Steve Ballmer: Mobile World Congress Keynote

Let me start by saying thanks; I really enjoyed the earlier comments from both from both Olli-Pekka (Olli Pekka Kallasvuo, President and Chief Executive Officer, Nokia) and Ralph (Ralph de la Vega, President and Chief Executive Officer, AT&T Mobility), and I am looking forward to what will be a very energetic panel when we are all done. I want to thank the GSMA and all of you for allowing me to speak here today.

The last 25 years have been really unbelievable in terms of the progress that we have seen in economic expansion. The rise of the PC, the mobile phone, the Internet, and software has completely transformed the way we create and use information, communicate with one another, run our businesses, and are entertained. This has fuelled an expansion in productivity and an outpouring of innovation that really has driven growth around the world. During that time, average incomes grew at unprecedented rates around the world, and many people emerged from poverty and into the middle class for the first time.

Now we find ourselves in the midst of the most serious global economic downturn for many years. It is something I would call an ‘economic reset’, which I believe will be with us for some time, as economies around the world return to more sustainable growth that is built on the innovation, productivity, and openness that we are describing, instead of on financial leverage and debt.

As consumers and businesses rein in spending, which they will continue to do, we will all feel some pain. The computer and mobile industries are no exceptions. As people struggle to make every dollar count, they will look to all of us to deliver the solutions that offer even greater value than anything we have been pushed to do before. I think that makes it an exciting and very challenging time to be in this business.

To some degree, it feels, as this economic downturn ripples across the globe, that people are reducing their expectations at a time when we may be tempted to temper our optimism and scale back our ambition. It is essential that, no matter what happens in the economy, the people in this room and across the literally hundreds of thousands of companies across the globe have to be optimistic, because the chance to continue to make our digital lives even richer is right there. There is no turning back from the connected world or slowing the pace of technological progress that continues to bring us closer together. Now is the time.

Innovation and Opportunity in Mobile Computing

I believe that the companies that recognize the fundamental importance of innovation will have a chance to gain competitive advantage, particularly as we weather this economic storm. As we all find new ways to deliver better value to customers, we all have a chance to position ourselves to be stronger and more competitive, as the economy eventually turns around.

Ultimately, the power of ideas and innovation is going to continue to drive us forward. Our opportunity to change people’s lives through technology – computing, communication, mobile and fixed technologies – is more powerful than anything I have seen during my entire time at Microsoft. In mobile computing, the opportunities for innovation are particularly exciting. What the industry has achieved so far is remarkable. The fact that more than 3 billion people around the world are connected is unbelievable, yet that is less than half the world’s population.

Only a fraction of the people who are connected are using smart phones. If everyone in this room and others do their job well over the next few years, that number will rise very dramatically. We know that people want to be able to access all kinds of information and experiences from their mobile devices that they might take for granted on their PCs – bringing together the best of what each of these two form factors have to offer in terms of connectivity to the people and information that we all care about.

More than anything, consumers want experiences that extend seamlessly across their home and work lives. They want to be able to connect only to the people and information that are important to them, from the PC or the phone, or directly to the web. I agree with Ralph that the TV will be one of the rapidly rising devices that participate in this entire dialogue.

Today, we are on the verge of being able to really enable those scenarios. A new generation of innovation is about to transform what technology can do for people. It will be a transformation that we like to equate to what ‘graphical user interface’ meant when it opened up the world of computing to more and more people, or what the internet enabled when it really allowed people to connect to one another in entirely new ways.

Emerging Technology Trends

There are a number of trends that will make it possible. One is the increasing ubiquity and power in computing platforms. Today’s laptops have more computing power than a mainframe did when I came to Microsoft. Today’s mobile phones have only about the same power as PCs had just 10 years ago, but are rising incredibly rapidly. Over the next few years, however, we are going to take a leap into uncharted territory. Processor architectures are transforming into multiple cores, and those will be common in PCs, phones and other devices. They will change the way we develop new software and applications and the way we write programs. We need to do a lot of work to harness the new computing power that will be made available to us by the semiconductor industry.

If we do that, we will have breakthroughs in applications that are more intelligent, more aware of their environment and location, and more able to anticipate not just what a user asks for, but also what a consumer really wanted to ask for or will ask for in the future. The next few years will also see dramatic changes in the way people interact with technology. We see where touch, gestures, handwriting, and speech recognition are becoming a normal part of how we interact with all kinds of computing devices.

Fairly soon, interacting with technology will be a lot more like interacting with people. Instead of asking my secretary to make my arrangements for my trip to the Mobile World Congress, I will just say to my computer or my phone, ‘Get me ready for my trip.’ It will access my schedule, figure out who I am meeting with, and then get all the information that I need and ensure that it is well cached so that I can read it on the appropriate device when I am on the airplane. As we automate the ways in which people can access information, it will make the technology more accessible and simpler to use, and it will unlock the potential for computers to help people and companies solve tough problems.

A third trend is related to screens and displays. During the next few years, high definition displays are going to become cheaper, lighter and more portable. They will be embedded in walls and tabletops and, frankly, there will be high definition screens that are as thin and light as a piece of paper, which you can roll up and put in your pocket, briefcase or handbag. That greatly changes all of the work that our firms will do.

Pervasive Computing Platform

These trends will help us create a single computing platform that extends from the PC, phone, and other devices out to the massive data-centre storage and computing capacity that lives in the internet.

This should enable us to transcend, to some degree, the barriers between devices. There will still perhaps be nine or 12 operating systems, but we need to ensure that there is integration and connectivity through the power of the Internet, which helps us to really achieve what we want to achieve, rather than limit us to a single device. We should then be able to connect seamlessly to people, information and applications, no matter where we are or what device we are using. This is important because, as computing becomes richer, more pervasive, and more universally useful, it will allow everyone in the world to access the benefits of technology and to participate in the knowledge economy.

For the mobile computing industry, this has incredible opportunities to deliver sophisticated, powerful mobile devices and valuable new services. Just look at what we are seeing with new lowcost PCs today – so-called netbooks – and what they are enabling you to do in addition to the PCs and the phones that people own. There are many things that I think will emerge from this world of pervasive computing, and the opportunity for us all to take advantage of it is really incredible.

The Open Ecosystem Approach

What does any of this have to do with openness and the open mobile ecosystem? That is a really simple question for me to answer. I agree that no single company can hope to create all of the components, technologies, hardware or software that will make it possible to provide the experiences that customers demand. To deliver on the promise of that transformation, we need to work together to combine the best ideas and the most innovative technologies.

Openness is critical because it is the foundation of choice for all of our customers. We may not, as an industry, be so open that you could infinitely mix and match anything, but we need to be open enough to assemble and put together the important and powerful solutions where we build on the back of and leverage the innovation of others. That will drive choice, which will drive competition, which is ultimately the engine of innovation and progress.

‘Open’ means different things to different people. To some people, ‘open’ means open source. It means more than that and something different to me, but that is an element. ‘Open’ can mean an open platform that people can extend. ‘Open’ can mean open standards, which are formal and baked-in, in the way that Ralph described. Ultimately, the companies that succeed will be open, perhaps in different ways and at different times, but it is only those forms of openness that will drive the kind of choice that really delivers the solutions for this next generation.

No one can deny the power and success of partner ecosystem approaches. It is an approach that we pioneered at the beginning of the PC revolution and it played a fundamental role in the rise of the digital information era. Thanks in part to the Windows open ecosystems, PCs are affordable and software innovation has flourished in quite a magic way. We have all – businesses and consumers – benefited from that as information technology has become more affordable and sophisticated, making us all more productive and more connected at work and at home.

We have benefited in this industry too. The Windows ecosystem has given rise to hundreds of thousands of companies and jobs around the planet. Thanks to the Windows platform, a broad ecosystem of hardware makers, software companies and service providers are thriving. In fact, the industry makes about $18 for every $1 that Microsoft makes through the Windows platform. That, in a sense, shows the leverage of openness and choice.

An Open Mobile Ecosystem

We have learned some hard lessons along the way too. We have had to address issues like those that (Olli Pekka Kallasvuo) and Ralph raised – security, application compatibility, interoperability – that touch thousands of partner companies. Over the years, we have grown from the learning experiences and learned how to form partnerships with companies from across the ecosystem to anticipate and, hopefully, avoid many of these issues and solve others very quickly. We have also had to strike a pragmatic balance between two extremes: on the one hand, very unstructured openness, in which quality, security and privacy are difficult to control, but with great choice; and, on the other hand, very closed systems, with much less choice and flexibility, but also much less chaos and fewer problems.

Our approach to the mobile marketplace is the same. We provide a software platform that is, today, supported by a broad ecosystem of phone manufacturers, mobile operators, software developers, and providers. There is one key difference, however, in the mobile space: the proportion of revenue that goes to the ecosystem in mobility is even higher than what we have seen in the PC ecosystem.

We continue to believe that that kind of open ecosystem is the right approach and to support the idea of open networks, open competition and open access. We believe that, by working in close partnership with great companies from across the industry, we can all create the best solutions for our customers as we move forward.

As we reach out and embrace this direction, you will see us building on the lessons of openness and interoperability. We have doubled down on the level of interoperability that you see in our PC operating systems; we talked about that in the context of the phone as well. In our case, yesterday, we made a set of announcements that really reinforce what we are trying to do. The next generation of software and devices from our partners is simply Windows phones. Learning all the best lessons from the Windows ecosystem and the mobile industry, and trying to apply them together, give our company and our industry the greatest chance for success.

It has been a pleasure to have the chance to share a few words with you. I look forward to being part of the panel. I want to leave people, however, with an upbeat message: no matter what goes on in the economy over the next few years, I guarantee you that technology and innovation are on a forward, upward and exciting curve, of which we are all glad to be a part. Thank you.