Filter Events:
JP Morgan Global Technology, Media and Communications Conference
Who: Kirk Koenigsbauer, Corporate Vice President, Microsoft 365, Marketing
What: JP Morgan Global Technology, Media and Communications Conference
When: Tuesday, May 14, 2019 1:20 PM
MARK MURPHY: Okay, good afternoon, everyone. Thank you so much for joining us here at the conference. I am Mark Murphy, Software Analyst with JP Morgan. And it is a great pleasure to have with us today Kirk Koenigsbauer from Microsoft. Kirk, thank you so much for being here with us.
KIRK KOENIGSBAUER: Thank you. I'm excited to be here.
MARK MURPHY: And we are going to be talking about one of the most exciting, fastest growing products for Microsoft, which is called Microsoft 365.
Kirk, why don't we start off with your background.
KIRK KOENIGSBAUER: Sure. So my name is Kirk Koenigsbauer. I've been at Microsoft since 1991. I spent a little bit of time at Amazon.com for about four years in the middle of all that. I run our Microsoft 365 business, which is inclusive of Office 365, our Enterprise Mobility and Security Suite, as well as Windows 10 in the enterprise and a bunch of other stuff.
MARK MURPHY: So I think people are familiar with Office, they're familiar with Windows. They're probably a little less familiar with the whole suite of products which you are overseeing now. Can you give us a little bit of an overview of Microsoft 365 and just how it fits into the overall Microsoft portfolio?
KIRK KOENIGSBAUER: Sure. So Microsoft 365 is a product that we launched just about two years ago. As I mentioned, it is a product that includes many products that you may have heard of before, but essentially the cloud productivity version of them. We think of Microsoft 365 as sort of the world's productivity cloud. And so, again, it includes all of the value that you'd find in Office 365. So, for example, all the Office apps, SharePoint, a new product that we've launched called Microsoft Teams, Exchange Online, and so forth. It includes this Enterprise Mobility and Security Suite which has a number of different workloads within that around management and security and compliance. And then, of course, it has Windows 10 as a core part of the offering as well.
And we sell this as a part of our essentially what we call our Modern Workplace sort of go to market which is really centered around productivity and collaboration.
MARK MURPHY: So can you help us frame up the growth opportunities that we may be looking at here with Microsoft 365? I think we've noted that the Office 365 Commercial revenue line, which is a very, very large one, has been growing over 30 percent recently. Pretty incredible given the scale of that. Windows is growing well; EMS is going well. How do we want to think about the broader opportunities here with Microsoft 365?
KIRK KOENIGSBAUER: Yeah, no, it's a good question. So essentially the way I would start to frame it is, we are repivoting our whole approach in terms of selling productivity and collaboration value to customers with Microsoft 365. It has all of these workloads in it. It is the way that we organize our sales force and our go to market. It's the way that we organize our partner incentives, our channel incentives. It's the way that we're increasingly organizing our R&D and our engineering and how we make investments, not in a sort of siloed way in any individual product in these regards, but literally thinking about the whole system across Microsoft 365 to deliver that integrated value.
In terms of how we think about growth, this a product, you mentioned the 30 percent growth on the Office 365 component. I think we're up to about 800 million active users on Windows 10. We just crossed 100 million seats sold of EMS. And so the sort of sub-stats underneath are really quite impressive. We have about 180 million people monthly active in the commercial space on Office 365. So there's a ton of momentum there, which is just for me working on the business for so many years is just really great to see.
When we think about the growth prospects, in many ways it's a lot like we think about the growth of or we used to talk about the growth of Office 365. It's essentially a play that is a P times Q business. We look at the install base of sockets. We constantly want to look at how we can grow that socket pool. And then we look at how we can increasingly drive the RPU for all those sockets that we have.
On the socket side from a growth perspective, certainly we're well positioned in the enterprise and in corporate space, though we still see room to expand seats in those businesses primarily as we think about entering markets like regulated industries that we have historically had challenges selling into now with the sort of cloud and unit economics of Microsoft 365 and so forth we're able to reach pockets of users that we hadn't been able to sell to in the past. SMB is a very, very important socket growth market for us. We see lots of white space there, wide open space for us to drive more sockets, more cloud sockets overall.
And then the last area on the socket side that I would say is a big growth area for us is, I would think about first-line workers, a category of workers that historically, again, have been underserved by technology. They might be in manufacturing, they might be retail sales professionals, they might be in hospitality, they might be in certain segments of healthcare, even financial services, where they're not tethered to a desktop machine, they don't have their own dedicated laptop, maybe they are on a shared device. We have opportunity there to reach those customers as well.
And then on the RPU side, you know, we've talked about this before, we have the opportunity to then move these customers up the stack in terms of value, and so whether it's moving from on-prem to cloud as sort of that first step, that's an RPU driver for us given the LTV that we derive from those customers, to then selling increasing tiers of service within Office 365 or within Windows, and then getting them to Microsoft 365.
So we see quite a bit of growth on both of those dimensions with this new offering.
MARK MURPHY: So, you've talked a lot, Kirk, about building modern experiences. You've talked a lot about security in the past. You've talked a lot about compliance in the past. I think it's apparent to us that there's a lot going on here in the componentry of the stack. Where do you see Microsoft's core differentiation today?
KIRK KOENIGSBAUER: Yeah, so putting aside the workloads that you reference, and we could certainly jump back to those, I think there's a few things that customers talk to us about in terms of differentiation. One is the integration value in the sense of for sure customers don't want to go to just one single vendor, but the opportunity to have all of these workloads on a common platform from a management perspective, from an interoperability perspective, from a broader TCO perspective. All this stuff just works better together. That is increasingly an important differentiator for us.
And, by the way, it's not just at the Microsoft 365 level, when we think about security and how fragmented that business is, you know, we see CISOs and SecOps really valuing that notion of integration which is a key one.
Another value prop that has been resonating for us, particularly on the enterprise side, is the position that we've taken around data privacy and trust. And increasingly with all the sort of things that are happening in the world today, that's a message that's resonating really quite well. And so we've benefitted from our investments and work around GDPR and other regulations that you see sort of happening all over the world. Customers trust, whether it's public sector customers or of course large organizations, they trust our hyperscale cloud infrastructure and the work that we're doing there and that's a big deal.
Another big differentiator that we are seeing increasingly is around data and AI. And as we -- I'll just pick security as one example. When you think about all the signal that's out there in the world, all the security signal that we have, whether it's coming through our e-mail system, whether it's coming from our identity system, whether it's coming from the variety of different endpoints that we have, being able to look at all that signal and reason over that with our AI capability and our investment that we have in security professionals at Microsoft, that is a differentiator in and of itself.
And so for a number of these reasons, let alone the work we are doing with products like Teams you referenced on the experience side, the work we're doing in security, the work we're doing in compliance, those are some of the things that we hear from customers.
MARK MURPHY: I want to come back to Teams in just a moment.
KIRK KOENIGSBAUER: Okay.
MARK MURPHY: Before we do that, I wanted to mention that, so my team attended your Build Conference last week. Incredible, amazing event. Satya spent quite a bit of time talking about the Microsoft Graph. And I think this is something that has really captured our attention. Can you explain to us what is Microsoft Graph, and then how is it going to be leveraged across Microsoft 365?
KIRK KOENIGSBAUER: Great. Maybe I'll start with what it is and then what it does. What it is, so basically the Microsoft Graph you should think of as an API into a database that sits in our cloud service. It's secure. It's tenant-based, meaning the data is only available to that customer. It's secure. It's their data, they get to do what they want with it. But essentially think of it as a collection of all of the activity that people do inside of the organization, whether it's they are a collection of e-mails and the meetings and the tasks and the people that go to those meetings. We have essentially a graph of all of that activity.
And then on top of that sort of raw information, we also derive insights on top of it. So, for example, if you and I aren't spending as much time as we used to spend before, that's information that we can derive, or if one organization within a company is doing a better job at collaboration than another those are insights that we can just derive from that graph.
And so this is a pretty powerful capability that's available to customers both in the sense that we can us the graph for our own first-party experiences. A good simple example would be Microsoft Search that we have. Microsoft Search is a great example of an app that uses, that we built, that uses the graph on the back end, where I can search for people, content, apps in my infrastructure, whatever I might need, all of that is really provided to me via the Graph.
But what's also really interesting is the ecosystem that's building up around the Graph, whether it's ISVs that build solutions that they want to sell into businesses and those solutions can be made better by accessing Graph information. One example I think that Satya used at Build was Survey Monkey, where if a company wants to do a bunch of surveys they can better target their population of people by integrating their tech with the Microsoft Graph to have it be more precise or for that matter even just building simple line of business applications, integrating them into experiences like Microsoft 365, they can use that Graph data to make those experiences better for their people. Those are some of the ways that we think about the Graph.
MARK MURPHY: So, this is something that's leverageable for both your corporate customers, as well as these third-party app providers, third party developers?
KIRK KOENIGSBAUER: That's correct. I want to be really crystal clear that it's the company's data and I should say the customer's data. And only if the customer says yes, this ISV app can plug in and access the Graph they can use that data. But that is the model. It's something that's available for ISVs and something that they can use on their own.
MARK MURPHY: Okay. Now, I want to come back to Teams now. You mentioned this a moment ago. It appears to be making great progress, something we've heard, when have gotten out and done our checks and interviews with your ecosystem of your partners, your resellers, the SI firms, they are telling us that when Teams goes in they will see a few months later that the seat count is doubling, tripling, quadrupling. Satya said something about it's the fastest growing app that they can ever recall seeing. He said that last week at Build. How do you see Teams first of all differentiating, and second how do you see Teams competing against companies like Slack and Zoom?
KIRK KOENIGSBAUER: For sure, so starting with the differentiation piece, and maybe I'll also talk just a little bit about what it is in case everyone is not familiar with it. Teams is a product that we launched, I guess it just hit its two-year anniversary as a product that went general availability in March.
It's a product that brings together a number of different workloads to help people in organizations communicate and collaborate. Think of it as a hub for teamwork, essentially. And the teams can be really of any size. You can be a participant in many different teams. A core part of the value proposition of this offering is that it provides a number of different workflows integrated into a single experience.
And so, for example, it's got collaboration capability. It's very conversation-oriented from that perspective. You've got chats and you can use bots and you can integrate content with that. It's got meetings capabilities. So, you could host a meeting like this, you could do ad hoc one-to-one meetings. You can do things like record meetings; you can do audio conference meetings. There's a lot of meetings capability that's built into the product.
It has capabilities to communicate, as well, not just using chat and so forth, but through phone system technology. So, if I wanted to call a customer or call my wife, call a cell phone number, it has PSTN services integrated. There's a dial pad and so forth. There's a bunch of work we're doing with third parties to create Teams-oriented hardware devices, whether they're or meetings, for conference calls, whatever, what have you.
And then also we've integrated the Office applications into Teams. And when I say the Office apps, I don't just mean Word, Excel and PowerPoint. Those are, of course, integrated into the experience, but also things like OneDrive for storage, or SharePoint. You can literally take a portal page, an Internet page and you can include it, you can integrate it right within Teams. It's super-super easy to do those sorts of things.
Power BI dashboards, analytics, all that can be wired into Teams. And so this sort of four in one combination is a pretty powerful differentiator for us, because customers will tell us I might have some legacy meeting solution, or I might be using Slack, .or some other solution, but the idea of being able to come in and offer a single tool for end users that's integrated where all of these different workloads are coherent across them is really quite a differentiator for us.
Another differentiator that we've really seen, again, the product is only just a couple of years old, but in the last I would say 6 to 12 months we've been super-enthusiastic about how customers are responding to the scaffolding that Teams provides to integrate line of business processes and workflows into that experience. I referenced first line workers earlier, that's one use-case. But we're seeing companies, again going back to the Graph that we talked about a few moments ago, using Graph data, integrating their line of business applications.
Sometimes those business applications can be built on Azure, but they front end them inside of Teams. Those experiences can also be front ended with thigs like Power Apps, as well. And this is a really great experience for customers, because you can have this notion of these horizontal workloads, the ability to be able to just do a meeting. But then simultaneously have that line of business application, or that business process integrated right into that experience. So, it's super, super sticky. It's a much cleaner environment, because everything is integrated into one space. And customers are really resonating with that.
MARK MURPHY: So, it sounds like this is the core differentiation is the comprehensiveness, the integration points. Office is woven in with this. Graph is woven in with this. I presume Cortana is woven in with all of this.
KIRK KOENIGSBAUER: Yeah, I would say one other piece that I didn't mention that's important is the enterprise grade capability around it, whether that's, again, the fact that we operate in data centers worldwide, the fact that we've added DLP types of capability, things like ethical walls, the sort of security and compliance around the Teams infrastructure is one where companies love it, because it's got this great sort of new experience for end users that they love, but then also it's something that can be controlled and managed in a way that works for that business.
MARK MURPHY: Now, is this going to be one of the hooks for pulling enterprises into your premium SKUs, like the E5 SKU. Maybe you could talk to us about how the customer conversations are shaping up around E5 or even E3?
KIRK KOENIGSBAUER: Sure, well, to the first part of your question, we do see Teams as something that will help us drive that sort of RPU growth over time, in the sense that, as you mentioned earlier in our conversation, once people start -- organizations start using Teams we do see usage rates increase dramatically across the board, not just Teams. But Teams pulls through all this other Microsoft 365 value. And that's a good thing for a couple of different dimensions.
One, of course, is that the more people that are using the products the more satisfied people typically are, retention rates and renewal rates are higher and so forth. But the really great thing about it is it helps us with that upsell approach as we look to sell higher tiers of service, which then would transition to me I guess to the conversation around E5.
E5 for folks that don't know much about it is essentially -- I'd take a step back. When we sell Microsoft 365 or Office 365 or EMS components, even Windows, we have different tiers of service, E1, E3, E5. On Microsoft 365 we have these two tiers. The E5 set is the premium set of value that we offer for customers. There are essentially four core workloads that are there. There's a workload around security. There's a workload around compliance. There's a set of workloads around communications and there's a set of workloads around analytics.
And the value proposition around all of these is interesting to different customers at different times, depending on where they are in their lifecycle. I would say right now, in terms of driving growth of E5, security and compliance are the top conversations that customers want to have. Security is just so top of mind for every customer that we go and talk to. They want to hear about Teams, and they want to hear about security. And that's got a lot of pull for us in the enterprise.
You referenced E3. We still have a lot of room to go in moving customers, whether it's an on-prem to cloud to that E3 tier or from Office 365 E3 to Microsoft 365 E3. And so that's another RPU driver for us, essentially, and we still see that as having legs. So, again, going back a little bit to the first part of your question, whether it's a socket play or the RPU play, we feel like there's good growth opportunity here.
MARK MURPHY: You would put Teams and security in the kind of one and two position, or maybe you can interchange them. Those are both critically important in terms of driving the gravitation upward toward E3 and E5?
KIRK KOENIGSBAUER: For sure, absolutely.
MARK MURPHY: It's just interesting that Teams would be in that context already at this early point.
KIRK KOENIGSBAUER: Yeah, it maybe not intuitive initially, but again if you think about it as a something that is driving just incredibly rapid usage inside of accounts, that in and of itself lays the foundation upon which you can go and drive that upsell to higher tiers of value.
MARK MURPHY: Okay. So, switching gears a little bit, there was a very interesting announcement in the past week or two, it was a partnership between VMware and Microsoft. Clearly, it's something significant happening there. And it did have some very specific references both to Microsoft 365 and Office 365. So, I want to make sure that we're kind of thinking through what that's going to mean, specifically for Microsoft 365 and the portfolio of products that you oversee.
KIRK KOENIGSBAUER: You bet. So, for -- first I guess I would say and you referenced Build earlier, one of the key messages that we wanted to land at Build and we've been really, with Satya's leadership I think in particular, doubling down on the notion of interoperability, the notion of openness. We want to do super-well in the industry, but we also want to create a platform that other companies can integrate with. And I think Scott had mentioned at Build just over half of the VMs on Azure, as an example, are running Linux these days. So, the shape of the company has really changed from that perspective.
The relationship that we've just announced with VMware, we're excited about. There are sort of two components to it. One is around Azure, which is essentially helping customers move from their on-prem environment, if they're using VMware tech, in hybrid ways to Azure, which is fantastic.
On the Microsoft 365, to your question, there are sort of two related things that are happening there. One is with the workspace one product. That product can now manage the Office applications on mobile devices, devices like these, Android, iOS, and so forth, and also integrate in with Azure Active Directory for things like conditional access. Conditional access being a really foundational sort of security capability.
In other words, if I've never been to Boston before and I'm logging in with my device, we can sort of detect that' s different place than Kirk has been to, let's actually throw up a multifactor auth or something along those lines. That's some of the kinds of scenarios that VMware will now be able to participate in with Microsoft 365.
MARK MURPHY: Okay. Again, going back to some of our survey work, we have been seeing in recent months that there's a lot of feedback about EMS, growth and adoption of EMS, very strong momentum for EMS. Could you maybe talk about how the mobility and security are fitting in as part of this broader Microsoft 365 conversation?
KIRK KOENIGSBAUER: Sure, so it's a core -- so EMS the Enterprise Mobility and Security suite is a core component of Microsoft 365. Think of it as one of the three legs of the stool, essentially. And for folks that aren't aware, EMS essentially has four core workloads as a part of that suite. There is a workload around identity. And identity is just so core today, particularly from the security perspective, although there are also other important ways that identity is used in organizations, but with sort of perimeter-based security sort of a thing of the past and identity and sort of zero-trust identity, with Azure Active Directory, our service, is very, very core to the EMS value proposition.
There's also a value proposition around management. There's a management plane that EMS provides. It uses technology that we have called Intune, for managing a wide range of devices on iOS and on Android.
There's also a part of EMS that I've referenced around security. So, in addition to identity there's a bunch of security value that's a part of EMS, whether that's protecting those Azure Active Directories, the people within those directories, threat protection capability, cloud app security capability. So, for example, an organization can understand all the SaaS usage that's happening inside of its perimeter, or inside of its boundaries and can put policy against those and so forth. And then on the compliance side, EMS also is a very, very important element of how we protect customers' information with something called Azure Information Protection as a part of that solution.
So, there's a number of different workloads there. The growth, the business model is such that it's obviously high attach to Office 365 and then of course Microsoft 365 all-up. But increasingly, too, we see EMS sold standalone, as well, which is good to see, again, for its identity and security value proposition. I referenced earlier we just crossed 100 million licensed users for EMS. So that's doubling year-over-year, more than doubling year-over-year. So, really, really strong growth rates with EMS.
MARK MURPHY: Impressive, 100 million. So, let's continue down that path a bit. You're getting into the domain now of security. And this is a topic we've heard Satya and others at Microsoft spending a lot more time on. I think there is a notion out there in the marketplace that this whole world of security spend for the typical company is maybe an area of inefficient spend. Perhaps there are too many point solutions, too many companies charging a little too much money in the security arena. So, how is Microsoft, if we kind of zoom back and take a 30,000-foot view, how is Microsoft thinking about security and maybe how is that going to fit into this, again, Microsoft 365 conversation?
KIRK KOENIGSBAUER: Sure. Taking a step back, it is an area we think that has a lot of opportunity for some of the reasons that you reference, which I'll get to. From the customer lens, what we hear over and over again is it is just the number one risk or blocker that they have to achieving this notion of digitally transforming their business.
They want to move to cloud. They want to move to these SaaS apps. They want to have a variety of different devices that their employees can use for whatever tasks that they're working on. But, at the end of the day they relay are quite concerned about the risk on the security front. So, that's why this is such a hot topic, is that it is that thing that's getting in the way to their digital transformation.
And so, the other pieces you referenced in this space is that this is a hard category, in the sense that there are just simply not enough security professionals in the world to keep up with the sorts of cyber threats that are out there. As you referenced, it is highly, highly fragmented. There are hundreds, thousands of apps that are out there, many of them are very, very narrow in terms of what they do. Many of them are also on-premises based. They're not native, cloud-based solutions and so this is a space that we see as really right for us to tackle. And we're making major investments in this space across the board.
I referenced EMS and how important that is. When we think about security we really think across the board in terms of, again, identity. We think of endpoint, endpoint security meaning across all these different devices, whether it's Defender on the Windows platform, which we're taking, by the way, cross-platform to Mac and others over the course of the next year.
We think about information protection, again, as another important part of the story. Compliance always comes into these conversations as well. And so it's not that we're just talking -- when we think about security super broadly, it's not that we're just talking to CISOs and SecOps, but we're literally starting to have more and more conversations with chief risk officers, chief compliance officers, chief legal officers, CFOs and so forth that are super, super invested in the information protection of their content within an organization.
And so we're investing big time in this space. And it's tough to say what's one and two. Typically whenever it's about the end user conversation around Microsoft 365 that's all about Teams and then when it comes to infrastructure our customers care about management. They care about interop. They care about a lot of things. They really, really care about security and that's first and foremost what they'll want to talk to us about.
I would just mention briefly, and we announced this recently, there's a lot of what we're doing on the sort of end user compute side with Microsoft 365, but Azure is also investing deeply in this space as well. And so, for example, the Azure Sentinel product that we announced at the RSA Conference a few months back, that's a great example, too, of a space that is largely on-prem, fragmented, really ripe for disruption, really ripe for using AI across the vast amount of signal that we have and that's going to be a real differentiator.
MARK MURPHY: And how would you position Sentinel for anyone in the audience who is not totally familiar with that?
KIRK KOENIGSBAUER: Yeah. You should almost think of it, most simply think of it as, again, cloud-based, think of it as a tool that allows a CISO or SecOps people generally to be able to look across their infrastructure, all the signal that they have, to be able to identify threats across, again, literally all of their different security systems. So it's something that is -- you should think of it almost as an aggregation layer across their entire estate. And it's just critical for every company. And we were quite humble because it's early, but also really enthusiastic about what the opportunity is.
MARK MURPHY: So Microsoft is going to tackle security across all levels of the stack from the core of the data center out to the endpoint and it's going to be something that is extremely overarching, it sounds like, and pretty well thought out.
KIRK KOENIGSBAUER: Yes. We hope so.
MARK MURPHY: Let's move on. I want to touch on Windows 10. I know this is an important topic for people. In our work I think we have been trying to assess when would be the peak of the actual activity for the typical enterprise that's going to be in this motion of upgrading and moving their environment to Windows 10.
Their feeling is that the peak of this kind of migration activity is coming up sometime soon, it's coming up in the next kind of few months, a handful of months. How do you view this opportunity to kind of drive additional customers to adopt Windows 10 if they haven't already done that?
KIRK KOENIGSBAUER: You're right in sort of the context. We're within a year of Windows 7 reaching its end of support, and then within really 12 to 18 months by the way Office 2010 reaching end of support. So that's creating a real nice tailwind for us and a real important need for customers to get current, to get modern on the desktop with both Windows and with Office.
And so on the Windows side, specifically to your question, I would say we're probably roughly halfway through the sort of upgrade cycle that's there. There's quite a bit of room and work left to go do. But this is really important to customers, it's really important to us from the perspective of not just having the latest and greatest value that is in Windows, but also to our conversation that we were just having it's lower TCO, it is a more secure operating environment. We can do more with customers if they're on Windows 10 in terms of adding additional security value on top of that.
So this notion of getting current has both these end user benefits but is also really important in terms of the infrastructure itself. And the way customers are approaching this is that some customers, of course, will operate existing machines, many will be Windows 10 machines on the refresh cycle, but the next 12 months will really be quite a bit of activity in this space.
MARK MURPHY: Kirk, if you were me, how much would you be thinking about growth versus the PC market at this point in the cycle?
KIRK KOENIGSBAUER: Yeah, you know, we don't share too much on this. I would say folks should expect our growth rate to be in line with the market essentially and performance over the last couple of quarters is certainly consistent with that.
MARK MURPHY: We have about five-and-a-half minutes left, let's check with the audience now for questions, if you would, raise your hand and we're going to get you a microphone from the back of the room.
Okay. Pretty packed room, but not a lot of hands going up quite yet. We can come back to that. We can come back to that in a moment.
Let me try and ask you a final one on a broad topic, innovation, future investment. We've heard Satya now talking, he's been using this term "tech intensity". I feel like he might have coined that one.
KIRK KOENIGSBAUER: I think he did.
MARK MURPHY: The notion that companies are just going to, increasingly they're going to have to adopt software technology to kind of maintain a competitive edge, if you will. He has spoken about how that is going to be -- this is kind of what's driving Microsoft today and into the future. If we go back to the last earnings call, Amy was talking about investing pretty aggressively in this upcoming fiscal year, Fiscal '20, to try to capture the opportunity.
How do we want to think about Microsoft 365 and how it plays into this notion of innovation and future investment?
KIRK KOENIGSBAUER: Yeah, no, it's a good one. I would go back to what we chatted about a little bit. When I think about the top two things we're hearing from customers that they're interested in, it really gets around how can they create these sorts of modern experiences for their end users, and Teams is at the forefront of that and we are shifting more R&D resources to Teams.
We are increasing the number of sellers that we have on Teams and folks that do customer success around it. We're working in the channel to ensure we have incentives aligned properly and are recruiting partners to build the kinds of ISV solutions and so forth. So there's a huge investment around Teams across the board on so many different dimensions. It will be really big 12 to 18 months for Teams, I think.
Security we talked a little bit about, a sort of similar profile. We're investing quite a bit in the security space from R&D through sales and channel and partner and investing quite a bit there. There are other investments that we're making as well. Those are the top two, but I would highlight things like we were just talking about, it is an important year for modernizing the desktop, and the Windows 7 end of support, the Office 2010 end of support, that is all within the sort of next fiscal year, next 12 to 18 months of growth for the company. Again, that's important for customers, it's also important for us to get customers modern. It allows us to do a better job of upselling to higher tiers of service and so forth.
There's a lot that we're doing in the AI space underneath all of the investment that we talked about. Every single one of these products is benefitting from AI, and the opportunity to use AI to make these products better, to make them more relevant, to help people with automation, everything from automation to decision making to insights to identifying threats on the security side to helping lawyers with e-discovery processes, reducing the cost of those, all using AI is sort of really front and center to what we're doing.
I reference a couple of examples of things that we're quite bullish on. The idea of delivering within Teams or using Power Apps or the Power Platform, these industry-specific line of business solutions, I really think there's something that's going to be quite important here that happens over the next 12 to 18 months as companies lay down this infrastructure from Microsoft 365 by wiring in their business process, their workflows into that, and that's going to be something that's going to deliver more business value than we've ever been able to really do before in terms of just sort of laying down vanilla infrastructure for collaboration. I think that's going to be a big deal.
So there's a ton of stuff.
MARK MURPHY: I'm going to check one last time. Now we have a lot of questions. We have one in the far back.
QUESTION: Hi. How much functional overlap do you see between Teams and e-mail? Said another way, to the extent people use Teams, how much less do they use e-mail?
KIRK KOENIGSBAUER: Yeah. It's a good question. It's a question that comes up a bunch. You know, so far they are different products in terms of the problems that they're trying to go and solve. E-mail, Outlook, combination of Outlook and Exchange Online, and so forth, that's going to be around for a long time. People use it as sort of a ubiquitous way to reach sort of whether it's anyone inside an organization or anyone outside of an organization. Our growth rates in terms of usage for e-mail, they continue to go up. They continue to increase year over year. Not the rates that we're seeing the growth of something like Teams, but we expect e-mail to be around for a long, long time.
With Teams, the use case is a little bit different. Teams is really designed around how you work -- how an individual works with the broad set or collection of teams that they're a part of. And so, you know, in my work environment, I have -- I'm probably a member of, I don't know, 40 different teams that I participate on, and there is a conversation sort of ongoing all the time about any of those. And I can or of use Teams to sort of tick through those and stay current and share content and information.
Teams is in many ways more of a hub. It's much more of a hub, I should say, for teamwork. Whereas, Outlook is much more of a sort of pure communications-oriented tool, communications and calendar and so forth. But the integration between these, we're doing more and more of it, where you can get notifications for e-mail of Team activity. We show you your calendar information inside of Teams for meetings and scheduling. There's quite a bit of integration.
You talked a little bit earlier about bots as an example, we have sort of a write-once bot approach where you can write a bot that shows up in Teams. It can show up inside of Outlook. So there's going to be increasing integration, but we do think of them essentially as two different use cases.
MARK MURPHY: Very well said. Apologies, we have multiple questions now, but we have just run out of time.
Kirk, I want to thank you very kindly for sharing the vision and these insights and spending this time with us.
KIRK KOENIGSBAUER: Thank you.
(Applause.)
END
Upcoming Events
JP Morgan Global TMT Conference
Jefferies Software Conference