Satya Nadella: Worldwide Partner Conference 2012 Day 2 Keynote
July 10, 2012
Remarks by Satya Nadella, President, Server and Tools Division, Toronto, Canada

Editor’s note – July 16, 2012 – The transcript below was updated to correct the names of FyrSoft and Pella.

ANNOUNCER: Ladies and gentlemen, please welcome Microsoft President, Server and Tools Business, Satya Nadella. (Applause.)

SATYA NADELLA: Good morning and thank you very much. It's a real privilege and a pleasure to be here in Toronto at WPC. First, I wanted to start off by saying a big, big thank you to everyone in the room. We've had another fantastic year with the Server and Tools Business; it's all thanks to your commitment, your capabilities, and your passion around the platforms that we create. So, give yourselves a big round of applause for a fantastic year. (Applause.)

Some of the momentum we see in products that we launched last year like SQL 2012, System Center 2012, is just unprecedented. These are some fantastic growth numbers that we're seeing, and obviously that's all being driven by your own businesses that are delivering that value to customers.

We also had a breakthrough year for Azure. The way we've ended the year, we'll talk more about this as we disclose our results in a couple of weeks, but we had a fantastic growth rate to Azure, and especially in conjunction with what's happening in the private cloud and the enterprise, we think of that combination as being something that's very, very unique to both of us.

So, today I want to talk about the future. I want to talk about the future, though, first by reflecting on the past. I joined the company in '92, that was just at the very, very beginning of the client-server era. We had Windows 3.1 and Windows NT being birthed, if you will. And over the last 20 years, we collectively have achieved a tremendous amount of success with the client-server paradigm.

And we've done a lot of innovation over the years, but two things that have sort of really remained constant and specifically were unique to the approach we took, one was to build a broad software-based platform and specifically the operating system that enabled the partners to innovate with their applications and services and capabilities and take it to market, and a partner-led business model.

We think of those two things which were unique to our approach in the past are going to remain constant as we move to this new era of connected devices and continued services. Broad platform-based approach when it comes to technology, a partner-led business model when it comes to go-to-market.

And in this new world, for sure, things are going to change. Yesterday, you heard Tami and Steve talk a lot about our connected devices, how we've reimagined Windows in its core from the silicon to the developer platform to the user experience and even the device form factors.

And, today, I want to talk more about what's going to happen on the back end, especially around continuous services. But as these things change, as the markers between categories, as business models change, I still want to come back to the fact that we will always be partner-led; we always will have a broad OS that enables partners to express their services, their value, and their capabilities to drive more customer value.

So, the thing that I want to talk today about is the back end and how the back end is changing in the next era. And we refer to this as the cloud operating system or the cloud OS. The cloud OS, like any OS, has two elements to it: The first is its job to really abstract away the hardware so that the application developers can focus on the application. And then we talk about the hardware abstraction. It's now going through a fundamental shift.

There are two pivots to it. The first one is that you think about the unit of compute now as compute storage and network, and at an atomic level, you really are thinking about the compute-server-storage capacity as well as the network capacity all together.

And then you're thinking about this at massive scale. When we say "massive scale" it's at a data center or multiple data centers. So, when we think about an operating system, we're talking about a true distributed operating system that spans multiple data centers.

Now, having thought about the resource pool or the hardware abstraction at that scale, you obviously don't want to make all of that sort of show through to the application developer. You want the application developer to be most productive with abstractions that help them focus on their application logic, on their experience. And that's what we do with a very rich application platform.

One of the things that is motivating the cloud OS development for us within Microsoft is the first-party applications that we run inside of Microsoft at Internet scale. This was very true even in the last era. When you think about the continuous improvements that we've done over the years for Windows Server, they were driven because of some of the workloads. Remember the early days of SQL were sort of a real boon for the folks working on Windows Server because that pushed to really get our IO right, a lot of the capabilities that we needed to get right in the core operating system were driven by the database that was pushing us.

The same thing with Exchange, later on SharePoint, Lync -- that was a fantastic virtuous cycle that we had internally that made our operating system better.

The same thing now exists when it comes to Internet-scale properties. We have one of the most diverse sets of workloads operating on Internet scale. You take something like Bing, it's a big-data, applied-machine-learning-at-scale application. Office 365, that's teaching us all about collaboration and communication in the cloud. Dynamics and AdCenter, are stateful, transactional systems in the cloud.

So, that diversity, not just the fact that any one of them has scale, but it's that diversity of workloads is what helps us build a general purpose cloud operating system, and it's a very, very important virtuous cycle for us.

The opportunity of the cloud operating system is right there. And I think there's a lot of excitement in the audience when Jon talked about people doing cloud development and cloud development next year, and these numbers talk to it. In fact, it's probably the most unbounded of opportunities because you would think about it for a second, the opportunity around infrastructure and cloud infrastructure is unbounded because it scales with the number of devices, which by the way we’re going to have more number of devices than the total number of people on the world by three times in five years.

It scales with data. It scales with applications. All of these streams are going through an explosive phase. So, therefore, the need for infrastructure, private or public, is going to be significant. And so therefore anyone who is either in the app-dev business, or in the infrastructure business, is going to see this growth rate over the next multiple years.

So, let's take a look at the modern data center. We've built Windows Azure and Windows Server as one consistent set, as that one distributed operating system that has the following attributes: The first core capability is the ability to scale your resource. We talked about compute, storage, and network; you need to have the capability to take compute, storage, and network and scale it to data center and multi-data-center scale on behalf of a given application or shrink it down. So, that's why elasticity is very, very core.

Always-up, always-on. You want to build software resilience into the operating system. You really want to build it. At scale, everything breaks. So, that means you need to be resilient to hardware breaking on the network side, on the storage side, on the compute side, and you want to build that right into the software fabric.

When it comes to sharing resources, you have to build multi-tenancy from the ground up. You want to be able to pool your storage, pool your compute, virtualize your network. You need to be able to isolate. Not only do you need to pool the resources, you need to be able to isolate the resources, so two workloads from two departments within an enterprise do not mix up with each other when it comes to resource contention.

And automating and self-service is super important. Everything's got to have a surface area for management both from a UI-based management as well as API, and so that you can automate everything so that you can have the total cost of ownership for such scale at reasonable levels.

So, to show you some of this innovation across both Windows Server and Windows Azure, I wanted to invite up on stage Jeff Woolsey. Jeff? (Applause.)

JEFF WOOLSEY: Thank you, Satya, it's a pleasure to be here. Windows Server 2012 was designed to unleash new business opportunities for you. You told us you wanted to help your customers virtualize everything, even those workloads considered non-virtualizable, workloads that require dozens of cores, hundreds of gigabytes of memory, or SAN-attached, and with exceptionally high IO requirements. Think Exchange, SharePoint, massive-scale-up SQL Server.

Well, today we're here to redefine performance and scale with support for up to 320 logical processors per server, up to four terabytes of memory per server, and up to 64 virtual processors per VM. (Applause.)

In addition, you can see this virtual machine has been allocated 100 gigabytes of memory, and will support up to a full terabyte of memory per VM. In addition, whether this VM has been allocated 10 gigabytes, 100 gigabytes, or a full terabyte, it still costs the same for your customer, which means more margin opportunity for you.

In terms of performance, let's talk about industry-leading, world-class performance. I'm going to bring up a standard industry benchmark iometer. I'm going to run an industry-standard test, 4K random IOPS. I should also mention at this point that the guys at VMware claim that they can deliver a maximum of 300,000 IOPS from a single virtual machine. We're delivering over 1 million IOPS from a single virtual machine. That's over three times VMware, and folks, I'm just getting warmed up. (Applause.)

We've made some huge investments in storage with transformational new technologies like offloaded data transfer, or ODX. I'm going to copy a 10-gigabyte file without using ODX. You can see that my network utilization has just completely spiked, and I'm saturating my network.

Well, now let's do that same copy, this time with ODX storage. Folks, I'm copying a 10-gigabyte file in about 10 seconds. This type of performance is unheard of and with the other slew of capabilities we're including in Server 2012, it makes Server 2012 a no-brainer for cloud storage. (Applause.)

Now, one of the things our joint customers have told us is, quite simply, they want to live beyond their means. They want a data center without boundaries. Well, with you as their cloud broker, let's transform the industry together. Here is the brand new Windows Azure portal. You can see I've got virtual machines, cloud services, SQL databases.

Let's go ahead and extend my data center to the cloud and create a new virtual machine. I'm going to do so from the gallery, and you can see I've got a number of options from Windows Server and from our partners, including Linux distributions.

I'm going to choose my favorite, Windows Server 2012. I'm going to paste in a name. I'm going to provide a password. You can see I can now choose the size of my virtual machine anywhere from extra small to extra large. I'm going to keep the default. It's now going to ask me for a DNS name, and then it asks me where do I want to deploy this. Lots of different options from around the world. I'm going to go for western United States. And finally, like that, I am deploying new workloads into the cloud.

Now, one of the things you've told us and our customers have told us is they want choice and flexibility when it comes to the cloud. They want to be able to run on-premises as well as service provider offerings as well. Well, take a look at System Center. Here we've got on-premises cloud, we've got service-provider clouds here with Toronto Hoster, and we've got Windows Azure. This is exactly what your customers are looking for -- a single consistent management interface for all of their cloud resources.

In fact, let's go ahead and deploy a new cloud service. A click on services, and click on deploy. And notice the first thing I'm going to configure, the first thing it asks me is: Which cloud would you like to deploy on? Would you like to deploy on-premises in Windows Azure or using my service provider? Which is exactly what I'm going to do.

Finally, I select a template, and just like you saw me do in Azure, I can now deploy my virtual machines using a templatized experience. So, we're taking what we've learned in Azure and bringing that to the Microsoft private cloud.

So, what have we seen? Massive scale, industry-leading performance, the ability to manage all of my clouds from a single, consistent management interface. With Windows Azure, System Center, and Windows Server 2012, we are delivering the ultimate cloud OS. Let's go transform the data center together. Thank you very much. (Applause.)

SATYA NADELLA: Thanks, Jeff. And what you saw there was a boundaryless data center powered by Windows. And that's pretty unique, the notion that you can build your own data center, use Windows Azure as well as the service provider cloud with consistency is something that we can do very uniquely. There's no translations of virtualization format, you have a single pane of glass for management, those are capabilities that we can deliver in the marketplace with your capabilities combined in a very, very unique way.

So, I want to talk about three specific announcements today relating to our cloud OS. The first is, Windows Server 2012 is getting ready for prime time. The general availability of Windows Server 2012 is going to be September. It's going to RTM in August. It's a huge milestone for us. (Applause.)

We've had over half a million downloads of the release candidate. We've had around 250 customers who have been part of our TAP program who have worked very closely with us, many of them have already gone to production. In fact, Bing today is powered by Windows Server 2012 already. So, we feel very, very good about the robustness of the operating system and we're looking forward to September.

The second announcement is a new set of services for Windows Server. We're announcing today the customer technical preview of three capabilities: High-density website hosting, VM or virtual machine hosting, as well as the management and provisioning capabilities on top of those two for Windows Server, specifically focused on service providers.

We have these features in Windows Azure that were announced very recently. As for our promise, we're now making it available on Windows Server so that anyone else who wants to provide these capabilities to customers as part of their service can do so.

Lastly, I want to talk about the Hyper-V Switch Program. This is another very exciting program for us. We've had some tremendous momentum building up with the number of customers who've chosen to move to Hyper-V from VMware, especially in anticipation of what's coming with Windows Server 2012. We've already seen some successes like FyrSoft was able to move Pella, one of their customers, from VMware to Hyper-V. We've also had Avanade who moved Unilever from VMware to Hyper-V. So, we've got great momentum building.

As part of this program, you'll get tools, resources, and guidance to take the risk out of these migrations. So, we think this next year is going to be a year for us collectively to push this significantly, and we're going to put all of our might behind this program.

Now, I want to switch to talk about the application platform because that's the second part of the modern cloud operating system. And when you talk about the application platform, the consideration set is similar to what we talked about in the data center, but abstracted to the application. So, the first thing is you want to have a very rich, capable application platform or rich application services. Things like media services, things like storage, identity, caching, service bus, all of these things need to be available as part of your application platform.

Data needs to be at the core. Now, SQL, obviously, and SQL Server is very, very key, but also things that are non-SQL format, so what we're doing with Hadoop is going to be part of it, what we're doing in the higher layers with BI is going to be part of it because there's not a single application that's not driven by data going forward.

You need to have a very dynamic life cycle for both development and management; this dev-ops cycle is going to be revolutionary in terms of the cycle times that people will come to expect in terms of what you can do on the cloud, both private and public.

And lastly, not only is it about building and monitoring and managing applications, it's about being able to take your applications and make them accessible anywhere on any device for any user based on their identity, because you want to have security and not be compromised at all.

So, things that we have done in VDI, things that we have done now with System Center in Intune to be able to manage these modern devices, and Active Directory and AD is something that’s super important for us to be able to deliver a more people-centric device management capability.

The uniqueness in our approach, again, is very similar to what we talked about in the data center, which is you have this application platform pervasive through the world of Windows across your data center, across the service provider cloud as well as Windows Azure. So, you have a complete application platform, so that means you can move an application between any one of these locations. In fact, you can split tiers. You can have a front end in Azure, you can have the back end inside of your private data center; we see many deployments like that today.

You want flexibility and development; of course we're going to do a fantastic job with .NET and Visual Studio as the framework and tool set, but we will also have support for other frameworks and tools in Java, in PHP, and Node, and that's going to all be first class on top of our platform, both Windows Server and Windows Azure.

The common identity, though, is going to be very, very key, especially any time you have distributed computing where things are running in different places, and applications themselves are running in different places, it becomes very important for you to have that identity and access control be governed in a way that nothing in the enterprise gets compromised in terms of data security or application access.

So, to give you a feel for what this people-centric access and device management is, I wanted to invite up on stage Deb McFadden from our team to give you a feel for some of the capabilities we're building in for new devices.

DEB MCFADDEN: Thank you, Satya. (Applause.)

Today, our customers bring all kinds of devices into their workplace. And for their personal devices, they'd like to have personal applications in addition to having business applications on those devices. With Microsoft's cloud-based client management solution, integrated with Windows Active Directory, our customers can embrace those personal devices that work, while ensuring that applications and policies are targeted appropriately.

Let me start by installing a business application for you on my device. This is actually my Windows RT device. I absolutely love it. It's got my Hotmail, Facebook, pictures, and what I want to do is install a business application because I've learned that there's an expense approval application that's available to me.

What I've already done is previously enrolled this device using my corporate credentials. And once I did that, Contoso Center was installed on this particular device and it showed up on my start menu. So, I'm going to push that to get started.

The first thing I see is actually it's more than just -- it seems to be a corporate portal. I've got applications, my devices, IT center stuff. Because I want to install an application, I'm just going to stay right here.

I'm noticing that, actually, these applications are really targeted for this particular device type, and they're actually just for me. Because that expense approval app is right here, I'm going to start by installing that, press install. I get a dialog box indicating that it will install shortly.

While that's going, I'm going to go back and take a look at some other applications. I noticed that the applications can be categorized. I'm going to look at tools and productivity. Let's check out Microsoft Reader. This is actually a direct pointer into the Windows Store where my organization has recommended the exact version that I need for Microsoft Reader.

I'm actually not going to do that right now. I'm going to check out the other potions of this portal. I'm going to go into my devices. Now, some of these devices are personal and some of them are my test devices. I'm going to check out Deb's Windows Phone. That's pretty cool. Actually, you can see that my device is located right here in the convention center, and I've got some functions on the bottom where I can rename this particular device, or I can actually wipe it if it gets lost.

Let's go back and look at that application that I installed previously. So, it's installed. I'm going to click it. I know I haven't done expense approvals in a while, so I expect that I've got some work to do here. And it looks like I need to get busy on that. Now, I can do work while I'm here in Toronto on this particular Windows device. This is super important to me because I'm not unique, and it's important to our customers because they're looking for you to help them to find the right strategy for their personal devices.

With your services and Microsoft technology, we can help our customers embrace the modern applications and modern devices. Thank you so much. (Applause.)

SATYA NADELLA: Thank you, Deb. So, that was a great example of how what you've done traditionally and what we will continue to support because in the world of devices, you're going to still have a majority of devices still be corporate controlled, IT controlled, and you have great device management capabilities with System Center. But now you need even additional capabilities that Deb showed for us to be able to have secure access in a very people-centric way for these other devices that are coming into the enterprise like Windows RT. And so we're very excited about that functionality and how that can help us all expand our ability to help enterprises manage the device proliferation.

Customers are betting on the platform. Some good examples -- you have Fusion X which is a BI partner of ours out of Singapore that's doing some fantastic work. Taking advantage of the very unique self-service BI capabilities in SQL Server 2012 in combination with SharePoint and Excel. This virtuous cycle between SharePoint, Excel, and SQL BI is something that we see in our numbers in terms of growth, and I think it's a huge opportunity for our partners.

INVID is doing some fantastic work out of Brazil in terms of cycle times taking advantage of ALM functionality in Visual Studio and our ALM tools so that you can go to the businesses doing app-dev and really help them improve their cycle time, which in this world -- you know, in competitiveness is one of the most important criteria for customers.

Jack Henry is an ISV partner for Azure out of the United States doing some very good work in banking, where they're taking their application set and moving it to the cloud. In fact, they have two modes in some applications that use the cloud for burst capabilities, and in other places where they're completely natively building applications in the cloud.

And then you heard from Infusion this morning out of Toronto where they're really taking some great advantage of the cloud computing capabilities to do these mass-scale interviews, video interviews in the context of things like X Factor and what have you. So, innovative solutions across BI, Windows Azure, as well as ALM and Visual Studio tools, betting on our application platform.

So, in closing, I wanted to say that our goal at Microsoft continues to be what it was in the early days when we were birthing the client-server era, which is to build a broad, consistent, comprehensive, software-driven platform that enables you as partners to be able to bring your applications, your services, your capability so that we can drive more value both in terms of business impact and economic value to our customers.

Thank you very much, and I look forward to a great 2012 and 2013. (Applause.)

END

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