Speech Transcript – Pieter Knook, 2003 Worldwide Partner Conference

Remarks by Pieter Knook
Senior Vice President, Mobile and Embedded Devices Division
Microsoft Worldwide Partner Conference 2003
New Orleans, Louisiana
October 10, 2003

PIETER KNOOK: Well, good morning. It’s a great pleasure to be here, and we’re in an exciting time in our business as we’ll hear about in the presentation. Three weeks back, we announced our new relationship with Motorola, and we’re about two weeks away from having those devices in market. I’ll be able to show you some sneak preview of what’s to come.

But I thought I’d start with just explaining what business we’re in and what kinds of solutions we put together, because in the devices area we are focused on essentially the non-PC parts of the marketplace. So if you consider Xbox a PC, because it basically runs Windows, then we’re really focused on the devices that are running the CE operating system. Obviously, the largest category of those devices are phones and PDAs. That’s our biggest accessible market, but we also have motor cars, we have a lot of investments in putting interesting technology inside the dashboard of cars. We worry about how to get devices into point of sales system. We worry about other areas where devices powered by Microsoft software can be part of a greater ecosystem.

First, when we think particularly about the Windows Mobile Devices, which is what I’m going to spend most of my time talking about, we are really focused on the PDA and the phone, recently re-branded as Windows Mobile. We did that quite deliberately because we think that Windows Mobile brand shows the extension that we have from the Windows Client Platform obviously. But it has some unique attributes.

When we’re mobile, particularly when we’re connected through a cellular network, the operator has a big role to play. And in fact it leads to an element of complexity that we don’t have in devices that are standalone. So the challenge for us is to orchestrate a value system where the operator still gets the opportunity to differentiate, to show their services, and yet there is a level of platform consistency that’s important if we are to create the true ecosystem that generates the service demand, the application demand, that we know can really build a market opportunity.

So, particularly, when it comes to orchestrating all these elements together, there’s obviously some complexity, and what I’m going to focus on a little bit here is what happens when you take these phones and these PDAs and you make them part of a bigger solution.

There are a number of elements, of course, that contribute to that. First of all, you’ve got to make sure that there are the basic elements of training and support in place. You’ve got to make sure that there is an ecosystem that can build applications. Those applications may run just on the device, just download into the device, run locally. Games and songs would be a good example of that.

But there are many, many applications, and I’ll show you some of those where in fact the device is communicating using the cellular network, or the Wi-Fi network or whatever, back to a service that is sitting either in the operator’s network or in the enterprise network connected through the operator’s environment.

Obviously, as part of that there may be a variety of different mobile peripherals that need to play a part. And so, there’s a big opportunity here to build these mobile solutions especially when there’s solutions where the devices are connected to other things. And that’s the one where we see this big opportunity for the partner community. That could be in just plugging these pieces together. It certainly is in the job of building the applications and putting the infrastructure together. And it’s also supporting the operator because in most cases the operators don’t actually have much software expertise and they are entering into a new arena also as their business transitions from purely a voice one. They mostly deal with purchase departments in large corporations, figuring out how many SIMS am I going to sell, what’s the data plan and so on, to a point where now they are being asked to explain why this port on the firewall should be open in order to allow connectivity to Exchange or one of the other applications that’s inside the enterprise data center. So, the operators really look for some help and support and I’ll touch on that again. That’s another big opportunity.

We see lots of value in the notion of systems integration and application development as we bring this ecosystem together for mobile and wireless solutions.

Now, let me just start with one of the core elements of our mobile devices platform, because when you think of one of the brand attributes of Windows Mobile, it has got to be about enabling mobile information work. Obviously, as Jeff has just explained, you know we are very excited about the future of Office System, we’re very excited about how that makes people in a PC environment even more productive. Our job in the Mobile Devices Group is to make sure that our portables, smaller form factor devices, fit in with that overall scenario.

So, one of the challenges for us is to make sure that we synchronize — well, that we’re managed in the same context — that we address the security concerns that people have and that we make these devices, which are very personal, work well in that context.

So, one of the things that I thought I’d do is show you one of our devices here. What I’m going to do is show you how the Windows Mobile Platform, in this case I’m going to focus mostly on the Smartphone, since that’s the newest product and many of you are probably quite familiar with — the PDA, Pocket PC Platform. So, I’m going to focus on the Smartphone elements of Windows Mobile and show how these things fit together.

So first off, what I thought I’d show you is the new Motorola MPX 200 device, and this is the devices that will be shipping in about two weeks. We announced that about three weeks ago, and you can see that this is really a phone. In fact, you can see it’s a clamshell design, it looks just like a phone, and that is really to us the distinction between Smartphone, which is primarily a phone first with data capabilities, and the Pocket PC, which is obviously a PDA device with phone capability.

So let me now turn to the device here, and you’ll see that this is a phone. It’s got a normal phone keypad, as you can see, and it’s got a screen that many of you will recognize: 176 x 220.

Now because it is a great data integrated device, I do have some unique things that I can do, which would be much harder on a standard phone. One of the things that I’ve always struggled with in the past is synchronizing my contacts between my device and my PC. In this case, I have over a thousand contacts. Because this is a great data device, I can synchronize a thousand contacts with absolutely no problem and with some very hard fidelity in how many fields — and so on — it stores.

But, if I have a thousand contacts, of course one of the challenges is well, how do I find the right person? So, in this case, I want to call Clarke Butler. I know that he’s stored somewhere in my system. His first name is Clarke, so simply by single-tapping on the keypad his first name, you can see that it’s coming up with all the matches for his first name.

Let’s bring that up so you can see that. I can just tap down here, there’s Clarke, and you can see by simply going right or left on the buttons I can scroll between his mobile number, his work number and so on. So in this case, I want his mobile number, and simply by pressing I’ve selected and made that phone call.

Now, the beauty of this is with just literally a few keystrokes, I’m able to make phone calls and you can see I’m right into his voice mail, in fact.

What this does for the operator is generate a lot more voice traffic, because with the convenience of all your contacts with you and synchronized, you actually end up making more phone calls. That’s an exciting value proposition for the operator.

Now, let me turn to the calendar element, because obviously as you might expect this device has got, like, full calendar schedules. You can see here all my list of appointments for today, and you can see that I can go change those, I can update them and I can do whatever I like.

Let me also quickly show you the e-mail environment here, because as you might expect, not only do we synchronize the calendar, the contacts, we also synchronize e-mail, and you’ve got a lot of power about how you set this up and I’ll talk about that in a second.

But, here’s my e-mail Inbox. I can go and open one of these e-mails. I’ve got a mail here from Mark, and I can see that he’s looking for something from me for Atlanta. Because I’m on the road, I will just give him a quick reply here. Now I could single-tap out a reply and respond with text, but because I’m on the road and I don’t have the time perhaps to do that, one of the things I can do here is to insert a recording. So, I’m going to say, “Mark, I’m going to get back to you when I’m back in the office. I should be able to help you with this Atlanta thing.” Save that and send it. As it’s sent, Mark will now receive a reply to his e-mail with a voice mail attachment.

So, you can see the incredible power of integrating the standard phone capabilities and the voice paradigm with what we are able to do on the Smartphone. (Applause)

I’m going back to the phone screen here. So, I showed you some great integration with Office environment, what you can do on-the-go when using one of these devices. But, of course, like most of us, we also use these devices when we’re not necessarily at work, and so entertainment and pure personal pleasure is also an element that we’ve tried to build in. In fact, one of the great things we can do here by bringing up the Windows Media Player, I can simply select one of the videos that I might want to play and, you know, here’s a little bit — good screen video.

The beauty of this is the quality of the picture, and certainly the quality of the sound. In fact, many of my colleagues come and explain to me — as I’m in the exercise class — that they’re using this device as their standard MP3 Player as they exercise.

So that’s just a little example of how these devices not only fit with your work life but also give it some opportunity to be entertained and see some of that in this device. (Applause)

So, that’s the MPX-200. That will be available on the AT & T wireless network in the next couple of weeks, and you’ll see it in the retail stores and through their enterprise sales department. It will also be shipping in Europe on the Orange Network and you’ll see it in a variety of Asian operators.

So, that’s the Smartphone, which is the newest product. But, of course, I didn’t want to completely ignore the Pocket PC, which continues to be a larger screen with stylus input device that, for certain types of use, may be more appropriate. We see this as being a family of products where, in fact, today you can pretty clearly tell the difference between a PDA Device with phone capability and a phone with PDA capability. We’ll see hybrids like the recently announced, or just announced, device from Sierra Wireless that’s focused on the Smartphone with, in fact, a pullout keyboard so that you can have a full QWERTY ability to write and respond to e-mails. So these are exciting times for us, and we look forward to the success of this device.

I did want to say a couple of things about how these devices fit with Office 2003 and Exchange 2003, because we’ve worked very hard to make sure that is a much-improved scenario. In the former scenario, you would have to install a variety of additional servers to ensure the security of the traffic in e-mail that was going over the operator’s network.

With Exchange 2003, those separate servers are all gone. It’s all integrated into a single setup and management story, so that’s very exciting. In fact, we’ve made the protocol a little bit better. In fact, we’re licensing that protocol. It’s an open protocol, but there is a mechanism here that allows this communication between mobile devices and the Exchange Server to be extremely efficient.

For example, the mail you saw me reply to, the only bit that’s going to go across the wire is the pieces that I’m adding to that mail. The body of the e-mail is stored on the server and does not traverse the network, making for a very, very efficient use of the network pipe and, that’s one of the great things we’ve done with Exchange 2003 and with the mobile device integration.

Secondly, of course, because there are no separate servers and because of the ability of Exchange 2003 to use the HTTPS protocol, we’re exploiting that in our devices. And so we have an open port there that we can use. It’s all secured, of course you have to provision those mailboxes, but basically each IT department will very simply be able to set up Exchange 2003 mailboxes to be accessible through the Internet and through these mobile devices.

If you’re synchronizing over the air, of course, you don’t even need Active Sync, and if like me you’re using one of these Smartphones it’s rare that I would put it in its cradle although sometimes when I’m back at my office, I might cradle it either because I need to power it up or whatever. But usually I’m synchronizing over the air, and so then I don’t even need the Active Sync application because I’m syncing directly to the server.

The last point I’ll make is all of this in our devices, in the Windows Mobile Devices, of course we have a local mail store, local calendar store; that means you can read offline, it means you can access those items very quickly. It is still possible to view those icons through a browser interface, which is, of course, what you would use with non-Microsoft phones or PDAs or feature phones that have browser capability.

Now let me change track here, because I’m going to talk about the platform and the unique applications that one can build on these devices in addition to what I’ve just showed you with the integration with mobile office work.

Here’s an example of an application that one of our partners, Accenture, has built to control mobile manufacturing. Complicated process, lots of people are involved, and in this case, each of these categories of people are using different technology to manage the overall manufacturing process.

First of all, there’s the supervisor, who’s using a Tablet PC with perhaps a cellular card inserted to make so when they’re on the go they’re able to supervise the various element of the manufacturing processes that their in charge of.

On the right, the Team Lead, who’s out on site with a Pocket PC device, being able to actually figure out exactly what is going on the ground and get all the data they need whilst being wirelessly connected back to the central application.

And, in the middle, the manager or executive, which is where I’m going to put my focus here. And this person may have a device which they might use for a variety of different purposes. You’ve seen the Motorola device here which has normal phone capabilities that obviously that manager or executive would be using.

But in this scenario I’m going to send an alert to this manager and the manager’s going to say, “Wow, you know, one of my jobs is stuck. Now what do I do about that?” So their first inclination may be to get into particular manufacturing application and figure out what is the job status.

So here they’re going into a custom applications, they’re looking at the job status, they’re drilling down into a particular job, finding out what’s going on and then on the top left-hand part of screen you can see they are actually calling the employee that’s associated with this job. So they are making a phone call to establish directly connection with that employee, all from the integration between that application and the basic phone functionality that’s available.

In addition to that, this manager obviously might want to understand how the overall system is working and generate some reports, which is one of the other features of this particular application. As you can see this application allows for a rich rendering of graphical information that allows that manager to really keep up to date with how this system is performing.

The beauty here is that we have obviously a standard browser, we have a rich color screen, we can display information better than most phones can, and the beauty is it all fits in the standard same form factor of a phone, so it’s always accessible, it’s always with you no matter where you are, possibly even anywhere in the world, as these cellular technologies have good reach everywhere.

So, it’s an exciting prospect. Here’s a brand new way of keeping managers up to date without them having to carry that other piece of technology with them. It simply is integrated with the thing that they carry around in any event.

There are other examples of people building mobile applications. On the left-hand side, we’ve got a Web site from TD Waterhouse, which is optimized 240×320 for the screen resolution of Pocket PCs.

One of the beauties that we have in our platform business is that we only have a certain number of screen resolutions that we support, which for a developer makes it much easier to build and optimize the applications around these devices.

So the top left is a Web site that’s optimized for the Pocket PC browser. That Pocket PC browser, as does the Smartphone, supports WAP, HTML and Compact HTML, so that’s one of the nice elements here is that you can see content from a variety of different sources.

On the bottom right, a custom application built for a real estate environment. We’re using the front end here. I can query the real estate database and figure out exactly which choice of housing meets my needs and, of course, that’s interrogating a database over the wireless back in the enterprise data center.

In the middle, an insurance co-application that really tracks what’s going on with my claims adjusters, in this case running on a Smartphone and showing me the essential statistics of how the people in my business are doing.

So you can see here we have a variety of different kinds of applications, all of which are connected to something at the back end and that something at the back end, of course, is the things that’s going to drive a lot of business for the partner community here in the room. In fact, it’s that platform element that distinguishes what we are trying to achieve here with Windows Mobile. What we are trying to establish is a platform for these devices such that they can be a single way in which enterprise, IT systems integrators, partners — whatever — can build applications that will work across a variety of these Smartphones and Pocket PCs no matter which operator is running the network, no matter which OEM has built the device. So there has to be a level of consistency in that platform, and nobody else in the mobile environment is really focused on that, making sure there is a single platform. We have one software development kick that you can use to build these applications.

The other thing that’s important is that, of course, it’s built on top of all the things that you already understand if you’re a Microsoft partner. You already know how to build Windows applications, you know how to use Visual Studios, we have our own .NET Compact Framework, obviously for size reason’s we can’t run the complete Framework, and we’re a smaller screen device. But the developer can use the same skill set to build these applications on these smaller devices that they would use to build the applications on the big environment.

So it integrates with the IT investment, of course, all the tools and the infrastructure, especially if it’s using Windows Servers, which fits in with the existing IT infrastructure that the customer is already comfortable with. And, that’s one of our big advantages. Plugging this right into Exchange means there’s a single administration level, a single security model, a single administration environment. And from the user’s point of view, of course, greater advantages too.

So that’s the platform that we’re trying to build, and that’s why this is such an exciting business for us. And really, it’s at its infancy as we just started shipping the devices that really enable this.

I also wanted to turn for a minute to the communication sector, because I really have two jobs. On the one hand, I run this business group that builds the software for Windows Mobile and overall device environment, but I also run a sales force at Microsoft. That sales force is focused on what we call the communication sector. These are service providers, wireless, wire line, cable, hosters, XSPs, and of course media and entertainment customers.

Those customers, many of them are very large, we’ve picked a number of key partnerships with Accenture and with HP to help address those partners. But there are many ways in which we need to plug in a full ecosystem. There are many ISVs that we need to complete those solutions, and there are many ways in which when we go to market with a service provider, and typically that might be either through a consumer up to a small or medium business, we need help together with that service provider to pull those solutions together.

As I said earlier, in the wireless case, many of these operators are getting used to the idea of how to deal with software, how to deal with the support, how to deal with the training and they are looking to help plug in local partners that can help with those kinds of areas.

So in many cases there are opportunities to partner with the service providers as they go to market, in addition to the more standard way of partnering to build the solutions that they might need to work inside their organizations when they’re consuming this technology inside for their billing systems, for their operational systems and so on. Typically, these are very big systems and they require large scale systems integration, which is why there’s oftentimes a big opportunity to build that ecosystem and work directly with the big system integrator who’s putting that puzzle together such as an Accenture or an HP.

So that’s the communication sector and that’s one of the elements of partnership that I think is available.

For the Mobile Solutions Partner Program, there are some specific elements that are worth noting. So, first of all, you can bring your own solutions to market, you can become part of this program and understand exactly what training, what support and so on is available to you. The best resource is the Microsoft.com URL that I’ve got on the bottom of the chart right here (http://www.microsoft.com/windowsmobile/partner).

One of the elements is to be able to publish what solutions are available in the mobile states. So Mobile to Market is focused on what device applications are available, the solutions to actually list a wider variety of solutions, both client and server, and more complex end-to-end solutions. And then we obviously want to partner with the leading systems integrator to bring those solutions to market, either with the operator, directly with the customer — there’s a variety of different models.

And, finally, don’t forget the Microsoft marketing engines that are kicking in around a couple of key areas where Windows Mobile is a key and important asset.

Communication and collaborations go to market, obviously, reinvigorated with Exchange 2003 and Office System 2003, those are very exciting components where Windows Mobile has a big role to play.

And, of course, our own Windows Mobile Global Campaign, which we’re doing a lot of work on with operators, will generate further interest and demand.

We’re excited about this point in time. This is a great point in time, as we are just getting into the business of launching these devices in the U.S., and we’ve already seen some great success in Europe. We look forward to sharing that with you, and we look forward to seeing many more Windows Mobile applications in the future.

Thank you very much.

(Applause)

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