Steve Ballmer: CTIA WIRELESS I.T. & Entertainment 2007

ANNOUNCER: Ladies and gentlemen, please welcome the President and CEO of CTIA, Steve Largent.

STEVE LARGENT: Thank you very much. Welcome back to San Francisco for CTIA Wireless IT and Entertainment 2007. It’s exciting to be here in one of America’s great cities to kick off the largest data event in the world. As always, we have an incredible array of things to do and see over the next three days, and I hope you have an opportunity to take in as much of this great show as you can.

This year, you’ll notice that we’ve changed our keynote format so that each morning we’ll have just one speaker who can really dive into their area of expertise. And this morning we truly have one of the great leaders in the enterprise world today.

But before we bring him out, let me first paint a quick picture of the wireless world we’re living in today. I have with me some of the fresh statistics from CTIA’s Semi-Annual Wireless Industry Survey. We released this this morning, and they show a wireless industry that continues to grow, continues to innovate, and continues to diversify. So, let’s first take a look at subscriber count. Drum roll please. Look at this, as of June 30, there were more than 243 million wireless subscribers in the United States, roughly 81 percent of the U.S. population, pretty incredible statistics. It’s hard to believe that when I started at CTIA just four years ago there were fewer than 160 million subscribers. And how about this one, the next slide, the trend of text is seemingly unstoppable, roughly 1 billion text messages are now sent every single day in America, 28.8 billion messages were sent in June of 2007 alone. I think it’s safe to say that texting is now something Americans of all ages and walks of life are utilizing and enjoying.

Well, there’s lots of other interesting and exciting facts in the survey, and you can view it on our Web site at CTIA.org. So please go visit there.

But for now, I would like to introduce our first speaker. Those of you who have been following the mobile space for any time know that Microsoft is a leader in providing the software for many of today’s best mobile phones. There are millions and millions of Windows Mobile users out there, and that number continues to accelerate since the release of their Windows Mobile 6 earlier this year. Some of you may have even seen the new ad campaign from Microsoft that highlights Windows Mobile, and some of Microsoft’s mobile partners. To set the tone for the keynote, I would like to share with you a few seconds of video to give you a sense of Microsoft’s approach to how we can all realize the mobile opportunity. The video please.

(Video segment.)

ANNOUNCER: Please welcome the CEO of Microsoft Corporation, Steve Ballmer.

STEVE BALLMER: Well, thanks. It’s an honor and a privilege for me to have a chance to be here with you today. I want to thank all of you. I want to thank CTIA, and I want to thank Steve Largent. It was fun to have a chance to chat with him about some o the things going on backstage, and for being here. It’s great to see. We have a lot of partners here in the audience, and it’s wonderful to have a chance to thank you and be with you here today as well.

I want to try to do a few things in a fairly short period of time. I want to talk about some of the trends we see in a world that is both increasingly mobile, and a world in which technology is moving from a world, at least from a software perspective, of software to software plus services. I want to talk about what I think that means in terms of the opportunities ahead, what it requires in terms of innovation, and perhaps a little bit of context on Microsoft’s specific role in that world.

Let’s start with the shift to mobile, and certainly there’s just been tremendous progress since the last time I was at the CTIA show six years ago. Six years feels like not very long, yet in this industry it feels like very long, very, very long. So much has happened, and some of the statistics that Steve showed I think really gives you something of a sense of that. If you just take a look, this is a new phone brought to market by Sprint and HTC. This will be at retail on Nov. 4, but you see little machines like this, unbelievable in the kind of power they have, processing power, compute power, running on a lot faster networks with a lot more powerful software. You get the kind of crossover device which is great for business, and yet has the software and services and applications that also make it great for TV, for music, for a variety of other scenarios. And at this size, you can see a very small, lightweight, kind of very sexy little form factor. And if I think back to what was kind of current, and hot, and popular six years ago, really quite stunningly, stunningly different.

I also bring the context, if you will, of the PC to that world. Six years ago Wi-Fi networks were just sort of coming on scene. Today, for US$50 a month, basically, you can have over the cellular network anytime, anywhere access to the world’s information from the very, very powerful device that’s your personal computer. So both in terms of the phone form factor, and the PC form factor, really things have evolved in some fairly dramatic ways.

I think over that same period of time, user expectations have been transformed. Users expect more capable phones. I live in a very ironic world, in the world of the PC everybody is talking about whether we need thinner clients, or thicker clients, that’s a PC debate. In the world of the phone, the phones just keep getting smarter, more capable, running more powerful software. And, at the same time, the phone and mobile communications more generally is being quite democratized, if you will. Users expect to have one of these things. It’s the top most desired, most purchased item in every emerging market economy. The first real capital good that almost everybody needs to own. And so the work we all need to do to continue to drive the power of the networks, the power of the software and services, the power of the devices, I think, presents an amazing opportunity.

The last six years have also have been six years of quite interesting progress at Microsoft. One year after the last time I keynoted CTIA, Microsoft had one phone in the market, one model, with one operator in one country. Today there are over 160 operators offering Windows Mobile devices. There are over 140 different form factors from different manufacturers that can be purchased. And Windows Mobile devices are available in over 55 countries. And we should sell over 20 million devices with our partners that include Windows Mobile this year. So a lot has happened, and yet a lot more will continue to happen, not only for us, but for everybody involved, bringing the power of software and services to the phone world.

The second trend, the one I just referenced, software plus services, is very, very important. I grew up with Microsoft as a software company, and software was, in the old days, if you will, was either something that got embedded into a piece of hardware, like a PC or a phone, or it was something that got put on a CD or DVD and shipped to somebody. The new world of software is a world in which we all assume the Internet, and software becomes a dynamic thing. It automatically updates itself, roams itself, backs itself up over the network, and there’s no more perfect environment to support the fundamental transformation of software through Internet services than the cellular networks of the world.

Now, in order to make this really fundamentally new model of computing happen, we need to bring together four very powerful computing phenomena that exist today. There’s the world of what I call desktop computing, the PC, powerful, rich devices in which the user is totally in control, and can mix and match, and push information together, can visualize with big screen and rich media in the most dramatic way. That is a model of computing, very thick client, very thin back end.

There’s the world of enterprise computing, this is the world of big servers, of management, of compliance, of reliability. It too is a model of computing kind of pioneered, if you will, first in the mainframe world, UNIX servers, and now UNIX and Windows servers, very, very important, we’ve got to bring together the world of the desktop and the enterprise. Over the last five or six years, an online computing model has really become popularized. Big services running in the Internet cloud talking to really simple browsers, either HTML or AJAX. That is a model of computation. It’s nice, you click and run applications, you can run them on every device, but they lack some of the enterprise robustness, and the desktop richness.

And last, but certainly not least, for this crowd of people is the world of devices, really the phone, and the set-top box, and how do we bring people in these other parts of their lives, their personal life, into this model of computing? How does somebody write an application that spans and takes best advantage of the phone, the desktop, that’s enterprise manageable, but deliverable in an online context? The focus on this problem technologically is number one on Microsoft’s innovation agenda. People shouldn’t have to pick.

I think it’s great that there’s over a billion text messages sent today in the United States. But the notion of having four text message accounts, and five e-mail accounts, and different worlds of communication and collaboration based on devices, that’s yesterday’s idea. We have to meld these models of computing into one. That’s an innovation challenge. And we have to bring together the business models in ways that are acceptable. The business model for the world of phones and cellular devices is different than the PC business model is different than the advertising-based model that people associate with online. And I think what we’re going to find, if we want innovation to proceed at the most rapid pace, we have to meld and weave together those business models in a way that works for software developers, for users, for telecom operators, for content providers, and for software companies like Microsoft and others.

The phone has a unique role. While the PC is the most powerful device, the phone is the most popular device. It will be the device that we can most count on everybody in the planet having, and having available at any given time. But how do we evolve the phone so it participates fully in this world, fully in the lifestyle side of this world, and the work style side of this world? How do we bring all the business experiences and entertainment experiences of the other devices to the phone in an appropriate way? And that’s a great opportunity for innovation from Microsoft, and for all of us in the room participating in this industry.

I think these two trends really drive an abundance of opportunity. Enterprise computing brought to the phone, an evolution of communication, voice, video conferencing, text messaging, presence, instant messaging, all coming together, social networking into new forms of communication and collaboration from the phone. Entertainment, TV, movies, music, gaming, how do those come to the phone in the very small form factor device? How do we make sure that the software works well with the networks that exist today, and the networks that increasingly will exist at much higher speed and lower latency in the future?

I think everybody sort of feels viscerally that there’s an incredible business opportunity given the presence information, and location information that telecom operators have to provide very relevant and appropriate advertising to people on their phone, but how do we make that happen.

In many countries, the phone will be the PC for people who have very little money. What does the docking station look like so that when you bring your phone home at night, it can use a simple, cheap keyboard, and it can use the video screen of the television set to become kind of a PC-like workstation for people who simply don’t have the financial resources for both devices? Payment, what’s the role of the mobile phone and the SIM card in the evolution of the payment infrastructure?

In a sense, I think we have to think about the phone as almost a universal remote control for your life, your business life as well as your personal life. To realize these opportunities, though, I think we have to recognize one other thing, consumers will want phones that span all of their life personas, my work life, my personal life, my life with my family, my life with my friends. People aren’t really going to want to sit there and pull out multiple devices, that is not how we get the kind of critical mass of innovation that will drive this industry to the next level. I always think it’s funny to see people pull out multiple phones, or handheld devices, one that was issued by the company, and another for their personal life, or one that does e-mail, and the other that does phone calls, or whatever the scenario is. That strikes me as incredibly odd. Consumers really do want a handheld device with a large selection in form factors. What’s right for one set of hands is not right for another set of hands. What is right stylistically for me, I’ve learned, is not right stylistically for my 15-year-old son, so we need different form factors, and styles, and function.

But the level and kind of set of scenarios people want to attack are very similar, how do I get at the information I need for work or for school? How do I get traffic information? How do I find out where I pick up tickets for the game? How do I find the closest store that is in stock with the new version of Halo 3 that I want to go buy? How do I take pictures and share them with my friends? How do I keep up with what’s going on socially with my community and my set of friends. So people want these phones to be general purpose devices that support me in my life, and in my work, and I think that is incredibly, incredibly important.

The other thing which I think our industry needs, so that all of our innovations can add up where the whole is bigger than the sum of the parts, is really a rich platform that supports work style and lifestyle innovation on the phone. So that people can build the value added entertainment services, music, games, sports, the value added business experience, line of business applications, productivity, expense account reporting, and build very rich, exciting, visually appealing, differentiated applications that will really create demand for the devices, and hold the data plans, and will create a positive cycle of consumer enthusiasm and business opportunity, for content providers, applications providers, platform providers, and, of course, the telecom providers themselves. So we need to focus in on the work scenarios, the home scenarios, and the platforms that permit ongoing excitement and innovation.

Microsoft has a fairly expansive view of the mobile space. We’ve thought a lot, because of our involvement on the PC, of the context switches that people go through between their work life and their personal life. We understand that people need phones that let them context switch with them. We’re focused on partnerships, with operators, and with the kinds of developers that can really drive the application scenarios that will drive this next level of innovation. So I’d like to drill into these topics, work, life, and platform, and share a little bit about each of them with you.

First, let me have a chance to talk bout mobility requirements at work. What do I do at work? I communicate, I communicate with partners, I communicate with vendors, I communicate with customers, I communicate with other people that I work with. I communicate by voice, by text message, by e-mail, communicate, communicate, communicate. I participate in corporate business processes. I approve things that require my involvement. I access corporate information. I look up customer records. I file expense reports.

I need access to the communications, and business applications that will let me succeed. And, because this needs to participate in the world of enterprise computing, as soon as you cross that boundary the IT departments of the world need the tools to manage these devices, to secure these devices, to deploy these devices, and to integrate these devices with the rest of the IT infrastructure.

A little bit I think about a coming  we’ll call it a small clash, or maybe we’re in the middle of it already. IT does need to control and manage some things that go on on these devices, and yet end users are going to want to be able to control what they do with the devices in their personal lives for sure. And we have to make sure there’s a rich set of tools that will support both the end user and the IT department to let these devices fulfill a broad set of work needs.

At Microsoft we’re trying to address those requirements, with Windows Mobile, with the work we’re doing in products like Exchange Server for mobile messaging, accessing, anywhere access, direct push of e-mail, remote phone support, so that you can wipe data off the phone if it gets lost. We’re trying to do work in our Office Communications Server product, so that you get rich voice   both voice and video style communications from the phone. We will support in our line of business applications SharePoint and Dynamics, access and connectivity of those applications into this kind of IT infrastructure for people who are at work.

One of the major investments that we have made, which we are really announcing today is something we call the Microsoft System Center, which is the brand name for our line of enterprise IT management tools, Mobile Device Manager. This is a product that helps IT manage, secure, and provide secure access for phones that are on the go. It increases that sort of general management capability. It will work with forthcoming versions of Windows Mobile devices. There will be updates starting Feb. 2 of next year, Windows Mobile phones will allow this product to work.

Essentially it is a management service that enterprise IT can instance, and use to manage anywhere from dozens, to many, many hundreds of thousands of Windows Mobile devices. And it will manage the phone, in some senses, like it would manage mission critical data on the PC. It helps provision the device, it will help IT control the devices, maybe they want cameras turned off, or data encrypted on the phone, password requirements to be set in a hard way for access to corporate data. People are going to want the control they need for data compliance, participating in enterprise security and directory on phone security. Mobile VPN capability, so I can come into the corporate network, get some important data, file an expense report, update a customer record, and go away.

We’re trying to do this in a way that is quite standard, standards-based and standards compliant, building on work from OMA and a variety of other standards issues. But, I think this is a major step forward, if you take the four quadrants I talked about, desktop, enterprise devices, and online, this really takes a step at bringing devices into the world of enterprise computing in a very, very serious way.

We’d like to show you a little bit of this work and so I’d like to invite Brian Hoskins Senior Product Manager in our Mobile Communications Business to come up on stage and do a brief demonstration for you. Please welcome Brian. (Applause.)

BRIAN HOSKINS: Thank you, Steve.

System Center and Mobile Device Manager has three important benefits, which I’ll demonstrate today. The first is device management. We are enabling the management of mobile devices in the same way we manage PCs today through active directory and group policy. This is going to enable things like easy enrollment, over the air software distribution, and rich inventory and reporting.

Second is the need for critical security management. For the first time we can configure policies based on user, or corporate needs. And the final piece I think everyone in the audience will appreciate, mobile VPN. We are providing a secure link from the device to resources behind the corporate firewall. Now, this is the first mobile device management solution to bring together all three of these elements in one place. This is going to revolutionize how we think about mobility in the enterprise today.

So let’s take a look. The guys back stage said that you needed a new device, maybe you lost your old one. I’m going to show you how easy it is to get this set up.

STEVE BALLMER: Good, good, I would hate to lose it, but just in case.

BRIAN HOSKINS: The first think we’re going to do is go to our self-enrollment Web site. And what you see here, we have the ability to enroll your device and get a password. I’m going to type into your device pane, and create an enrollment request. And from there I’ve generated a one-time password. Let’s go over to our device, and I already have the enrollment wizard pulled up here, it’s a native part of this comprehensive 

STEVE BALLMER: Any user who can log into Active Directory can go fill out one of these requests.

BRIAN HOSKINS: That’s exactly right, Steve, it’s a very simple and easy process. So I’ve already typed in your email address here. Let me click on next, and we’ll take that one time password and we’re going to enter it in here, 939, don’t tell anyone. And we’re going to click on next, and over the next few minutes policies and settings are going to be pushed down to your device completely over the air. Now, it’s important to know, this is actually joining Active Directory. We’re becoming an object in Active Directory, which is going to create all sorts of group policies a little bit later on that we’ll show you.

Wow, look at that, in under 30 seconds I’ve taken this device completely out of the box, and enrolled it in Mobile Device Manager. Pretty amazing. (Applause.)

What about the other side of the equation, server management? What you’ll see here, we’re going to pull up our device management console. Now, the first thing you’re going to notice, this is a pretty familiar environment. It’s based on Microsoft Management Console, or MMC. IT pros live in this environment. And guess what, that means reduced barriers for IT pros, and lower cost for companies.

Now, the next thing you’re going to notice is all the rich inventory and reporting information is right here at my fingertips in one single console. I’m going to click on (Martin Vu’s ?) device, to see things like device status, device history, or even general information. We can also take a look at lost devices, devices pending enrollment, and for those of us who have lost our devices over the past year, even recent wipes.

Steve, 13 wipes?

STEVE BALLMER: That guy doesn’t do a good job of holding onto his phone.

BRIAN HOSKINS: Well, we’ll take care of that a little bit later when we talk about critical security policies. Before we do that, let’s take a look at our software distribution console. Now, when you get a new PC at work isn’t it nice having all of your corporate applications preconfigured and ready to go on your PC? But, what if you could do exactly the same thing on your mobile device? In fact, you can with Mobile Device manager.

We’re going to go in here and create a software package. We’re going to pull up our software package creation wizard. I’m going to click on next, and I’m going to select a cab file. What do you say we pick Microsoft Communicator, a great new software package announced last week. Let’s go ahead and give it a title here. We’ll call it communicator, and then a package description, we’ll call it IM client. Click on next, and from here I can choose which devices in my enterprise I want to distribute this to. Now, today I don’t have classic devices in my enterprise, so I’m only going to distribute this to professional and standard devices.

I have the option of picking whether this is a mandatory of optional package. We’ll say the users cannot uninstall this, and make this mandatory. And I have over 24 languages to choose from. Now, suppose for a minute I only want to distribute this to my Chinese subsidiaries, so I’m only going to click on Chinese simplified and Chinese traditional. We’ll click next here. I can even set things like software dependency, or registry dependency, we’ll select no to both of these, and in just those five steps we’ve created a software package that’s ready to be distributed fully over the air. This is a huge step forward. (Applause.)

Now, let’s go to our security policies. I mentioned before, we’re joining these devices with the Active Directory domain, and that enables all this robust functionality around group policies. Now, the other thing we can do is we can target different users in our enterprise, and over 80 percent of organizations already use this today, this exact same system, to manage their PC environment. We’re putting it into one place and making it easy and simple for companies and IT departments.

So I have our executive policies pulled up here, and let’s go in and see what we can do. So the first thing I’m going to do is go to our Windows Mobile settings, I’m going to pull up our password policies. Now, security experts tell me the best way to protect data in the event that your device is lost is to enable a strong password policy on the device. We’ll make sure that’s enabled for you, Steve, go to our next setting, and make sure it’s a strong password, we don’t want any PINs here, we want a strong password on the device.

Literally in four clicks, I distributed that policy seamlessly and fully over the air to all the executive devices in my enterprise. Now, say I’m an organization that wants an additional layer of protection. With Mobile Device Manager, we’re enabling full file encryption on the device. Now, let’s go ahead and enable that policy, as well. I’m going to enable that, and in two clicks we’re done, and that’s been distributed out to all of our executive devices. Now, that’s just a brief sample of the over 100 policies that come out of the box with Mobile Device Manager. You can also create your own policies based on ADM, or Active Directory Management templates. So there is lots of flexibility there for the enterprise.

Okay. Enrollment was easy. Our device management console has loads of rich inventory, and reporting capabilities, software distribution was a snap, and our group policy has robust security features. I think we’ve saved the best for last. And let’s talk about mobile VPN. Now, Mobile VPN provides a persistent, secure connection back from your device to corporate resources, where and when you need them. This is going to revolutionize the concept of line of business applications in the enterprise today.

We’ve already shown how easy it is to create a software package to be distributed over the air, and now we’re closing the loop by allowing users to interact with this in a very real, a very rich, and very secure way. So think about the possibilities. We can access HR Web sites, perhaps CRM applications, but let’s take a look at something I think we can all appreciate, and that’s expense reports.

Probably everyone in the audience recently filled out an expense report, and what I’ve pulled up here is our Microsoft Expense Manager. Steve doesn’t know this, but last night I was so excited about the public announcement of our product I took a few members of the team out to celebrate.

STEVE BALLMER: You were too excited. Let’s VPN and reject that one.

BRIAN HOSKINS: It was worth a try. (Applause.)

That’s just a quick preview of some of the many amazing benefits of mobile device manager. This product will help enterprises realize the full value of their Windows Mobile Devices by making them easy to deploy, manage, and secure. By integrating back to existing IT assets, and by enabling a new set of killer LOB applications beyond mobile messaging. And one more thing, Steve, I want to hand to you this device, it’s the new device by AT&T. It’s a Blackjack II. We’ll get a close up over here, so you can all see it. And this is ready to run out of the box with mobile device manage. It’s one of our early partners. And as long as you promise not to lose it, it’s all yours.

STEVE BALLMER: Thanks, a lot.

BRIAN HOSKINS: Thank you very much, and thank you to everyone in the audience.

STEVE BALLMER: Many of you say, hey, look, I’ve never been in the IT data center, I don’t know what all that was, but if we really want to get these mobile devices to participate fully in enterprise applications we’ve got to stitch these things together, and the kinds of security and management we talked about are very important.

We’re excited to have AT&T as a launch partner for Mobile Device Manager. We’ve done a lot of work, and AT&T has done a lot of work to optimize the way Mobile Device Manager works across the AT&T 3G network. We’re driving devices that are ready for Mobile Device Manager, like the one Brian just showed you, and we’re working hard with AT&T to ensure that enterprise corporate users really can get, and participate fully in everything they need to do in their jobs, in addition to their personal lives.

We’ve got a range of industry participants who are interested in this mobility meets the enterprise phenomenon, and see the potential in mobile device management. Companies like HTC, and AT&T, Palm, Intermec, Motorola, a number of people who are really working with us to try to bring the benefits, again, together, of mobile devices and enterprise computing.

There’s one systems integrator I want to particularly call out, and this is a company called Enterprise Mobile. They’ll be ready with a set of services as soon as we make Mobile Device Manager available. They’ve been working with us in early pilots, they’ve been really helping to develop and deliver a set of managed solutions around this in the strongest possible way. Enterprise Mobile is a startup company, started by a fellow named Mort Rosenthal, who I’ve known since the early days of the PC world, when we were both involved trying to bring the benefits of PCs to the enterprise. And Mort is at it again, now, trying to bring the benefits of mobile devices fully together with the mobile world.

He’ll be joined by a lot of other systems integrators, people like (TASA ?), (Hiptronics ?), EDS, and a wide variety of others who are announcing support for this important product, and this important theme. With that, I want to switch now from work to lifestyle. And I think that’s very important. As I said, the phones that people carry have to span my personal life, and my professional life. So everything we showed you has got to work at work, but I still want these devices to be a source of community, personal and social communications, media and entertainment, and I want to have the rich selection of choices that meets sort of my personal needs, and my personal style.

I think one of the things that I would say has surprised me most is just how particular, and how much people care about what their phone looks like, and how it works. So having a range of innovation to make both a personal statement, but still participate in business process, and business environment is very important. What I would like to do is talk to you a little bit about some of the work we’re doing on the personal, or home front, the lifestyle side of phones with Windows Mobile.

We’ve announced a bunch of new technology, great search support on these devices, including voice-powered support with our new Live Search. We’re bringing our Windows Live Hotmail, and Live Messenger services to these devices, for the hundreds of millions of people who participate with Windows Live Hotmail and Live Messenger in their personal lives. Office Mobile helps on both the personal productivity side, as well as professional side, Media Center, media player, so that we can bring the full richness of media applications and entertainment applications to these devices, phones with very rich photo experiences, and personal video experiences, and great games. We’ll be working with our partners to bring a lot of the PC games and Xbox games, in an appropriate form, to these small form factor devices.

I thought what we’d do here is also do a little bit of a demonstration. So on the lifestyle side I’d like to invite up Derek Snyder, a product manager, again, from our Mobile Communications Business, just to wet your whistle, not just with what we’re doing, but, again, the phenomenon of bringing what I might call the world of online and the world of devices a little bit closer together on the home front. So please welcome Derek. (Applause.)

DEREK SNYDER: Thank you, Steve.

It’s great to be here. As Brian just showed you in the previous demo, we’re delivering in a big way for the enterprise. But, more and more smart phones are being purchased to be used beyond business tasks. And a Windows Mobile phone is perfect for straddling that constant transition between work and between life. So today I want to show you how Windows Mobile phones make it easier to search for information, to connect with your social network, and also plug into the local scene. Through great new devices, great software, and great services, Windows Mobile is the one phone that can work for your entire life.

Now, let’s take a look at this new device from HTC, called the S630. This one is particularly compelling, because it has a really fast, 400 megahertz processor, 3G high speed data, he talked more and more about the extensive capabilities of these devices. It also has this full QWERTY keyboard, as you can see here.

Now, one of the great things about having a smart phone is that it would be particularly good at making phone calls, incidentally. So let’s suppose I want to make a phone call to you, Steve, it’s very easy with Windows Mobile, because we’ve got this technology called smart filter. So I can just start typing a few letters of your name, S, T, E, and just like that, I’ve filtered through literally hundreds of contacts to find the exact one I’m looking for.

Now, it doesn’t just stop there. If we, of course, look at some of the bread and butter of these devices, it’s really in mobile messaging. I can open up Outlook Mobile, which is a pocket version of Outlook on my device, I’ve got my text and picture messaging, I’ve got my work e-mail which synchronizes up with Exchange server, and I’ve also got a number of personal e-mail accounts, whether it be Windows Live Hotmail, or any custom third party e-mail I’ve added, like Yahoo, or maybe my campus e-mail from my old alumni back in college.

So I can do all that in Windows Mobile. Let’s actually spend some time in Outlook e-mail. You’ll see at the top here that I’ve got 194 messages in this inbox. Obviously that’s a lot of messages, I can certainly power through those, but this is a smaller form factor, right, so I’d take a lot of time if I was particularly spending time looking for a message. I think you had said something about a team dinner, so it would be very easy for me, in the same way as with contacts, to search for that e-mail. If I just type in a few letters, S, T, E, and just like that we filter that 194 just to the e-mail that I’m looking for, and I can now open that up.

Now, what you’ll notice, in this e-mail we’ve got the full fidelity that you’d expect form the desktop PC. We’re getting all the photos, maps that were attached, tables, graphs, anything that would be supported on the PC is supported on Windows Mobile, across all of the e-mail accounts on your device. But, it doesn’t just stop there. We also have a pocket version of our Media Player on the device. This is Windows Media Player Mobile. One of the big things about having a device that suits your work and your life is the ability to listen to tunes.

I particularly like to commute in listening to some music. I use a stereo Bluetooth headset, which we also support. Again, I’m confronted with the same challenges, scrolling through hundreds and hundreds of songs to just find the one I’m looking for. So I can use that same smart filter, and in three keystrokes I get to just the song I’m looking for. I mean, that’s faster than any other mobile device for finding music.

Let’s change gears a little bit, and talk about how we can connect to our social network with a Windows Mobile device. This is the new Sprint Touch, from HTC, that Steve had pointed out earlier. Let’s take a look at this device. Now, the interesting thing is that this actually can only be interacted with my finger, I don’t actually have a built in QWERTY keyboard, or anything like that, like many of our other devices do. But, that doesn’t actually stop me, because a number of our tasks can be done just with one hand, or just with the one finger, as it were.

On top of this device I have a number of Windows Live Services running, which is more and more important as we start to connect on the go, we want to really be in touch with friends, family, and colleagues. The first thing I’ll show you is that we’ve actually got Windows Live Messenger running right on this device, with the full fidelity that we’d expect from the PC. I can scroll down and create a new conversation, maybe I want to talk to Ichiro, we’ll see if he comes back from away. Certainly I get the soft keyboard here that I can bring up and start typing a message. That’s fine. But, you know what, this device, and many of our devices, have support for voice. So why not actually just send him a voice clip. We can do that.

Hey, Ichiro, I’m on stage with Steve right now, I’ll have to talk to you later, but everything seems to be going well. Just like that, it sends a voice clip over to him. He can listen to that on his PC, or on his device, and we can start having a voice dialogue. How cool is that? (Applause.)

Another big scenario is photographs. More and more these devices have really powerful cameras on them. More and more we can use and capture photos, share a photo, but the sharing part has always been a bit of a challenge. Certainly I can send an individual photo through picture messaging to one of my contacts, maybe I can send it in an e-mail, we’re certainly empowered to do that. But, you know what, I like to keep my blog up on Windows Live spaces. I like my friends and family to go up there, and read about what I’m doing, and at the same time I like to host all the photos that I’m taking on my device there, as well.

And with one click I can choose one of my photos that I’ve taken so far here in San Francisco, and send that up to my space. This is posting this photo up on the Internet so that my friends, my family, my colleagues can view that. I haven’t put in any user name and password, I haven’t typed anything, just automatically up on the Internet for everyone to see. One of the other things that we like to do on our device, of course, is keep up with our media, and our recorded content. I actually have a Media Center PC in my home, back in Seattle, that I like to use to record a variety of television content, have music and photos, all that great media experience at my fingertips.

Now, I do remember that there was some television programs that I wanted to record, but haven’t had a chance to set the recording on. Now, certainly I can try to get someone else in the apartment to set the recording for me, but wouldn’t it be great if I could actually do that from my mobile phone.

STEVE BALLMER: You’re going to call your PC?

DEREK SNYDER: Exactly. So we’re tunneling in with a Web service called Web Guide that allows me to basically emulate my Media Center experience on my mobile device, through the Internet Explorer Web browser. I can view my guide. You’ll notice it comes up in a very mobile optimized view. I get a listing of al the programs I may want to see. Now, some folks may have thought that I wanted to see The Office, no. I do whatever Oprah tells me to do. So I’m going to record Oprah Winfrey. And just with one click I can set that recording quickly and easily.

So that’s just a great way that we  

STEVE BALLMER: So you’re saying then when you come home, sitting there on your Media Center PC you’ll have Oprah.

DEREK SNYDER: That’s right. All the recordings will be ready for me. That’s right, Steve.

So let’s change gears one more time, and talk about this new device from AT&T called the Tilt. One of the great things about this device is that beyond being a great messaging device, and having the full touch screen, and large screen, built in GPS, the list goes on and on, it has this great QWERTY keyboard, and it also has the ability, true to its name, to have this tilt, so that I can use it, maybe, on an airplane tray table, or something like that, a little bit more comfortably, like a mini-laptop.

Now, on top of this device I’ve installed the free application, Windows Live Search for Mobile, and it’s available for any Windows Mobile device, you can get it on the Internet today. As you mentioned earlier, we continue to add more and more services to these applications. So I’d like to demonstrate some of that now.

Now I think I want to catch a movie later night, but I am new to San Francisco. I don’t really know where any of the theaters are. I certainly don’t know what’s kind of near my hotel. I think the first thing I’ll need to do is to actually change my starting location to make sure my results are really going to be honed in to my present location. Right now it’s set as the Moscone Center, which is fine, it’s actually used the built-in GPS to figure that out. But I actually know that my hotel is the W Hotel.

Now, certainly, I can slide out that keyboard, start typing in the W Hotel, I can do that. But maybe I have a device like this that doesn’t have the keyboard. Again, we’ve built more and more into our applications the ability to recognize voice. So let’s see what that looks like. As we go down to initiate a search, you’ll notice this soft key lights up with the word speak. If I tap that, I can then say my command whatever I’m looking for. The W Hotel. Just like that, it will start processing and pull down those results right from the Internet. How great is that? (Applause.)

When I open up this, I can of course read the ratings, initiate a call, maybe read some reviews. We’ve got all that information. But all I want to do is actually set this as my starting location, so I’ll choose to search near here. You’ll set it’s now set as my new starting location, and then I’m free to engage in other activities, like look for that movie I was interested in. It will pull down all of the movie show times for me based on that location, which is the W Hotel so that in the event I do want to catch that movie tonight, I can look either by theater, or by movie show time. And so I can do that very easily.

Let’s take a look at that on this device. You’ll see we have AMC Lowe’s Metreon. We have a list of all the movies that are playing. I have 30 Days of Night, so I can open that up. I get all of the rich movie poster art as well, I can read a review through MSN Entertainment, initiate a call. But maybe the best part is the fact that I can bring up this map. I can really interact with that map with my finger. It pulls up all of that data right over the 3G connection. And, best of all, I can zoom in and get a much more detailed view, all coming over the Internet from Windows Live.

So I hope I’ve demonstrated today how Windows Mobile 6 phones make that perfect companion for work and for life, allowing you to search for information, connect with your social network, and stay plugged into local happenings.

Thanks very much. (Applause.)

STEVE BALLMER: No one company is going to have anywhere near the wherewithal to really do all of the exciting applications and services that will power the next generation of this revolution. And so, as we think about our issue, part of it is to build some great applications, but in all cases it’s to make sure that we are enabling innovation around those platforms so that the folks in this room can create next generation personal applications, social applications, enterprise applications that really bring this alive. We’re investing very heavily in the device itself, and in the services around them as a platform. If you want to write a rich application, we have a version of .NET that runs on Windows Mobile phones that supports rich application development. If you want to write a thin client application, HTML, or AJAX, or eventually with our Silverlight technology which provides for rich media and video, those things will be available on this platform. We have rich APIs for things like forms and Web services, for location, for contact, calendar, messaging, maps, sound, graphics, all of that is available for third party innovation. Our Visual Studio product, our development tool suite, provides the capability for people to build these applications, design them, debug them, test them, emulate them. We now have storage capabilities available. There is a compact version of our SQL Server available as part of Windows Mobile 6 so that you can write richer applications in terms of storage, database, database manipulation.

The key thing is to try to provide a very consistent platform across all of these phones to leverage all of the learning, and technology that people understand from writing applications for PCs, and let them bring rich experiences to the phone, and let those experiences build off not just the low level programming platform, but also the higher level services that companies like ours are building. And I think this notion of Windows Mobile as a platform is perhaps the most critical issue of all. Third party innovation in home, in lifestyle, in work style are all going to be critical to really bringing together the best of the phone, the best of the PC, the best of the enterprise, and the best of online.

I don’t think there’s ever been a better time to be working on mobile scenarios, despite the fact we live in a world where there’s already over a billion phones sold a year, I actually think the next five years, and ten years will bring even more excitement and innovation around mobile devices. I think there’s incredible opportunities for application developers, content developers, and for the folks who run these telecommunications networks, and I think there’s plenty of opportunity for innovation in devices, in services, and in software. And certainly Microsoft is very committed to leading on innovation, but most importantly leading in partnership with you to ignite the next phase of this revolution.

I want to thank you again very, very much for your time, and I look forward for the chance to take some questions from Steve Largent. Thank you all very much. (Applause.)

STEVE LARGENT: Thanks, Steve. That was incredible. Steve, I was just listening to you backstage, and I’ve got to tell you, that’s very exciting. I was getting very pumped up about all those different features that you were highlighting here at our show today. But I have a list of questions I’d like to ask you and I won’t do the swami deal, but how will Microsoft partner with mobile operators and device manufacturers, many of whom are here today, and how will that compare to your competition?

STEVE BALLMER: Well, I think if you sort of ask where’s our DNA, where did we grow up, we grew up actually in a world in which we partnered quite broadly with a hardware ecosystem to really enable an industry. That’s kind of where we came from on the PC side. That’s also kind of our approach to the mobile industry, and in some senses you could say between the device makers, and the telecom service providers, you actually have kind of like what I would call the HPs, the Dells, the Intels of the mobile world. And if our objective is to try to get some of our software in literally hundreds of millions of devices, the best way to do that is to support broad innovation, and to have business model strategy that works broadly for a lot of people who make devices, and for the service providers themselves.
STEVE LARGENT: Well, I think when it comes to innovation, you’ll find plenty of volunteers in this crowd. Let me ask you another question, Steve, as you probably know, we have a big spectrum auction that’s about to take place in hopefully the end of January. It’s scheduled now for the end of January. Does Microsoft have any plans in the spectrum auction?

STEVE BALLMER: No, we don’t, as a matter of fact. I sort of failed to answer part of your last question, maybe I’ll dove-tail it. You asked me to compare a little bit to our competition. We don’t have plans to participate in the spectrum auction. At the end of the day, we think we may be broader in what we do than almost any company out there, but we think we have a core competence, and we think that the telecom industry and the service providers have a core competence. (Applause.) There are people who really understand  it takes some real expertise to set up networks, to invest in the capital expenditure, to do the servicing of the networks, to provide the customer service 7-by-24. That is a core capability. And we think the partnership opportunity. So what would it buy us to own a piece of spectrum? One piece of spectrum in one country, it would probably do a lot to alienate the telecom industry. It does not do a lot to advance our goal, which is try to take some very exciting technology and spread it everywhere. Nobody knows what will happen out of some of our competitors, because they’re rumored to be doing a lot of different things, and we’ll just have to wait and see. But I think compared to anybody else participating in the industry, we are trying to provide a critical mass of solution, but really be an enabler of third parties.

I think if you take a look at the nice work, Apple has done some nice work, clearly, but it’s far more end-to-end and self-contained. I would expect probably the same  we have the same kind of approach a little bit out of RIM, probably the same thing will come out of other new entrants. We’re trying to be more an enabler of other hardware players, and other service providers in addition to our own services and software.

STEVE LARGENT: Let me ask you another question, what role will mobile advertising play in Microsoft’s future, and what will your partners play?

STEVE BALLMER: I think mobile advertising is going to be a great revenue source for all of us. And exactly how the pie gets split up, that will be a first rate problem for our industry to have, and we need to first really do the things it’s going to take to have mobile advertising be relevant and important and high-impact. That will create revenue, and that will give us all the kind of opportunity that we want.

We’re investing in the technology for advertising in general, and for mobile specifically. We bought a company earlier this year, aQuantive, $6 billion, it’s an ad platform company. We bought a couple of companies, MotionBridge, and ScreenTonic in Europe that provide specific technologies around mobile portal and mobile advertising. So we think there’s a bit opportunity there, and certainly as the demonstration showed a little bit, as soon as you can make it easy to find a movie, you can probably make it pretty simple for somebody to pop up the right kind of relevant ad about where to go get a piece of cheesecake, or whatever, afterwards.

STEVE LARGENT: Right. Microsoft is well-established in the enterprise and IT space, but it hasn’t been as successful in the consumer space outside of the Xbox. How will that change in the coming years?

STEVE BALLMER: Well, Microsoft is a company that I think distinguishes itself in two ways. Number one, we actually are willing to do things we have never done before in a business model sense. Most companies in our industry are good at something, they stay good at it, but a company like Apple has never really moved into the enterprise, and a company like IBM has never really moved into the consumer world. We’re trying to span both. I think that makes us quite unique, and I think it’s quite important relative to the work style meets lifestyle vision that I talked about.

The second thing that makes us quite unique is, we’re very persistent. If we don’t get it right, we just keep coming, and coming, and coming, and coming, and working, and coming. It’s funny you call us an enterprise company. For the first 10 years, from about 1987 to  the first 15 years, 1987-’88 until about the year 2002 that we were working on the enterprise, most of our enterprise customers said, you’re not an enterprise company. And it may have taken us 15 years, but we’ve got a $10 billion, and great capability, and hopefully it doesn’t take us 15 years to be recognized as world class consumer guys, but you can count on us to just continue to stay after it.

STEVE LARGENT: Yes. That’s great. (Applause.) There’s a lot to be said for that, I can tell you.

How important is Windows Mobile and mobility in general to the future of Microsoft?

STEVE BALLMER: Very. I think that if we think about, and there’s two ways to explain that. One, I think there’s a big opportunity for us financially. If we can really be in a position where hardware makers, and operators wanted to put some of our software in someday hundreds of millions of devices, that can be a great business for us, a great business, very different than the business that some of our competitors have, but a great business for us.

Number two, I don’t think we can serve our customers’ broad desire to bring together desktop, devices, enterprise and online if we sort of ignore the mobile area. So Windows Mobile is both a great financial opportunity, and sort of a necessary strategic ingredient for us.

STEVE LARGENT: Well, this last question is of a more personal nature. Do you think the Seahawks are going to be in the playoffs this year?

STEVE BALLMER: I was going to ask you that as the last question, but I have to say absolutely, positively, 100 percent. I’ve been in Seattle a long time now, long enough that when Steve mentioned it’s been almost 20 years since he retired from the Seattle Seahawks, it kind of surprised me, but, absolutely, the Seahawks are going to make the playoffs, and our number two shareholder, Paul Allen, who owns that team, is going to be very happy. You knew my answer in advance.

STEVE LARGENT: Thanks a lot, Steve.

STEVE BALLMER: Thank you all.

STEVE LARGENT: Appreciate it, thank you very much.

END