Steve Ballmer Speech Transcript – Address at BizApps 98

Steve Ballmer Address at BizApps 98 Conference

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

MR. BALLMER:Well, thanks.Double thanks for spending all the time with us this week.And I think with all the thunder, and presumably lightning and rain I’m hearing, a triple thanks.I’m sure many of us could wind up spending this evening here in Las Vegas, the way the weather is going.

The one thing I’ll promise you, though, before I start, is even if I thought I had nearly half as much to say as David Vaskevitch, I promise you I won’t go two-and-a-half hours on Friday afternoon.

(Applause.)

MR. BALLMER:When I finish, I’m going to have a chance to take some of your questions, collect some of your thoughts, and hear what you have to say.So, if you don’t mind, I thought maybe I’d do a little informal audience poll, just before I got started, and kind of get a sense of who’s out there.Just a small show of hands, how many folks in the audience here have ever written an application that used CORBA?

(Show of hands.)

MR. BALLMER:And for how many people has it been important to do so-called “100 percent pure” Java applications?

(Show of hands.)

MR. BALLMER:How many of you have written applications using Lotus Notes?

(Show of hands.)

MR. BALLMER:How many people have built applications using Oracle databases?

(Show of hands.)

MR. BALLMER:And how many of you have written components to plug into a Netscape browser, or have written applications that use Netscape browser plug-ins?

(Show of hands.)

MR. BALLMER:Good.I wanted to get a little bit of a sense of the lay of the land.I guess that gives me now the length of time of my speech to prepare for the audience a little bit of a feel for what people are doing outside of the things that they’re doing with Microsoft products.

I certainly hope that you’ve had a chance to enjoy this conference.I’ve got to say that I think for us it was very different.And we’re not sure if different is good or different is bad, but we try to be very different in the sense of starting with the kinds of application and development problems that we think you face every day, and backing into what we need to do to put together the right pieces, products from Microsoft and others technically, as opposed to starting with a new product and telling you about it, and trying to do some technical education.

Particularly important for us, and I hope you’ll be able to fill out some of the feedback forms or send us an email, we do want to get a sense of whether the kind of presentation approach, the CDs, et cetera, that we did for the conference really did make sense or not.So, please, we really do invite the feedback.

I think the world of application development is only getting more complicated.The kinds of things that the business community wants to see out of IT, the kinds of applications are expanding and getting more complicated.So, we need to make sure that we’re providing the right kind of information and support to you as you attack those challenges.

You had a chance to hear a lot during the course of the last few days about the digital nervous system as we see it, and the role of commerce, and knowledge management, and tracking, and operational applications, in terms of the potential for those things to add value, and a little bit of our view of how you might go build those things.

We think it is equally important, and I wanted to spend a little bit of time talking about some of the initiatives, some of the investments that we’re making, not only giving you the tools to build these applications, but to improve the end user experience in terms of simplicity and ease of the experience, but also the tools that we’re giving the other members of the IT community to deploy these applications, to manage them, to instrument them, to secure them, because at the end of the day, the key is getting the applications built.But we know that you and we can face a lot of road blocks on these applications if they don’t fit naturally and with the right kind of reliability, et cetera, into the scheme of the overall IT infrastructure.

Our company this year will spend about $3 billion in R & D, and over $2.4 billion of that will be spent on the three key products that are involved in almost every scenario you saw here, Windows, Office, and our BackOffice line of products, NT Server, SQL Server, Exchange and Site Server.That’s sort of the backbone foundation, and those products need to be extended to give you better facilities to rapidly build the kinds of applications that will help your business, but also we need to provide the improvements in the infrastructure, and we’re spending a lot of our R & D effort now in improving the manageability, the interoperability of the core platform.

I want to start with interoperability because could see, when I did the show of hands before we started, almost everybody in the room does have a set of applications, a set of code, a set of platforms on which they’re working that come from companies other than Microsoft.And I think there has been, at least, in the press a prevailing view that we’re not very sensitive and focused and attuned to the issues of interoperability.I’d simply be the first to admit that there are times when we blow it.We miss some important interoperability requirement.But we’ve had a chance to really, I think, learn in a very gut way the importance of interoperability, because every product we’ve built, for every product we’ve built, just about, we did not achieve the level of success we hoped until we focused on the interop issues, whether that’s the interop that we needed to put into Windows NT Server to Novell, or that’s the interoperability requirements that we had with Excel to 1-2-3, Exchange to Prop to Notes, to other electronic mail systems, SQL Server and our database development tools with Oracle, or the interop requirements that we’re seeing today really very strongly from application developers in the UNIX world.

We have people who want simple file management services, and Telnet services back and forth between Windows and UNIX, people who are pushing us for transaction integration services to other UNIX-based and host-based transaction systems.We’ve done the work now to put COM on top of UNIX, Internet Explorer on top of UNIX.We’ve put a lot of effort into working with third party on bridges between COM and CORBA.I’m frankly surprised at how few people in the audience here have built to work with CORBA applications, but to the degree that UNIX applications remain very popular, which we expect them to, we know it will be important for us to have great interoperability between the Windows world and the UNIX world in all of the application services, cueing, object broker, transactions, et cetera, so that you can build applications that execute across those two environments.

We’ve also put a lot of effort into a number of initiatives designed to promote application interoperability across vendors for applications in the retailing space.We have an initiative that we call Active Store, which promotes a set of conventions and protocols on top of COM to get applications to work together in the retail industry.We have a thing we call the value chain initiative, where we’re working with a set of people who make goods, sell goods, and who ship goods to, again, promote a set of COM protocol standards so that applications in the manufacturing space, the distribution space, the retailing space, can exchange information seamlessly across the Internet.

We’ve worked with Baan on the bridges between their application and the COM world.The same thing with SAP.We think XML will be terribly important, and we’re putting a lot of energy, we have over 50 people working on important standards efforts around XML in order to promote application — exchange of information at the application semantics level from vendor to vendor.We’ve been out licensing our Visual Basic for Applications technology quite broadly to ISPs to build applications that they want to see customized.And the list goes on and on.You’ll see us do more of these initiatives.We have a set of protocols that we’re working with industry partners on in the financial services space, in the health care space, in the state and local government space, all designed to allow you to take third party applications and very quickly get those things to interoperate and satisfy the kinds of scenarios that we were talking about throughout this conference.

One of the — what shall I say — comments, charges, statements, very frequently leveled against NT Server today is, it still requires too many reboots in the data center environment.That is absolutely a job one focus for us, because we know that you’ll get a lot of resistance to building and deploying NT Server applications if those things can’t stay up seven days a week, 24 hours a day.

I was talking to the CIO of a large Canadian bank on the phone before I flew down to Las Vegas today, and he was talking about an application that they had built with IIS using JavaScript, using Microsoft J++.They’re very happy with the application, except once every two weeks, it inexplicably, and in a way that they can’t even diagnose, the application goes away.They think it’s some interaction between NT Server, IIS and SQL Server.And we were talking about some of the techniques that we need to pursue not only to make the system a little more reliable, but to make problems like that more diagnosable for the people building the applications, and the people who will run those applications in the data center.

We have a service pack coming out for next month, Service Pack 4 for Windows NT Server.It’s primary focus is on stability and reliability, year 2000 fixes, bug fixes, memory leak problems, security issues are being all challenged.And a key goal for us as we bring Windows NT 5 to market next year will be to make sure that we keep the service packs coming on a much more regular schedule than we have so far, and that NT 5, when it ships, NT 5 has the same kind of reliability, we take no steps backward when we move from NT 4 to NT 5 in terms of reliability.NT 5 has been designed to improve availability.There are fewer things that require reboot in order to do a configuration change.And so we think there’s been an architecture on NT 5 that promotes high availability, high reliability, but we cannot, will not take steps back.So, we need to make sure we take the right amount of time to really get that product right.

There’s a lot of focus on manageability, manageability of the data center and deployment and management of the software out to the client.And we’ve done some of those products ourselves.Our systems management server products have begun to get some real market acceptance in terms of using it as the tool for deploying and configuring change management of software components across the network.There’s more technology and infrastructure in NT 5 to help with these challenges.We added the Windows Terminal Server to the arsenal of products that we sell, primarily so that application developers, like the people in this room, would have the option to deploy applications just to a central server, and your codes can all execute either out on the client or you can get all the client side code executed up on the server, to support down level clients, or to just generally reduce the number of possible points of failure in terms of the deployment of a complicated application.

We have a lot of technology that we have built and are improving for management.The management console, the WMI management infrastructure, which is WBM based, the scripting host which will come in NT 5, the directory which affords the ability to do policy-based management, and the intellimirror software which allows for the automatic systems managed promulgation of application components from server to client, effectively looking at the client simply as a cache for components that which are all stored server side.

There’s a lot of work either in place, being enhanced, or being offered as part of NT 5, but all of the management infrastructure that we offer is only a part, I think, of what will be required to make the applications that you build highly manageable inside your organization.So, we’ve really tried to reach out broadly to a set of partners to work with on management solutions.Companies like Hewlett-Packard, Computer Associations, Platinum have fairly broad management schemes, which they’re now targeting with a lot of energy and effort on the Windows and Windows NT environments.But if you look in the area of change in configuration management, there’s a whole host of people from Blue and Babich (sp), down to Zoom It who are building change in configuration management software targeting the NT environment.

Security, there’s a wide range of people who are building security management software.Performance, there’s a set of people who’ve put a lot of effort in there, people like Blue Curve, and others, who I think have done very, very good work.Both Compuware and BMC have done not only problem management software, but very well tailored to SQL Server and Exchange, where literally they have knowledge management modules that anticipate and understand common problems that are scene with SQL Server and Exchange in deployment, and can do the early alerting, and even in some cases automatically fix the problem before things proceed.The event management system in Windows NT needs to improve, but we do have a set of partners who have done some very good work adding onto the existing infrastructure in NT and building management based solutions around those events.

Batch and output management, there are people who have done work.Storage management, there’s a range of people who have done great work on the NT platform.Today, I think I can fairly say that there is a comprehensive set of tools for the people who are actually running the networks, running the data center, and deploying your applications to keep these NT Server based applications and Windows client based applications up and running with the kind of performance and reliability that you want.

As we go forward and as we march forward with these partners, I think that environment gets better, more integrated, still more comprehensive, but I think people’s perceptions of where NT systems are from a manageability perspective is broadened to some degree in a view that was appropriate in the past.

We kind of promised at this conference we wouldn’t talk about future.I think we cheated a little bit on that.For people who went to the collaboration track, I guess you had a chance to hear a lot about Office 2000.How many people in this room have a SQL Server 7 beta?

(Show of hands.)

MR. BALLMER:We sure cheated on that one.But it’s not too far in the distant future.But one where I think we tried not to cheat too much was on NT 5.We tried to really focus the discussion about what you can do on NT 4.We’re still probably, who knows, eight months to 12 months, how’s that for being vague, away from NT 5 availability, but I did want to remind people, particularly from a developer perspective, of what some of the key attributes are of NT 5, and help remind you of the key design goals, because I think you’ve got to have that in the back of your mind as you leave here, understanding where we’re going, and where this product might fit in your plans.

I want to start at the server level, and I want to talk a little bit about the things you’re probably less interested in, file services and print services.This is the place where Windows NT Server grew up, delivering files and acting as a print server.This year we’ll sell about 1.8 million Windows NT Servers, but less than half of those will actually be used for file and print service.Over half of the NT Servers that get sold get sold to run the applications that you build.And they get sold where people would traditionally have picked a UNIX server, or perhaps tried to do something with a simple file sharing based solution.But less than half of those will be file and print services.

NT 5 does do a world of good for the network manager trying to manage a network of servers that includes NT file and print servers.The directory improves the manageability of the file system.We put in disk quotas, and hierarchical storage management.We have dynamic volume management capabilities.We’re working with the people who build high-end storage solutions to make sure that those are available on day one with NT 5.The print service is so much better in NT 4 than it ever was in any earlier release, but there’s a lot more that we can do to improve the user interface, the administration capabilities on printing.And we’ve put a lot of work into making NT 5 a better file and print server.That’s the part you probably don’t need to hear about, but it’s important about half our customers.

The other half of our customers are building applications.They’re building applications that are Internet based.They’re building applications that use databases.They’re using applications that have intelligent business logic running up on the server.In other words, they’re running applications like the ones that you build every day, and the ones that we tried to talk about extensively at this conference.

NT 5 is not a boldly go where no man has ever gone before release from the perspective of the application developer.The job one for NT 5 was to improve manageability and cost of ownership.But there are some important points from the standpoint of application developers about NT 5.The improved performance, scalability, memory addressing in NT 5 does make it, and does make applications running on top of it a clear candidate for more mission critical, more robust and larger applications.

MR. BALLMER:(In response) We’ve also done a lot of work to improve the availability and manageability of the system, whether it’s auto start of failed services, clustering or a variety of other techniques.The key emphasis from a server level, from an application perspective, focus around COM-plus, which you had a chance to see a demonstration of earlier this week, and the new security tools which your applications can take advantage of, in terms of the way they choose to do trusted interaction with one another or with third party applications across the Net.

We’ve also enhanced the web services capability to make it easier to author and version application either components or web pages up on the server.And we’ve done some things to improve the performance and overall CPU utilization of IIS.I think all of this is good for you as application developers.But, there is not a fundamental application development programming model change that comes with NT 5.It’s not like Windows 95 in that sense, where there really was a fundamental change in that case, from 16 bits to 32 bits.

The core infrastructure for application develop, whether it’s COM, whether it’s MTS, whether it’s the cueing code, whether it’s the new capabilities in SQL Server, some of the things that are in Exchange, the we’ve evolved the Internet infrastructure with DHTML, those components are largely either available today or will be available to you before NT 5 ever ships.And NT 5 simply provides a more scalable more available and more manageable platform to run your applications.

Windows NT Workstation Version 5 has that same characteristic.Again, the focus is not in changing the application programming model.We focused on ease of use features for end users.We focused on making sure that we’re faster in every way than Windows 98, yet we run the same applications that Windows 98 runs, and we pick up many of the manageability and total cost of ownership features that people associate with Windows NT Server or Windows NT Workstation today.So the app model, client and server, stays largely the same.COM-plus is the most significant new initiative over the next year.And we simply focused on providing a better platform to run the kinds of applications that we were talking with you about over the last two-and-a-half-day period of time.

We’ve been fortunate as a company.There’s been great acceptance of our products.And we certainly say thank you to all of the people in this room for using our products, for developing with them and for taking advantage of them.Just some statistics to give you a little bit of perspective on how we’re doing, because we know every day there’s two inputs that are important to you as you decide how to build your applications.One input is, what technically will allow you to do your job best and fastest, and the other input is, what tools and run times are popular and will be easy to get the data center and other people to support.

Internet Explorer today, over 53 percent market share on a worldwide basis, coming from essentially zero, close enough, two years ago to about 53 percent today.Microsoft Office and I hope you guys have a very rich sense of how we’re trying to evolve Microsoft Office to be a richer run time for you to use in application development.We’ll ship over — we shipped in the last 12 months over 33 million units of Microsoft Office.Microsoft Office market share is very high, shall we say.But, perhaps more important than the high market share is the very broad acceptance of Office, which means you can count on it as a component in your applications, since most of the desks that you target will own an Office license.

And the amazing thing about Office is, the rate of sale of Office is actually increased in many regards over the last couple of years.We thought people would stop upgrading, they’d stop buying.Yet, we found that people more and more are trying to really standardize this infrastructure, both from a management standpoint, as well as to give developers that kind of platform to build on.

SQL Server, over 4 million new users or SQL Server last year.How does that compare might be a good question.Well, Oracle probably shipped about 5 million — or licensed 5 million new users in the last year, where we licensed 4 million new users.That is very different than, I think, most people’s perception of what’s happening in the market place.But, we are, from a unit perspective, seeing great uptake and great acceptance of SQL Server.We’re certainly very thankful for that.But, I think it should start increasing everybody in the room’s confidence about using SQL Server as the standard database for the applications that you build.

Windows NT Server, 1.8 million servers, as I said, over half of those were used to run applications, database, communication, applications, logic, electronic mail, collaboration software, e-commerce, et cetera, et cetera.And if you take a look at it, total NT server sales outsold all UNIX and all NetWare combined.And if you compare just NT Servers that are running applications, no file servers, no print servers, and you say how does that number compare to the number of UNIX servers sold last year?Last year we passed UNIX, we think.We think NT is now the number one unit volume server running applications around the world.Certainly, we’re now the number one Intranet server.And NT has become the number one platform to run commercial Internet sites.There are still more Web sites hosted on UNIX servers, and until we do a better job of hosting multiple virtual web sites on one NT machine, that’s likely to be the case.But, we’ve made good strides on that, with Windows NT Version 5.

I particularly want to highlight two products where I think we’ve come a long way and that I think are important to you as application developers.The first is Microsoft Exchange.Two years ago we were nowhere, essentially, in the marketplace.We now licensed — the last two quarters in a row we have licensed more, installed more new users than any other mail system in the world.There are over 11.8 million new users of Exchange in the last 12 months.That number is accelerating.And if you look at the deployment, companies like General Electric, with 150,000 seats, Lucent with 75,000 seats, Siemens with 130,000 seats, all of these people have plans to go further with their deployment.I think it is safe to say that of the top 10 largest electronic mail deployments in the world, at least 8 of those are done today on Microsoft Exchange.

For many companies this is a mission critical application.The ability to communicate, to collaborate, to send price quotes, to send competitive information, I will tell you I get many phone calls.If there is a problem in the electronic mail system, and some CEO someplace can’t get a piece of mail, CIOs they call they’re mad, you hear about that even faster sometimes than when a mission critical application of the more typical form goes down.And I think it’s just a great testimony to the ability of Windows NT to run the kind of mission critical applications that not only our company builds, but really that all of you build all the time.

The other product that I’ll highlight, because I think it’s one of the best pieces of work we’ve ever done.It’s a little bit of a sleeper, is the Site Server Commerce product.It’s used on 15 of the top 25 commerce sites on the World Wide Web today.It’s a product that has had amazing acceptance and approval in the reviews that reviewers have done about it.And certainly, for anybody in the audience looking at commerce applications, I encourage you to take a look.Just a small show of hands, before the conference this week, how many people here had done any work with our Site Server product?

Great.Well, I certainly recommend everybody take a look.It’s such a red hot area.No matter where I go, no matter what kind of customer I talk about, everybody wants to talk e-commerce, e-commerce, e-commerce, e-commerce.It’s crazy how much interest there is among he businesses of the world in the electronic commerce phenomenon.And that makes for incredible opportunities for everybody in this room to get skilled up and understand how to build the important e-commerce applications of tomorrow.

Rather than just have me talk about the acceptance by customers of the platform, I thought I’d have James Utzschneider come back on up and demonstrate for you an application that Toyota has deployed in their industrial equipment division.Industrial equipment means their forklift business.It’s a very large business.I gather about a billion dollar business for Toyota here in the United States.Working with Toyota, some of our consulting people, some of our partners, and the Toyota people themselves put together an application to automate the way their dealers interact with Toyota headquarters.And I’m going to let James do the demonstration for you.

MR. UTZSCHNEIDER:Thanks, Steve.

Last demo of the conference.And it’s not dissimilar to the scenario that we’re demonstrating with Fabrikam, because Toyota is a business in transition, in terms of the systems that are deployed.They have a dealer auto-processing system that they deploy to 180 dealers throughout the United States.It’s a legacy application built with DOS and FoxPro on the client that was designed to do daily batch updates to an order processing system running on an IMS mainframe in the host environment. And what they’ve been able to do is maintain their investments in their order processing system, without touching any of the IMS code.But, they deployed a three tier application, putting some application logic on a middle tier app server, and setting up a customer tracking database on SQL Server, and they are now using a web front end. So in addition to maintaining their order processing environment, they now can start doing tracking, some more detailed processing of business rules.And they’ve started a platform for collaborating on different quotes from customers.

MR. BALLMER:Toyota is in the process of deploying these.They do about 16 a week.The average size of the dealer is about $14 to $15 million a year.And this is absolutely the mission critical application, not only to Toyota, but to those medium sized businessmen who run these dealers.

MR. UTZSCHNEIDER:Yes.So what we have here is the screen that the employees at the Toyota industrial equipment dealers throughout the United States would see.And it’s a visually appealing DHTML screen.I will log in —

MR. BALLMER:You didn’t go into forklift sales, did you?

MR. UTZSCHNEIDER:No, I didn’t, although I have driven one, like over someone’s foot once.But, that was a former career that didn’t last too long.

This is a DHTML client.We’re doing some business processing down on the client, and we’re doing queries up to a SQL Server database up here.So we can do some tracking here, and we can click on truck order, and we bring up a maintain truck order command.This goes up and it makes a query to a database, and it takes a result set that it populates into a frame on this DHTML.We don’t have any Active X controls or Java applets running down here, so it’s all taking advantage of the DHTML support in IE 4.

I can click on a particular order and bring it up and get information about it.I guess you were buying a lot of forklifts yesterday.So I can go through, and if a customer comes into the store I can give them information about what the status of their order is.We can have updates in terms of the ETA, et cetera.Previously, there was a batch printout that you would get on a daily basis.So if a customer came in at 10:00 in the morning, you would say, well I’ll get the report for you at 5:00 this evening and you can come back tomorrow and I’ll tell you the status of your part.And what they do now is they have it run online.

MR. BALLMER:Some of this information is being pulled off the local SQL Server at the dealer and some of this information is being pulled over — from COM TI to the host, is that right?

MR. UTZSCHNEIDER:Actually, all of the data is on a centralized SQL Server database, because one of their goals was to have their dealers just focus on selling forklifts and not have to administer applications down at the dealer environment.So it’s similar to the type of application David Vaskevitch was talking in his keynote, where this is a single function application deployed using DHTML technology, with complex processing taking place up on the server.So we can go ahead and add an order and up pops some different tabs and a page.And this is all DHTML, so it’s DHTML running down on the client.So we can go ahead and we can enter in the purchase order of what the customer had given us.

MR. BALLMER:This is an application that was built by five people over approximately a six month time frame.So it’s about 2-1/2 man years, roughly, of total effort went into building this application starting with the basic infrastructure that lived on the mainframe and the applications they had already in FoxPro and DOS.

MR. UTCHSNYDER:Yes.Now, they have a very large parts catalogue and they have many options that customers can use to order these parts.Previously you had to look up all of this parts information on a paper manual and accurately type it in for the daily batch upgrade.Here we can make a query into a parts catalogue up on the SQL Server database.And let’s do a search for a gas powered forklift.

So I can go into a search, and here we get a result set now, where we did another round trip to the database that returns that, so we can pick that particular one.And forklifts have masts, the things that lift heavy containers in front of it.And that’s an option on a forklift.So we can go ahead and pick the type mast we want configured on this forklift.And let’s go ahead and just — oh, let’s go just buy it.

So we hit transmit and do you want to save it to the database, and enter it into this IMS mainframe on line, via the COM transaction integrator.And I hit okay, and it says, not all required fields were entered.What do I do?Oh, I didn’t put in the customer name.So we did data validation down on the client.Previously, if you had made a mistake in your data entry you would have found out about it the next day.So I want to order this for a customer.

And we want to do a search on customer.And I — like I’m a forklift guy, so I don’t like to type, so we’re going to order one for Fabrikam.And we’ll go do a search, and now we’re going — a query to the database for everyone that has a customer name that begins with F.And we have a stored procedure up there that says, look, I’m only going to return 50 rows over the Internet.I’m not going to have 5,000 rows go down to someone who did a bozo query like I did, where I’m just asking for a customer with an F.But, Fabrikam starts with and F-a, which is right there.So we can click Fabrikam.

MR. BALLMER:Convenient.

MR. UTZSCHNEIDER:And before I actually book the order, let me just quickly bring up the former screen that they had on the DOS FoxPro application.And — don’t laugh, because when this was built this was really cool.They were using computers to order their parts.But, technology has advanced, and they want to have more functionality.There is no querying capability.You had to manually, accurately type each character in.It got batch uploaded to the mainframe at the end of the day.If you had an error, you found out at that time and had to reenter.So from this standpoint you can go ahead and transmit the order.And we didn’t have to change any of the lines of code on that IMS application.Previously they had written an APTC application that took the FoxPro file, parsed it into a APTC call that went into the host.And it goes ahead and makes that call, and then it gets a result set.

So now we’re simulating calls out to the mainframe.We’ve stubbed the mainframe out.So this is the report that the mainframe generates.And this used to be a paper report that would come at the end of the day.And they get it right now.So you have a receipt record and it’s now entered into the database that this order was taking place.Because you can save orders before you transmit them, you can have multiple people in a dealership work on an orders, if it’s a large, complicated bid involving many parts, et cetera.

So this is just an example of — and I think this is all that will show up in this app.What I wanted to get across is, in addition to the people that we had up on stage this week, like Merrill Lynch and Merrill Sells, and Sprint and Red Robin, there are many other customers out there today who have in production the type of applications we’ve demonstrated for you.And this is a good example of one.Middle tier order processing components, that call into the mainframe, which creates a platform for you to start doing more value added services to your customers, like making queries on customer records, like tracking orders, like enabling you to collaborate on work together.

So that concludes the demo.

MR. BALLMER:Awesome.

MR. BALLMER:(In progress.)Just a little bit of history for you on the project.Phase one, kind of the development phase, started November of last year.The first application was just parts ordering.Phase two is the phase that we’re in now, and we’re currently at about a 12-person team in phase two.Phase one, which we demo’d, was the five people for about six months.There are people from Toyota, people from Microsoft, and from two of our partners in the Southern California area, SEI Information Technology, and Systematic System Integration.

I think the key element, if I put myself in your shoes in terms of what’s important on the kinds of decisions you’ll make about what to write, we’ve got to have great technology.And hopefully over the course of the conference, you’ve had a sense on how you can take the pieces and parts that we provide, and that our partners provide, and put those together fairly quickly and conveniently.Those applications have to be easy to manage and install.They have to be reliable.The applications have to run on an infrastructure that people are going to want to maintaining, which are using run-times that are popular, and I think it’s very important for you to understand the range of partnerships that we can bring to the table to help you in the creation of the application, or to help others in your organization on the deployment and management of those applications.

There are over 4.3 million Windows developers in the world.There are over 100,000 consulting and services firms that we work with in the United States alone.We have over 900 solution provider partners who can help with this type of activity.There is a rich third-party infrastructure that can supplement your own resources as well as the resources that are available for the deployment and management of these applications inside the organization.

The last thing I’m sure you will all insist on, you want to know we’re going to be there for you providing the kind of information, advice, technical support, that you need to get your jobs done.We have over 2,000 people in R & D focused on nothing but tools that support developers.We have another 8,000, of course, building the run-times which we show and which we talked about in Windows, in SQL Server, et cetera.

But in addition to that group of people, we have over another thousand people who simply are focused on answering your questions on the telephone.We have a tremendous knowledge base now available for you through Microsoft Developer Network, which you can get in CD form or you can get on the Internet.We have a very large membership and an active community of site builders, and developers online.Since the start of Microsoft, which is now, what, 23 years ago, the key to our success has been in our desire to, our support of, and the support which the development community has shown for our product.

We talked a lot about the enterprise and deployment, and manageability, those things are important.But at the root, our products cannot succeed if we are not doing the right job of building products for you, providing technical support for you, providing information for you, providing learning opportunities, listening to you, learning from you, modifying our products, enhancing our products.Developers are the heart and soul constituency of our company.And that’s why we’re so gratified that so many of you came and spent the time with us over the last two-and-a-half days.We hope many of you will have found this conference super useful and interesting.

If there are comments, questions, feedback that you have, I’m going to break in a minute, and have a chance to hear from you, please let us know, what can we do?How do we improve the product, how do we improve the training?How do we provide better support?How do we listen better?Whatever it takes, responsiveness to you is job one at Microsoft.So, please, please, please let us know.

Again, I hope you very much enjoyed the conference.We certainly loved having you.And thank you very much.

(Applause.)

MR. BALLMER:There are microphones in the aisles, at least I can see one in this aisle and this aisle.Please, questions, comments, thoughts, suggestions, please come to the mikes and start.James will join me.We’d love to hear from you.

The gentleman over here.

QUESTION:Yes.Both Jim Gray and Mr. Vaskevitch discussed an issue with our inability to find documents as a core issue that computing faces today.Several years ago, Microsoft was talking about an extensible file system that would allow us to assign attributes to documents, and then search those in a programmatic fashion.Is that a venture that’s died, or is there a future for that in our industry?

MR. BALLMER:Well, there’s absolutely a place and a role, and it hasn’t died, although I’d say our first attempt sort of faded into oblivion, because it wasn’t working.And we’re now working on a new set of ideas to deliver exactly that set of capabilities.David, when he was out, talked about something I think he calls Storage Plus.I think that’s the code name they like to use.But the concept of Storage Plus, David talked about the need to bring together the best of unstructured storage and structured storage.And one of the key reasons to do that is to make sure then that you can build the user interface on top of it that fundamentally changes the way you navigate, search for, find and use information, including the problem of document location, et cetera.So, it hasn’t gone away, but our first attempt didn’t play out quite the way we had hoped to.

QUESTION:First, I would like to thank James, and Dan Rogers, and the whole group here for putting on a really great demonstration, the whole thing, and really showed that there are people in Microsoft that understand what enterprise computing is about.

(Applause.)

QUESTION:My question is, how do you, as the president of Microsoft, going forward, see the new application developer, customer?

MR. BALLMER:As a unit.

QUESTION:Thank you.How does that fit in?Right now, I understand there’s sort of an adjunct to the sales organization?

MR. BALLMER:Yes, it is.Though, I didn’t understand.What is the question?

QUESTION:My question is, I think for a lot of the people in this room that are doing big systems development, what we used to call corporate computing, and now in the ’90s we call enterprise computing, how are we going to work and partner with them to get into the applications server aspects of your product, the things that we really need to help solve the business solutions?

MR. BALLMER:Good question.I’d say it was what, it must be about a year-and-a-half or so ago, maybe a little bit longer than that even, it became very clear to a number of us that if we ever wanted to see our platform graduate to, you’re right, the word of the ’90s, do enterprise computing, not just do file sharing, or even electronic mail, which is kind of enterprise computing, but really to run the applications that are at the backbone of the business, we would need to do two things.

Number one, we’d need to beef up some of the technologies that we had in place, SQL Server 7 is a good example, COM+ is a good example, there’s a range of other things that we’ve talked about that we had to do, but we also had to put in place, in addition to our support organization, in addition to our development organization, we needed to have a group of very technical, I’ll use the word salespeople, because you pointed out they do live in our sales force, very technical, evangelist relationship mangers, people who can really talk to and touch customers on these kinds of issues.And that they would work in conjunction with our consulting organization to really be the heart and soul of understanding what you need, what you want, helping you understand what we have, and helping us understand what you want us to do in the future.

That was the reason we set up this group that we call the ADCU.We set it up in order to focus specifically on that set of issues about a year-and-a-half ago.I think it’s probably taken us almost a year-and-a-half to get some traction, to really have good models of what kinds of applications you’re trying to build, what industry initiatives, like the value chain initiative or active store, et cetera, that would be important, and I at least think they’ve made a lot of good progress.But the proof will be in the pudding.The proof will be in whether people use COM+, the build mission critical applications, they use SQL Server, whether you tell us conferences like this were a waste of your time or were valuable, you learned something.The CD has good information, you learned something.

This group is really at the forefront of trying to stitch together our entire product line in a way that is sane for the kinds of enterprise computing problems you’re attacking.So, please send us feedback, send it to any of the alias, I’m steveb at microsoft.com, send it to me, whatever, but please let us know how we’re doing.

MR. UTZSCHNEIDER:The group was originally called the Business Applications Division, until someone spelled the acronym.

MR. BALLMER:Yes, Business Applications Division was BAD, literally, as an acronym, and since everybody in our industry likes acronyms, we didn’t want to say this was the BAD Customer Unit.It didn’t seem to make sense.

QUESTION:I usually get questions about whether we should use Microsoft product or general about Microsoft versus other platforms.And I typically go ahead and my answer goes something like this: I truly believe that Microsoft, and I admire the people at Microsoft more for the usability that they have brought into the software world.You might not have originated it, but you have made it a reality here.So, I admire you guys for that.That’s been great work, and you continue every day doing it.You can see it in your new applications.

However, then comes the other side of the coin, when I say, they have not been as good with reliability and scalability, in particular.So, there’s a new, different trend, I would say, that started in the software industry where — I’m sure you must have read Forbes Magazine last August, where open source specifically is starting to become an issue for major businesses.It’s not a drought issue like it used to be, where you would say, no business uses that.IBM has embraced the Apache team.Netscape released their — (inaudible) — Informix is releasing Informix SE on Linux, and Oracle is also doing that.I hope to see that — (inaudible) — you’re supporting Corvarus (sp), which is available via open source, made available by the MIT, and that’s a pretty sensitive piece of software.So, I actually see that you believe in this.

My question is regarding what is your strategy regarding this in the long-term?

MR. BALLMER:There really, I think, maybe two issues.Number one is, can we provide our software products for free?The answer to that is, no.I don’t think that’s a very smart answer.But I also don’t believe that the fact that Linux or Mozilla, or any of these things are free, I don’t think that’s even their number one attraction to people today.The notion that people can get at the source code that would be helpful for them to get at, whether it’s to do modifications to be smarter about the way they create their applications, I think that’s at the heart of this phenomenon.

And we are looking carefully, not at the whole thing, not at taking all whatever, umpty-ump, 30 million, 40 million lines of Windows NT and say, source is now available.The real question is to take a look at NT and say, what are the pieces that would really be helpful for developers to have that source code available to do the kinds of add-ons, or applications that they want to do?

We’ve done more of this than we ever have in the past.There are components of NT for which the source code is public, but we’re looking at that more and more because I do think there’s a real customer desire being represented there.But, simply taking 40 million lines of source code and saying, now you can read it, I don’t think that’s going to delight anybody.It doesn’t get at the heart and soul of the issue that way.

So, we’ll sort of figure it out step-by-step and piece-by- piece, and I think you’ll see us start publishing more of the Windows NT source codes.

A small show of hands, how many people here in production have an application that uses freeware, open source software?

(Show of hands.)

MR. BALLMER:How many of you would put freeware into a mission critical application in our companies?

(Show of hands.)

MR. BALLMER:That’s pretty one-for-one match with the people who have, which makes sense.

QUESTION:A couple of notes of feedback, and maybe a question on strategy for stability.But, as far as the seminar goes this week, I really appreciate the senior people that came out, such as yourself, and the VPs, and those talks as far as strategy and vision.

I’d like to request that if you do do this again, that you bring more developers, because having been to some PDCs and things in the past, the ability to go up and ask questions of people that are writing the servers, and that really understand the hard technical issues is really critical.And that would be a big help.

(Applause.)

MR. BALLMER:That’s good feedback.

QUESTION:And one of the previous PCs, when Windows NT 4.0 was just coming out, I believe it was Bill Gates who got up and said that they’re going to take pieces of the GDI and put it down into the kernel in order to improve performance for graphics and other things.And, at the time, I just groaned because I’ve been using the NT since the second beta, and doing middle tier app servers.And so, I have a little instability, and I always used to brag about how stable NT was, and say, you know, I can do C+ or C development and on OS/2 I used to reboot my machine all the time, and now I never do.I just leave it on for years.Clearly, I think my three — I have one machine that I used to leave on for over a year, and never reboot.

And since 4.0 came out, depending on what you’re doing, I mean sometimes it will last a long time, but sometimes you can sit there and reboot several times a day.And I mean, I just was like, oh, now, I can’t do that — say that anymore.And I thought, if I could just slip that in at the top, and ask you to take that back out.Don’t let anybody, because — and then, actually, I was working on a piece, like an add-on security for NT — NT is not a game machine to us, because we don’t care about graphics performance.

But another piece was, I realized after doing some security work, and trying to work it in the kernel, that drivers are incredibly hard to debug and work on.So, if you don’t let other people doing drivers get into your kernel you’ll have more stability.That’s just, you know, a thought.

MR. BALLMER:Good comment.Let me just — a couple of responses to that, in action.There are many people, maybe not in this room, but in the business community who care about graphics performance.That was a tough trade off.I mean, if you take a look at the guys at Gusto Systems (sp) they have a product called Catia app that Boeing uses, Chrysler uses, Daimler Benz uses for design of cars.There are segments of the business community like that, where people are graphics performance sensitive, even though there are applications like the one we just saw where perhaps it’s not the same issue.

So I think that the key feedback you’re giving me is two-fold.Number one, you have a particular thing that you think is at the root cause, but the real problem is 4.0 wasn’t as stable as 3.51.And I don’t take away from your comments, you wouldn’t mind where the graphics subsystem is, but there’s no excuse for 4.0 being as stable as 3.51, and that — the particular architectural suggestion you make, I’ll let the developers hear, but the stability point I take as an absolute kind of requirement.So that’s — I note that feedback.

In terms of drivers, drivers are tough.We’d love not to let other people write drivers.But, there is sure a lot of hardware in the world.One of the theories would be perhaps with — I’m not sure they’re still thinking about it for 5.0 or after, but would be to have a feature that would allow you to set up a system, so that it would only run drivers that had been signed.So it would only take drivers that had been through a formal test process, and had gotten a certificate from us or from a third party test lab that they had really been tested in the context of the most rigorous tests that we have.

That might start to get at some of the issues.But, there is still a lot of hardware out there and it’s hard to think through the process of closing down the architecture some.

QUESTION:I totally agree.I don’t care where the DDI, you know, is, where drivers execute at.But, memory — you know, memory debuggers like Numega are wonderful things.And I was really surprised that there were still 20 — you know, 20 memory leaks fixed in it before.

MR. BALLMER:Good feedback.

The gentleman right here.

QUESTION:Yes, in the development cycle of Visual Studio, Visual Basic, Visual C++, SQL 7 as a platform that you’re upgrading to an ADO product called 2.0, that when installed on our machines is breaking legacy code based on 1.5, why?

MR. BALLMER:Do you know why?

MR. UTCHSNYDER:No, I don’t.But, we can find out.Send me a note, jamesu@microsoft.com, I’ll get you an answer.

MR. BALLMER:Send James, send me, send both of us — I’m going to make a note.I’ll send a piece of email to the team.But, send us — we’ll get you an answer.The answer is, that shouldn’t be the case, but let us take a look at it.

Yes, sir.

QUESTION:Your research people showed us an incredible view of the future, all centered around the top end of a very elaborate, very large programs.What can you tell us about the future of Windows CE, in the enterprise computing environment?

MR. BALLMER:I am very pumped up about the response we’re seeing to CE in enterprise applications.I was with a very large U.S. retailer last week.And they’re looking at replacing all of the handheld terminal devices that are used in-store with Windows CE based devices, which is the key — I mean, literally, that’s the system that you walk around, you check inventory, you check order status, you check all — you check sales rates if you’re the store manager.But, literally, it is your mission critical operational and knowledge management device.

We’ve had some discussions with people who build embedded devices, whether that’s gas pumps or embedded controllers, who are looking at Windows CE in those sorts of devices.We have a project that we’re doing with Osaka Gas in Japan.They’re the largest utility in the world.They’re going to arm their linemen, the people who literally work on the gas lines, pipelines around Japan, with Windows CE based devices, with wireless communication into the network, which they’ll use for incident reporting, repair status reporting, et cetera.

So I see a very rich future in a wide range of applications, from operational applications, sales applications, knowledge management applications for Windows CE based devices.In addition, of course, to office workers, knowledge workers, developers who simply carry them to have a greater form of mobility on the basic information that people want.And there’s — we’re starting to see a lot, a lot of interest.But, it’s just — we’re kind of in that first early build up phase.

QUESTION:And you’re in for the long haul?

MR. BALLMER:Absolutely in for the long haul.Yes, absolutely.

MR. UTZSCHNEIDER:Is that Odyssey app that we are using, that front end of the production systems, we got that up and running in a day.And the manufacturing companies that have come to us just at the conference have said, you know, we’ve been looking for something like this for such a long time.

MR. BALLMER:Two comments, though, there’s almost nothing we’re not in for the long haul.Even if we screw it up the first time, you know, we’ll keep banging our heads on almost any problem until we get it right.I think that’s well documented.But, also, you know, we have a lot of customers already who have done — U.S. Marines has a battlefield tracking application.There are retailers, there’s Osaka Gas, we’re not going to let customers, you know, leave them at the alter.We’ve just got to keep pounding on the problem until we make sure we’ve got absolutely the right product, and the market gets fully bootstrapped and engaged, so to speak.

MR. UTZSCHNEIDER:We’ll take one more question.

QUESTION:Hello, Steve.This is about something I don’t think Microsoft has right yet.I believe in Microsoft.I’m a developer, our company does everything with Microsoft.And you don’t need to market to me, because I only use your products.A company came to my company saying, we want you to put together an e-commerce package.So we put together a proposal, totally based on Microsoft solutions, thought we did a really good job of it, presented it, they looked at it and said, but we have a problem with this.I said, what’s the problem.It’s all Microsoft.I was dumbfounded, I’m thinking, well, what’s wrong with that?This is great.They said, well, it’s all Microsoft.And just a comment, I perceive that for us developers this is great stuff and the marketing to us is great.My company has trouble selling total Microsoft solutions to our customers.

MR. BALLMER:That sounds like a marketing problem that we have, and a challenge I’ll accept.I want you to be able to comfortably sell all Microsoft solutions, despite the fact that we are highly interoperable, anybody who wants to take the path this gentleman did and be all Microsoft, believe me, you’ll have our full and unfettered support.But, the notion that it’s actually hard, you know, that’s an interesting issue.I find, and I visit with customers a lot.I’m out with customers probably 15-16 weeks or more a year.I don’t find that too prevalently.

I do find a lot of — what shall I say, jabber in the press about whether this is an issue or not.What I usually find in real application settings with real customers is, customers just want to take what’s going to work.If they can get a solution that works, that solves their business problems, and that comes from a vendor or set of vendors that they think will be around a year, two years, three years in the future, that’s okay, even if all the components come from one guy.But, if it’s starting to be a problem, it means we need to both talk about our interoperability, but also talk about why it’s not such a bad thing to be all Microsoft, and I appreciate that input.

There’s a gentleman standing there like he wants to ask the last question, and we did say that last one was the last question, but we’re going to take one more, and then I think they’re probably kicking us out for some nightclub act.But, we will take one more question.

QUESTION:Okay.I used to be a Visual C++ programmer.I had been that for five years.And I mean, this conference, I’m looking to learn more about application development.So Microsoft came up with this Visual J++ tool, I found it fantastic.But, I’m trying to see the sample code in this conference, everything is Visual Basic, probably.All the code I can see if Visual Basic.And does Microsoft assume every application will be developed in Visual Basic instead of Java, J++ or Visual C++?That’s the first question.The second one would be, I like the Visual J++ too much.Everything is fantastic.But, the only thing missing there, why — where is the– (inaudible) — so I think it’s — Microsoft can add all the efficiency they want, and they can support– (inaudible) —

MR. BALLMER:Well, two — I’ll answer both questions.First, no, we expect people to use a range of languages, Visual C++, Visual Basic, Visual J++, other people’s development tools, maybe as we — as the people building the demos sort of shaded through, maybe they shaded for time, time or their current knowledge perspective, maybe they shaded too much toward Visual Basic.We’ll just take that as good input.But, they’re all honored members of the Microsoft programming family.

If you — in answer to your second question, I guess what you’d like is to get the Sun RMI code and wonder where it is.It is up on our web site, as part of the MSDN section on microsoft.com, and you can certainly download it from there.It’s been there since we first shipped Visual J++ a year ago.

QUESTION:(Inaudible.)

MR. BALLMER:It’s up on our web site for downloading, that’s correct.

MR. UTZSCHNEIDER:And just one last observation that Java-VB thing, we built almost all of the components in Visual Basic, because we knew this was a training conference, and we find it’s much easier to walk through Visual Basic, it almost looks like pseudo-code.So people can understand the flow of the application logic.It’s certainly much easier than using C++, and to a certain extent more so than Java.But, as Steve said, they’re all honored members.We do have some components that we built in Java and C++.And one of the exercises we’re going to do with the Visual Studio team is take some of the components that we built in VB and reimplement them in VC and VJ.

QUESTION:Yes, look at how you can do the COM component in Java, that’s what it is supposed to be.See how difficult it is — if it is, to do COM in C++.I think it’s easier to do it in Visual Basic.But, you know, you still — it’s — (inaudible) — a good model for how to build a COM component.I think the way you do it in Visual J is the right way.

MR. BALLMER:Good input.I think we’d better say goodbye for now, and thank you again very much for you time.

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