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STEVE BALLMER: Thanks. It's an honor and privilege to have the chance to welcome you all here today. We certainly have a very busy day, I think, and if the dialogue that I had recently when I was back from the Sanford Bernstein Conference and seeing some investors is any indication, I'm sure we'll have quite a lively day.

I want to start a little bit with the notion that in some senses this last year has been a time of some firsts. For me it was the first time I got out, outside the context of this analyst and investor meeting, and had a chance to meet with shareholders. That was an interesting and eye-opening first, very valuable for me. For those of you I had a chance to sit down and talk to, I certainly want to say a big thank-you. All right, it was a first in the sense that probably the first time I've ever felt like we were getting real questions about the potential payback on investments we're making. We've been asked for many years on various things we're doing -- are we going to win or are we going to lose? But the notion that there wasn't a big return on success -- probably the first time I've heard some of those questions. That was an interesting thing for me, that's certainly the case.

That's really the first time we did a tender offer, and I think we wound up doing one of the biggest tender offers in business history, and we're excited to be in the middle of that at this stage. I'm sure I'm not supposed to say a darn thing -- so I'll stop there!

Let's, you know, from our perspective, this first financial analyst event, first investor event of this type, was done without Bill here. Bill is someplace in Africa at this stage, enjoying his vacation, many years planned. I know we'll all miss him at the event this year, but certainly we'll have him back next year.

This is the first time we get to a chance to launch Windows Vista and Office 2007, which I actually think are the most exciting releases of both products, maybe ever, but certainly in at least 10 years, 11 years since we launched Windows 95. In a sense, this is also the first time I've had a chance to broadly address our investor community since Bill Gates made clear that he will change from full-time to part-time status in a couple of years.

And all of those things together to me kind of mark the beginning of a new era for Microsoft Corporation. I think a lot about how the company will move forward, our growth, our innovation, where we're going, and I think that we have so many amazing assets in the company, and so many things to be excited about. I know that there are certainly also some questions that people have, but I think that this next era of Microsoft will be more exciting, we'll be able to generate more shareholder value, we'll be able to generate more innovation and have more impact that changes the world positively than even the last 10, 15, 20, 30 years.

I get these kinds of questions from press, from investors all the time: How do we drive, increase return on investment, how are we going to keep growing our desktop business, how do we win online, when will we be profitable in the Xbox business, how do we continue to expand, when will our stock price do something interesting, reflect our results, how do we continue to improve our innovation agility, how do we continue to attract top talent?

And I put in the middle here a flywheel we use all the time with our people. We just got back from our annual sales conference -- almost 12,000 people in Orlando, Florida, and we talked to our people about five important things: We innovate, we win customers, we drive customer satisfaction, we grow, and we build our talent and we build our people. And those five things are kind of, they measure the success for the business overall, and I feel very strongly that if we're succeeding as a company, we're going to continue to attract the best and the brightest, and if we attract the best and the brightest, we're going to continue to succeed on all of these dimensions.

It's certainly my hope that by the end of the day today, you have some perspective, if these are your questions. Or even if they're not, you have some perspective on every one of these questions, because on every one of these questions I have a very positive set of thoughts. I know our company, like all companies, has a set of challenges, things we need to improve, things we need to do better. But at the same time, I think we have our big issues well understood, well identified, and the opportunity and prospect for innovation and growth have never been better.

I felt personally on June 15, when we announced to the world Bill's decision to move from full-time to part-time, I certainly felt that as an individual, I was entering into a new era that essentially, I had a new job. And that may sound surprising to people. I've been CEO for over six years now, I've been with Microsoft a long period of time. But the partnership that Bill and I have in running this business has been unique in many ways, not the least of which is there are some things that I've just been able to think Bill will do, and some things that he has just been able to think I will do. And really, we have been co-whatever you want to call the top job in the company for a long, long time.

As Bill transitions on June 16, I said I have a new job. I have never had to be the primary champion of innovation in our company. I've not been the primary innovator. That's not me, that's not my capability set. You're going to hear from great people like Ray Ozzie and Craig Mundie and many others today. But Bill has been a real, the real driver, the champion of innovation, the champion of pushing us to expand into new areas to get into new things. I know some folks in this crowd sometimes think that that's a little bit interesting -- let me use that word. Yesterday we announced the acquisition -- I'm sure many of you saw it -- of a company that does what I'll call business intelligence-type software for doctors in the healthcare field, a company called Azyxxi. And certainly our passion and appetite for expanding into new areas is no less today than ever.

But on June 15, I said, look, over the next two years, I have to become the full-time champion of innovation. Because if you look at the four things that will really allow us to both succeed in the marketplace, change the world, grow, and drive shareholder return, innovation is the foundation. And I'm going to talk to you this afternoon about innovation, but hopefully after you've had a lot of good examples of work that we have underway for today and through our Research organization for tomorrow.

To be successful, though, with innovation, we think there are three other important pillars. One is what we call the long-term approach. Microsoft's not a company that starts things and gives them up. We keep working on things and working and working and working and working and working. In a sense you could say we're not afraid of initial resistance to our efforts. We'll go back, we'll learn, we'll come back with new ideas, we'll put even more bright people on any challenge that we take, because sometimes things take a longer period of time to really become successful than anybody might anticipate. But in our industry, real success is almost always paid off with really substantive returns.

Innovation will have to be at the backbone of what we call our Live transformation. Software is becoming a service. Ray Ozzie will talk about that. And embracing advertising and subscription business models and Internet-based delivery across Microsoft product lines is an important part of what we will do. And it'll be fueled with innovation.

And last, but certainly not least, and I'll talk about this some again at the end of the day, in a sense I think about us as a business that we might characterize as multicore. If the new generations of microprocessors are all supposed to have multiple cores on a single chip, Microsoft has multiple core capabilities or operations or businesses in a single entity. And we're unified by some common innovations, a common innovation approach, our dedication to some common platforms like Live, and our long-term approach.

We were a desktop company -- that's what we were thought of for many years. For many years I think people thought we were a developer tool company, but we established the position on the desktop. And throughout most of the 1990s, there were big questions from customers, from investors, can this company become a server company, an enterprise company?

There are no questions about that anymore. And the innovations, the long-term approach that we've applied, have allowed us to essentially have these two big muscles. They each have their own customer set, products that are involved, technologies, delivery models, business models -- and we've been successful now in two dimensions. I don't think most technology companies ever get a second big set of capabilities. And we're trying to grow today two new cores, one in online and one in entertainment, and you'll hear about those during the course of the day, and I'll come back and talk about them.

But certainly if we can build the kind of capability and deliver the kind of performance that we've done in our so-called desktop business and our server businesses, those two opportunities we will all sit here 10 years from now and agree we're not only fantastic in terms of the innovation delivered, but also in terms of the returns that came back.

So four pillars of capability is the way I think of it, four pillars of performance.

Now, some of you will say, but you've got five segments; why do you have four pillars if you have five segments, and the truth of the matter is things don't map perfectly. Certainly the Windows client is all about the desktop, and most of our entertainment and devices business is all about entertainment, but our Windows Mobile product is also important in other aspects, including our server and enterprise business.

What we do in our Information Worker Division, now renamed our Business Division, some of that is very desktop oriented, but as we enter the world of unified communications, as we enter the world of business applications, that segment actually spans different kinds of customers with different kinds of needs. And the fact that we uniquely can make multiple technologies map and work for multiple business models and multiple segments I think is great.

We see incredible amounts of opportunity. If you just take a look at some of the names of the new products that we have coming out of each of our business segments, our new Windows Vista product, Office Live, our expression development tool, the new Zune products and service that we've announced, adCenter and what we're doing with Windows Live and with MSN, hopefully today you get dimensions across these segments, and then I want to come back again and put them again in context, the context of innovation, the context of a long-term approach, the context of Live, and perhaps most interestingly for investors, the context of these multipillars of capability and performance.

We were initially going to just dive into the meeting, and we talked about it and talked about it and said, we have got to start this meeting with a demonstration of Windows Vista and Office 2007. They are the engines, not just of short-term revenue growth, blah, blah, blah, the numbers are the numbers; they're the engine which will enable us in the market to attract interest, to have a platform to talk about and sell add-on offerings. They are incredibly exciting products, and I think as these products come to market, excitement builds around them, the Windows Vista and Office 2007 launches come for consumers at the beginning of next year, we're going to see a lot of enthusiasm around these products and what they can do not only for our customers but also for our shareholders.

And so what I'd like to do, before we do anything else today, is have Shanen Boettcher and Jared Andersen from our Windows and Office teams come up on stage, and they will walk you through just a short run-through on Windows Vista and Office 2007.

Thanks, and I'll be back to see you at the end of the day. (Applause.)

DEMO

JARED ANDERSEN: Good morning. My name is Jared Andersen, and I am a product manager on the Office Client Enterprise team. For the next few minutes I'm going to walk through a demonstration of how customers can use Windows Vista and the 2007 Microsoft Office System to solve some of their most common business challenges, specifically how they can simplify how people work together, help them protect and manage their content, and find information and improve business insight.

Now, to do this I'm going to play the role of a sales manager in a fictional company. And like many people -- one second while I log in here -- like many people, I'm going to start my day in Microsoft Outlook.

Now, Office 2007 allows me to manage all the different types of communication that I receive, including not just e-mails but also now voicemails, instant messaging conversations, RSS feeds, all again in a single mailbox.

Now, one of the things that has been sent to me today is an e-mail from a team member, John Chen, who's asked me to create a presentation for a sales conference later this afternoon. That was awfully nice of him.

So fortunately I've given this type of presentation several times before, so I'm going to use the search capabilities in Windows Vista to go and find the presentation that I can update. So I'm going to search here for sales, and in the Windows Vista Search Explorer I can see all the different documents that quickly match the topic that I'm looking for. You can see that Windows Vista also visually shows me the items that I'm looking at here.

Here's the presentation for our sales manager meeting, and without even having to launch the application, I can preview the entire content for the presentation right here in the context of the Search Explorer.

Now, this looks like the document I want. I'm going to open this up in PowerPoint 2007 and start to update it.

Now, Microsoft Office PowerPoint 2007 uses the new Office user interface that helps me with two things. One, it makes it easier for me to find and use features which today I may not use as commonly; and second, it makes it easier for me to complete complex tasks.

Let me give you a quick example. Here on slide three, I'd like to communicate a little bit of information about our product development cycle. There are three things that I'd really like to say here in this slide. It's that we have a tremendous investment in research and development, we do a very good job at responding to customer feedback, and we also have strong interest and strong efforts in marketing.

Now, a list of bullets in PowerPoint by itself is not very interesting. But to be able to communicate this information in a much more visual way, by converting this information into a diagram, is really much more interesting. And, in fact, my ability to not just convert that to a diagram but to also easily add colors, add styles with just a few clicks, this is the type of work that would typically take me hours to do inside of other products or inside of earlier versions of PowerPoint, or require me to employ a graphic designer. So that just gives you a quick flavor of what you can do with the new user interface.

Now, one of the other things that I would like to add to this presentation is the slide that describes the product that my company has recently released called Orion 2007. Now, as the sales manager, I personally don't know very much about the product. In fact, one of my most common challenges is being able to go and find information in my business, and also expertise.

So one of the tools that I'm going to use is Microsoft Office SharePoint Server to go and search on my enterprise on the topic of Orion 2007. And you'll see that SharePoint quickly returns results, structured, unstructured information, documents and sites, and so on. But I can also search people. And you'll see that those people are returned -- they're sorted based on their social relevance; I'm sorry, their social distance. But I can also sort those people based on their relevance. And it looks here like Tammy McDonald is actually -- she's actually the product manager for Orion 2007. I'm going to click here on her name. And what we're looking at here is Tammy's personal portal. Much of this information is generated automatically; things like her responsibilities, things like where she fits here inside of the organizational hierarchy.

But what's more interesting is over on the right-hand side, where I can see how that information relates to me personally. I can see things like what are the various touch points between me and her in the organization. What are the memberships, the teams, the sites, the other places, the distribution lists that we both participate in? So I have some sort of connection with this person.

I can also see down here at the bottom that she maintains a blog. In fact, she's recently announced that she's created a slide presentation on the topic of Orion 2007. How fortunate.

So what I'm going to do is look here at this slide library. And what SharePoint is doing is it's hosting a presentation that she's created, but I can literally see all of the individual slides that are posted here and select the one that I want. So here's a slide here that gives a product line summary, and that's actually a pretty good representation of what I'd like to add into my presentation. And then I'm going to send that to my PowerPoint presentation.

You'll see here that not only can I choose to include this in my presentation, but I can also be notified when this slide changes. Using SharePoint in conjunction with PowerPoint 2007 helps me make sure that when I deliver this presentation later this afternoon, if Tammy were to make any changes to this slide, I can be confident in knowing that I always have the latest information here in front of me. I just added this slide, and there we go.

Now I can see there's also one last piece of information I need to add to this slide, and that is some sales performance data. Now, I seem to recall that somebody sent me some information on this a few weeks ago, so I'm going to go here at the Outlook and do a quick search on the topic of Orion 2007. And you'll see that literally as I type, Outlook brings back instant search results for this topic.

Here's an e-mail from John Chen again, including some of those sales reports. It's attached here in this e-mail. And I can preview, in line with my e-mail, the entire content of that attachment without having to launch Excel 2007.

So let's go back here to the message, because John has been gracious enough to include a link to our sales portal, where this information is most up-to-date. And here on the sales portal I can see an aggregate of information that may come out of my CRM system, my financial database. All of this aggregated into things like key performance indicators here at the top, as well as what you're seeing here down below, which is actually an Excel spreadsheet rendered inside of the browser.

Now, this chart here is a fairly good representation of what I would like to show. So I'm going to open this in Excel 2007 to do some further analysis and expand this.

Now, Excel 2007 also makes use of the new Microsoft Office user interface. And one of the nice things about this interface is it not only helps me analyze the data here, but also to visualize it in completely new ways. I can go here and turn on a set of data bars so I can instantly see a list or basically visualize this information and understand very quickly what the relative values of this data are. I can see right down here, there's that chart I wanted. So I'm going to copy the chart and I'm going to go over here to my PowerPoint presentation and paste that right back in. So I'll click here, paste that in there, and you'll see that PowerPoint automatically adapts the color scheme to fit the color scheme that I selected for this presentation.

Now, my presentation here is complete; at least the content is. But I'm also going to want to think about the things that I need to do to make sure this information is protected, specifically the sensitive financial information that I've added to my presentation. There are a few things that I'm going to want to do, including making sure that none of the comments, the notes and other track changes that were added to this document in the process of creating it are there when I choose to publish it.

So I can use the Document Inspector to go and remove all these individual items fairly quickly. And there we go. So you notice that the comments and track changes are now removed.

Now, one other thing that I'm going to want to think about; fortunately, I'm using Windows Vista, which means that I'm using BitLocker Drive Encryptions here on my laptop. If I were to leave this laptop in a taxi cab on my way to the meeting, accidentally lose it, I can be confident in knowing that the information that's on here is secure, even if someone steals it.

One other common way that people steal information off of laptops is using a USB device, a USB storage device, much like the one that you see right here. Now, what typically might happen is that someone may take that device and plug it right here into my laptop. But my IT department has chosen to block unauthorized devices like this by policy. So you'll see that when I plug the device in, or if someone else were to plug this device in, that in just a couple of seconds here we'll see that that device was blocked.

Now, when I actually am ready to deliver this presentation at the venue, two other things that I might want to do. One is that I can open up the Mobility Center in Windows Vista, which is the single place that I can go to manage all of the mobility settings on my laptop. One of those settings is the ability to turn on a presentation mode in my laptop, which does things like change the background that I have or the wallpaper that I have on my laptop. It disables the screen saver. It changes the volume of my computer. So now that I'm ready to give that presentation, it's fairly easy to do in a single click, and I can go back to my PowerPoint.

Windows Vista also contains a platform that allows related devices, related displays, to be able to share information. And one of those devices that I have here is actually my cell phone. And on my cell phone, I'm going to open up the presentation that I have here on my laptop, utilizing its Bluetooth connection, and I'm going to tell it to start that presentation. Hold on a second here. I'll start that presentation, and in one second I should -- sorry, it's not coming up.

But what these types of devices are able to do, since I'm using a Bluetooth connection, it will communicate with my laptop and use my cell phone not just to preview the slides that I have here on my laptop, but also to be able to advance the slides using the Bluetooth connection that I have between my phone and my laptop.

So these are the key things that I wanted to communicate about the value that our customers can make use of, using Windows Vista and the 2007 Microsoft Office release; specifically, being able to simplify how people work together, being able to find information and improve their business insight, and being able to help protect and manage their content.

Now, Shanen is going to come here on stage and is going to give you a quick demonstration of some of the other capabilities in Windows Vista.

SHANEN BOETTCHER: Good morning. I'm Shanen Boettcher with the Windows Vista team. Thanks, Jared.

You just saw some great demonstrations of business end-user value, information worker value in the product. We've already seen really a lot of interest and buzz about the product and wanting it in-house. In a moment I'm going to show you some of the end-user consumer or home-user benefits for Windows Vista as well, and that is going to create additional pull. With our beta that we just released, we had over 2 million distributions of this product. And so we know that that pull is happening.

I wanted to start by talking about the IT pro value that we're putting into the product. Many of you have questions about the deployment, the speed at which we will deploy Windows Vista into the enterprise. How soon will it come? Well, part of that is creating that end-user pull of people wanting the product. And the second one is giving IT professionals the tools that they need to deploy it quickly. And we've learned a lot working on Windows 2000 and Windows XP about just what is needed to do that.

What you're seeing here is the Business Desktop Deployment Toolkit. This is a comprehensive tool that pulls together both tools that we've made available right now as well as technologies that are in Windows Vista to help speed the deployment process of Windows Vista.

The first question is usually about application compatibility. What kind of impact is this going to have in my environment? How are my applications going to behave? So one of the great tools that we have available to us that is available today is the Application Compatibility Manager. Now, this is a toolkit that has some agents that you can deploy down-level on Windows 2000 and Windows XP systems that can do inventory of all the applications that are in the environment. You can see them all enumerated here.

And then I can go through, and the great thing about this is that it's interactive with a community. So enterprises, if they choose, can upload this data to this community site and compare and contrast how their applications are working with other organizations. ISVs are involved in this as well. Microsoft is posting information here as well. So you can see, for example, how these applications are running in the environment. Think about what types of mitigations you might need to use.

So here you can see some versions of this product passed. Others have not. The community has given some advice, specific guidance about what you can do here to resolve that issue; so some great ways that we're leveraging that community. The big point here is that these tools are available today. They launched with beta.

In the past we've shipped these tools as late as six to 12 months after the release of the operating system. So that's really the point in time when enterprises got started on their deployment. So our early adopter programs, we're seeing great updates using tools like this.

The next tool I want to talk about a little bit is deployment itself. And so let me bring up the deployment workbench here again. And last year I dazzled you with some command-line demos that I remember. And what we have here is really the progress that we've made. This is a full, comprehensive tool that allows you to enumerate the different operating systems that you want to deploy in your environment. It allows you to edit those, add applications for post-install, lets you customize them with packages and out-of-box drivers to really make sure that it's customized for your environment.

Remember that Windows Vista has a new imaging format. So this is the way that we deploy Windows Vista. It's like a snapshot of the way that you want the desktop to look in your organization. And Windows Vista has this new capability to be hardware-neutral and language-neutral, as well as to be componentized for all the kinds of applications that you might want to add.

So what it does is it allows enterprises to get down to a single worldwide image. And that's important, because it really reduces the complexity and the amount of time that they spend in managing that. So here you can see some great tools that go and enumerate the entire system, allow me to edit the different packages, customize it to exactly how I want the system to work.

Now, I can also go ahead and automate deployment of those. It can actually create a desktop here where I can switch to and create a DVD for that distribution of that. Can we get it switched to one, and we can deploy to a server, we can deploy to a DVD or an SMS Server. So, automatically, I'll push those out to the computers in our network.

Now, after we've done application compatibility, we've rolled our images and our deployment, one of the questions is about help desks. How do help desk costs rise or fall with the deployment of Windows Vista? How can we help end users discover new features in the operating system and use them and reduce overall help desk costs? Well, one of the things we can do is use the new help system that's in Windows Vista. This is an online help system, it's dynamic, it can be updated over time by the enterprise to focus on the top issues. It has this convenient search built into it, so you have a full enumeration of all the great questions here. Here I want to learn how to show all icons on the task bar, and this innovation works with some of the graphics platform to actually go ahead and accomplish a task for me. So, it's going to walk me through the process of actually accomplishing this task, both doing it for me and teaching me how to use it. Again, this is a platform that can be extended by IT shops, by ISVs to really help expose some of the new features, as well as to avoid help desk costs.

So, there are also some great tools, when a help desk call has to happen, the diagnostic tools for those technicians help diagnose what's going on on the PC. So, a great view of what's happening on the system. We've had some monitors in the past. You can see the richness here that we've improved. Here is something brand new, which is the reliability monitor. And what this does is, it tracks telemetry data on the system, how it's performing. And so a technician can take a look at this and say, hey, I can see that some of the performance or reliability waned a little bit, and then it's starting to increase, and come in and look at the events that happen.

Well, usually the first question is, what have you done, what have you changed on your system? And the answer is always nothing, of course. Here you can see specifically an application was installed, it had some trouble, and eventually the application was uninstalled, and the performance and the reliability increased. This gives IT professionals insight across their entire network. You can aggregate these events in a single place. You can become proactive on how to address issues across the full organization.

So, some great IT pro tools and technologies available today that they're using to help them get ramped up on deploying Windows Vista.

So, let's switch to consumer. What are we doing for end users and consumers? Well, one of the things that we focused on is really end-to-end experiences, really maturing those experiences out. What I want to talk about here first is memories. So, in Windows XP we had a nice photo gallery, some video importing capabilities. What we're going to do here is take a look at the Windows Photo Gallery in Windows Vista. And you can see the beautiful layout here, how pictures are displayed. The other thing I would point out is, look at how many pictures I have. I have almost 1,000 pictures on this PC. Well, from our customers we know that people are amassing larger and larger libraries of photos. So, is there an easy way to manage that? Yes, there is, there is the convenient search built in here. And so, let's say I wanted to manage some pictures just of my kids, of my children. What I did is, I want to import those, I was able to easily tag them with the word kids.

And so I can quickly get down to just the pictures that I want to edit. This one looks a little funny; let's take a look at this one. It looks like one of those tragic editing mistakes that can occur. And what we want to do here is show a little bit about how we protect memories for our customers. So, this is one where we've done some editing, we've had some issues. And I want to go in and actually fix it. What Windows Vista does is, it saves off a digital negative, or a digital original of your picture. So, despite any kind of mistake in editing, there's little Henry, he looks much better now, right, we can go back to that original picture at any time. So, really protecting those memories for you. A very nice feature for safety there as well.

And then sharing these memories, we have some great new sharing capabilities, simple things like slideshow capabilities, and in a moment I'll show you how we can burn a DVD or publish a DVD very easily with this. You see the great animations we're using to display this. It's a great way to share these pictures and even integrate some live video into that, so you can see how seamless this experience really is.

So, next let's talk about sharing it in a different way. Let's say we want to publish a DVD. Windows Vista has DVD publishing built into the system. It's a natural part of the system. So, here I'm going to take my pictures, it's going to lay out the video, and we're going to create a DVD that I can share with my mom, I can send to her, she can enjoy it using a standard DVD player in the comfort of her home. We can do some things like add some music, a soundtrack for my DVD, and then we actually have also some great menuing capabilities, so we'll get a professional menu capability, that's what's going to pop up when we first put the DVD in to start playing the scenes or select the scenes. So, this is a great new feature for DVD making and sharing of these memories. What a great way to have fun with the product.

Speaking of fun, we've got a great new graphics platform you've probably heard of in Windows Vista, the new display driver model, DirectX 10 will be releasing with Windows Vista, and we're seeing already a lot of momentum around new types of games that will be developed. So, why don't we take a look at some titles we can expect for Windows Vista. Some great titles there. I'm excited to play those games, but I've got some little kids as well, right. It looks a little bit violent to me, so I'm glad that Windows Vista has parental controls built into the system. It lets me be the IT pro of my home.

So here, for example, we have integration, it allows me to turn on parental controls, I can even track usage of the PC by my kids, right, it's always OK to spy on your kids, right, that's all right. And even actually go in and control a little bit about what the behavior of the PC will be like. So, in the gaming space, for example, specifically, what I can do is work with the ratings boards, and so we've done work with ratings boards around the world — in North America it's the ESRB — here you can see that when you buy a game you've got these logos on, you can specify which of the levels can be played by your child, everything from early childhood all the way up into the top stuff here. There's also some great content protection here, so at a very granular level you can prescribe specifically what types of content in these games can be shown or not shown. And we're working with gaming vendors, this is a platform so that they can integrate, and you can specify the options of how this appears when gameplay is happening. So, it's a great way to protect how children use PCs in the home. We see this as a great opportunity, because the parents are going to feel comfortable putting a PC into the bedroom with the kid because they have the ability to prescribe how things are going to be used.

If you've got multiple kids, you can specify time limits. You can do some sharing of the PC, and even block the late-night usage, if you'd like. So, very simple but powerful tools, I think, for parents to make them feel more confident about their kids using PCs. That's a platform, as I said, working with our ISV partners in the gaming space.

Now, another element of the platform is, of course, the presentation framework and the communications framework, really the next generation of our Windows platform. One of the things I wanted to show here is an application that really demonstrates well how the hardware industry and innovation in it, how the software industry is moving forward to create really new types of experiences.

So here we have a reader, this is a New York Times reader, we're working with the New York Times on this project, and it's running on a Tablet PC, a very nice model here by Motion Computing, that actually supports touch computing as well. So touch, as a natural form of input, is supported in Windows Vista for the first time. So here, if I want to go ahead, you can see as I touch the screen a mouse appears on it, it helps me navigate within that experience. So it's just a very natural experience, just like reading that paper I can move forward and back, just by swiping my finger across, a simple gesture, giving me control of that. So a great way, I think, of looking at this experience, a new channel for the New York Times, for the way they display their paper, the way they can position advertising in the paper, as well as a great reading experience for the end user, using some of the great technology that's in Windows Vista and the presentation framework.

So lastly, I wanted to show you an innovation in natural input, as well, in using PCs in new types of ways, and talk a little bit about speech. It's a little bit risky to do in a large auditorium, but I wanted to show you some of the innovations here around the speech area. So I'm going to ask for you to be quiet, which seems not to be a problem, and we'll start here. Start listening, open photo gallery, open Word, press Windows tab, switch to Word. Dear Mom, fix ant, doesn’t make sense to me out of context—is it accurate? Delete that. Delete that. Delete that. Select all. I think it's picking up a little bit of echo here. Select all. (Laughter.) OK. I'm glad you're enjoying this. Dear Mom, comma, new paragraph, I hope you like the DVD. New paragraph. We miss you, comma. New paragraph. Shanen.

So there you have it, a little bit risky with the echo in here, but you saw both command and control of the PC, as well as dictation. So this is really unlocking new markets for us, you think about, of course, accessibility, and working with PCs, as well as into markets where keyboard input can be difficult, or hasn't really been the norm. So as we think about both the handwriting recognition and the voice recognition unlocking capabilities in new markets.

Well, thanks, and I'm glad you had some fun with that at the end. I sure did. We just had a little bit of time today to share with you some of the features in the end-user space, and the business space, and the consumer side and IT pro. I could go on all day; it's a very rich product with lots in it for everyone. So thank you very much for your attention. I hope you can see, as we do, that we feel this product is going to have major impact for Microsoft and the marketplace.

Thanks very much.

Due to the varying sound quality and subject matter of tapes, the information in this transcript may contain inaccuracies.