Kurt DelBene and Kirk Koenigsbauer: Worldwide Partner Conference 2011

Remarks by Kurt DelBene, President, Microsoft Office Division, and Kirk Koenigsbauer, Corporate Vice President, Microsoft Office Division Product Management Group
Los Angeles, Calif.
July 12, 2011

KURT DELBENE: Hello there. It’s a pleasure to be here today in my very first Worldwide Partner Conference among my 15,000 favorite friends. You can imagine as an ex-developer geek, I’m just thrilled to be in an audience this size. So, be kind to me along the way.

I’m very excited, though, it’s a great story in terms of where the Office business is and where it’s going. So, I’m really ecstatic to have an opportunity to talk to you about it today.

It’s particularly important because the partner community for us is such a critical one. Our business literally would not be what it is today without all of the folks that are in the room today helping us, supporting us, selling our products, completing solutions, et cetera. So, I’m ecstatic to be here.

We’ll talk a little bit about the success we’ve had in the business so far, talk about the opportunities that exist for partners moving forward, and where I want to take the business, where we’re all working to take the business in the future, because the future is as bright as the present is today. So, very excited to be here today to talk to you about that.

Taking a moment to talk about the success that we’ve had so far, and it really, as Steve said, it really has been a phenomenal year for the Office business with the 2010 versions of the products. Just a few statistics to highlight: A billion PCs around the planet are now running Office, a phenomenal accomplishment. Really, delivering on that productivity vision across the world. (Applause.)

That success goes through to the 2010 products as well. 2010 has been the fastest-selling version of Office, selling a copy every one second, which is a phenomenal accomplishment. And that also goes through to actual deployment, a place where you guys help us tremendously. Office 2010 is being deployed at five times the rate of Office 2007. So, we’re getting those new scenarios out to people, they’re seeing the product, they’re seeing the value of the product, and that’s really resonating with customers.

But the success that we’ve had is broader still. It goes across the entire panoply of Office products. We have moved from the point of it just being about the client to it being about a connected ecosystem of clients, servers, and services that work together to enable people to collaborate together as effortlessly as they author products individually.

And so you see that and the red-hot success of the SharePoint product, it is the industry leader in all of the workloads that it works in today, all six workloads, it’s in either the magic quadrant or the Forrester leading category, doing phenomenally well.

Exchange continues to hum along as well, really being the leader in the communications space. We have converted 22 million Notes seats over the past five years all with your help. (Applause.) Thank you very much.

And that has driven us to have 73 percent market share of the enterprise messaging and group scheduling category, and 65 percent worldwide, a phenomenal accomplishment.

And the great thing about this business, as I said, is we couldn’t do it without you. Numerous statistics of where you guys have completed us. For instance, the Accelerate program, which has only been around a year, we’ve had 3,000 of you engaged and convert people to the latest version of Windows, the latest version of Office, fantastic success there.

SharePoint, as much as it’s an out-of-the-box solution for collaboration, it’s also a platform for building line-of-business applications. We’ve built 1,000 of those applications, really, again, completing the scenario that we deliver to customers. And there are 1,000 more that are on the docket ready to be released.

Another statistic I find amazing, the majority of deployments of Exchange Server are deployed with partners. You guys are in there, upgrading from 2010, making sure our customers have a fantastic experience. Again, a business that we could not do without you.

Finally, completing this story, we’ve got fantastic support from the Lync side as well. We’ve got people deploying things like SIP trunking, like enhanced 911 services and over 70 different devices that are Lync ready right now.

So, across the board, very, very excited about the success that we’ve had. It’s been, as I said, a fantastic year and partners are truly the thing that keeps us successful, all of you here should share in our success, and I just want to give you all a round of applause for how you’ve helped all of us be so successful. (Applause.)

But as pleased as I am about the results that we’ve had so far, the future looks even brighter. We have a very broad vision about how we think about productivity. As I said, it’s no longer just about PCs, people working individually on Word documents, Excel spreadsheets, et cetera. It’s really about delivering on an IW ecosystem where people can work together as effortlessly as they work today individually.

And there’s really three major components to that solution. First, we want to remain the leaders in productivity on the desktop. We need to push forward in new scenarios that we had not delivered before, and we’re very excited about doing that.

Second, it’s a recognition, though, that the kinds of experiences people want go beyond the desktop. They involve browsers, they involve Windows Mobile phones as well. We want to be the leader on all devices. We want to lead in productivity across PC, phone, and browser, that’s the mission we’re on.

We need to extend our leadership in the core platforms that are the business productivity platforms. This is a much broader vision than any of our competitors have. It involves collaboration, unified communications, enterprise content management because once you have all that data sitting in SharePoint or in Exchange, you’ve got to be able to manage it effectively. It involves taking that business intelligence information like Amir showed you and putting that in SharePoint, putting that in Excel on the desktop, and it involves great search with products like Fast. So, that whatever nugget of information you have anywhere in the world, you can lay your hands on it simply by going to the browser, simply by going to the portal, or from the desktop and finding that piece of information.

Finally, it’s the cloud on your terms. It’s not about taking a consumer-oriented cloud service and saying that’s good enough for enterprises, it’s about saying that the products that people want are the products that they love today. So, if they want them in the cloud or they want it on-premises or they want a hybrid environment of the two or they want it in a private cloud. So, we’re busy delivering on those solutions and really giving the customer the cloud on the terms that they’re really looking for.

So, very, very rich view of where we’re going. We’re very early on in the vision, and I guarantee you multiple releases to come that are just as exciting as the 2010 versions today.

I want to spend some time talking about a particular product that we’re particularly excited about. I know Steve mentioned it, and KT thinks it’s the product that’s so simple to sell you’ve just got to get it in front of customers and it’ll sell itself. We also believe that about the Lync product. It really takes what SharePoint did in collaboration and does the same thing in unified communications.

It’s crazy to think of a world where somebody buys a single product for instant messaging, a different product for real-time collaboration, yet another product for enterprise voice.

Lync takes a different approach and says what you want is a unified platform that brings all of these together into a single, easy-to-install product. That means you reduce cost by only having to purchase a single product. You reduce training costs because it’s so intuitive to move from one workload to the other, from instant messaging over to real-time collaboration conference. That’s deeply integrated with the Office clients, very intuitive to use.

That means they can also be adopted quickly. Give you an example. The Commonwealth Bank of Australia deployed Lync, and in the first 24 hours, over 60 percent of their users were up and using the product. That’s a fantastic accomplishment and really talks to the ease of use that we’ve delivered into the product.

The next thing is ease of deployment. That’s either a greenfield deployment where you can roll out the servers, roll out the client, and have the entire set of features available, or it’s a mixed environment. There’s a lot of our customers who still have PBXs out there and they want to eke out that last bit of value from those PBXs they’ve got installed, the physical life cycle of a PBX being 10 years or so.

And so what we’ve done is made it easy for you to deploy Lync alone with those PBXs. We’ve taken the effort out of it by testing those PBXs in our labs, 20 such PBXs we tested side by side with Lync to make sure that it all works super, super well.

So, really, across the board, a fantastic product. And it comes at a fantastic time. It is the right product at the right time in the market. Just to give you a few statistics, we’ve got over 10 million Cisco legacy voice over IP lines that are going out of support over the next year. Huge opportunity to convert them to a better vision of the future around Lync.

We’ve got 150 million legacy lines that will be converted over the next three years among our customers. Opportunity to go in there and tell them the value of Lync over just replacing them with a legacy voice over IP network.

Third, we’ve got 40 to 60 percent of our enterprise customers who don’t have anything in terms of real-time collaboration and communications for their organization. So, you can tell them the value proposition going from instant messaging all the way up to enterprise voice with the rich integration in with the desktop, a fantastic story to tell.

I’d love to show you a little bit more about what Lync can do. And to do that, I’d like to bring Kirk Koenigsbauer, who is the Corporate Vice President of Office Product Management, on stage to show you.

KIRK KOENIGSBAUER: Hey, everybody, how are you doing? (Applause.)

All right. So, we’re incredibly enthusiastic about Lync, as Kurt suggested. What I want to do is walk you through a few scenarios that show you how Lync is integrated into different devices from small screens to large screens and medium-sized screens.

Where I’m going to start is right here on the PC experience. I’m going to pop up the Lync interface itself here, and you can see the client is absolutely gorgeous. You see you’ve got pictures of people for all of your contacts, you’ve got colors that identify their availability and their status. You can set status at the top of the screen, as you see here. It’s really, really quite a rich experience.

If I hover over any of my contacts, I get this nice contact card. It gives me an easy way to go ahead and call them, do a video call, do an IM, an e-mail. I’ll just go ahead and do a quick IM here with my friend Mara. Type “hi” — obviously no spell checker there built in, we’ll work on that. Great, “hola.”

Now, as great as the client is, one of the things that we’ve done with the client as well is we’ve made it extensible. So, I want to give you a cool example of a tool that we’ve built called the conversation translator. It’s an add-in to Lync that shows some of the great client extensibility that you can do.

It basically uses the Bing translation service up in the cloud. So, I can decide, for example, pick which language I want to be typing in, and I can pick which language I want the other person to translate that language into. You can see I can pick from a whole host of different languages using that service. And I’ll go ahead and just click on Spanish here. And I’ll type something like, “Hi, how are you?” And you’ll watch as that gets translated automatically into Spanish. (Applause.) And Mara can come back and she translates that back into English for me. So, very, very cool technology that’s here. Now, we’ll say goodbye to Mara for a second, we’ll come back to her in a few minutes.

Now, that’s a little bit about some of the basic IM capabilities. One of the things that we’ve done with Lync is we’ve integrated HD video into the service itself. And this is incredibly important. Video is transforming the way collaboration is done. And we’ve worked with one of our partners, Polycom, to deliver a great multiparty HD solution. So, I want to show you what that looks like here. I’m going to go ahead and start a video call.

This is the Polycom RMX bridge that we’re using here. And as I take it full screen, check this out. HD video, multiparty. I’ve got four different people here. (Applause.) All in a single window provided by Polycom. Unbelievable clarity, unbelievable quality. (Applause.) Kirk, are you there?

PARTICIPANT: Hi, Kirk, hi everybody, great to be here at WPC with you. I’m joined by a couple members of the Lync team, Vijay and Maura, also with Sue Hayden, who is with Polycom.

KIRK KOENIGSBAUER: Cool. Hey, Sue, how are you doing?

SUE HAYDEN: I’m doing great, Kirk, great to be with you at WPC.

KIRK KOENIGSBAUER: Now, one of the things that you just saw, as Sue started talking, she came into the forefront of the screen, the Polycom system detects that and puts that person into the main line. Hey, Sue, anything you want to say about this particular service?

SUE HAYDEN: Yeah, happy to. What you’re experiencing is the Polycom RMX. That’s our UC intelligent 4, and that’s what’s providing this tight integration between Lync and the Polycom high-definition video. We’re seeing huge demand for this solution from our customers and it presents a great opportunity for every Microsoft partner watching us today.

KIRK KOENIGSBAUER: Awesome, awesome. Thanks a lot, Sue. There you have it, very, very cool solution using HD video here. (Applause.) Let me drop out of this for a second and we’ll come back to the group in a couple minutes. (Applause.)

So, I’ve showed you some of the experience that we can do on the PC using some of these kinds of systems. I’m going to shift gears here, walk over to this station, and show you a little bit about how Lync will be integrated into mobile devices.

I’m going to start with my favorite phone here, the Windows Phone 7. I’m going to swipe up and show you the new Lync client that we’ll be delivering at the end of this calendar year. We’ll have clients for all leading mobile providers, but we’re going to show you the Lync client here on Windows Phone 7.

I’ll go ahead and just open this up here. Take a second to load. And you see I’ve got my picture here. It’s got my status. I can go ahead and swipe over. You can see I’ve got all of my contacts that are here and their availability. I can go ahead and search the corporate address book if I wanted to right from Lync to add other contacts if I wanted to.

I can see things like my conversation history. If I want to go do a quick IM say with Vijay, I can just go fire that up here, type in a message, and that’ll do a quick IM. So, we’re incredibly excited not just to have the experience on the PC, but to be able to deliver rich IM, presence, and conferencing on mobile devices, and we can’t wait to get the Windows Phone 7 client out into the marketplace itself.

All right, so I’ve shown you some — (applause) — great, thank you. I’ve shown you some PC experiences, I’ve shown you some experiences on the mobile device; I want to show you what Lync will look like on some large screens.

So, I’m going to walk downstairs here, and move over to this device that you see, and this device is provided or built for us by a partner called Smart Technologies. They’re based in Calgary, Canada, and they build these wonderful, high-definition, interactive, HD video screens here. They’re touch-enabled. So, you can see I’ve got my Lync experience that’s here.

And if I want to go ahead and say join a conference, we’ve integrated — watch this touch experience that I’ve got here. I can just go fire up a conference right from this screen. I’ll click join online here. That will open up my Lync conference.

And if you’ve seen the Lync conference experience itself, you know, we’ve got the great video experience that we just talked about. On the right side of the screen, we’ve got this wonderful place to go and collaborate. Here we’re doing a sharing session with Microsoft OneNote, our digital note-taking tool. It’s got different notebooks, and tabs, and so forth.

But, again, this is touch enabled. So, if I’m in a conference I could just say go ahead and say, hey, let’s look at the PowerPoint presentation. I’ll show that view here with everybody, and we’ll switch that device here. And now I can go ahead and view the PowerPoint. Again, I can just go ahead and touch, and you can see how we move through the animations here, back and forth. A really, really great experience.

We also have, of course, whiteboarding capabilities built into Lync as well, and I can select that here. And this is where it’s particularly valuable to have this interactive screen, because if I want to, I can go ahead and I’ll use the input device here. I’ve just been using my finger, but now I’ll use the input device. I’ll go ahead and I’ll select, say, a highlighter, and if I want to say focus on profit, I can go ahead and underline that. Other folks on the team can be co-authoring in real time here. In fact, I can go ahead and move any of these items. I’ll just go ahead and take this chart. Check that baby out. We can just move that right over there. Unbelievable experience using the Lync, that’s excellent. You can see people adding that in. Great.

So, the last demonstration I want to give you, I’ve been showing you a solution here that’s an interactive whiteboard, particularly used for, say, commercial uses, or academic uses. We’ve looked at the PC experience. We’ve looked at the mobile device experience. I want to show you some experience using Lync where it can connect into your personal or your family experiences using Xbox.

Let’s walk around over here. We have integrated the Lync technology into the Xbox stack. And so I can do, using Video Kinect, I can do video conference calls here in this particular scenario. So, imagine I’m at home. I’m in my family room here, and I want to talk to somebody that’s using Lync. I’ll go ahead and just fire up the Kinect here. As you can see, I can go pick my contacts. We’ll go ahead and do a quick video call with Vijay. I’ll try that one more time here. Great. This will go ahead and start my video call. Again, I’m using the Kinect. Vijay is on his Lync client. And there’s Vijay right there. And, again, because it’s Kinect, watch as I just go sit down, the sensor follows me. I can just have a nice relaxing video teleconference here with my friend Vijay.

So, excellent experience, hope you guys have gotten a chance to see what we can do with Lync on all these difference devices. Thanks a lot, Kurt, back to you.


KURT DELBENE: Thanks, Kirk.

Hopefully that gives you a sense of the breadth of our vision, and the set of cool products that we’re delivering to really transform productivity into the next generation.

As excited as we are about the vision that we’ve set for productivity in a collaborative environment, we’re just as excited about the potential of moving to the cloud. The opportunity here is immense. We announced Office 365 just two weeks ago, announced its availability in 40 countries, and 20 different languages, and the early success of that product has been phenomenal. We have 200,000 people sign up during the beta and just as we launched two weeks ago we had 50,000 additional sign-ups since that point. So, we’re getting incredible enthusiasm and energy around that product, and the reason is both the ability to have that full productivity experience available to companies of any size, entities of any size, but also the huge savings that can come from that.

Customers are estimating that those savings can be as much as 50 percent. It’s estimated that a 1,000-person organization can save up to 350,000 a year by moving to the cloud. So, great productivity experiences, the ability to, as Steve said, to have that experience anywhere, whether it’s a train in Scotland, or at your desk, or at home, and to drive real savings as a result.

It’s worth kind of pulling together what Office 365 is all about. At its core we’re talking about Office. That product is known and loved by a billion people across the world. And it adds to that SharePoint, Exchange, and Lync, to allow businesses to stay connected. It has a unified communications collaboration experience. It has the world’s leading e-mail and calendaring solution. And it’s a product that’s right for everyone.

As I said earlier, it’s not about taking a consumer-oriented service with a limited set of functionality and saying, go at it enterprises. It’s about creating a set of solutions that works for companies of all sizes, from the smallest company, the two-person shop all the way up to large organizations like the American Red Cross, with 66,000 users moving over to Office 365, and it’s backed by Microsoft. And it’s backed by some of the best partners in the world, all of you here today, so a phenomenal opportunity for us moving forward.

It’s also a product that we put our heart and soul in, in making it the leading industrial-strength product that you can really count on to move your business to. That means it’s reliable. It means it goes beyond thinking about meantime to failure to thinking about geo-redundant datacenters across the world. It means about automatic recovery, so that we sense issues that we have along the way, and we fix them before they become a problem. It means being always up to date, keeping the service always up to date, keeping the clients up to date, as well.

It also means transformations for how we think about developing the software. We’ve actually moved the responsibility to run the services into the development teams. So, there’s that fast recovery process saying, oh, we see what’s going on there, not just how do we get things working again, but how do we change how we’re building that software to become even more reliable in the future. And it means service-level agreements that are backed by real financial commitment, a critical thing in this business.

It means security. It means being secure by design, something we’ve been working on for decades. It means thinking about physical security, and who has access to our datacenters. It means thinking through our policies and auditing and who do we give that information to, who do we not give that information to? It’s the customer’s data. They’re the ones who ought to be able to hold onto that data.

So, it’s enterprise class for everybody, and we think it’s a huge value proposition, a huge differentiator that you can go to your customers and tout versus the other offerings that happen to be out there in the market today. We will be the leaders in cloud productivity in the same way that we are leaders in on-premises productivity and it will be up to you and to us to get us there.

So, a number of you have actually started transforming your businesses to the cloud, and we very much appreciate that support. We’ve doubled the number of cloud partners in the past year alone. But, we’ve put together a video that kind of brings together some of those experiences that some of those early cloud partners are having, some of the success. So, let’s watch the video and get a sense of that.

(Video segment.)

KURT DELBENE: Hopefully that gives you a sense of how some of our early partners are embracing the cloud, and the success that they’re seeing as well. There’s huge opportunities in terms of the partner engagement that’s possible with the cloud. In some sense, even richer than the engagement that you have with your customers today. You can have discussions around how they move to the cloud, do the planning with them. You can help them in the transition to the cloud itself. You can add value added services, think about the SharePoint customizations you do today. All those customizations are needed in the cloud environment just as well as they’re needed on premise, and you have to think about how you bring together the on premises deployment with a cloud deployment.

There’s integration opportunities, like Kirill will show you a great example of how CRM integrates with SharePoint. Those same things are possible when you think about the CRM Online service integrating with SharePoint in the cloud, the same way you think about that integration on premises as well.

And then there’s cloud-based applications. There are either greenfield applications, or a number of our current partners are actually moving their solutions to the Web. So, for instance, Formatus, who actually builds forms for SharePoint, that’s a great product on premises, it also works in the cloud as well; or Nintech who does workflow on SharePoint should work just as well in the cloud. So, huge opportunities there.

We really believe that Office 365 is a conversation that you should have with every customer, particularly those who are on Office 2003 today, because remember Office 2003 does not work with Office 365. So, this is an opportunity to have that talk about that transition as well.

We’ve also been busy to make sure that we can assure your success by the support services that we have for you as well. We’ve deployed a cloud-ready enterprise agreement, which means that customers can move any number of their users to the cloud, and retain on-premises rights to them for the first year of the agreement. A huge transition opportunity there. We’ve revised our advisor compensation model, so that first 12 percent that you get for moving people to the cloud, you’ll get that sooner to help with your cash flow. We’ve got a premier deployment program, which enables a deployed expert to work with you on up to three engagements. And, finally, the Office 365 Marketplace is open. And this is an opportunity to get online and get free lead generation. We’ve had one customer say that in the first two months that they were on the Marketplace they drove $350,000 worth of new business by being involved in the Marketplace.

So, I hope you will get as excited as we are. We are committing our entire team to think about the future being in the cloud. There is not a person in my dev team that doesn’t think about how the cloud is impacting what we do in the development team each and every day. We hope that you’ll sign up. We hope you’ll register to be an online Office 365 services partner, and use the service yourself. It’s not always known that you can have up to 250 of your employees actually use the service, the enterprise versions of service, for free. And so there’s an opportunity for you to eat the dog food, so to speak, and learn more.

Kirk, who you just saw do the Lync demo, will be giving the Office Division Value Keynote right after this, and we’ll also have an Office 365 Partner Launch session later on today.

So, that’s it. I hope you get a sense of, one, we are incredibly pleased and thankful for all of the great work that you’ve had to really make a success in the Office business today. We will continue to be the leaders in productivity, not just in today’s world, but as our world moves to the cloud, and we’ll do it through the strength of the partnerships that we have with everybody in the room. So, thank you for our shared success.