ANNOUNCER: Ladies and gentlemen, please welcome Microsoft Corporate Vice President, Worldwide Partner Group, Jon Roskill. (Applause.)
JON ROSKILL: Good morning, everyone. Good morning. WPC 2012, day three. What did you all think of Thievery Corporation? Pretty awesome, huh? Good way to get going in the morning? Another example of the great talent that we're able to bring you here to help get WPC going in the morning.
So, what a conference it's been so far. I'm having such a good time. Let's do a couple shout-outs to partners to see who's up here in the morning with us. Any LATAM partners out there? (Cheers.) Good turnout. I know you guys had your party last night. What about U.K. partners? (Cheers.) They're up over here. What about IAMCP? (Cheers.) All right. You'll see I've got my IAMCP badge on here, so I'm officially indoctrinated this morning. And let's do one more, how about Learning partners? (Cheers.) Okay.
In this transition to the cloud, through any technology transition, Learning partners play such an important role because they help us get skilled up as we move into the new technology era.
So, it really has been an amazing conference so far, and I'm having such a good time. The buzz is there, the energy is there, and I've been out talking to you guys in the afternoons and in the evenings, and you're telling me great stuff. I love what I'm hearing.
You know, sometimes I have to get a beer into you to get to hear what you're really thinking. You know, it's usually a good, healthy dose of optimism mixed with just a little bit of skepticism, just a little bit of skepticism.
But this WPC, it feels different. The energy is really there. Everyone is looking forward. Everybody is excited about stepping into the cloud. And where is that energy coming from? That energy is really coming from back where we all started, the foundation of our relationship. Microsoft, you know, you guys know this. Microsoft builds platforms. We build platforms that are extensible so that partners can add their IP on top.
You guys add your IP and who wins? The customer. The customer wins because they get the biggest choice of anyone. And what you're excited about at this conference is you're looking at us and you're going, you know what? Microsoft is doing it again. They really are taking the same formula and they're taking it to the cloud.
So, other companies out there, other companies will tell you they're partner-driven, but the proof is in the pudding. Numbers don't lie. You all know that over 95 percent of our revenue goes with and through partners. It's not the same for the other guys. It's just not even close. They may say they're partner-driven, but the numbers tell a different story. The numbers tell a different story.
And what the competitors are missing is what we've known all along: That you are the best sales force in the world, bar none. You are the best sales force in the world, bar none. (Applause.) That's right, give yourselves a hand. (Applause.)
So, where are we going in FY13? Where are we going? Well, we really are on the edge of a new era. Our partnership is going to get even stronger. It's going to get even broader and even more profitable. You might say, "Jon, is this really a new era, or is this just another big launch year for Microsoft?" And I would say, "Let me tell me why I'm so excited about this year."
And it goes back to this: Here's a graph of Microsoft revenue over the last 30 years, a nice, steady line going up and to the right, exactly what you hope to see. And I've been in the company now going on 20 years. And there have been a lot of great moments over those 20 years, but there are two that really stand out in my mind. The first is back in 1995.
Back in 1995, we shipped what was just a killer release of our anchor product, Windows -- Windows 95. And at the same time, we filled out the offering with all of the other products around it. And we got the partners skilled up. And so we went to market together. And what was the net result? Boom. 49 percent revenue growth year over year. Everyone remembers 1995, it was a great time for us.
The second item that stands out in my mind, though, is much more recent, and it's last year. We've been selling cloud offerings for a while now, but last year we introduced Office 365. Office 365 came to market, we had those cloud programs, we went to market together, and what happened? Boom. 114 percent growth year over year, 114 percent growth. Yeah. (Applause.) Cool, we're just getting going here, but it's cool, we can clap, those are numbers we've all got.
So, why am I so excited about FY13? Well, those two phenomena are coming together into one. And we got this killer release of our anchor operating system in Windows 8, and we're filling it out with all of the products around it, and all of the products are "cloudified" this time. And so we've got Windows 8, we've got the cloud products, and all of you are getting ready for it.
So, what do I expect is going to happen? Boom. We're going to see this radical trajectory on our revenue line. That's what my expectation is.
So, this isn't all new, though. We've been getting ready for this for the last 18 months. We introduced the new MPN, and we did this together. And over the last 18 months, we've, collectively, over 10,000 Gold-competent partners. Over 10,000. And, in fact, almost half are in the room with us here today. We also have over 25,000 Silver partners. So, we've built out the MPN competencies.
The second thing is we introduced this new incentive model, and we've moved from just incenting on transactions to now incenting across the full selling cycle from sales into transact and all the way out into deploy and support.
And then the third piece was we brought out the industry-leading cloud programs with Cloud Essentials and Cloud Accelerate. And thousands of you are in those programs today making money in the cloud with us hand in hand.
So, it's been an incredible 18 months, but we've just been laying foundation. We are just getting started, folks, because as I said on Monday, we aspire to more. We aspire to nothing less than leadership. Leadership in cloud business software. Come on, guys, this is Microsoft and its partners. Microsoft and its partners. And we're not in this to be in second place. Are you? Anyone here want to be second place? No. Okay?
So, as I've gotten to travel the world the last two years, I get to work. I get to work with you, we go to meetings together, we meet with customers, we solve problems together. But I've also listened, I've also listened to you. And you've told me that while we're doing well, there are a few things that you need to really help us break through to that next level. What you told me is products. The products we've got are really good, but you said you want our very best. You want spectacular products and nothing less.
You like the relationship you've got with our field teams. That's where the selling is really happening, you like that connection, but you want to do even more business together. So, you told me we need to strengthen that business connection there. And you said, "Show us the path to profit, show us the path to profit in the cloud. Show me how the cloud can be the most profitable path with Microsoft." And you know what? We listened. I listened, all of Microsoft has been listening.
We know you need the very best of each of these three components if we're going to win together in this new era. So, to do this, we had to start at our core, which is the products. Over the last two days, you've gotten to see that we are in great shape with the products. We've got Windows 8, we've got Windows Server 2012, we've got Office 365, we've got SQL Server 2012, and we've got the new release of System Center. And then we're filling it out with all of the other products around it. It really is the most important release wave in the history of Microsoft, and Kevin's going to talk more about this in a few minutes. So, it's up to us to put this all together and take it to market in FY13.
So, we've got the great products, but it takes more. It's going to take that local support. It's going to take that local connection because this is where the rubber really hits the road, when we're out there doing the selling.
So, in FY13, we've done a number of things to really help strengthen the field connection here. It starts off with the PAMs. You've been asking us and saying, I'm having good business development discussions, but I want to take those to the next level. I want to grow my business, and I need some help.
So, we've been up-skilling our PAMs so that our PAMs are able to have those business development discussions with you.
The second thing is, you guys want to build out practices. You want to add new practices to your existing businesses. So, we've taken the hundreds of PTAs that are out in the field and we focused them in on building practices with you and expanding the practices that you've got going into FY13.
Third, you guys want to drive sales pipeline, right? Anyone out there want to drive sales pipeline? (Applause.) So we are adding hundreds of tele-sales reps to help drive that pipeline with you guys. And then you guys want to close pipeline, you want to close the pipeline, and so we're adding over a hundred tele-sales specialists, product specialists, to help us close the pipeline in FY13.
So, we've put the resources out there. We see they're aligned by the selling cycle, and they're there to help you support and win in FY13. And that's great, but one of the things you guys ask me when I come out and visit, and in fact somebody asked me this question just yesterday. And the question is: What about the Microsoft field? What's going on with those guys? How are they getting paid in FY13? And what I can tell you is we are introducing a new cloud revenue hurdle. So, our field is not going to get into accelerators, our field is not going to make the big bucks until they hit the cloud revenue number too.
So, we're all in this together, folks, and let's look at what happens when we get it right.
(Video: Partner Field Story.)
JON ROSKILL: (Applause.) Okay. This is the big one, folks. You said, "Show me the path to profit in the cloud. Show me the path to profit in the cloud." Well, as you learned on Monday, Microsoft -- with the introduction of Office 365 Open -- we now have the broadest array of cloud business models of anyone in the business. The broadest array of cloud business models. And we are able to align with your business. However you set your business up, we have a cloud business model that will align perfectly with what you're trying to do.
Second, incentive. In FY13, we're growing our incentives budget by over $200 million -- over $200 million to $4.2 billion, folks, 4.2 billion. And we're focusing that extra $200 million in on -- guess what? -- cloud incentives and solution incentives.
They're some of the richest programs we've ever had. We're growing them by 40 percent in FY13. So, when we align the business model and we get the incentives right, I think we really are showing you the path to profit in the cloud. So, let's take a look at what happens when we get this right.
(Video: Partner Success Story)