Remarks by Steve Ballmer
Chief Executive Officer, Microsoft Corp.
.NET Briefing Day
July 24, 2002
STEVE BALLMER : Well, thanks. It’s a real privilege for me to have a chance to wrap up the formal presentation and move us into the question and answer. I’m going to be pretty brief. I have exactly one PowerPoint slide that I hope I can use to kind of wrap things up and bring us to hopefully a conclusion in a good way for you.
We sat here two years ago and talked a lot about how important XML was, we talked a lot about the fact that the journey that we were embarking on with .NET was going to be a long journey. I think more so even than two years ago, those two principles are right today. In fact, somehow, in some magical, unbelievable way, it wasn’t done in one steering committee, or one meeting, or one anything else, but the entire computer industry has decided in the last two years since that meeting that we had, in the last two years, it’s become 100 percent clear that the computer industry is retooling around XML. And literally every part of the IT industry is reshaping itself, redoing itself, redesigning itself. You can see in the discussions that we had today that we are literally retooling all of our product lines around the .NET infrastructure for connections and how that sits on top of XML as kind of a key standard, whether it’s what’s going on here or at our competitors or partners in the industry, whether it’s what’s going on in application development or storage or security, literally there’s an entire reshape going on today of the IT industry.
It does remind me in many ways of the move to graphical user interface back in the ’80s. It took a while for the idea to catch on, and that that was going to be an important shift, but once it did, things got moving, and if you actually want my honest opinion, there’s probably more motion, more quickly around this notion of XML and certainly we’ve seen more progress in the first two years with .NET than we would have in the first two years of Windows as a graphical user interface. So a lot of interesting things, but this is certainly a long-term journey.
If you don’t get anything else out of the meeting today, and I think we’ve tried to hit it six ways from Sunday, .NET is the platform on which we are building a new foundation for connecting, systems, people, devices, information. It sort of builds off of XML infrastructure, but it is a platform that’s really designed to deliver on the benefit of improved connections. The biggest advances in my opinion in the computer industry have come when people have figured out new ways to reuse the work of others. That’s with the Internet and HTML, and HTTP, where it’s about how do you get to reuse or plug into a vast communications infrastructure around the world. In a sense, that’s what graphical user interface was about. How do we get to reuse skills and technology that manage a different way of taking a look at applications?
And this whole notion of connection that’s in place in .NET is about an architected way to reuse, to tie into, to integrate with information, data, systems, devices, that are not in sort of the cult scope of the initial design. In some senses, I think about XML and .NET as an architected approach to interoperability.
We took you through — I was going to say dragged you through — but we took you through, dragged you through, a lot of detail today, a lot of detail, a lot of low-level, technical detail. Then we tried to bring you up and show you a little bit of perspective from the application perspective. But I think it’s important for me to highlight that no real revolution in the computer industry in my opinion has ever happened in which there wasn’t kind of a reason for involvement, and an excitement from end users as well as developers. There’s always something, object-oriented programming, JAVA, blah, blah, blah. Tons of things which have been important in our industry. But the things that really start big revolutions have always had an end-user component to them, and certainly .NET, or at least in the context of the way in which we see .NET, it has an end-user component. It’s about user interface, it’s about the client-facing application, it’s about the servers, it’s about the development tools. And to bootstrap and really move forward this kind of innovation does require that comprehensive approach that at the end of the day winds up serving not IT people, or developers, but really winds up serving real end-users. And so some of the kinds of things Jeff showed you, and the scenarios that we’re modeling out for the Windows client, or for Office, I think are very, very important.
.NET is about, and is in tune with the sentiment in the world today, that says, if anything, this is not a good, it’s a little bit of a bleak economic climate. IT budgets are under-pressure, and .NET has to fit in that context. Since a key part of our message here is about how you reuse things you already have, applications, systems you already have, in some senses, nothing better could have happened for XML, or for customer budgets, or for Microsoft, than what we’re seeing today. XML is an architected approach to integration. To reduce costs, the number-one issue that most IT departments face is, how do I integrate systems. And so, in some senses, having an architected approach to systems integration is just a huge benefit, and hugely relevant to the times.
We sat down recently with a CIO of one of our large accounts, and he decided he really wanted to learn about .NET and what we were saying, and he started off the meeting saying, hey, look, you know, my budget is going to get less next year by umpty-ump percent. Let me hear what you have to say, but you ought to understand this. By the end of the meeting, he said, because he had just come in off vacation, I’m really glad I came out of my vacation to hear about this, because this fits in the context of the kinds of imperatives that the business is giving me.
Great things in our industry don’t happen from just one company, it requires industry support. It requires an ecosystem of software developers and training companies, and book writers, and everybody to galvanize behind something. We think we’ve started a real sense of this around .NET. We’ve got a lot of ISVs. A lot of reference customers. I’m an exec sponsor on Verizon, for example, a large cell communications company here in the U.S. And the work they’re doing, and the interest that that then breeds in the systems integration companies, the ISVs, to invest, to learn, to get themselves trained, to redo their applications around something like .NET, is really quite impressive.
We recently won a core banking system bid with one of our partners, with their application in core banking, which they had ported with COBOL code, they ported it over, brought it to .NET and are moving it in rapidly into some core banking applications. This is an environment that breeds opportunities for partners, and we think we’ve got a strong group of people galvanized already to move with us.
And last, but certainly not least, this requires a long-term approach. We told you two years ago, this is a long-term thing, but it’s big, big, big, big, big, big, the biggest thing that’s going to happen in the IT industry, and we’re committed to it. We sit here today, I’m more convinced of the size and the importance. We’ve tuned, and we’ve tweaked, and we’ve worked, and we’ve learned, and we’ve changed, not everything you’ve heard today is exactly what you heard two years ago. Software as a service is a concept we believe in. It will be enabled by the move to the XML infrastructure. But, in essence, they’re sort of almost two different dimensions. An infrastructure that permits software to be a service, and then software that really gets redesigned to be a service. So, that as we sit here today, we see that as a clear opportunity for the industry. It builds off of the XML and .NET revolution, but it’s not a prerequisite for this revolution to happen. It’s just another benefit that will come.
When we take a look at .NET, we say, how important is this to Microsoft, where does it fit in, how do you make money? It’s a pretty simple answer, everything we do, the Windows desktop business, the server business, those things are going to be profoundly affected by the degree to which this .NET platform provides the next generation of value. And if we’re going to see growth in any of our businesses, client, office, server, anything else we do, it’s because we’ve correctly embraced these opportunities, and we’ve laid a foundation for making software more valuable as a service, that we’ll be pursuing this year, next year, three years, five years from now. It will take time and it will all come together.
I think as we sat here two years ago, we thought we had those two things much more intricately tied up together in our thinking, one facilitates the other, but there’s really two separate opportunities.
We said two years ago we’d be here two years from now working on the problems, the issues, the opportunities, and I continue to be very bold and upbeat and optimistic. In fact, if you ask me today, I think we are really, precisely where I might hope us to be in terms of market acceptance. The number of customers, the number of leading edge customers that we see doing incredible and exciting applications with .NET, the degree to which the industry is retooling around XML, the degree to which I think we have real R & D leadership and investment around that is favorable, if you will, from a Microsoft perspective. And despite the fact that everybody is a little bit down and gloomy, based upon what’s going on in the economy, there is still significant R & D flow, certainly here, and throughout the industry that is entirely targeted around XML, and a lot of it around very specifically our .NET platform.