REDMOND, Wash., Oct. 6, 1999 — When Microsoft bet on the Web several years ago, it made a critical decision that would chart the company’s direction for years to come. Now Microsoft is placing a wager on another new frontier. It’s called broadband services, and leading the charge is Thomas Koll, vice president of the company’s Network Solutions Group.
Koll, who guides Microsoft’s telecommunications strategy, describes Microsoft’s investment in broadband networks as one of the key decisions the company has made in the last few years.
“Certainly I would rank our bet on broadband at the same level as our bet on the Web,”
“This decision really drives the company vision, which is to enable consumers and businesses to communicate and get information using any device, anytime, anywhere.”
As head of the Network Solutions Group (NSG), Koll is challenged with leading Microsoft’s worldwide business with telecommunications companies and Internet service providers. It’s a job that requires making complex predictions about the future of a highly competitive and volatile market. It’s also a position that entails negotiating high-stakes deals with a range of influential companies. In the 15 months since Koll took charge of Microsoft’s telecommunications efforts, the company has formed dozens of partnerships with telecommunications and cable companies.
While the Web promises countless new conveniences, restrictions in bandwidth limit the opportunity for people to take advantage of all it has to offer. By investing in telecommunications, Microsoft’s goal is to widen the data pipelines available to deliver services over the Internet, thereby providing more opportunities for consumers and businesses. Koll says he believes greater bandwidth will pave the way for a new set of services that will radically change how people communicate and obtain information at work, at home and while they’re on the move.
“We can see how the Web has stimulated a whole new service industry,”
“We believe that bringing the Web into a standardized, broadband world will lead to a much wider range of opportunities for customers.”
From International Studies to International Deals
Koll’s ascent to one of the most critical roles at Microsoft was a circuitous one. Born in a small town in northern Germany, Koll’s early interest in preventing war and poverty led him to an academic career in international politics. He received a master’s degree in political science from the Free University of Berlin, helped run a one-year training course for third-world diplomats at the German Foundation for International Development, and then returned to the Free University to serve as an assistant professor in political science.
Koll had his first experience with a personal computer while teaching at the Free University in the mid-1980s.
“I think their biggest mistake is that they gave me one of the first PCs to use as a tool,”
Koll says. Using early versions of Microsoft Word and Excel, Koll created academic manuscripts and published books on topics in international politics.
“Over time, perhaps I became even more hooked on the PC issues than on the academic issues,”
After seven years in academia, Koll was ready for a career change. He was already using Microsoft software, and wanted to apply his knowledge of international relations to a software company. In 1988, after seeing an employment ad in the newspaper, he accepted a job as a sales representative in Microsoft’s Dusseldorf district office.
Initially, the transition was difficult.
“I was coming from a world where you produce your own ideas to a sales position where you look at revenue charts, so at first it was not that thrilling,”
he says. But Koll quickly moved into positions of increasing responsibility, and began enjoying the leadership opportunities afforded him. From his entry-level position as sales representative, Koll became sales manager for central Europe, then district manager of Microsoft’s new Berlin operation, then sales director for Germany. He served as the first general manager of the Organizational Customer Unit (OCU), and then for both OCU and the Enterprise Customer Unit (ECU) after Microsoft divided OCU into two customer units. Koll also served as general manager for the Dedicated Systems Group and chief of staff for Microsoft President Steve Ballmer, before joining the Network Solutions Group (then the Internet Customer Unit) in July 1998.
“If you do a good job, there are no limits,”
“That’s one of the great strengths of Microsoft. It’s a big difference from the university world and even from many other big companies.”
As leader of the NSG, Koll heads a team of 100 employees working to bring about next-generation data services that will enable Microsoft to develop more advanced software, technology and services for customers. A typical day for Koll involves discussing initiatives with customers, developing strategies with outside partners and other divisions within Microsoft, communicating with the media and handling internal affairs such as division policies and staff issues.
“We’re really in the middle of a gigantic change in the industry, and that makes it a very compelling, interesting, challenging job,”
The Benefits of Bandwidth
Over the next five years, broadband services will significantly take off, Koll predicts, and the notion of a
in which the Internet will play a more fundamental role in people’s lives, will emerge. By converting the Web into an everyday tool, broadband technology will have far-reaching implications for the way we live and work, Koll says. It will convert the television into an interactive device, breathing new life into one of the most popular forms of entertainment. It will alter the way we work by making it possible for companies to create “virtual offices” that bring together employees in diverse locations. And it will bridge the distance among friends and family by providing an effective way to share more about our lives.
“It’s not just about e-commerce; it will change the rules for how we communicate and do things,”
Higher-speed connections will even change the way we learn, Koll says.
“The classroom will look very different if there’s a broadband connection where you can link people together regardless of their location,”
“Wouldn’t it be great when you study the Roman Empire if you could link to an Italian classroom where students can talk about their experience seeing Roman ruins and what it means to them? Wouldn’t it be great if you could connect senior citizens in a retirement home with a school and transmit oral history directly to students? There are so many exciting examples for how we’re going to be able to use this.”
In an effort to move the broadband market forward, Microsoft has forged alliances with a wide variety of players in the telecommunications arena, ranging from industry giants such as AT & T to emerging companies such as NorthPoint Telecommunications and Rhythms. All the investments Microsoft has made during the last 12 to 18 months are aimed at bringing about this new Web lifestyle, Koll explains.
“We think that more bandwidth and the opportunities that more bandwidth creates will lead to the Web lifestyle, and that’s important for consumers and businesses,”
“We really have to partner with the communications industry to make that happen, and the investments we are making are intended to drive that agenda forward.”
By making investments in this arena, Microsoft’s goal is to create a market for future software, technology and services, Koll says. The company also wants to encourage the telecommunications industry to adopt a standards-based infrastructure that will give customers access to the widest range of services.
“We want to create the same kind of platforms and standards in the telecom industry as in the PC industry because it will allow more people to deliver more applications and provide more value to consumers and businesses,”
While many in the media predict that one form of broadband service will win out over all others, Koll says Microsoft has been investing across the board–in wireless, DSL and cable technologies — because it believes the broadband future won’t be dominated by one type of high-speed connection. Home users might have a DSL connection to their PC and a cable modem for their television set. They might use a wireless connection while on the road and a cable or DSL connection at work, depending on price and the service provider they use.
“You certainly can make some bets and predict that certain broadband services will be market leaders in certain areas,”
“But it’s not an ‘either-or’ situation. Perhaps somebody will be stronger in the home, and somebody else will be stronger in small business. And someone else might be stronger in the large enterprise. So I believe there will be at least three ways to obtain broadband access.”
More Rapid Changes Ahead
Koll says he expects changes in the telecommunications industry to continue to occur as rapidly in the near future as they have during the past year.
“I think there will be many more deals in the industry, whether we or others do them,”
“We still see very strong consolidation in the industry due to deregulation, and I don’t think it’s over. We have seen major mergers and takeovers in the last 12 months, and I expect we will see a lot more internationally.”
As it has in the past, Microsoft will continue to channel its efforts globally, Koll says.
“We have a great relationship with Hong Kong Telecom, for example,”
“We’re working very actively in Japan, which is a great market that is moving very rapidly into new forms of broadband communication. And I think deregulation has opened up new and interesting opportunities in the European cable market.”
Does Microsoft expect to make many new deals during the next year?
“It could be that we don’t do any, or that we do many,”
“I think the deals themselves are not really that important. The question is how can we together with our partners deliver these new services to consumers and businesses? I don’t think we’re there yet. So until we reach that vision, our emphasis will remain the same.”
There are two major challenges to Microsoft’s success in this arena, Koll says. One is the potential for excessive regulation to
“hinder the delivery of fruitful new services to consumers.”
Another is the potential for competitors to develop solutions that counteract Microsoft’s goals. A third is the potential for the industry to adopt proprietary technology rather than standards-based technology that every company can build upon.
“I think if we don’t succeed here, the industry will not be able to deliver all the rich services it could have,”
“So driving standards, driving the Windows platform, driving applications and services into the market remains a challenge.”
Betting on Broadband
Koll acknowledges that working in the fast-paced telecommunications environment has its pressures.
“It can be a very high-pressure job,”
“But it’s also fun because we are at the leading edge of new technology and services, and it’s exciting to work with other partners to make something new happen.”
There’s no cookie-cutter approach to forging alliances with companies in the telecom industry, Koll says. Some deals take weeks. Others take months. Some take months and end up nowhere.
“I think the most important thing is that you have to create a win-win situation for both companies,”
“A one-sided agreement usually never works. You need to understand your objectives, and you need to understand your partner’s objectives, and then see if you can find a creative way to make it a win-win situation for both.”
The most difficult part of his job, Koll says, is making accurate predictions about the future of the industry.
“You’re always dealing with projections and forecasts, and you’re betting certain aspects of the business on future developments when you don’t always have a clear picture. So that is very challenging. On the other hand, it’s also very exciting because you need to understand the business and you need to take certain risks.”
It’s often said that society overestimates what will happen in two years, but underestimates what will take place in five. While that may be the case with the telecommunications industry, Koll says there’s no doubt that significant advances are on the horizon.
“The world has rapidly changed in the last five years when it comes to communication and data services, and it will change even more dramatically in the next five years,”
Amid all the rapid change, Koll says he will remain focused on bringing the Web Lifestyle to fruition. And if Microsoft’s bet on broadband is as successful as its bet on the Web, he will be satisfied with his contributions.
“I’m personally excited about this new way of doing things,”
“And if I can offer any value to this change in the way people work and live, I think that’s a tremendously satisfactory achievement.”