customers streamline their operations and improve their agility. In some senses I think we all know for our customers their mission No. 1 is to take cost out of the ongoing operations and maintenance of IT so they can invest more in new scenarios and new applications.
Because of what the cloud, both technologies like Azure, as well as the Microsoft Online Services, can mean for the customer, we can remove many of those costs and much of that complexity, and enable more of the value-add that all of you bring to our customers to focus in on the new applications and new scenarios our customers want to embrace, that business value that all IT directors and managers talk about.
And lastly, the cloud brings a set of new responsibilities. When our customers start putting their data in our systems, and we'll talk with you today some about public cloud and customer-hosted cloud and partner-hosted cloud, but when customers entrust more and more of their data and operations to all of us, the need to do better and better jobs on reliability, security, privacy, it's operational excellence, but it's also technologies that make it simpler and easier to keep systems up and running and private and secure. And as we talk to you over the course of WPC, you'll hear us talk about some of the investments that we're making in our cloud offerings in order to facilitate this path forward.
So, that's No. 1: opportunity and responsibility.
We've had very good success, as I remarked a minute ago, but I wanted to share with you a list of some of the customers who've already chosen to move with us, with you. So, Microsoft and our partners together are helping the companies on this slide in one way or another move to the cloud: Starbucks, McDonald's, Quark, 3M, Nokia, GlaxoSmithKline, Aon, and the list goes on and on.
We are not at a phase where we're just seeing small companies take experimental steps into the cloud. This opportunity is real and concrete and available to all of us today.
The second dimension of the cloud, the cloud learns and helps you learn, decide and take action.
A lot of what we talk about in the cloud can oftentimes sound like all we're doing is moving things from enterprise datacenters to the cloud, but because the cloud is a shared resource, there will be new scenarios that didn't make sense or couldn't really be executed just in an enterprise datacenter that we're now pursuing.
We've learned a lot about this from our work on Bing. We've come a long way in the last year since we were here. We picked up about 3 share points in the last year as the Bing technologies continue to get better and better, and we've gone from about 8.5 to 11.5 percent market share.
But what you learn by building a product like Bing is how much once you have millions of people trying to figure things out, trying to make decisions, trying to mine data in order to take action, you learn a lot about the technology which lets you statistically understand what users are interested in doing.
When I type "show me the sales data -- show me industry-wide sales of personal computers by country," that is a BI question that I just happen to pose to the search engine. So, how do we take those technologies, how do we take what we're learning about natural language and statistical reasoning, how do we apply that to enterprise technologies like SharePoint search, like SQL BI, how do we apply those technologies as we move them through Microsoft Online Services into the cloud?
How do we do better at bringing together enterprise data with industry data? We have a whole program that we refer to as Dallas around our SQL Azure service to help people publish business data streams that can be used for business intelligence.
So, the opportunities for all of us in the cloud to do a better job helping our customers pull together, find, pull together enterprise and cloud data, and then let them make decisions, I think is phenomenal, and we're pursuing that in Bing, we're pursuing it in SharePoint, in SQL, in Excel, and the rest of Microsoft Office.
No. 3, also new scenarios for business enabled by the cloud, the cloud enhances social and professional interaction.
Now, we can talk about all of the work, good work that many of us have done together to bring companies their e-mail systems, their collaboration systems, to help arm them with better tools for internal collaboration, and yet there are still a lot of scenarios that we know our customers want to pursue where the cloud and cloud technologies are important.
Everybody is the member of a social network. We're all a member of at least one, maybe more. There's a convenience, there's something about that method of interaction, whether it's Facebook-like or Twitter-like, that is appealing to users.
With what we're doing with the new SharePoint we're trying to bring under IT control those metaphors of interaction into the enterprise, colleagues and colleagues of colleagues, how do I Twitter or tweet privately to people in my company who are interested in what I have to say; so applying cloud technologies through products like Office and SharePoint into the enterprise.
We're trying to improve through the cloud people's ability to collaborate outside their organization. Today, if one of our partner account managers wants to quickly whip up a secure website in which a Microsoft employee participates, a partner participates, maybe two partners who are collaborating on a deal, a customer collaborates, that is not an easy process to set that up simply and securely. We need to keep pushing those technologies, and you'll see us pursue that with Office Online, SharePoint Online, as we move forward.
Customer interaction. I'm really excited and proud of the work that we've done so far on Dynamics CRM Online, a tool and a set of tools to help facilitate and let you help our customers facilitate their structured interaction with their customers.
So, the cloud doesn't just allow us to move the enterprise up and save costs and improve agility, but there are new scenarios for social and for professional interaction.
The cloud drives server advances that drive the cloud. What do I mean by the cloud drives server advances? This is pretty important.
We have learned a lot through running Windows Live, Hotmail, Bing. Those are some of the highest volume -- Windows Update -- these are some of the highest volume services run on the Internet today.
And one of the things that we have learned is when you run a high scale, highly dynamic service, you need a whole different approach to building a datacenter, to building the software and management infrastructure for the datacenter, than we ever needed just to run classic enterprise applications.
We scale our Windows Live service to hundreds of millions of people in hundreds of countries. We propagate changes to these systems weekly, daily in some cases. So, the volume, the volume of transactions, the volume of deployment, the scale, the physical scale of deployment is all huge.
And that's driven us to redesign our infrastructure in Windows Live and in Bing. And what we've done is turn around in Windows Azure and SQL Azure, and we're taking everything that we have learned -- everything that we have learned, and then bringing that back in a form where our partners can have the same infrastructure, where our enterprise customers can have the same infrastructure to provide your cloud and enterprise applications.
We've had a lot of feedback from partners particularly on Windows Azure, you know, what are we going to do to support customers who want their own private version, et cetera, and we have some announcements that Bob Muglia will make here at the conference about that.
Because what we're finding is we started here with servers, we built a bunch of cloud infrastructure, we've brought that cloud infrastructure back to all of you through Windows and SQL Azure, and now we're trying to ask the question, how do we reintroduce those technologies back even into the enterprise and into Windows Server.
Certainly Hyper-V and virtualization is a part of that, but nobody should be confused that the difference between a cloud infrastructure and a virtualized infrastructure is dramatic. And we want to not only give you a virtualization infrastructure that is second to none, we want to give you a full cloud infrastructure that you can use to serve your customers, with a consistent development approach between the enterprise and the cloud, a consistent management approach between the enterprise and the cloud, and we want you to be able to build applications or host solutions, whether it's in the Microsoft cloud, in solutions that you or our customers host themselves. That should be one consistent cloud infrastructure platform. And Bob is going to get up and talk about some new announcements in this area. But Windows Azure, Hyper-V, and System Center are really central to where we're trying to drive this. We think we've made a lot of progress in conjunction with you, but you're going to hear about a number of new steps that we're taking that I think are very important.
Last but not least, the cloud wants smarter devices. Many people, especially in corporate IT, will say, once I move to the cloud, I'm only going to use thin clients. I don't believe that at all. I don't believe that the cloud is a place where thin clients will take over.
Time and time again, we have seen the advantage of the rich client. We see that today. We see it with PCs, we see it with smartphones, not only Microsoft's smartphones but the people that we compete with. We see it actually happening today in the television market. People are actually trying to build devices to bring more intelligence down to the rich clients.
The world of tomorrow is a world of smart cloud talking to smart devices. We and the people we compete with may disagree on whose smart client. You'll get a different answer from everybody. HTML 5, in fact, which we very much embrace, it's a form of smart client technology. The whole notion is software comes down from the cloud and it executes locally. It may execute just to a standards-based infrastructure, it may take more advantage of the intelligence and capability of the client operating system and devices, but rich is the No. 1 path forward. It's what consumers will want.
We will support thin client infrastructure. Certainly in the last year you've seen us embrace VDI very, very aggressively. So, we will support thin client scenarios, particularly for customers who just absolutely want to keep all of their data locked up centrally, which at least today may be for a set of compliance or other reasons.
But we will drive these smart client devices to be easier and easier and easier to manage. As we talk about Windows Phone 7, you'll see that. As we bring new technologies to market with System Center and the technologies in our Intune cloud service that Tami Reller will talk about, you see us focusing on making the smart client easier to manage.
But there are a lot of good reasons that people embrace -- embrace the rich device. The rich device can be higher performant, the rich device can do more on behalf of the user without network latency, the rich client saves bandwidth. And as we see certainly today, with even the move to 3G and 4G, people are trying to conserve bandwidth.
So, the cloud wants smarter devices. Windows, we've done a lot of work, we've got a lot more we'll do in future releases of Windows, Windows Phone. You see what we're doing in our Xbox product line with what we call Kinect. Kinect is this camera that will come with -- center that comes with Xbox where you can literally control it with the movements of your body and your spoken word, because there is enough local intelligence in the smart device to process language, to process vision, et cetera.
So, the cloud wants us to build smarter devices that are cloud centered. They're not independent of the cloud, they've been designed to be smart in the context of the cloud, to enable you to roam your information across the Internet, to synch your information and state across these devices. So, we're making a big investment in this area of smart devices really designed with the cloud in mind.
An important step forward in that will be Internet Explorer 9. For those of you who have taken a look at the preview, development preview that we've put up on the Web, it focuses on why even in the world of the cloud you want to be able to exploit local graphics and local processing power to improve the performance of things which are HTML based. So, we're going to push hard on this notion of smart, smart, smart devices talking to the cloud.
This year, one of the most important things that we will do in the smart device category is really push forward with Windows 7-based slates and with Windows 7 phones. This is a terribly important area for us. It's certainly an area where, how do I say it, we feel all of the energy and vigor and push that we have ever felt to innovate, to drive hard, to compete. We know that you as partners are hearing from our joint customers that they have a lot they want to do, not just at home but at work, scenarios in which they believe in the slate as a device, scenarios where they want to embrace the smart phone.
And we have to really push this from a Microsoft perspective. You need to see between us and our hardware partners a range of slates and a range of phones that you can take to your customer when they come with this, that or the other random device that's not currently supported by corporate IT, we want to give you an great device, a consumer oriented device, but a device that fits and is manageable with today's enterprise IT solutions.
So, over the course of the next several months, you will see a range of Windows 7-based slates that I think you'll find quite impressive. Tami is going to show you some of those today. They'll come from the people you would expect, from Asus, from Dell, from Samsung, from Toshiba, from Sony. Windows 7-based slates, they'll come with keyboards, they'll come without keyboards. They'll be dockable. There will be many form factors, many price points, many sizes. But they will run Windows 7. They will run Windows 7 applications. They will run Office. They will accept ink as well as touch-based input. And they will be very good for the kinds of scenarios that all of us are going to see for knowledge workers in the business that we serve that want to have something that works super well at work, but also supports their kind of personal interests as they travel.
So, we are hardcore about this. I know I've heard from a lot of partners that this is an area where you really want to know what's coming with Windows 7, and this is the partner conference where we're really going to tell you that there's a lot of stuff coming over the next several months, and we have to be prepared to get after it together.
The same thing on the phone side. We missed a generation with Windows Mobile. We really did miss almost a release cycle. But Windows Phone 7, which we had a chance to debut at the Mobile World Congress in Barcelona earlier this year, has received really quite nice reviews, really quite remarkable reviews. And I think we will give you a set of Windows-based devices which people will be proud to carry at home, and which will really fit and support the kinds of scenarios that enterprise IT is trying to make happen with the phone form factor.
So, I encourage you, and certainly we're going to reach out vigorously to work together with you, and to drive enterprise IT, as well as the consumer, the people who work for the businesses we serve, they've got to come into IT and say, I want a Windows 7 slate. I want a Windows Phone 7. And we're absolutely hell-bent and determined to drive that volume with IT as well as with the end consumer. (Applause.)
If I was to step back for a second and take a broader perspective from a partner, from your shoes, and say, what is it that brings us together? All of you have options in how you choose to allocate your time. Some of you come from very small companies, one or two people. The average Microsoft partner employs 10 to 15 people. Some of you come from partners that employ literally thousands. But no matter where you're coming from, I think there's a number of things that you look to us for. Whether you happen to be in the distribution business, systems integration, custom application development, whether you're an ISV or an outsourcer, no matter what your particular competence, you come here to, in a sense, evaluate are they all-in? Are they driving forward? Can we bet on Microsoft? Microsoft and Microsoft products, are they going to continue to generate the kind of success in the marketplace that justifies my investment?
Kind of like a chicken and an egg. If we don't build good stuff, you can't drive it. And if you don't drive it, we can't have great success and keep the wheel spinning. The wheel has been spinning very well for us and our partners. And from your perspective, I want to comment on some areas that I think will be important, and I want you to rest assured Microsoft is going to do its job to continue to drive the kind of demand that justifies your support and interest.
New form factors, it's the one I just talked about, and I think for this WPC it may be No. 1 on the list. Show me. Show me, Microsoft, show me that you're going to do it with slates, show me that you're going to do it with phones. We're going to show you some stuff, and you'll see we're all-in.
Certainly, if you go back two years ago, some of you were saying, show me what you're going to do with Windows. Show me what you're going to do with netbooks. And that's an area where I think we have proven again that your investment in Windows is well-served. Windows sales, Windows unit volumes will be over 350 million units this year. Windows units are growing in excess of 18 percent. (Applause.) That's no accident. That's a result of Windows 7. That's a result of your good and hard work. That's a result of the embrace from us and companies like Intel of the netbook. And we're going to continue to power that. And that's going to continue to create opportunity for Microsoft and its partners.
No. 3 is business productivity. Frankly today, if you want to help a business help its users be more productive, with Office 2010, and everything that comes around it, we just flat out have by far the best solution in the marketplace bar none, not Cisco, not IBM, not blah, blah, blah. Nobody else. If you want to help people be productive, Microsoft, let's set down on that together, because I'll tell you together we're way ahead, and we can win. (Applause.)
No. 3, enterprise IT and management, this is an area that's been a huge focus for us now for years. Ten years ago when I took over as CEO of Microsoft, most people would have said Microsoft is not ready for the enterprise. Nobody says that today. We can be better. You remind us and our customers remind us every day that we can be better. But, if you look at the percentages of the world's desktops and servers that you are managing, and that our customers are managing because of your support, under the direction of our System Center product line it is phenomenal. If you look at the explosion in market share for Hyper-V, and the management tools that we've given you to go manage servers in a virtualized environment, it's amazing.
And yet there is still a lot of opportunity, we think, for you and we together. This is an area where, again, I think our product lineup is good, but it's a highly competitive world. And you should understand that we are determined to lead with cloud infrastructure. When somebody who we most support, when one of our mutual customers wants to build a modern cloud-oriented data center infrastructure, it should be you, it should be us, and we should go solve those people's problems and we're absolutely determined to do that.
ISV applications, some of you write applications for phones and PCs. Some of you write Web sites, some of you write enterprise applications. This is an area of strength for us today. About half of the enterprise applications in the world are written on top of our platform, and that has been growing over the last several years. With the new Windows Server and SQL Server, with Windows Azure and SQL Azure, with our Visual Studio development tools we will continue to march forward.
And last, but certainly not least, is this move to the cloud. I will say, when we first started talking at WPC about the move to the cloud, many of you said just don't do it, not because in some senses you were anti-new technology, but this is a scary move. The cloud does change and makes us reinvent our business models, yours and ours. But it's a change that's inevitable. It's a change that allows us all to deliver new value. It's a change that, thankfully, is not happening overnight, and it is a change that I think we have well embraced together.
I'll have a number of breakout sessions with partners, where I'm sure I'll hear various things about how we are competing with you when you don't want us to, and how we can improve channel conflicts. I'm sure I'll hear about margins and blah, blah, blah, blah, blah. But, we will factor those inputs in. We will continue to tweak and tune. We will continue to support you and drive this move to the cloud together. If you don't want to move to the cloud, we're not your folks. But, if you want to move to the cloud and take advantage of one of the most fantastic ways of interested investment that corporate IT has ever made, there's nobody better to bet on than Microsoft.
From cloud to devices, from IT to business productivity, I think the next 12 months will be some of our most exciting, phenomenal, and incredible opportunities together. I thank you very much for your time. I thank you very much for your support. And I look forward to the opportunity to have a chance to get out with some of you over the course of the next year and close some business.
Thanks very much. (Applause.)