COLLEEN HEALY: So, with that, it is my great honor to introduce to you Chief Research and Strategy Officer Craig Mundie.

CRAIG MUNDIE: Thank you very much. Good afternoon. In some ways our business is like many of your businesses. You manage portfolios, and we do too. And to some extent Microsoft, if you're going to build and manage a portfolio, there are two parts. There's picking them and then deciding how to build them and hold them.

And our business has those two aspects too. For 30-odd years, you could say you knew who our principal research analyst was; it was Bill Gates. And Bill made many of the choices in our early life about where we would invest technologically and from a business point of view, and most of the presentations that you've seen so far today are a reflection of good calls -- largely all good calls, you might say -- by Bill during a long period of time.

At the beginning of this month, Bill retired. We spent two years planning the handover of his current responsibilities to Ray Ozzie and myself. And I just thought I'd start by refreshing, for those of you that haven't thought about it recently, how did we divide Bill's job, and what role do Ray and I intend to play in the company going forward?

I think about it in three simple dimensions: in/out, long/short, up/down. And the way that those get interpreted is the in/out part is relative to our focus. I will spend more of my time dealing on an external basis, and Ray will spend more of his time dealing with many of the issues internally. I deal with a lot of the geopolitical issues, the external research issues, and many of the strategy issues that relate, for example, to the work that we've been doing in the emerging economy countries.

The long/short part is really the time horizons over which we focus. Most of the things that I do are in the time horizon from maybe three years at the shortest to 20 years in the future. And Ray is tending to focus over the next couple of product cycles, and that you could think of as zero to five years. So we overlap a little bit in that time horizon.

The up/down part is within the technology stack. Microsoft is a very complicated technology business. We're influenced by what happens in the semiconductor and hardware world below us, and of course at the other end of the spectrum, we are increasingly a player in the cloud. And so the up/down part is I start from the bottom, from physics, and think about how that hardware world and all of the fundamental platform technologies need to evolve to meet these requirements in the future, and Ray's background and interest is more from the cloud down. And we kind of meet in the middle around the application business and strategy.

So as we take on this mantle from Bill of being the research analyst, if you will, for the company, picking our strategy, picking the products and the technologies and making those seed investments, if you will, we do it at a time where we -- as Steve said this morning -- are changing our view of what we're trying to do as a company from a very PC-centric one that built the company up in its early years, and the derivative products like the server and tools business that grew out of those same fundamental technology capabilities.

But now we recognize that we need to have three parts to the way we think about it. We want to use software in the broadest possible sense across a world of very diverse devices, and we want to build killer experiences that people will want to have and will pay a premium price, in a perfect world, to get. And so we have articulated that in the vision statement that Steve showed to you this morning.

As we look at the need for these new revenue streams, you know, the company continues to branch out, not just by adding new things to the portfolio in each of the traditional businesses, but actually looking at completely different businesses. Our business started in the productivity sector, and of course we look now for many, many interesting ways of extending what we can do within that business.

Over the last 10 years, we took a set of investments in graphics and communications and online service technologies and started to move into the consumer space more and more aggressively. That will continue to extend into the mobile gaming and, broadly, the entertainment area.

Now we've been moving down into new classes of products in the systems area -- security, authentication, identification, new types of real-time monitoring, management systems -- and we've even expanded in the last three years into the scientific and technical areas. One, because software is going to be key to everything that happens in that environment, and two, we think that there are lurking there some fairly large businesses that we can drive new answers into, things that, for example, in robotics, in healthcare, and I'll talk a little bit about that today.

Being the guy with the long-term requirement from a strategy and investment point of view, I feel obligated each year to remind you and sort of refresh the picture of how long it takes for us to actually build these really big franchises. Many of the decisions that we make only pan out over fairly long periods of time. And so this, if you will, investment curve, you know, you start out with some ideas, you dig a hole, you start to fill in the hole, and then eventually you end up with a couple of these really big franchises. And, you know, when you look back, many people forget how long it took in terms of both the technological efforts and the marketing effort to build those core franchises that have been long-term drivers of our business -- a decade for Windows to surpass MS-DOS, 11 years, nine releases before Word outsold the historical or predecessor word processors. Similarly, a long time period for Office itself. And this same pattern has been repeated now as we start to turn the corner with the Xbox business, many of the investments still starting to just get into the yield curve in unified communications and other things.

I have been not only responsible now as Bill departed for taking on our global research operations, but in thinking about new businesses in which we can harvest some of that research and create new large-scale business opportunities.

Two years ago at this meeting, I talked to you about our early activities in the healthcare field where we're moving beyond the idea of just selling people our infrastructural technologies as we always have, and actually moving to provide a new line of products specifically to deal with the evolving world of healthcare. Not only in the rich countries, but ultimately for the expanding emerging economy countries as well.

I just want to take one second to update you on our progress in that two-year period. This is the kind of business that I at least dream about as being a huge opportunity for Microsoft. In many ways, it builds on all the investments we're making in both the cloud and the client class of technology, in both the institutional go-to-market as well as the consumer access capability and brand, and we've now set out and have a four-part product line, all four parts of which are now in the market two years later.

We have a hospital information system that's being sold to the new hospitals and emerging economy clinics, we have the Amalga technologies that are being used in some of the world's premier hospitals. We launched last October HealthVault, which is our online safety deposit box for personal electronic medical records, and we introduced the health search capability, which is one of the first domain-specific searches. One of the predecessors to some of the things that Satya Nadella talked about this morning.

I'm very proud of our progress here, and in many ways, they're like our traditional businesses. They target one of the world's largest areas of spend. Healthcare is typically first or second as a percentage of government outlay in every country in the world. And so we know that there's a huge opportunity, and we see a transformation coming in healthcare.

One of the things I'm really proud of is I'm -- into the Amalga technologies -- is who some of the first customers are, because I think these are really an indicator of whether we are getting traction and are likely to get a lot more. And if you look on the right side here, the first four installations went to the No. 1, 2, 6, and 11-ranked hospitals in the United States: Johns Hopkins, the Mayo Clinic. They have not only acquired it, but we have this in deployment there, and we're really starting to get a lot of experience with it. So we're very optimistic about this kind of business, but we couldn't do it if we didn't make these very, very long-term research investments.

So you can ask the question: Where are we now in terms of the evolution of the technology environment? And I believe that our business now and in the future will continue to have two parts: a platform business and an application business or an experience business. And what is often overlooked is how long the cycle is for establishing and harvesting the value of each of these platform cycles. You know, we have managed to navigate our way through a number of these; the spreadsheets and word processors were the killer applications that drove the first PC platform, and then millions of applications were written around it. As we entered into the Internet era in the mid-1990s and we transitioned to what's now the cloud-based component of that. The company recognized that e-mail clients and Web browsers were going to be the killer apps of that era in the server side or the services side. And we focused a lot on having a leadership capability there.

Now, those two things have come together to create this software plus services opportunity as a composite platform. As you've heard through the day, we're very focused on having a major role in that. My job is to think beyond that and with our research people look at what will it take to fundamentally, qualitatively change what people expect from their computers, or computing. And a year ago here, I talked a bit about this idea I called fully productive computing, and I'll give you a little of an update about how I think that's going to evolve and perhaps make it a little more tangible for you now than it has been in the past.

Today, if you look at all the world's personal computers or cell phones or anything like that, they are underutilized if you are an asset manager. You know, they don't compute much because they were designed to deal only with interactive response. You ask a question, we want to make it almost instantaneous, we give you an answer. For the rest of the time, we don't do that much. And so we face an opportunity not only how do we think about computing differently to get value out of the unused cycles, but we're also looking down the barrel of a gun that says, here comes a bullet, that bullet is a radical change in the underlying computer architecture. And if you can figure out how to use it, then it's going to give you perhaps one or two decimal orders of magnitude more computing capability per dollar than that which we already enjoy. What are you going to do with that?

And so I think we have to move into a world where we've got to find more ways of using the computer to improve qualitatively the kind of traditional application, but we also have to start to look for radically different ways to think about utilizing this computing capability. So I think we'll move not only to new ways of computing traditionally, but we'll start to have machines that do more speculative execution. You'll come in in the morning and it'll say, "Craig, I looked at all your mail that came in last night and your calendar and analyzed it and these are the ones that are most important, and I've even drafted some responses for you." That's what a great personal assistant does, why don't computers do that for everybody? The answer is: it's just a matter of software and enough computing power to be able to move us up to that level.

So this next era of computing will be -typically will have many new characteristics we don't have today. You'll see more parallel programming as a requirement to capitalize on that -that's a technological hill to climb for the industry. But you'll see it now become contextually aware. We'll drive a lot more things based on models and very low-level hardware functions of the machine. The interaction with you will be more personalized, more humanistic in the way that you deal with it, and it'll adapt and be part of a much more immersive environment in which you encounter computing, you don't go to the computer. The computer will be part of the overall environment.

In the last minutes we have together, I'm going to give you two examples of how I think that's going to play out. One of the things that Bill Gates has talked about for quite a few years is this evolution toward what we think of as the natural user interface. You know, the user model of engagement with computing has evolved from the desktop metaphor of the late '80s and early '90s. We've added the Internet and browsing metaphor. We've injected rich media into both of those, folded in communication, and now you could say we came up with the first concepts of search.

So the real question is: What is the next big thing? And who is going to figure out what it is and get you there? And I think the next big thing to some extent is, if you will, an environment where space is the new frontier. Spatial environments where you interact with computers is going to be a big, big deal. One, because it will allow us to move the people who already use computers into a completely different metaphor of engagement with them, and it provides the basis of thinking that the 5 billion people on the planet today who don't have a computer -or if you put one in front of them wouldn't know how to use it -might have a way of getting engaged in this much sooner than they would otherwise.

And so the Surface technology that we put out a few years ago is one example of that. And I think that there will be a number of others. I'd like to show you now a video. This is not a high-quality video, it comes from some of our researchers, but I'm going to explain it to you and then show you the video. The three people in this picture on the left are the research people who built this. It is a robotic receptionist that we're actually going to deploy later this year in the lobbies at Microsoft to perform one function that's highly repetitive, but very important to daily business here, which is getting a shuttle to go from one part of the campus to another part of the campus. And people do that all the time. And we have people who sit there and they do a lot of other things, but they always have to stop and deal with getting shuttles for people.

And so I'm going to show you this demo where the head on the right is a 3-D model, at this point a relatively simplistic one, of a robotic receptionist who interacts with you as a human would. And the green boxes which you'll see, you're essentially looking at this through the eyes of this automated receptionist. And the red dot is where she's looking. And you'll see that basically she interacts in a very natural way with this. This is built on a manycore computer system. When it's not doing anything, it consumes 40 percent of the cycles of a quad-core machine, and we've barely turned it on. We have very simple models, and of course we want to make the interaction richer.

So I apologize in advance for the audio quality, but listen to what it's like to walk up and deal with this robotic receptionist.

(Video segment.)

When people talk about a natural user interface, you know, we talk about handwriting and touch and speech and these things, but this is what a natural user interface is really going to be all about. And it won't be just your receptionist. I mean, you should be able to come to computers and interact with them in a much more natural way, to ask questions, have them respond to you to do tasks that are valuable to you. And I think this is just the tip of the iceberg, but it's the first example built in a completely new way using these robotics technologies that we brought to the market two years ago. And so this isn't really about just programming arms that assemble cars in the factory or making things that run around hospital floors, this is in many ways the beginning of building very complex interactive applications.

So how is the Web going to evolve? Well, it's gone from text to pictures to animations to video to a sort of 3-D immersive environment. We've brought you Virtual Earth and things like that. Now we've injected high-definition television into the mix. And the question is, where do we go next? And I think the next thing we're gonna do which will complement this natural way of interacting is what I'll call the visual Web. And I want to give you a little demo of what it might be like in the future where we have this visual Web kind of environment.

So first, I'll just start with a cell phone. Let's say I'm going through the airport, I'm traveling. My wife, Marie, and I have just built a house and we want to get some Northwest art. So I take my cell phone -I'm passing a magazine stand and here's a magazine that has stories about Eskimo art. So I take the picture just so I can remember it and I go about my day. And later I end up at my hotel room. So the hotel room of the future won't just use Surface as a hospitality thing in the restaurant as the first applications are being done; I might go into a hotel room and I've got a couple of active Surfaces here. One might be the desk, another is the wall.

So when I come here, I can basically just put my phone down, put my hand here to basically use a biometric model of access. It grants me access. It basically takes the information out of the phone and now it gives me an opportunity to interact with it. So I can use a touch surface to move this out. I can expand it. And I can now do things like use the computing power to analyze it. So I'll say, OK, analyze this picture I took of a magazine cover. So this will now do a computational analysis. It analyzes the text, it looks at the information, recognizes the bar code, goes online, finds the Web site. And when it's done, each of these becomes an active object I can navigate. So I say I really want to understand more about the article on the Eskimo art, the walrus on the front. Here I can read about this Eskimo art and where it came from. It's essentially a shop in downtown Seattle.

And I can say, all right, go here. I'm interested in shopping for this. And so what it does is it actually moves me into a 3-D world. And this world is something that Ray Ozzie and I, when we have talked about this, call first life. Many of you may be familiar with this second life idea where people are building a wholly synthetic world on the Web, but very few people really have an appetite to help build a synthetic world and then have avatars and other things in that environment. And it's already begun to taper off a little bit.

We think that the idea of first life, where there's a mirror world of 3-D that everybody can participate in constructing and maintaining and which gives us a navigational metaphor that's completely consistent with the world we already live in would allow many more people to get into this environment and operate there.

So, in fact, I think we've shown before some Photosynth technologies that the company perfected where we have many pictures that can be contributed on the Internet by professionals or cars driving by or people. And what we have is a server-based technology that composites these and creates a 3-D world. So in this environment, we can go back to this. And what you're looking at now is actually a picture taken as a composite of those. It's mapped onto now a 3-D model, and I can actually just walk into this world and I can navigate through it.

So I can walk over to the store that had the Eskimo art. And when I get there, I could essentially go into the store. So now I start to use the surface capabilities to go inside the store. So now I've entered another mirror world, in this case one built by the shopkeeper. Again, just using photography as a vehicle for keeping it updated. And in this environment, my wife is online, has recognized that I'm there, and I can invite her to essentially come into the store with me, and we can shop together, but in a virtual 3-D environment.

So she's there. I'm going to walk around the store. I'm going to navigate back to this piece of Eskimo art. And she can look at other things. So I'll look at this piece of art, I can get background on the artist. It may offer me a story about him or, in fact, a video. I could touch this and watch the video of him telling me about the construction of this piece of Eskimo art. And when I'm done, I basically can go back and go shopping some more.

So I'll just continue to browse around the store. My wife has basically tagged this piece of art; let me see what she says. Can we put this in your office at home? I'll say, "Sure, let me look at it first." So I can go over to this. I can basically pick it up and now I have access to this as a full 3-D model and I can manipulate it using touch, turn it around, and come back and tell her, yeah, you know, I could put that in my office. (Video message plays.)

OK. So she's left and I'll make us a restaurant reservation. So I go back, touch my desktop, takes me back out on the street, we can walk around, now we're compositing information about my personal interest and profile onto the 3-D world, a mash-up, if you will, but in the real world. I could pick this restaurant, which it indicates is more to my preference. I could look at the menu, I could make reservations.

What we think is going to happen is as we bring these together, we'll have more and more powerful client computers that work in conjunction with these capabilities. As a proxy for that and to show you what we think might be possible, I've taken a standard Vista ultramobile PC from Sony. This is just a video cable, so in a minute you'll be able to see what I see on this screen. And I've taken a high-resolution photograph of that same street in downtown Seattle. And when I basically hold this up and look at it, I can say, OK, tomorrow I'm trying to meet my wife at this restaurant, guide me where it is. It says, OK, I recognize this street, where you want to be is over there. It says, OK, that's the place. Says it's 1.2 miles away, hail me a taxi. So this is a bit like the robotic receptionist, it can get the taxi for me, tells me who it is, it's directed to my location. They have automatic geo-location.

And as I look around, this little computer, which you should think of as a proxy for your next phone in the future, your future Smartphone, is actually doing real-time image matching from its database of this 3-D world and basically pointing out things that might be of interest to me in this space. And this is actually happening on this device right now.

So when you bring these things together, I think you begin to move to this visual Web environment, and with it, you begin to see the power of a form, at least, of what we think of as software plus services, what I call the client plus the cloud. Today, I think it's pretty much a foregone conclusion now that the idea that software will only be delivered as a service and that all of this incredible computing and interaction capability would just lie fallow at the edge of the network will never really happen. And that's why our strategy was to say software plus services.

This is a diagram that diagrams out the different functions that were done in these two demos and shows which part of them naturally exists on the devices that are near me, and which parts of these naturally live in the cloud. And by bringing them together in a seamless experience, it's much more powerful than anything we've been able to do in the past. It's one of the reasons we're so optimistic about that strategy and why we think it builds on all the assets that the company has.

If bringing these things together happens the way that we think it will, this is a qualitative change in the way people will think about computing. We won't be sitting around and asking ourselves what's the next feature of Word, Excel, and PowerPoint or the next capability of Vista, you know? What will really drive people to make that next acquisition? I think it'll basically be another major platform shift into this environment where we have incredibly powerful devices in our daily lives in a seamless way integrated with all of these services that will be available in the cloud, both from us at the platform and infrastructure level, and ultimately from all the businesses in the world who want to operate in this future space.

So let me stop there and just use a few minutes that we have left to answer any questions that you might have.

PARTICIPANT: Craig, when we last talked, which was in February at our tech conference, you mentioned mobile as the next kind of billion-dollar opportunity you were excited about for Microsoft. Is there a reason why Microsoft feels so strongly about having to have the mobile OS? Why not just go for something more open, a la Symbian, and then win on the application side? You know, why do you feel so compelled around the OS, per se?

CRAIG MUNDIE: Well, I think at the end of the day we think of mobile the same way we think of the desktop in days of old, which is we really wanted to have a symbiotic relationship between the killer application, in that case it was Office, and the underlying operating system. It's our belief that if you let the platform, the underlying part, trend towards commodity, then it's very hard to add the features to it that allow you to move these compelling applications forward.

You know, the things I just showed you today, there's nobody building any standard operating system today for phones, desktops, or anything else that would do any of this stuff. And the idea that, oh, I'll just say it's a browser-based application, of course, wouldn't lend itself well to this kind of experience. So we have believed for a long time that we need to create this symbiosis between the evolved platform, in this case which includes the cloud component, and the technologies necessary to make these qualitative changes in the experience.

And that doesn't happen but once every 10 or 15 years. So people tend to necessarily look at the environment we're currently in. But if you want to be relevant in the future, if you want to drive to something that's much larger again than the world that we've been in, you have to take those steps. And we think that the mobile phone not only for the rich world, but particularly in the emerging economy countries is the on ramp to real computing. That wasn't the way it happened in the OECD countries where I would guess most of the people in this room, if you're old enough, you had a PC before you had a mobile phone. And the emerging economy countries will actually come at it the opposite direction. People there will get a phone before they get access to or ownership of a traditional personal computer.

So mobile is important to us because, as Kevin Turner said, we see a lot of our growth opportunity in these emerging economy countries, but capturing that and getting them involved with us is going to require that we have these compelling experiences there, not just as adjunct to the PC experience in the rich world.

PARTICIPANT: I wonder if you could talk a little bit more about multicore, particularly on the desktop because already we've seen because of heat constraints and power constraints, multicore in the desktop already and yet operating systems don't really use multicore. Can you talk a little bit about how quickly you see that evolving and how the operating system really has to change to accommodate the chip architectures?

CRAIG MUNDIE: Yeah. We actually started our series work to anticipate this change here in 2002. We've been investing to get ready for this real fundamental shift for quite a while. Your question kind of implies that the operating system is the problem. Indeed, the OS will have to change to deal with the heterogeneous many-core world. Where you are today is just a transition point from single-core machines to -I'll say at a steady state point where you're going to have a lot of processors on a chip, but they won't all look the same.

The many-core world today is one where it's still a homogeneous, symmetric, multiprocessor architecture. Frankly, the operating system, Vista, does a great job on those multiprocessor machines. And, in fact, it's the same technology that runs the 128-processor data center servers. The problem is the applications. In the data center, we know how to take workloads and smear them out across those things, and you get good efficiency. But all the world's programmers were given a set of tools and a set of techniques for the last 30 or 40 years where when they wrote an application, they squashed out all the parallelism that was intrinsic in it. And it's that serial manifestation that limits our ability to use those additional cores.

And so today it's the applications that haven't gotten there, not so much the operating system. Both will evolve. The fundamental breakthrough that's required is to make it easy enough for people to do complex parallel applications that can use a lot of CPU in a client device. And the reason I showed you the demo of the receptionist is that the technology that we developed to allow us to program robots is a highly concurrently, fully distributed architecture and a programming model for that which allows people to simply wire up these robotic types of applications.

And that's why I chose this demo, because if you took that robotic application and put it on a four-core, 10-core, or 100-core machine, it would just go faster. You wouldn't have to do anything. And so that's an example of the class of applications and the model of application construction that will be required to get value out of those cores. And today we have to coast through this transitional period until those tools are introduced. You'll start to see us giving -we've already delivered the robotics one as one way to get some people started in a certain domain. But you'll see more from us in the next 12 to 24 months where we really start to bring the programming community forward not just to deal with the sort of software plus services or cloud and client model, but to give them tools to program those clients in a way where they can get benefit from that hardware evolution.

PARTICIPANT: I have a question in terms of cloud computing. If you think about it, there are three phases of a cloud computing environment. You can have infrastructure in the cloud, you can have developer tools in the cloud, you can have applications in the cloud, and then you can have various business models, whether direct or indirect, that you can have supporting those three initiatives.

I think the challenge that I feel Microsoft may run into is you are trying to do all these three things at the same time without making it easy for the end customer to ease into the cloud. And I think that is a challenge that I feel Microsoft may hit such as Amazon.com, which has elastic computing, very easy to understand, utilities on demand, period. And then they will evolve from that. I was thinking maybe you need to have a step-by-step approach rather than one fine day everybody wake up and we have all the pieces checked in.

CRAIG MUNDIE: I think we've been actually going at it a bit more step by step than you might think. I mean, years ago we started offering the infrastructure and communications services. We basically said that we will now offer a cloud platform that allows people to do it. We've started to introduce some of these new ways of making it easy for people to link things together, for example, the Live Mesh capability, which if you haven't looked at it, I really encourage you. Most of you would find it really interesting. You have computers at home, computers at work, in the future you're going to have a number of these other devices. You really want to keep them synchronized, shared media, pictures. These things are starting to emerge. And I do think that they will make it easy for people and we will approach it in a fairly orderly way.

PARTICIPANT: As you look at out at this next paradigm that you're talking about, you know, what do you see as the most significant constraints or the toughest problems that you think need to be solved before it becomes a reality?

CRAIG MUNDIE: Well, I think of it differently in different parts of the world. For the dream that we've talked about here, you know, in the emerging economy countries, we're going to need a lot more connectivity at low cost for data than we actually have to bring many, many more of the billions of people online with -in a way that these type of interfaces might otherwise allow. They need to get the gear, and they need to be connected. And so I still think connectivity is going to be a challenge there.

When I think about it more broadly or especially in the developed parts of the world, our biggest challenge is really to get the development community to move beyond the way they historically thought about building applications and get them to construct them differently and to deploy them differently in order to bring these things forward.

For this new platform to emerge, which I'll say is in the five- to 10-year horizon, we've got to find the next killer application. I don't know whether it will be the robotic receptionist kind of interface I showed you today or this ability to combine surfaces and wander around, we are making big investments to try to be the company that can identify what those few killer applications are that will make this thing the thing everybody just has to have. The fashion will dictate this is what you will buy. And that's what we're out there looking for right now, hopefully we'll be the ones to find it. But certainly I think we'll be the ones to provide a lot of the tools and technology to allow that to happen.

PARTICIPANT: Thank you. The world really loves innovation. And every year when we come to these events, you show us terrific products that are very exciting, but the rest of the world outside of this room rarely gets to see it or isn't aware of it. So Microsoft has a perception out there of being a Windows operating system company and an Office company. As part of your new role as being half of Bill Gates, I would say as a shareholder we would appreciate it if you would spread this word out of all the great innovation, all this human enabling that you're creating so that people out there will perceive Microsoft for the technology innovative company that it is, as opposed to being the legacy company that is often maligned in the press.

CRAIG MUNDIE: Well, that is a commitment I can make to you and all the shareholders. Because as I said in the beginning, one of the ways Ray and I split this was the in-out part. And partly my commitment is to go out there. A few years back, I mean, in my early years in the company, Bill Gates and I both spent a lot of time sort of on the road talking about our vision of the future. Bill wrote some books about it, we gave a lot of speeches, I was bootstrapping many of these new technologies. And over the last few years, both of us kind of got out of the habit of going out and talking about it. And the businesses, of course, were getting a lot bigger. And I think we share your observation that we haven't done a great job in recent years communicating about the tremendous things that the company does. I think we've seen some failures, frankly, even in our marketing of the products, some of the stuff that Bill Veghte showed, you know, it's sort of a proof that it's better than the perception of the product.

But I think the whole company is better than the perception, as you say, and partly what I've signed up to do is to take this show on the road and be able to let the public understand that these things don't just -they aren't born full grown, you know? That it takes huge investments and that the company is at the leading edge of thinking about these things, and hopefully they'll be as receptive as I think some of you are today. Thank you very much.

Let me now start and introduce my partner, the guy filling the other of Bill Gates's shoes, that's Ray Ozzie, our chief software architect.

END

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