Steve Ballmer Speech Transcript – WinHEC ’99

Remarks by Steve Ballmer

WinHEC ’99

April 7, 1999, Los Angeles, CA

MR. BALLMER:It’s my great pleasure to have the opportunity to be with you today.Carl gave you a lot of logistical details.He explained that the bowling shirts that they’ve made us wear today highlight who is from Microsoft, please contact us.The only thing I think he should have done and which I will do at the beginning of the day is to tell you, if you have any questions or comments or issues that don’t get answered over the course of the sessions, please feel free to email us: carls@microsoft.com; or steveb@microsoft.com.We’re super interested in your feedback, your opinions, your problems and your issues.

It is a particular pleasure for me to have a chance to keynote this event.Carl mentioned that I used to run our Windows development efforts.Back in 1991, we had a concept, an idea, that we thought would be very powerful, very important for us, and for our partners, to do a hardware engineering conference.I transferred out of the job of running our systems software development activities about two weeks before the first WinHEC conference, and so I never had an opportunity over the last seven years to attend a WinHEC, let alone the opportunity to address our most important partners in the computer industry.So, for me this is a real honor and a real privilege, and I’m glad to have that opportunity.

I want to start out with a little view of our industry.When we first put this talk together, I would have called our industry the PC industry, and it certainly is that, but I think it’s growing to be much, much more.When Microsoft was founded back in the mid-’70s, the vision that Bill Gates articulated for our employees, for our partners, for our customers — for whomever would listen — was the notion that the PC was a very powerful device, and some day there would be a PC on every desk, and in every home.We’re still far from that goal.There’s not a personal computer on every desk and in every home.If you look worldwide, less than 50 percent of all desktops have a personal computer, and a much, much, much smaller percentage of all homes, even in developed economies, have a personal computer.So that original compelling vision is still relevant today.

But so much has happened over the last, not just 25 years, but last five or six years, it strikes us that it is time to renew that vision, to renew the dream we’re pursuing and I’m sure you’re in the process or have renewed the dreams that you’re pursuing.And so this industry is not just about a PC on every desk and in every home.The PC has come to be the ultimate symbol of empowerment, and what we really need to do is take that notion of empowerment and extend it to anybody, anywhere, anytime, connected to the Internet, on any device, and with the power available wherever they want it, at the center on their device, have it your way.So, it’s empowerment, anywhere, anytime, any device in a connected fashion that we all need to pursue.

And so I talk about our industry.Our industry being the industry that takes open chips, open interfaces, programming interfaces, device interfaces, and puts these things together in the kinds of devices, starting with the PC, the central fundamental device, but then a broad range of other devices that can be connected to the Internet or the intranet, centrally, out at the nodes, but give the empowerment that I think all of our mutual customers will insist on and demand.

There’s a good reason to build upon the foundation of the personal computer.In this vision, and as core device in this scenario, it’s brought us all the success that we’ve had, and the personal computer is not getting less popular every year.We’ve gone from a world in 1981 where there were a very small number of personal computers were sold, and that’s grown to the point where this year, there will be well over 100 million personal computers sold.Systems built by firms in this room, running chips and peripherals built by firms in this room, running software written by Microsoft and many, many others.

The cost of processing has gone from over $5,000 per MIP down to about $1.78 per MIP.And that incredible innovation, that incredible fountain of power that’s been given to us by the semiconductor industry has allowed all of us to really push and pursue this dream of a computer on every desk and in every home.But that same power is now effecting or allowing us to effect new form factors, hand-held devices, living room devices.It’s affecting the communications industry.We see more and more new communications devices, routers, switches, et cetera, coming out with essentially personal computer architecture, chips, systems, peripherals and software as built-in componentry.

And so riding the backbone of success that personal computer has had not only as the device, but also as an architecture, a hardware and software architecture, I think is absolutely right.But I think we must extend the vision.We can’t let the PC be static.It’s got to be the best device to connect.It’s got to lend itself, or we have to have devices that can leverage the same hardware architectures, and attach new problems.

Our industry needs to encompass everything from the personal companion on up to the super server.And we need to take the approach that I described earlier that’s made this industry successful.We have an approach, and we had a set of componentry that are proven by their experience in the personal computer.We have a model in which there are open device driver interfaces which allow peripheral companies and chip companies and systems companies to innovate independently of operating system and application vendors.We have a set of open application programming interfaces that let software application developers innovate separately from the hardware and operating system layers.And we have an industry — just evidenced by the number of people in the room today — we have an industry that knows how to pull together and work on common problems, from CPUs to peripheral chips to peripherals to systems to system software.This is an industry that has been able to do amazing work together.We need to harness this model for the next generation of device and of connectivity.

I think there’s a lot of opportunity in both the business market and the consumer market for all of us.We’re all concerned, will PC growth slow?I’ll tell you, by the way, we’ve seen no evidence yet of that, but who knows.I’m a little worried about Y2K, but so far we see good overall demand in the marketplace.But we need to continue that sleep slope.We need to continue it in the business market, we need to continue market growth in the consumer space.So, I want to talk some about the opportunities both in the business market, and in the consumer space.

In the business market, there’s a wide range of opportunity.There’s growth opportunities.I think the market for high-end workstations, PC-powered devices, PC architecture devices, but running higher end applications with greater security, that market will grow steeply.We’ve certainly seen that in the results in the marketplace so far.

The notion of servers for small business.In the United States today, less than 20 percent of all businesses with under 100 employees actually have a server.And so the notion of not only building general purpose servers, but perhaps very specialized devices to help connect up the vast array of small businesses in this country and around the world is a great opportunity.

We see the opportunity to do more infrastructure hardware, to really let the PC architecture be at the center of the communications revolution.The kind of announcements you’ve been recently in Vermont with Nortel, with 3Com, with Cisco, and others, are very important in terms of infrastructure and networking hardware.

We see opportunities in the business market for the PC architecture to grow up, so that literally the biggest, most powerful servers at the backbone of the Internet will run on PC architecture.We see opportunities to have the PC replace in its entirety the minicomputer market as we know it.All of these are opportunities for innovative hardware design, innovative software design, innovative systems work, and innovative sales and marketing.We’re very bullish on the opportunity to take the architecture, even if some of these devices are of different form factors, to take the architecture and extend it.

Over the course of the session today, I’m going to have a chance to show you a variety of different applications of the PC architecture, but in new spaces.We’re going to take a look at what happens when you take the PC architecture and try to make it extend up and attach bigger problems.We’re going to take a look at what happens when you try to take the PC architecture and make it simpler, more dedicated, less functional.What happens when you take the PC hardware architecture and simply try to make it better.There are scenarios that don’t just work today and need to.And we’re going to take a look at what happens when you take the PC architecture and try to make it attack smaller devices, simpler, more dedicated single-function devices, because there is the potential in the work that all of us do from a hardware and a software perspective, to not only attack the mainstream PC market, but all ends of the spectrum.

We have a strategy for Windows, multiple implementations of Windows from CE, 98, Win 2000, Win 2000 Data Center Edition, but various implementations of Windows with a consistent programming interface up and down the line that scales from the largest server cluster on down to the smallest palm-based device that I hold in my hand.And it’s the scalability of both our software and the scalability and innovation in your hardware that will allow the PC architecture, hardware architecture to be vibrant across the line.

I want to start by showing you an example of the high-end.We’ve had a lot of interest in the 64-bit version of Windows.When will Windows be 64-bit?Today, Windows NT only allows you to target machines with up to four gigabytes of virtual memory.But with the Merced chip coming from Intel, with the work that Compaq has done with Alpha, there’s an opportunity to go full 64-bit.

We will launch a 64-bit version of Windows based upon the Windows 2000 code base as soon as we can after the shipment of Windows 2000.We do have a single source code base for Windows 2000 between the 32-bit version and the 64-bit version.When we ship Windows 2000, we’ll also ship an intermediate form factor that actually supports 36 bits of addressability on today’s Intel chips.So four gigabytes of memory is sort of standard maximum with the extended, what we call PAE addressing, you’ll have up to 64 gigabytes of virtual memory, and with the full 64-bit version, you get up to eight terabytes of virtual addressing.This will are part of allowing the Windows 2000 server really to scale up to the biggest needs of any company or anybody doing business on the Internet who wants to retain a lot of the logic and processing centrally.

I’m going to invite to join me on stage Richard Waymire, a program manager at Microsoft, so we give you the first public showing of the 64-bit version of Windows 2000.

Richard Waymire.

MR. WAYMIRE:Good morning, Steve.

MR. BALLMER:Good morning, Richard.

MR. WAYMIRE:Okay, so last year at WIN-HEC ’98 we talked about 64-bit Windows 2000.Today we want to show you what progress we’ve made, and prove that it’s the real deal.And we’re up here to show it to you.We’re currently building both 32-bit and 64-bit Windows 2000.Every night, we go through the build process.It’s the same source, just a different compile.So there’s no special development effort per se underway on 64-bit, it’s the same stuff.

The first thing I want to show you is our Intel environment.Intel has been providing a great IA-64 development environment for us.It’s actually an emulator for the Merced chip set.So, what you see over here is, if you take a look at your screen, it is Windows 2000.It’s the same source, it’s the same code, and it runs just like Windows 2000 would.It’s just the same stuff.

We currently have support for the network cards, graphic cards, SCSI cards, everything you’d expect to run here recorded over some of those drivers.This particular Merced emulator here actually has its own graphics card driving the video, so completely separate from the other graphics cards.So you can start your development efforts for IA-64 today.

MR. BALLMER:Actually, I think you’re running the same build that I’m running as NT Workstation on my laptop.

MR. WAYMIRE:Yes, we’re right there in line.It’s like one day.

MR. BALLMER:Super.

MR. WAYMIRE:Okay, let’s switch over to the Alpha.So what we’ve got on our Alpha system, again, the same thing, a 64-bit Windows 2000.It runs just like you’d expect, all of our, you know, high end stuff like Notepad works like you’d expect.So what do we expect to have over here?

MR. BALLMER:Of course this big, honking super server here.

MR. WAYMIRE:That’s right.Giant server over here, four-way processor, seven gigabytes of memory.Runs just like you’d expect, we can take full advantage of that entire seven gig of ram.We had a 30 or 40 gigabyte swap file on there just do see that it works just fine.Everything is great.It runs on real hardware shipping today.In fact, this isn’t even the latest model from Compaq.

So again, to emphasize these points, with 32-bit NT you could get 4 gigabytes of memory.With 64 bit Windows 2000, 8 terabytes of memory.So what I want to show you today is a demo of SQL Server.So I’m going to go ahead and start up task manager.

MR. BALLMER:This is super important.One of the top pieces of feedback that I’m getting today from our enterprise customers is performance, absolute raw performance of database software, our database software, Oracle’s database software.We don’t have enough absolute performance to take PC architecture up to the highest end.And database is kind of the torture test that the IT department typically talks to us about.

So we’ll let Richard show us a little database benchmark.

MR. WAYMIRE:So we’re going to make that challenge.We’re going to do perfectly good in this space.We’re very, very excited about doing 64-bit SQL Server.So what I’m doing here is running a quick query on 64-bit SQL Server.It literally took one developer and a part-time effort to port an application as sophisticated as SQL Server over to 64-bit.He’s been working on this for about the last 6 months.So it’s not a big deal. It’s the same source for our 32-bit and our 64-bit code base, it’s just a different way of compiling it.So it’s the same stuff.

Now what I’m showing here is the query that’s counting our 800,000 rows from a SQL Server data table.It’s about six-and-a-half gigabytes.So when we ran that on a 32-bit system, actually on the exact same box, it took about 12 minutes to load up the initial query.The same thing here on the 64-bit platform, because it’s disk bound.Now, we run that again on the 32-bit environment, to see how we use cache, and we got a whopping 10 minutes of response time.So we did improve.We used the two gigabytes of RAM we had available.But, now as you can see from this query, we got it in 31 seconds in the 64-bit environment, about a 20 time over improvement in performance, because everything is in memory.A piece of cake, a very easy port, and it’s running today.This is the real deal, this is the current version of SQL Server.

MR. BALLMER:Great.Thanks, Richard.

It’s the first public showing, but I think you get a sense of the kind of progress we’re making.Probably even more important is to get a sense of how important it is for all of us that we focus in on the opportunities on the high end.We have a lot of work we need to do to enable that in the software.We need to enable 64-bit.We’ll need to do more and more to enable new clustered approaches to come out of the hardware industry.But, the opportunities for innovation is high, and the market demand is there.Most CIOs I talk to today don’t doubt that we’re going to get the PC servers to scale up and to attack bigger problems.But, they’re asking a lot of questions, not only about absolute scalability, but about availability, about reliability.The opportunities in hardware are large.Most of the system designs in PC servers today are not well balanced, with respect to use of CPU, I/O, et cetera, for these very large system designs.The I/O architectures aren’t that effective.

If you really want to run very large database problems, we’re going to need more parallelization over the BUS.Network optimization, as you put bigger and bigger loads on fewer and fewer servers.Systems area network innovation, as we see increased separations between processing and storage on the LAN, there’s a lot of opportunity for hardware innovation.Fault containment, as people consolidate down to fewer, bigger servers, you’re going to need to build more redundancy from a hardware perspective into the system, to isolate and remove points of failure.And of course, there’s a need for better and better systems management capability from both the software and the hardware perspectives.

I expect this to be an area of incredible innovation for our hardware partners over the course of the next several years.Steps like Windows 2000, and the 64-bit work which we just showed you here for the first time will be an important part of that, but it’s going to require a lot of your best creativity, thinking and ideas.

I said I’d show you bigger, and I just had a chance to do that. Now, I want to show you simpler, and more dedicated.I want to show you something we call the Windows Server appliance.What we’ve done is taken the Windows NT code base — in fact, the toolkit which is available to everybody in this room, which we call the Windows NT Embedded toolkit, that allows you to take NT, build a device for a given function, and just select out the specific modules of NT that are needed to serve that dedicated device.We have some partnerships where this has been used to put NT in a variety of very interesting applications, copiers, point of sale machines, very small memory environments, on-board systems on airplanes.

The same technologies we have used ourselves to apply to the problem, how do you let a group of people who have three, four, five PCs, and want to put them together and not do very much.They want to share some files, they want to share some printers, they want to share a connection — high speed or low speed — to the Internet, how do you do that very, very, very simply.Today we tell you to go buy a server, which you have to somehow figure out how to do, you probably paid somebody $100, $120 an hour to set it up, configure it for you, et cetera.What we did is say, suppose we give up for this set of customers the opportunity to run arbitrary server applications.And suppose we give up all the fancy administration and security that you might need in an enterprise environment.But, maybe in a home, in a small business, where everything is basically file and print sharing, and Internet access, maybe email lives out on the Internet, can we make that a totally simple experience, where literally you buy an appliance, a hardware appliance that runs the thing, you turn it on, and you’re set up instantaneously, without the involvement of some value-added reseller or whatever.

We’re going to show you that today, we call it the Windows Server Appliance.We expect to see it available the second half of this year, with prices under $2000 from some hardware partners.I think it’s conceivable we’ll even see some of these devices close to $1000 in price, but that remains to be seen.There’s a lot of flexibility that the hardware maker gets as a result.So here we’re starting the appliance based approach, but still using standard PC hardware architecture and software approaches that we all know and recognize.

I’d like to invite Jeff Donosky from our Windows NT team to come on up and join me, and have a chance to show you the Windows Server Appliance.

Jeff.

MR. DONOSKY:Thanks, Steve.

Hi, this morning what I’d like to show you is the Windows Server Appliance.It’s an integrated hardware-software appliance device that makes it very easy for people to set up small networks for file sharing, Internet sharing and printer sharing and that incorporate backup as well as security.So what I want to show you today are two things.First of all, how easy it is to set up a small network with the Windows Server Appliance, and then secondly the user experience once we’ve set up the network, just how easy it is to be networked.

So the first thing I want to do is show you the box itself.So basically what I’m talking about today is, Steve and I have a small office.So it’s a two-person office.We’ve got a couple of Windows 98 machines, and we want to show you just how easy it will be to get our network up and running.So we call up our favorite OEM and we order this box.Now, this box is an example of the partnering that Microsoft and Intel are doing together to offer the Windows Server Appliance.So we call up our favorite OEM, we order the box, we receive the box, unpack it, and what do we see?We see this nice looking Intel chassis, and we pull it out of the box, and it’s just got an easy to set up poster that tells us a few steps to get our small network up and running.

MR. BALLMER:The hub’s all built in here.

MR. DONOSKY:The hub’s built in, and basically it’s a complete solution, hardware and software, as well.

MR. BALLMER:Okay.So I plug in a few cables.

MR. DONOSKY:Yes, so we plug this into the wall.We’ve got a built in hub, we plug in our connection from our PCs into the server appliance, and we turn it on.So the first thing I want to do is go to my first Windows 98 machine.Now, I’m the guy in the small business who kind of

MR. BALLMER:This thing doesn’t require a monitor, or anything.

MR. DONOSKY:No.

MR. BALLMER:It’s just a headless device.I take the two PCs, I plug them in, I go to one of the PCs, and that’s what you’re going to show us.

MR. DONOSKY:Exactly.And the thing that you probably would have noticed, as well, is that you don’t need a monitor, keyboard, or mouse, it’s got a built-in LCD display that kind of tells you what’s going on.So you turn the thing on.It shows you that it’s booting, you don’t need to know what booting means or anything like that, it tells you when we’re ready to go.

So the first thing I’m going to do is go to my first Windows 98 machine.Now, as I said, I wear kind of the technical hat in the company.Steve’s kind of my assistant here.And the first thing I’m going to do is I’m going to go ahead and

— you know, I’m reading my poster, step one is open your Internet browser.So I open my Web browser, and I type in the name of our server, Our Server, hit enter, and viola, there’s my user interface to basically set up our server appliance.

MR. BALLMER:The default name of the thing is Our Server.I get up, and I’m ready to go.

MR. DONOSKY:We’re ready to go.DHCP is turned on.I don’t need to know what DHCP is, but it’s automatically assigned addresses to all the PCs that are networked to our device.So we go to our user interface and the first thing you’ll notice is how simple it is.You know, there’s not a lot going on there.It tells us, hey, we’ve got a document share set up on our appliance.And then we look down under messages.Hey, we haven’t yet set up our Internet connection, and we haven’t yet configured a printer.So what I’m going to do is I’m going to say, okay, well, I want Internet sharing, I want printer share.We’ve already got file sharing set up.So let’s go ahead and configure our printer.

MR. BALLMER:The file sharing is just set up by default.

MR. DONOSKY:It’s set up by default, exactly.

So you’ll notice that it’s just a very easy to use wizard, and it just takes us through a simple set of steps, no technical jargon.

MR. BALLMER:And I’m adding a network printer this way?

MR. DONOSKY:Yes, I’m adding my network printer.

So it’s already selected our parallel port, which we plug our printer into, and now we’re just going to go down and we’re going to choose the printer that we have.It supports over 1000 printers right out of the box, but it’s also very easy to add new printers as they get released.So we just finish our wizard, and

MR. BALLMER:It’s printing the test page for you.

MR. DONOSKY:It goes ahead and it prints our test page off the server.And there we go, we’ve finished.So basically now we’ve configured our network printer, which is as easy as one, two, three.Now, the second thing I want to do is configure our Internet connection.

MR. BALLMER:So literally, in a small office, where all people want to do share files, printers and Internet, you plug in, you boot up, and this thing is going to be done in a minute.

MR. DONOSKY:Exactly.

So the beauty is, there’s a lot of technology built in.As Steve said, it’s built on Windows NT embedded.It’s got proxy technology built in, et cetera.But, the user doesn’t need to know that.We make it really invisible to the user and really, really simple.So now we’re going to go to the Internet connection wizard.And once again, plain English.Just for simplicity we’ve already typed in our ISP number, we’ve typed in our user name and password.

MR. BALLMER:That we would have to type in, but you tell people that.

MR. DONOSKY:That’s right.I’m a slow typist, so I figured, you know, I’d save everybody time this morning.

I automatically get my DNS assignment from my ISP.In some cases an ISP might have a fixed address, which we’d have to type in, but in this case it’s being dynamically assigned.

MR. BALLMER:Then the ISP would tell me, and I’d just type it in.

MR. DONOSKY:Exactly.

And then it allows me to test my Internet connection, but what I’m going to do is I’m going to pass through, assume that it works, and then we’re going to go to our user in just a second.So there we go.We can see that we’ve now set up our Internet connection.We’ve set up our printer sharing, and we’ve got file sharing.So basically in just a couple of minutes we’ve set up our small business network.Now, what we’re going to do is we’re going to go over the Steve’s machine and I’m just going to

— okay, we’re going to go to Steve’s machine, and the first thing we want to do is Steve’s got a folder set up on his desktop, but he wants to store it on the server appliance, so that it’s backed up, and secure, et cetera, et cetera.So what we’re going to is double click on Network Neighborhood, and there’s our server.So we’re going to double click on our server, documents, okay, and then user folders.So this is our file share on the appliance.I don’t need to know fancy terms like file share, anything like that, it’s just up there and running, kind of like the phone.

MR. BALLMER:You’ve got built-in backup.

MR. DONOSKY:Yes.

MR. BALLMER:Built in drive redundancy in the device?

MR. DONOSKY:That’s right.

So it’s basically

— it’s fault tolerant, it’s got mirroring built in.So now what I’m going to do is I’m going to take Steve’s folder and I’m just going to drag it over onto the appliance.So there we go.The first thing we’ve shown is that we’ve got file sharing up and running.Again, small business doesn’t need to know the technology, but it just makes it very, very easy for them.

The second thing I want to do is now I want to be able to print off the appliance.So, again, I go into Network Neighborhood, I open up our server, and I see that we’ve got our Canon printer there, and I’m just going to double click, and it’s going to take me through a couple of wizards, or just a quick set of steps to basically enable that point and print functionality, and this is unique to Windows.This is some of the value that Windows brings to this device, is that it’s very, very easy for users to now print on the network.So now we’re printing a test page from Steve’s machine.

And then the last thing we want to do is open up our Internet browser, and go to Hotmail, so that we can set up an email account for Steve and myself, for our small business.

MR. BALLMER:This is an environment where we’re not going to run any apps locally, so we’re not running email locally.We’ll just use our ISP.

MR. DONOSKY:Right.

MR. BALLMER:You could do this over ISDN, you could do this over dial up.

MR. DONOSKY:Exactly.

MR. BALLMER:And I guess we’ll do ADSL here in the near future.

MR. DONOSKY:Exactly.

So, you know, whether you want to share just an analog 56k connection, or if you want something higher bandwidth through ISDN, for example, you can do that.So you can pick up both improved performance, and you can save money.So there are a couple of things that these people really want in small networks.

So we’ve just dialed up our ISP.And it’s just loading up our Hotmail account.So there we go.In just 5 minutes, I’ve been able to set up our small network, I’ve been able to get us file sharing, printer sharing, and Internet sharing, and we’re ready to rock and roll.So there we go.

MR. BALLMER:Super.Thanks very much, Jeff.

MR. DONOSKY:Thank you.

MR. BALLMER:Basic hardware architecture, software devices, drivers that we all know, repackaged, different form factor, doesn’t do everything, won’t solve every problem of every small business, or small environment, but a very, very simple device that lets you do file sharing, printer sharing, Internet sharing, and leveraging the kind of investment that all of us have made.

I want to turn now and talk about some of the opportunities we see in the consumer market.The consumer market continues to be a dynamic part of the computer market.In the United States this year, over 40 percent of the personal computers that are sold will be sold into the consumer world.I think there’s a lot we need to do to improve the consumer computing experience.I think it’s going to require a real partnership between our company, other software companies, and the hardware community to really do what is demanded by consumer customers.

We’ve got to get the consumer computing experience to the place where everything just works.We’ve got to remove complexity.We’ve got to add relevance.What comes out of the box on a consumer PC has to be more and more relevant to the gaming, the work-at-home, the online scenarios that are so powerful in the home.We need new form factors that are visually appealing, and fit well in the household.And we need a device that connects to everything, other devices in the home, as well as other devices out on the Internet.It’s got to just work.

This is an area where I feel like we have certainly underperformed in some senses, versus consumer expectations.David Cole, who you’ll have a chance to hear from later today, we’ve

in our recent reorganization given him a large staff and a charter to work with the hardware industry, put together a Windows platform that just works.It’s time to rebirth, if I could say it that way, the consumer Windows experience.The number one device, there will be other devices and I’m going to talk about those in a minute, but we have to make the consumer PC the most important new appliance, by fundamentally changing the way people think about it.The PC today has a lot of good and some bad.

It’s a general-purpose device, and customers really appreciate that.There will be cases where people want a dedicated, fixed functionality device, but the market is so dynamic, the things people want to do are so dynamic, the general purpose nature of this device will keep it very, very, very high volume for years to come.People get a choice of software and services, online services, and software on the PC today.It’s a product of a lot of good work, of standardization, and industry effort.It’s improving, it transforms itself.But, the computer today, as I said, is error prone.It’s difficult and complex to use.And the form factors tend to be somewhat unexciting from a consumer perspective.

We have a chance, all of us to be part of changing, enhancing the good and eliminating the downside for customers.The PC of tomorrow will be able to be both general purpose, but if the customer wants a single-purpose device, just a gaming machine, just an online connection machine, less complexity, we’ll give it to them.All of us will, just as we are all prepared to give the customer what they want in terms of single appliances.

We will get to appliance-like simplicity and reliability, and that is a hardware and software community working together issue.But you’ve got to turn these things on, and they have to just work, and they’ve got to work all the time.And they have to work no matter what software you install and use.We need to provide new and exciting form factors, and we definitely have to systems that connect with everything, everywhere.I’m going to have an opportunity to show you some of the new devices that we think people will want to connect to, and how we might connect the PC to those new devices.

Before I do that, I’d like to show you a couple of the new form factor devices that we have on stage here.There’s a couple of pretty interesting ones.I’ve got to make sure I walk past them, these are larger and smaller.This is an Intel concept platform.It’s got USB and 1394 built-in.It’s very small.It’s got a very sort of nice little form factor.You can see here another device with CD built-in that Intel’s done.Concept, different ergonomics, different fit, different finish.And people use 1394 and they use USB to sort of make smaller, nicer, devices that fit in the context.There’s even a little difference in color here.

Here’s a concept device from AMD where the colors are even more different, shall we say, would look great in my den, but probably not too many, but the purple colors, the rotating CD that you can kind of open up and look at, kind of neat.I don’t know that I want my kids’ fingers near it, but kind of neat.And then, a nice flatter screen, high resolution device.

So, we’re starting to see a lot of innovation, and I think we’ll see a lot more innovation from the companies in this room, on the chips and the systems that really let the PC of tomorrow and today move forward in some pretty exciting ways.

How are we all going to deliver the PC of tomorrow?We’re going to have to design for simplicity and appeal.We’re going to have to build devices that are much more driverless.That is the driver just appears magically, the customer doesn’t have to get involved in the configuration of hardware and devices.These devices will certainly have to be instant on and always available.It is a pain in the neck today, one of the real downsides of Windows in the home that it’s not instant on like the television.We’re going to have to provide pervasive connectivity across all of the devices in the home, wireless connectivity, phone line based connectivity, power line based connectivity.

And we’re going to have to supply improved resource management.Today, when things are happening in the machine, and multiple applications and peripherals are fighting for resources, instead of the computer figuring that out and resolving that problem, and making sure the customer gets a good experience, we get the customer involved in bandwidth contention on the bus, or whatever the issue may be.So, there’s a set of things we need to do to engineer the consumer version of Windows to be at the center of this reborn PC appliance that I’m talking about.

One of the most important longer-term initiatives that we’re kicking off an announcing today is what we call the Easy PC Initiative.This is a joint initiative of Microsoft and Intel.And it’s designed to focus in on a real redesign of the PC from a hardware perspective.We need to do the software work that supports it, but this gets us to an environment where the PC just works, no ISO bus or super I/O.We completely hide MS-DOS, we only use 1394 USB and device base for expansion.It encourages innovative form factors.Joining with Microsoft and Intel are a large array of the biggest computer makers in the world, Dell, HP, Compaq, Toshiba, NEC, IBM, Fujitsu, Micron, Gateway are all participating with us and Intel in the definition of this Easy PC Initiative.Reduced hardware complexity, the right software support and a rebirth through Easy PC of the consumer computing experience.

I also want to announce today a new version of Consumer Windows that we will deliver in the year 2000.We weren’t sure for a while what we’d be delivering in the year 2000 exactly.Today, I’m here to tell you there will be a new version of Windows next year targeted for the consumer market.It will continue to be built in the year 2000 on the Windows 98 code base as opposed to the Windows 2000 code base.We will get there eventually with Windows 2000 in the consumer market.It had been our target to bet here in 2000, but we’ve decided to do the things that we all need to do to simplify the experience.The right approach next year is to continue to enhance the Windows 98 product.And it will be focused on the key consumer needs, the simplicity or it just works aspects that I talked about, Universal Plug and Play (UpnP) home networking which I’ll have a chance to show you in a minute, improving the online experience since a larger and larger percentage of what people do with their home computers is to be online, and the handling of digital media, pictures, music, video, et cetera, which is becoming more fundamental to the consumer computing experience.We want to extend the functionality of Windows in the consumer environment out of the box.

The application of choice for 1985, when we shipped Windows, was Notepad, there’s a set of applets that we ought to ship to really target and support these kinds of important consumer applications.What this gives us is a Windows road map that gives us Windows 2000 when it’s ready, which we target to be the end of this year.It gives us a Consumer Windows product which we will update in 2000, and it shows convergence on the Windows 2000 code base post-2000.That’s the basic road map for the Windows product line, targeting consumer PCs, business PCs, servers, and super servers.

That’s not all we need to do in the home.Just as in business, we’ll see devices like the server appliance, there’s a range of consumer devices which will also be important.Appliances that you hold in your hand, that attach to your TV.Over time, more and more of what you have in your home will have intelligence built-in, whether it’s the garage door opener, the lamp, the microwave, what we call smart objects.We need an approach that embeds software appropriately in those devices, and allows them to connect one to the other, and to the PC, if you happen to have a PC involved in the chain.But we want to absolutely go full bore on the new devices, and let the PC be a real value-added extra if it’s there.

Our focus with the Windows CE platform is on this next generation consumer set of devices.I think it will be increasingly potentially an important part of our dialogue to talk about CE and what you can do with it.It supports a subset of the Windows 32 API model, Direct X for gaming, Internet Explorer, we have a range of driver network support, but for these devices, increasingly CE will be the target.CE is nice, it doesn’t require a hard disk, which makes it great for low-end machines.It does have instant on capabilities already today.And so, we will work with you on a range of lower end appliance devices built around Windows CE.We think that that’s an important new opportunity that we both have.

On the other hand, more and more of our OEMs have been coming to us saying, with the drop in component prices, is it possible to use today’s PC architecture, not different chips and different drivers, but today’s PC hardware architecture and target some of these appliance scenarios.Some of them may require your new OS, CE and all that, but what can we do with today’s PC hardware architecture.Can you build a low-end gaming appliance, for example, with an X-86 hardware platform, and with the kinds of peripherals and software that we use today.So, we and Intel have kicked off something we call the Concept Platform Project, for which will invite industry feedback and participation, that takes a look at using the classic X-86 hardware architecture in some of these appliances as well.Internet access devices, dedicated devices that are built on X-86, gaming devices, entertainment devices, education devices.

We’re still going to pursue the CE strategy, which we know is well-suited for the low-end, but as prices have come down more and more of you want to target some of these specialized device markets with classic X-86 architecture, and we and Intel want to facilitate that in every way.

Part of the issue, then, will be taking these new devices, and letting them talk to one another, or letting them talk to the PC, which will continue to be a very important device in the home.Universal Plug-and-Play is an architecture, a standard for connecting devices and services over a network.Today, I’m pleased to announce that we have now over 50 top partners, 20 new partners, including Canon, Sony, Casio, Minolta, Panasonic, Sanyo and IBM.HP is joining us in announcing support for UPnP for their implementation of the Java language, and for their jet direct devices.And we’re announcing the UPnP Forum, which is an open working group to evolve and enhance the standards.

This lets devices, whether they’re PCs or not, it doesn’t have to be a PC to speak to one another, to discover one another’s capabilities, and also talk to the PC itself.What I’d like to do now is have Keith Laepple join me to give a little demonstration of what the digital home of tomorrow might look like, some new devices talking to one another over UPnP, talking to the PC if there’s one available, and letting the PC enhance the whole experience in a number of interesting ways.

Pete.

MR. LAEPPLE:Good morning, Steve.

What Microsoft envisions is that UPnP, home networking technologies, and digital media services that will be implemented on the PC can really dramatically enhance some of the things people want to do in their homes, some things that are important for them to do.So what we have brought on stage this morning is a concept demonstration that sort of illustrates what that might look like, and what some of the possibilities are.And the scenario that we’re going to take a look at is listening to music in the home.

So, in my house, what I have is a CD player, it’s a multi-disk CD player, and I enjoy listening to that.But since I don’t have an audio wiring throughout my house, my limitation is that I can listen to my CDs only in a single room.Now, the new technologies that are coming that are starting this year to wire and network PCs and other devices in the home will be applicable to enabling possibly my CD player and my speakers and my audio receivers to connect together as well.And so what we sort of have here is a set-up, a configuration of some prototype network devices using

MR. BALLMER:The prototypes, I wouldn’t use them in my home?

MR. LAEPPLE:That’s right, you wouldn’t use these exact devices in your home.This was a concept demonstration, what we’re trying to show is the use of networking, the use of UPnP to make a seamless interconnection to support a digital music scenario, and specifically CD playback.So, what I’m going to do is use this dual CD player, the dual CD drive from Maximus Communications, that’s actually a network device, it’s actually got an Ethernet connection to this black box here, which is a network speaker system that we’ve designed specifically for this demo.Now, both of these devices are on the network.They run TCP/IP and they have actual UPnP code implemented in their firmware.

MR. BALLMER:Neither one of them is a PC.

MR. LAEPPLE:For purposes of the demo, these devices would not be PC.We’re showing this to be a CD player, and this would be a network attached

MR. BALLMER:And they might talk to one another over the bottom line networking or whatever in my home.

MR. LAEPPLE:You’ve got it.Home networking technology is coming that will enable my devices to connect on my existing phone lines, like a home CNA standard, power line, or even wireless.

MR. BALLMER:Okay.

MR. LAEPPLE:So what I’m going to do is play some music from my network CD player to my network speaker system.I’m going to do that by accessing it from this tablet that I have that is a mobile tablet.I can pick it up and carry it, except it’s wired to the screen so the audience can see it.I’m going to leave it on the stage, but this graphical tablet is running a home control application that is showing some of the things I might want to do.Common household activities, like watch music, play music, or watch video, or look at some images.

So, for our demo, what I’m going to do is select ‘play music.’And what the home control application is doing is using UPnP to go out on the network, and this tablet is actually networked to these other devices using a wireless connection.So, it’s on the same network, but not using a wire, so that I could carry it around my house.

What it just did was go out on the network and, using UPnP, it discovered that I have this set of digital speakers that are on the network that have identified themselves as being in the living room.Now, if I had additional network speaker systems in other rooms, they would appear here as well, but I only have this device here on the stage today.

MR. BALLMER:UPnP allows this information to be communicated, where, what, et cetera, and now I’m looking at that on this little device.

MR. LAEPPLE:Yes.Exactly.It was a seamless, automatic, I didn’t have to tell it I had speakers in the living room, here’s the network address, it was automatically discovered on the network.So, we’re going to select to listen to music on the living room audio system.

And now what has happened is that the controller has gone out and is looking for music sources on the network.What it was supposed to do was find some titles loaded in the CDs in the player. What it did find was that the UPnP CD player has a couple disks loaded, it has a couple of tracks available loaded that we can listen to.So, I’m going to go ahead and select track 2 on disk one.And what that is doing is causing the network speaker system to issue a command and establish and peer-to-peer connection to the CD player on the network and start streaming audio.

So, basically what I’m showing here is using networking technology made seamless with UPnP in devices that are not PCs to interconnect as peers on the network.

MR. BALLMER:Okay.Next generation devices for the home using UPnP.

MR. LAEPPLE:That’s right.

MR. BALLMER:But suppose, as half the households in America do and more will, suppose I also have a PC, does that help you?

MR. LAEPPLE:It absolutely does, and I have a PC right here that can actually be connected to the network.So, I’m actually going to plug this PC into the same network that my CD changers and my network speakers are on.And what we should see on our home controller here in a few seconds is this is that there’s the PC, the PC is going to search for sources again, and it should discover music services that are loaded on the PC.The PC is actually going to publish itself using UPnP as a music source device.And there we see the PC as an audio controller, that was sort of a hot plug.What our controller has done is, it’s going to the PC and loaded HTML user interface that the PC is providing that enables access to the enhanced music services.

Basically, what this is showing me is the same music titles that I saw before, but I have a richer display.I see that I have title names, track artist names, a variety of views on my music.So the PC is enhancing and providing a richer view and functionality and control for the music sources that I have in my home network.

One of the examples here would be the ability to configure a play list

— say we’re having a party, rather than just having my CD play just randomly, I could select music titles that would suit the tastes of the guests I have coming over.And I would actually configure that play list using an advanced software application that would run using digital media services on a PC, which we’ll turn our attention to now.That should be appearing on screen number 26, I can’t tell if it’s up.

But, now we’re looking at a program that’s running on the PC, and what this is showing us is all the music sources, all the songs, that this PC application could find.These songs could be coming from the CD-ROM in the CD drive, it could be coming from the Internet, these could be MP3 files on my hard disk.The point is that the user doesn’t really care for purposes of creating a play list for the party where the music lives.They just want to see the songs, see the genres, the artists, and select a play list.

So, I know that one of the guests coming to my dinner party is a Jimi Hendrix fan.What I just did is drag and drop a Jimi Hendrix song from my music collection to the new play list that I’m creating.I know that another one of my guests is getting into the industrial genre in music, so the band X, song Take My Home I’ll add.

Now, I could keep doing this and manually create this play list, but the PC is going to help me out with this because with its access to the Internet, it has resources available to it where it can automatically generate for me a play list that it can determine to be compatible with the tastes just based on these two songs. So, I’ll go ahead and I will click this magic wand icon, and we’ve automatically generated a play list that would be of the same style, same genre, same artists as the two songs that I seeded into that selection.

The point here is that the PC is providing a capability and a level of simplicity for enhancing listening to music that I didn’t have before, and I certainly didn’t have without the PC present with my CD player.

MR. BALLMER:Super.The best of all worlds, new devices running UPnP, taking to each other, and when you need, if you need, if you want it, you use the advanced intelligence of the PC to run other programs to give you new services.

MR. LAEPPLE:Exactly.

MR. BALLMER:Super.Thank you very much, Pete.

(Applause.)

MR. BALLMER:I hope you get something of a sense of our embrace of the new devices and the new connectivity types which will be important in the home, and still also our enthusiasm for the role the PC has to play in helping give advanced services, in the connection and management of those devices.

We’ve talked a little bit about the business market and the consumer market — before we break, we’d like to show you one more thing.I’d love to give you a sense of some of the exciting user interface techniques that we’re experimenting with for the PC, as well as for new classes of next generation devices in the home.I’d like now to invite to join me on stage Dan Robbins from our research group.Dan is working on a project that uses 3D in the user interface for PC and new devices.I know this is an area that’s been of keen interest, particularly for people who make 3D graphics chips.I think what Dan will show you today is pretty exciting.

MR. BALLMER:Dan Robbins.

MR. ROBBINS:Thank you.

What I’m going to show you today is a user interface concept that we’re working on at Microsoft Research.Now, I’m sure all of us these days, as we’re using these computers, are faced with the problem that we’re juggling more and more things everyday.We’ve got lots of different tasks and applications that we need to switch through.We’re melding things that we do at the home, things we do at work, things we do collaboratively.So what we’re trying to do in research is figure out how we can bring some of the abilities we have in this physical world and use those on the PC.

So let’s jump in and see what we’ve got here.So what I’ve got here, it looks like sort of the standard Windows interface.I have a bunch of applications, and these are all live.And let me take a moment to tell you what you’re actually seeing technically.These are standard out of the box applications, this happens to be Office, running on top of Windows 2000, taking advantage of some of the new features in GDI-plus, and using a consumer 3D accelerator from Nvidia. So, let’s jump in.

So all these, again, are live applications, everything is working.I can open up new windows, do all of my standard operations, but the magic happens when we start to use that 3D hardware to manage these applications and manage the different kinds of things we’re doing.So using that hardware I can very quickly reuse the space in very different ways.But, there’s more.As I said at the beginning, what we’re much more interested in is how people juggle these collections of applications and documents.So if we step back, what we’ll notice is we’re actually in a much larger environment, something that is akin to a physical environment.So you look at these hallways, and on the walls of the hallways we’ve taken collections of applications and we’ve put them in these little frames.So very quickly I can switch back and forth between different kinds of tasks.

Again, these are standard applications.Everything here is live.I’m going to take what I copied out of that mail message, just paste it in, everything works just like it should work in Windows.I can go over, again switch to a different task.So here I’ve got Internet Explorer running, these are live Web pages with animations and whatever ActiveX controls you need.And just to prove that this is, in fact, a 3D environment I’m going to go on this Web page, and let’s look up some of the pricing for some suppliers that I’m dealing with.Take some of this information, come out, and I can again rearrange these Web pages in different ways.

And again, I can reuse this information amongst different tasks.Additionally, we’re going to extend this whole physical metaphor here and think of your body in this space, as well.So if I look over to my left, we’ll notice that I’m holding in my virtual hand a sort of palette that has the common applications and documents that I need to use every single day.And I can take these documents and assign different tasks.I can create new tasks at will.

So we also envision this moving forward and existing on lots of different kinds of platforms.Because it is so graphical, it can scale down to a handheld device, it can scale up to a video wall in your home, as we have large displays.Again, multiple people could be interacting in this space.Again, supporting new kinds of applications and legacy applications.If you want to hear more about this, we’ll be showing it on Friday in a future graphics forum.

Thank you for your time.

MR. BALLMER:Thanks, Dan.

I want to go back to the point I was discussing at the beginning.That’s the notion of renewing all of our vision.The PC is a tool for empowerment.There’s a lot of additional things we all can do with the PC.But, we’re going to have to extend its definition, extend our view of connectivity, extend our view of the large jobs it needs to attack so that it can give you empowerment anywhere, any place, any time, on any device, and always with the appropriate connectivity.There are people who wrote the Business Week article two weeks ago, that want to talk about new devices as the death of the PC.I don’t believe that at all.I think the new devices give new opportunities, and it gives enhanced value and meaning to the personal computer.And I’m just excited to have a chance to address today an audience who has done such great and such innovative work to create a market that will sell over 100 million units this year, and will be part of this next generation of empowerment any place, any time, any device.We still love the PC, we just see a lot of new opportunities for all of us.

Thank you all very, very much.

(Applause.)

MR. BALLMER:I think Carl Stork is going to join me on stage, and we’d love to have the opportunity to take a few questions.My understanding is that there are microphones in the aisles, and I’m glad to take any questions people have on things we talked about directly, or anything else.

MR. STORK:We’ll take about five minutes worth of questions.And if people will line up in the aisle mike, we’ll use those in a second.We had a few questions that were submitted on cards ahead of time.We’re going to kick you off with one of the questions from the cards from last night.

And, Mr. Ballmer, what is your opinion about Linux and open source software, from the Microsoft point of view?

MR. BALLMER:Well, as we’ve maintained fairly steadfastly, we’re in a very competitive environment.And it’s good to see people doing innovative work, it keeps us moving forward.I think there’s a lot of value to the kind of software that we build, that we test professionally, we work on the installation, we validate the device drivers.The customer gets an incredible value out of the additional efforts that we put into our software.

So I don’t think the great attraction to Linux is the fact that it’s free.If these new devices require very low price points in order for you to build them, we’ll work with you on that.The key thing I think that we’re trying to really understand and decide what to do about is this notion of open source.There is a level of flexibility, or at least a level of comfort that people have when they have the source code just in case.Most CIOs I talk to don’t actually want their people to touch the source.They don’t want to introduce new variations, new perturbations, new confusion.

Most hardware manufacturers I talk to don’t really want a lot of additional software engineering costs in the price of creating a new device.But, there’s a comfort level there, and we’re, of course, thinking with great interest about that.We’re really studying and talking to customers about their reaction to this source code availability, and as we figure out what that means for us, we’ll certainly let people know.

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