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Financial Analyst Meeting 2005
July 28, 2005

ANNOUNCER: Please welcome Group Vice President, Information Worker Business, Jeff Raikes.

JEFF RAIKES: Well, good morning. Thank you. It's great to be here again at the Financial Analysts Meeting. And as Steve said, we really appreciate your commitment of time today.

I'm going to build on the framework that Steve laid out very clearly earlier today, and talk about the next chapter of growth in the information worker business. To that end, I want to give you an idea of how I look at the business. I want to show you a bit of the future, understand why we're very excited about this next chapter of growth. But, before I do that, I want to get into the numbers so that you have a good grounding of what happened in fiscal year '05 and how we're thinking about fiscal year '06.

Now, I feel very, very good about our numbers in fiscal year '05. To be honest, we thought the IW business might shrink a little bit in FY '05, the reason being that in FY '04, the previous fiscal year, we had nearly $700 million of upgrade advantage revenue that was recognized as part of the licensing transition from a couple years before that. We had none of that revenue in fiscal year '05. So you can say in some sense we had nearly a $700 million hole or gap that we needed to fill.

But we actually grew the business. We grew the business 300-and-some million dollars. So when you take the two together, we grew our business overall by a billion dollars. And, in addition, we helped to drive solid growth in the client access license business.

Let me give you a couple of other things that cause us to feel very, very good about the performance in fiscal year '05. Sixty-three million new and renewed Office licenses went into the marketplace—63 million. Now, if we were a packaged product business and you laid those boxes end to end, that would extend all the way from New York City to Beijing — the short way—laying the boxes out the short way. So it was a very, very good year in terms of delivering the licenses. We had exceptionally strong transactional business. If you look at our OEM revenue, our student and teacher license, what we did in our select licensing business—double-digit growth across the board. And we're able to maintain our revenue per commitment; basically, our pricing was stable. We thought we'd be under a lot of pressure on discounting, but people love Office 2003. A strong transactional business, being able to maintain our pricing indicates people love Office 2003.

Another factor of fiscal year '05 is that that was a year—last year was a huge year for enterprise agreement renewals. Again, that was part of that licensing transition, about most of those contracts were three years, those contracts were coming up, and the team surpassed our expectations in being able to continue our historical renewal rate for enterprise agreements. And that gives us a lot of momentum, especially in terms of revenue that will be recognized in fiscal year '06 and moving forward.

Finally, from a competitive standpoint, like all of you, we worried about what might happen with Open Office and StarOffice, Linux, the overall OSS movement. We sell more Office licenses or Office solutions per week than Open Office and StarOffice combined do those kinds of solutions in a year. So we are doing very, very well from a competitive standpoint, again because people love Office 2003.

So let's build on that momentum and look at what's going to happen in fiscal year '06. We're expecting higher growth in fiscal year '06, despite the fact that this will be the third year of the Office 2003 product cycle, and people will also be anticipating “Office 12.” We expect higher growth even in that context. Part of it is we have no upgrade advantage gap we need to fill, but we have very, very strong product momentum.

So the keys for us in the information worker business are to make sure that in fiscal year '06 we continue with the strong product momentum that we have and get prepared for the “Office 12” launch. And I'm very thrilled for the future.

And what I want to do is to take you through that and begin by giving you a look at how we think about the business. Now, our mission is to broaden the audience of information workers who use and realize value from our innovative software. And to that end, we have three key areas in the portfolio. And this really builds on the presentation or the framework that Steve Ballmer laid out for you this morning.

In the first key area, the anchor or foundation businesses, the key things are to reach out to even more information workers. Part of that will come from PC growth, part of that will come from more people doing information work. And we have to reach them, and we have to continually re-earn the business. That's one thing that is a characteristic about our business. We have to have great innovations in our releases in order to attract customers. If we do that, then we challenge the good-enough perception, that perception that the old versions of software are "good enough." And you've seen us very aggressively challenge that, including not only with our product releases, but also our supporting advertising, our air cover.

Now, in this part of the business then, the revenue gets driven by PC growth, by the number of information workers increasing. But as Steve alluded to this morning—and I got lots of questions at the break—there is the opportunity by creating great additional value in the anchor or foundation businesses to have premium editions. And I'll touch on that briefly later.

Now, the second key part of the framework for us are what we call the category businesses. What we've been able to do is to build on our strong foundation and the core of information work with the Microsoft Office Editions and get into new categories of information work. Microsoft Project, Microsoft Visio, and in particular a new product for us from about three years ago, SharePoint Portal Server—the fastest-growing product in the history of Microsoft. You put all of those together, they have double-digit growth. In fact, Project and Visio by themselves are greater than a billion dollars in revenue now. So that's been part of our success in transforming the business. And in the future the key is to profitably grow these businesses faster than the competition.

But we're not stopping there. We have new business areas that we're substantially investing in. We have big investments in real-time communications and collaborations. We have investments in Office business applications—how Office gets connected to line-of-business systems for business information and business processes. We are investing in that services transformation that Steve referenced with information worker or Office services. Those show very little revenue now as a percentage of the overall IW business, but we see them as big opportunities. In fact, let's go through a little model as to how we transform the business.

For me this is nearly the fifth anniversary of my taking on this responsibility for Microsoft. And in 2000, the year 2000, when I just took over the business, for the most part the feeling was Office was done. People didn't think there was much more opportunity. And if you think of it as a word processing and spreadsheet business, perhaps that's true. We were very focused then on the packaged applications, we were focused in on what we thought of as the core of the business knowledge work. And if you look at the opportunity of that business, you could say, well, momentum and desktop refresh—probably about a $10 billion opportunity that we were playing with.

As Steve indicated today, the key in this situation, when you have a very successful business, is to define your overall market opportunity, decide how you can build on that position, get into new businesses, and successfully execute in those businesses. So that's what we've been doing in the information worker business. With the Office 2003 launch, we introduced 26 programs, servers, and services. So we really redid the business. We extended from just focus on personal productivity to encompass team and organizational productivity. And business value is a core part of this success that we're seeing with Office 2003. As an example, there's a Navigant study—it looked at 22 customers very recently in terms of how they were using the Office System. And what they found is that on average, an information worker was able to redeploy 375 hours per year to more productive uses, and that the improvements in sales processes, customer service processes, HR processes, financial systems, the net result was a financial benefit of about $2,500 per user per year on average in those organizations.

So by redefining the overall focus of the business, we feel we've increased the market opportunity that we're playing in to at least 20 billion, maybe even 25 billion.

But if we look to the future toward the end of this decade, we see even greater opportunity, and we are making those investments. As Steve said, we're basically an operating expense business when it comes to investments, and that's what we're doing in the IW business: We're investing in the area of Office services, unified communications, line-of-business interoperability, the opportunity for specialized versions of Office. And so we think that we can transform this business into a market opportunity that can approach $40 billion.

Now, in order to give you a sense of how we're transforming this business, I wanted to pick one of our customer videos so that you can see how the tools of information work are transforming how people do their jobs. So let's go ahead and take a look.

(Video segment.)

JEFF RAIKES: I chose that video because it's a very interesting example of how office solutions can transform information work. It was built by a partner, Convergence; it's an example of how law-enforcement agencies can use the tools of information work to work together, to work in real time. It's an example where they have to spin up a solution very quickly in order to handle a big challenge. And while IW or information work productivity is important, the real key here is the business process of safety, and how they use the tools to do that.

We have many other examples. The Office of Homeland Security used a very similar solution for the presidential debates in Missouri. So the key here is how information work and the improvement in information work delivers on the business mission, in this case improved security — but we have a wide range of customers and their business vision of course varies, and so what we do is we help them achieve their business goals through improved information work.

These are great examples of the new world of work, and we're going to touch on that later. But next what I want to talk a little bit about how we are innovating in the business and how we're trying to address new needs. Earlier I referenced the Microsoft Office System launch. That was October of 2003; it was the biggest launch in Microsoft history. Today, we have 26 programs, servers, and software services, and it was absolutely key to this redefinition of Office as an integrative platform for information work.

We've had great reviews, great product reviews. Our customer satisfaction is the highest of any version of Office, in part because we did a great job addressing key pain points. People feel overwhelmed by the flow of information, in particular, e-mail. Outlook was a key part of that. People are very concerned about access to information and controlling that access to information. So those kinds of issues we addressed with Office 2003, and we've gotten great traction.

I mentioned the "good enough" perception. I want to give another customer example: W.L. Gore, best known for Gore-Tex. 6,000 desktops, old systems, they wanted to update it. They thought the way to go would be Linux or StarOffice, but they were looking for StarOffice, probably on Windows. Net result: They did the comparison, found that they would save $100,000 in help-desk costs and have at least $135,000 of productivity improvement for their people, so they went with Office 2003.

Gartner issued a report recently about a financial services firm with 100,000 desktops. They thought that they would be able to save money by going with Linux and OpenOffice, basically going to technology that in terms of capabilities is more in the Office 97 class. Net result: They found that they were much better off, and you can read the details in the report from a financial standpoint, by going with Microsoft Windows XP and Microsoft Office 2003.

Another good example is what we've been able to do in collaboration because of SharePoint. Sara Lee in Australia decided that they could move off their Notes workflow applications and use SharePoint and Exchange Server. That's a big thing right now. We haven't talked about it a lot yet, but clearly what we're seeing is a lot of customers are at a point now where they're trying to, if they were Notes customers, they're trying to decide, what is that next step for them. Most of them, if they haven't already, are migrating their e-mail off Notes onto Exchange. They’re sun-setting their Notes applications and looking at the Microsoft platform, as in particular, the foundation with SharePoint for collaboration.

Partner uptake is, as I indicated, part of it is to transform the business into being a foundation for solution. We had a great worldwide partner conference, the number of partners around the world that have the IW, or information work, where competency has grown dramatically. We have an excess now of 1 million developers around the world who have the skills to do Office development.

And if you look at deployment, deployment of Office 2003 is ahead of Office XP in every segment of our business. Well, that was the Office 2003 launch, but we've continued to innovate and invest. We had a great collaboration launch this last spring: We introduced the Office Communicator, an update to Live Communications Server, a major update to our Live Meeting service. Good example, 7-Eleven corporation, they were able to now use Live Meeting as the way to get all of their people, all of their store managers, together because of the savings in travel costs. They're expecting a 500 percent return on investment from using Live Meeting.

With the addition of Groove Networks, and Ray Ozzie and the team, we are extending our lead in communications and collaboration. We're investing in how Office connects to business information and business process. You've heard a little bit about what we've done in that area, the information bridge framework; we introduced the Scorecard Accelerator that was very, very popular. And we've introduced segment-specific solutions, our Small Business Edition as an example. We've gotten great feedback on what we did for the Business Contact Manager update. And if you think about what Steve said earlier on Premium Edition, there's a great example. By having specific value for small businesses, we have at least $80,000 incremental revenue for that portion of our product line since the launch.

And we're continuing on. In fiscal year '06, we're doing even more before “Office 12.” We're going to continue to build in the integrated communications area with Communicator Web Access, the ability to use our instant messaging solution in a Web environment. Also, in the Windows Communicator for Windows Mobile, the ability to connect that into the telephony infrastructure, which is a foundation for voice over IP.

We're going to introduce a Business Scorecard Manager, which is based on the success of the Scorecard Accelerator I mentioned earlier. We see a huge opportunity in business intelligence. We are going to take business intelligence to the masses, spread the benefits to many, many more information workers than the current state of the industry, and we'll take our traditional approach of very high volume, low price in order to do that.

We're working with SAP on how you can use Office to connect into SAP business information and processes. Of course, we're working with Microsoft Business Solutions on how we can have great integrated innovation to connect Office into Microsoft Business Solutions. We are working in the small-business accounting area with Microsoft Business Solutions and we're coming out with an offering in that area by the end of this calendar year.

So to give you a sense of some of the innovations that are coming out in fiscal year '06, I'm going to have Marc Chardon join us. He's our chief financial officer for the information worker business, and he's going to show you the Business Scorecard Manager, which was based on SharePoint.

Marc?

MARC CHARDON: Thank you, Jeff.

Hello, everybody. One of the most fun parts of my job is to get the opportunity to use the products that we build and sell, and sometimes to get to use them ahead of time. We've been using the Business Scorecard Accelerator, the technologies that were in it, for the past year. For our scorecards and dashboards, inside of the information worker business, getting the data out to people more quickly, more broadly, and also reducing the load of sort of the ad hoc queries that the finance organization usually has to answer. And one of the other things that I enjoy doing is giving feedback to the organization that's doing the engineering, and we've had an opportunity to put input into the Business Scorecard Manager product that you're going to be seeing right now. We cannot only get information out, but we can help turn the information that's in the systems we have into actual decisions and action in the organization.

So what you see on your screen right there is a SharePoint portal, a standard tool that people know how to use every day—and it has the Contoso Corporation, it's a fictional corporation that we use to demo the Business Scorecard in this case—it has their corporate scorecard. It's a balanced scorecard. And you can see on the front here, it's really quite sort of standard in the sense that it has financial performance, it's got stats, sort of operational excellence, and what you see on each of these is an aggregated performance measure, sort of yellow, red, green, and the metric as well as the trend information. It's important to be able to put both of those things in front of the user because what you might see in the financial case here, for example, is it's green, but you see that that's trending flat and that 30 percent number says that our trends are not predicting a positive outcome for the full year. And in fact, if you dig into it, you'll see that maintained margins is red, so sort of the underlying pieces of information is red, and in fact, the details of net profit and the profit margins are both on a difficult situation and trending, in fact, in one case down.

So that's sort of the scorecard of the balanced scorecard approach, but you can use the same tools to do P&L approaches, or sales approaches, so from a sales organization, what you have—sorry, from the finance organization, and you can control access. Not everybody, for example, would be able to drill into this P&L that I'm about to show you. The finance team would want to look at that in a much more structured P&L perspective. And so in here, you have a more traditional view, profit and loss, revenue costs and so on.

And one of the things that's new in this version which is very valuable for us is the ability to take a look and to visualize the information that's associated with the metric, in this case the profit and loss metric. But if I go down here and I start to say, hmm, I'd like to drill into the question of why is average discount bad and the trend is not improving, I would then be able to drill into the average discount. What we wanted to be able to do in this version, which is very powerful for the user, is to give contextual data, so you notice that the chart we just had that was net profit is turned into the average discount chart. That's just a Web part, it's a standard simple Web part to enable you to do that.

But also from a control and management perspective, you'd like to be able to aggregate the unstructured data that would normally be on everybody's PC. So you'll see that we have here on the chart, in the lower right-hand corner, we have the documents that people use to create the analysis and do the work.

And so from a control perspective, you now have on a centralized, backed-up, stored environment all the tools, the analysis, and the decisions that are made from it, and that's really important from the perspective of things like Sarbanes-Oxley.

Also as you've clicked on that average discount, you've also got the ability for it to just pull right straight out of the SQL through the reporting services, pull out of SQL the data that's behind it. And so as a finance user, you can go and drill down and cut and do the slicing and dicing you'd want to in order to be able to produce an activity or a decision, and in the case of this particular chart, what we want to be able to do for the finance team is to add the opportunity to track the decisions, and to track the tasks that came out of the analysis.

And so you'll see we have a task environment which says "average discount task." That obviously changes depending on which of these metrics you clicked into. The actual next steps—what are we going to do, how are we going to focus on improving the discount results that get put into there—get assigned and you get to track the status of those right directly from the inside of the portal. And so, this has gone from sort of the very first version of just transmitting information to an environment where you can actually make decisions, keep the context, and track the actual progress.

Obviously, if you're a sales and marketing professional, you're going to want to look at it in yet a different way. Sales and marketing — I used to run the subsidiary at Microsoft France and we would very often start from something that's either more geographic or more visual. So, if you look at the sales and marketing scorecard, you'd want to have an opportunity to do something like drill visually directly into the sales pipeline, for example. In this particular case, you look at the Kontoso sales pipeline, and see the one area where we obviously are out of step or having a little bit of difficultly getting the proposals out to the customer. I would then want to drill into that and find out where, for example, maybe geographically, that was having an impact.

So, this particular view is Visio, a tool people use everyday. But you don't have to know how to use it, because it's driven directly by the data. You do a cut, the data would be different. For example, if I say a subset of geography, the chart would look the same, but the numbers would be different, and the size of the disks would be different.

Then, I want to go and then drill into what regions I have: which regions are doing well, which are doing poorly, which are doing well or poorly on which products. We drill down into the regional cut, and using MapPoint, you drive directly from the data, from the SQL Server database that gets poured into the MapPoint view, and what you have—I'm zooming in and out on my view a little bit too quickly—but what you have is a geographic view here where each of the stores is a direct OLAP query showing the sales of different product lines, or any of the other methods you'd care to actually have show up. And you can, in real time, drill in and out and subset or look at different portions of that.

So, this particular tool has come an enormous way over the past year in terms of our ability to not simply give people the information necessary to make decisions, but also to give them an environment to keep track of that, to manage it, to move forward, and also to do it in a way that's really easy and inexpensive to do. We built these without IT involvement. We built the scorecards with a few hours or a few weeks of junior analyst time because you simply need to know who you are trying to address and what they'd like to see. You don't have to know how to actually hard-code the products or the tools that you see in front of you.

So, that's my bird's-eye view of how we use a tool like this on a daily basis. And I'm excited about it—I hope you can tell.

Thank you, Jeff.

JEFF RAIKES: Appreciate it. So, that was Marc showing you some of the great innovation that we have coming to enhance how Office connects to business information before “Office 12.” As we look forward, we have an incredible year coming up. “Office 12” is coming, and it's going to be the most revolutionary release of Microsoft Office ever. We believe that it will significantly challenge, we hope shatter, the “good enough” perception, the perception that people want to stay on their own old tools. It will build on the successful transformation. We have opportunities, opportunities for premium editions. Steve referenced that earlier, to be very clear, we're excited about that, but we haven't finalized all the details about what we might do. We're doing a lot of research right now on how we could configure such a premium edition. We have great new server products. In fact, we have servers that people haven't even written rumors about yet. That's another opportunity as well. So, in the first half of next calendar year, we'll lay out the final results of our research as well as the SKU strategy.

The next big event will be the Professional Developers Conference in September. You're going to see a huge amount about the “Office 12” wave at that point in time. And to give you a little bit of a look about the opportunities, the “Office 12 opportunity,” and the changing nature of the work place, I would like to invite Chris Capossela to join us. Chris is our vice president for product management in the information worker business.

CHRIS CAPOSELLA: Thank you. Good morning, everyone. Thanks, Jeff.

I really wanted to talk about the way we've started to talk to customers about “Office 12,” and the opportunities we see to help them solve some of the business challenges they face. Really we've coalesced our vision for information workers around this concept of the new world of work. This is a concept that we rolled out through Bill's CEO Summit, have some white papers on our Web site about, and we are really talking with analysts and customers about this concept at a high level of detail at this point. The whole concept of the new world of work is really rooted in our beliefs as a company that people really drive business success, and it's individual people inside a company that are really where the great innovations come from. And that is a pretty differentiated view from the clones that we compete with, and some of the larger companies that have a very different view about the way you should think about people and the work that they do inside an organization.

So what is this new world of work? Basically through the research that we've built with “Office 12,” we see that the world of work has changed very, very dramatically over the past five to seven years. And there are four trends that have emerged that tell us the workplace is a very different place than it was five to seven years ago. And there are four trends that we outlined here on this slide, and some of the trends have positive impacts right away, but some of the trends are very, very challenging for our customers, and that gives us an opportunity to be a partner with them in helping them address the changing nature of the workplace.

So the first trend is this thing that we call one world of business. And this is really straightforward. It's just the concept of globalization, the need to partner with customers, and with partners and suppliers and vendors far more deeply than companies have ever done before. The need to work across geographies, time zones, and cultural barriers is increasing. So in terms of the needs that customers have, it really is protecting the confidential information inside their company while still working across corporate and organizational boundaries in ways that they've really never done before.

If you look at the work that we've done with SharePoint, if you look at the work we've done with Groove, we really think that those technologies are very, very exciting, to show people that there's a far better way to work across boundaries than e-mail and e-mail attachments. That's a whole area of investment for “Office 12” that we're excited to talk about.

The second big trend is actually quite a tough trend for many information workers, and it's what we call the always-on, always-connected trend. Five years ago the real desire for information workers was to get connected, to get access to e-mail, to get access to calendars no matter where they were. Now, five to seven years later, people are pretty connected, and the challenge is, oh my gosh, I have to be connected all the time, I have to be connected seven days a week, 24 hours a day. Lots and lots of people do e-mail after they put their kids to bed at night, so there's this increased pressure to deal with the huge volumes of information that comes to people now that they are connected all the time.

So in an always-on, always-connected world, the challenge isn't about connectivity, it’s about finding who and what you need, prioritizing your work, and dealing with the volumes of data that come your way. There's really some stark data on this. We know that e-mail volumes have increased tenfold since 1997. We know that over 50 percent of information workers say that they get interrupted more than they'd like, to the point where they have a hard time getting their job done. And those interruptions come in a lot of forms. They come in the form of e-mail. They come in the form of instant messaging. They come in the form of too many meetings. They come in the form of too many people calling them on their mobile phone. So we think we really have an opportunity to help people adjust to this somewhat negative element of being always on and always connected, and a lot of that comes into making it far easier for people to find who and what they need.

The third trend is probably the most stark trend that companies deal with right now, and that is around transparency. There is increased focus on accountability and governance, both from a legal and fiduciary responsibility perspective, from a regulation perspective, and consumers are demanding far more transparency of organizations that they do business with, in terms of how people use their data and so on. Companies have to walk a very fine line between being very transparent while protecting their own intellectual property. And that's something we think we can really help them do. So they have a need around compliance and far better business processes.

For us, an area that we think will surprise people the most with “Office 12” is the work we've done to help them control their content — documents and spreadsheets, but also things like Web content — through the entire life cycle of that piece of content. So from creation to editing to routing to approval to archival to expiration, we'll actually allow people to do that in a fundamentally easier way than they do today.

The same goes for business processes. We think there's a wonderful opportunity to use Office as a front end to lots of different business processes. InfoPath, Word, and Excel, with their XML support, are really critical for us there.

And then the fourth and final trend is the trend of the shrinking work force, and the trend of the NetGen, the Net Generation entering the work force, and being accustomed to far more sophisticated tools than, let's say, baby boomers who grew up with a telephone and a television. The NetGen is growing up with the Internet and instant messaging and mobile phones and multitasking in a way that most people in the baby boom generation aren't really accustomed to.

So for us we expect that the Net Generation will expect those tools to be in place for all the organizations that they enter, and they're going to use that as a differentiation factor for what company they want to join. When there's more competition for that shrinking work force, we think we can really help organizations provide those tools and really harness the capabilities of this new sort of generation of workers to help them drive better business success.

We've already actually begun the disclosure of “Office 12.” At the CEO Summit, we stated talking about it, and at Tech•Ed we did the XML file format announcement where we announced that the new core applications—Word, Excel, and PowerPoint—will use XML as the default file format. So we've actually already begun that disclosure. We did some more at the Worldwide Partner Conference. The Professional Developers Conference will be the real blowout for “Office 12,” to really show everything that's going on.

Today I wanted to give you just a taste—I only have a couple of minutes left—specifically around the things that we're doing to help people control content and business processes. So let me just give you a quick three-minute demo here of this.

I'm going to go ahead and launch the browser, and you'll see I'm going to be a fake customer at a bank's Web site.This is a standard Web site. But as a customer, I might want to apply for a loan online. When I click on this, we're actually going to bring up a form right here inside the browser. This form was built in InfoPath.

And now, with “Office 12,” with the “Office 12” version of InfoPath, I can put this form on a SharePoint server and people can just use the browser to fill the form out. That's a huge change from the previous version of Office, where you had to have InfoPath on your machine to fill the form out. So it was great for forms inside the company, but now this is something where governments can use this technology to have forms that citizens actually fill out without needing InfoPath itself.

And yet, if I start filling this out, you'll see all of the rich capabilities that InfoPath has traditionally provided, things like calendar controls. If I enter a bad Social Security number, this InfoPath form will automatically show me that it’s invalid. I have a drop-down list I can choose from and so on. I can fill in the form just for sort of a demo feature. I get the form filled in with real data.

And down below, if I want to insert another credit card that I have, I can just click the Insert button and InfoPath will automatically do that. I can add $500 as a monthly payment, and you'll see that InfoPath will automatically calculate this to be $600. These are all technologies that we have in InfoPath 2003, but none of them were available in the browser. So you can manage one set of forms and have people filling them out in the browser or in InfoPath. And this happens to be IE, but nothing stops this from being Mozilla. Nothing stops this from being Safari on the Macintosh. Nothing stops this from being a Smartphone, because this is just the HTML 3.2 that will actually render itself quite well.

Now, I can submit this if I want. If I switch hats now and go inside the bank, here I am looking at a SharePoint site that has lots of forms that people have hit the Submit button on, and they're flowing into the company by automatically posting to a SharePoint site. And I can sort these on the application status: which ones have been approved, which ones are pending.

I can open up Tammy McDonald's. Now I'm going to open this in InfoPath. And if I go ahead and, let's say, minimize this and do a quick vertical view, you'll see that it's very hard to tell the difference between the InfoPath form in the browser and the InfoPath form in InfoPath. And, of course, that's by design. You don't want to have to have two different views there. So, again, a lot of richness here.

I can switch the approver view. I can maybe run some business logic and decide that this is a low-risk person. I can hit the Approved button, hit Submit. I'll submit the form. And if I go back to my SharePoint site, you'll see—I won't actually go back to my SharePoint site—you'll see that we've actually approved that, and it'll show up right there in the SharePoint site.

New also in “Office 12” is the ability to have information platforms not just go to a SharePoint site but actually get routed into an e-mail. So here I am inside of Outlook and I'm going to go to this top e-mail. And when I click on it, you'll see on the right-hand side, here's the InfoPath form showing up in the preview pane. In Outlook, I can go ahead and open this form up, and here it is again. There's the mail header. If I didn't want to approve this, I could forward this off, and it would just travel to Exchange to someone else inside the organization.

So just a very quick view of one of the key things that we're doing to help people control business processes. SharePoint and InfoPath version 12 really gets far better there.

With that, let me turn things back over to Jeff. Thank you.

JEFF RAIKES: Great. Thanks, Chris.

CHRIS CAPOSSELA: My pleasure.

JEFF RAIKES: Well, as Chris emphasized, the world of information work is continuously changing, and it's changing dramatically. The old tools aren't good enough. And what we're doing is we're investing significantly to be the provider of the best tools for the new world of work.

So as I close, what is it that I think it's going to take to win, and what makes me confident in our success? There are four key things: First of all, our history, our tradition. We've been in this business nearly 25 years, focusing on information work. We have more than 400 million users of Microsoft Office applications every day.

Second, we are but one company that invests very broadly and very deeply in the tools for information work. No other company comes close to us in terms of the investment. We put information work and the tools to support it at the center of business success. And we build our products in a way that we can really learn how to improve the products on a continuous basis; our Watson technology, our software quality monitoring technology.

Third, we have great customer connections. We have more than 50 million users who are coming to Office Online every month. And we use that as an opportunity to connect with them, to encourage them to get the most out of the software. We are doubling the number of specialists we have in our own field organization, in excess of a thousand, who can reach out to customers and help them with these tools. And, in conjunction with that, we're growing the number of partners that can deliver information work solutions.

Finally, we're the one company that really invests in thought leadership in this space, with our customers, with the Board of the Future, our Center for Information Work. And in order to have a great business, as Steve mentioned, where is that business going to be in the future? That is going to determine in part—or the overall industry is going to determine in part our opportunity for success.

We're very confident in the future of this business. We all live in a global, information-based economy. And to us in the information worker business, what that means is the number of information workers is increasing every day. The percentage of the work that they do is more and more information work. And finally, the ability for software to help them with that information work is growing. There's device proliferation, connecting to information. We are the company that's well-positioned to deliver on this next chapter of growth.

Thank you very much. (Applause.)

END

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