Kevin Turner: Announcement of HP & Microsoft Solutions for the People-Ready Business

PETER BOIT: Welcome. I’m Peter Boit, the vice president of the Enterprise Partner organization in the Enterprise & Partner Group at Microsoft.

I’d like to thank you all for coming today, and listening in for what is truly an exciting global announcement around the HP and Microsoft solutions for the People-Ready Business.

Microsoft Chief Operating Officer Kevin Turner at a news conference announcing a three-year agreement with HP to deliver hardware, software and services for business customers. Redmond, Wash., Dec. 13, 2006.

Now, joining me today to do that is Ann Livermore, executive vice president for the Technology Solutions Group at HP; Kevin Turner, chief operating officer at Microsoft; and then John McCain, senior vice president and general manager for HP Services.

And the follow-up today is Ann, Kevin, and John are going to do the announcement, and then we’re going to open up the phone lines for the press to call in with questions, and actually the details of doing that are on Microsoft.com/presspass.

So with that, let me hand it over to Ann.

ANN LIVERMORE: Thanks.

Hello, everyone. I’m Ann Livermore. We’re here today to mark another really important milestone in the 20-year partnering relationship that HP has had with Microsoft, and it’s to tell you about the things we’re doing for solutions for the People-Ready Business.

We’ve agreed to a three-year, US$300 million investment between our two companies, and a very aggressive go-to-market program on top of that. What you’ll see us do is bring these solutions to the marketplace in a very aggressive way, and go after our customers with something that we think is quite unique in what it can do to change the way people work.

Together you’re going to see us focus on five different solution areas, and these are solution areas where we see tremendous customer demand and very strong market growth.

The first one is around messaging and unified communications. And this will really enable customers to move to an integrated messaging platform. It will enable them to bring really great services to mobile professionals, and on top of it to be able to have e-mail, voicemail, IM, data conferencing and videoconferencing all from a single platform.

The second area we’re going to focus on collaboration and content management, another very important area to our customers. We’ll focus this to our installed base of Exchange customers, and we think there’s a tremendous, tremendous opportunity for them here as they can do a better job with the data they have, integrating the data, being able to manage the data, protect the data, just a very strong set of solutions in that space.

We also have work together around business intelligence solutions. This is a huge area of market interest, and we think we’ve got some very unique capabilities between HP and Microsoft in this important space.

The fourth set of solutions is around business process integration, being able to do business-to-business, business-to-consumer, and also workflow projects, and again some very unique capabilities between the Microsoft suite of software and HP’s services and products.

These are all areas that we see as very exciting. Then we build on top of it an area we’ve been working on together for years, the core infrastructure, both the products and the services to make the Microsoft IT infrastructures be the most reliable, scalable, secure in the world.

These sets of solutions are built on top of both HP and Microsoft technologies brought together hand in glove in a very integrated way, surrounded by a set of services we can deliver. For HP it plays to our entire company portfolio, and that’s one of the reasons we’re so uniquely positioned to team with Microsoft. Our ProLiant Servers, our Blade Systems, our StorageWorks products, our PCs, our notebooks, our tablets, our printing and imaging products, and then on top of that a very robust suite of services; we’ve got more Microsoft services professionals than anyone in the world. We’re going to bring the full force of them to these solution sets.

Our customers, when they’re looking for these solutions, they’re eager for what it brings to them, but they also want it at a very attractive cost. And what you’ll see is the combined solutions from Microsoft and HP will be delivered at a cost that’s very attractive to the customers, and on top of that at a quality that they demand.

We’ve also got a great set of work together around our go-to-market activities and investments there where you’ll see us do ongoing account planning at very detailed levels. You’ll see massive training happening inside our services organization where we already have 3,000 people ready to deliver these solutions.

On top of that you’ll see HP ourselves as a corporation implementing these solutions inside HP, making HP one of the model companies of being able to have better access to information, better decision-making anytime, anywhere.

Our sales forces are ready, they’re launched set, we can begin tomorrow in terms of the services both from a sales and a delivery perspective.

So in conclusion, this is a great positioning from what is a unique combination of capabilities brought to our customers by HP and Microsoft together. Again it builds on 20 years of successful partnering between our companies, and it really addresses for customers a very integrated, full set of solutions to big, important business problems.

These are things we’re excited about and we know the market is ready for, and our two organizations are poised to be able to really do things that change the way people work.

I’d like to turn it over to Kevin now, and he’ll give you some perspectives and comments from Microsoft’s perspective. Thank you.

KEVIN TURNER: Thank you, Ann, appreciate that.

Well, again I’d like to thank my colleagues and Ann and John for being here from HP.

We’re very excited about this partnership, and certainly where we can take it and really strengthening both of our commitments to the enterprise as well as to CIOs around the world and all businesses, and that’s super exciting.

You know, the last couple of weeks at Microsoft have been unbelievable. We launched Windows Vista and the 2007 Office System, we launched Exchange Server 2007. These are the biggest launches in the history of our company, and we’re very, very excited about that opportunity, and we believe that that will add to changing the face of commercial computing well into the future.

Today we launch another exciting partnership, this partnership with People-Ready Business. And all of you know we started the People-Ready Business campaign, which is really about putting people at the center. It’s people within businesses that extract business value and drive that value. And that’s really what this partnership and go-to-market integrated partnership that we have with Hewlett-Packard is going to enable us to do.

Ann talked about the five areas that we’re going to highlight. Those are super important for our customers. Customers want to hear how can IT advance the business, how can IT drive value in the business. And as people collaborate and share information and compete, they want to be able to invent, and that’s the nature of these five solutions that we have.

One of the things that IDC tells us is the opportunity for these five solutions, five solutions in the marketplace for IT spend just this next year is over $50 billion. So this is an over $50 billion opportunity that the two companies have to be able to bring these solutions into the marketplace.

Hewlett-Packard and Microsoft have a very unique partnership, Ann and I have a very unique partnership. Years ago, when I was a chief information officer for Wal-Mart, Ann was the executive sponsor for Hewlett-Packard on the account, and we were a big Microsoft customer, and we were a big HP customer. And so this is a natural point for us to collaborate on to be able to drive those solutions into the marketplace for CIOs and help change the face of business. And that’s something that we’re super excited about again as we strengthen and solidify our commitment to the enterprise.

And this is just another add-on to the huge launches and events and initiatives that we have of bringing value to commercial customers. The most comprehensive partner that we have out of the 640,000 partners that we have at Microsoft is Hewlett-Packard. We interface with them on a variety of dimensions, and this partnership really speaks to the differentiation and the uniqueness of that partnership.

So again I’d like to thank Hewlett-Packard, I’d also like to crank up all the Microsoft sales folks out there and let them know that this is another way that we’re going to be driving value into the enterprise, and really it’s about driving hardware sales and services for Hewlett-Packard, and it’s about selling more Microsoft technology.

Thank you all for being here today. I want to turn it over to John.

JOHN McCAIN: Thank you, Kevin.

And so I’ll echo what Ann and Kevin had to share. It’s a very exciting opportunity particularly for HP services. I think we’re at a great inflection point with the capability we’ve built inside the HP family over the last couple decades, and with your new launch of Vista and People-Ready Business it’s a perfect time for us to go to the market as one single stack of the best hardware and software in the world today.

So I think we’re uniquely qualified. We have tens of thousands of professionals today that are ready to go tomorrow to deliver for you. We’ve got a great customer qualified list already, and some very good experiences to share with the marketplace of our learnings.

I also think from an HP Services perspective I really like the opportunity for us to drive significant pull-through for both Microsoft and HP products across the world on all of our platforms. So it’s a great opportunity.

I think I’ll turn it back over to Peter right now, and say it’s Q&A time.

PETER BOIT: Q&A time. Great. Thank you very much.

So, the operator will start taking calls, and while that queue is hopefully filling up, maybe I can just get us started a little bit, and just ask you all, you know, we’ve had the partnership for a long time, but what’s different about this than what we’ve done in the past? What’s unique from historical steps?

ANN LIVERMORE: I think there are a couple of things that are unique. One of them is just the scale of the commitment and the scale of the opportunity. The opportunity is very large, and for our two companies to make this commitment of $300 million of investment over a three-year period is a very significant statement, and that’s important for our customers to hear, because they want to know that there’s a lot of power behind it.

The other thing that’s quite unique is it pulls on Microsoft’s whole portfolio for the enterprise and our whole portfolio. And very rarely can you find a set of five solutions customers are dying for that requires the portfolio that’s very uniquely shared between our two corporations, and that puts us in just a tremendous position.

PETER BOIT: That’s great.

JOHN McCAIN: I’d add to that to say I think it’s unique that we’re on the front-end of this in creating a market. And I like that we’re doing joint go-to-market plans together with our teams to go address those five solution areas that we’re investing in together.

PETER BOIT: So, we do have a question on the line, and I’ll let the operator introduce the question.

QUESTION: Any position in this for the Linux situation that you have with Novell? And what percentage of the $50 billion opportunity do you think you can bring home?

KEVIN TURNER: Let me comment on the Linux opportunity that we have with Novell. Specifically this is targeted at the five tiers that Ann talked about, that get right back to messaging and collaboration and business intelligence and business process integration and core infrastructure. And those are at the heart of what we’re trying to do with this particular initiative. And it’s about selling our portfolio and it’s about selling HP’s portfolio.

And again this partnership, to kind of follow on to the first question, I think it’s a unique point in time for both the maturity of both sides of the solutions, and I think that it’s a natural partnership because those are the emerging trends of CIOs and us being able to bundle those in an integrated way and a go-to-market way and in an elegant solution for customers and for CIOs are going to be very unique in the marketplace. So, this is about how do we extend both of our opportunities and really leverage where the market is going.

JOHN McCAIN: On the second part of that, which is —

QUESTION: I’m sorry; is that yes or no?

KEVIN TURNER: You know, generally we think that that’s a conservative number of the opportunity, but this isn’t something that we certainly release from a financial project standpoint.

PETER BOIT: But I think one thing we all see is there’s a lot of upside potential from kind of what we plan, but that the market really has a potential to expand.

We have a second question on the line.

QUESTION: Yes, good evening. Ann, Kevin and John, congratulations.

Say, for example, that I happen to be one of these customers to whom you refer. Perhaps I’m a nationwide commercial enterprise, I have, say, 2,500 employees scattered across the nation. Describe to me, if you would, what my customer experience is going to be. Who is it that’s going to approach me with these solutions? Is it Microsoft, is it HP, is it a representative of both companies? And what type of experience will I go through in determining what solutions are best for my enterprise?

ANN LIVERMORE: Well, depending on the particular situation, the first contact might come from Microsoft, it might come from HP and it might come from one of our channel partners who see a great opportunity associated with this. And that’s the power; we ought to be able to cover almost the whole world between the partners that Microsoft has, HP has, and our two sales forces.

And then whoever finds that lead will bring in the appropriate parties from the other organization to put together the solution offering. In some cases it might be a very simple implementation of a server with the software; in other cases it may be a much more complex solution which requires some consulting or design or implementation services. But the power is that we can come at this from very many different start points.

KEVIN TURNER: Just to continue the point, I mean, we have over 20,000 shared customers that we were able to parse today, which is an unbelievable number. I actually think there’s 20,000 more out there that we could extend this opportunity into. So it is literally going to come from all different directions, but having that way of doing business, and a way to go to market, and a muscle that we will leverage through this People-Ready Business initiative is going to be very strategic for us to being able to assimilate all the right resources at the right time to deliver the right value for customers.

JOHN McCAIN: And part of our investment is around the joint go-to-market activity where we work on our enterprise account plans together, so we define who’s on point and who leads and who partners in which role.

PETER BOIT: And I think one other aspect of the customer experience is wanting to ensure the customer is self-sufficient in the sense that they get the implementation of their solution and can support it and provide it going forward.

JOHN McCAIN: That’s right.

SCOTT FULTON: Very good; thank you very much.

PETER BOIT: Okay, we’ve got another question on the line.

QUESTION: Hi. I was wondering if anybody at Microsoft could comment on what impact or how this might relate to the partnership announced earlier this year with Nortel around unified communications, since that’s one of the areas that’s being covered under this agreement as well.

I also wondered if you could go into any detail around the go-to-market strategy as it relates to your channel partners.

PETER BOIT: Well, you know, the unified communications space is growing and has a tremendous amount of opportunity. And so this is a very strategic initiative we’re doing with HP and we’re very excited about it, but we will also do partnerships with others in the same space, whether it’s from a services standpoint or they are providing particular products or solutions that enable unified communications. And that’s a lot of what the Nortel opportunity is about, as well as tapping into and working with the channel that they bring those products and services to marketplace.

So, it’s a very big, growing category, there’s a lot of opportunity. The HP announcement we’re talking about today is a great way and a very big way for us to get into that marketplace together, and we see this similar opportunity with some complementary ways with Nortel.

ANN LIVERMORE: HP has a partnership with Nortel as well, and so it’s very natural for us, as you might expect, a lot of our services implementations, a lot of our big solutions have a network component. So they’re a partner of ours, and it would be natural for the three of us to work together when appropriate.

PETER BOIT: And then to the second part of the question is we think we’re at an inflection point from a business opportunity standpoint in not just these five areas but a lot of areas, and what the customers are expecting from a business value standpoint, the kinds of technologies that we and our partners are releasing, and so we think there’s a tremendous amount of growth opportunity.

So we think we’re doing this partnership with HP because of that opportunity, and that also will lead to a growing market for other partners that we’ll work with around the world in the enterprise segment but also in the medium and small business segment as well.

PETER BOIT: I think we have another question on the line.

QUESTION: Thank you very much.

I have a number of questions, if I might. One is just trying to get a little bit better understanding of a couple of the structural issues in terms of the joint venture, specifically some sense of the level of contribution in terms of people, as well as who’s going to be responsible for follow-up and support on implementations, and then also conflict resolution, if you could help me with those things, thank you.

PETER BOIT: What conflict? (Laughter.)

ANN LIVERMORE: Sure. Well, you know, as we look at the focus and the investment from both of our companies, it’s around solution development, it’s around capability development, it’s around sales and marketing activities, and so those are very critical for us in terms of the investment areas, and it’s a joint investment between our companies.

If you look at the ongoing support, you know, after the implementations are done, it will depend on the nature of the solution. In some cases it will be most natural for Microsoft to be the main point of contact for the solution, and in some cases it will be for HP.

So, we know how to do this with Microsoft. We’ve been doing it for 20 years, and so it’s something that’s a natural set of collaboration for us, and it may vary a little bit, depending on the nature of the solution and what’s included in it.

QUESTION: And, Ann, just to be clear, will there be people that will be contributed to the venture that will – will they continue to be badged as HP employees and continue to be badged as Microsoft employees respectively?

ANN LIVERMORE: Yeah, it’s not a structural announcement. This is a joint investment of our two companies. So we’re not creating any sort of separate structure to do this.

On the HP side, as we mentioned, we’ve already got 3,000 people who are ready to be delivering these services from our services organization, and you’ll see us continuing to invest more in that area.

Across HP as a corporation we’ve got about 22,000 Microsoft field professionals, and so we’re going to pull on whatever resource we need to capture this market opportunity because it’s such a big opportunity for us, but there won’t be a separate structure.

JOHN McCAIN: And in Ann’s group you’ve got it spearheaded by a worldwide alliance team, and in HP services I have it spearheaded by an HPS worldwide Microsoft partnership.

PETER BOIT: We have it spearheaded in the Microsoft Alliance Team as well as working on the services side as well, so it really comes together.

JOHN McCAIN: And those teams have been — well, we’ve had them in the back room working very closely for the past several months putting this agreement together for us, and have done a great job.

KEVIN TURNER: And I might comment on the conflict-resolution element, too, because that was something we addressed and really tackled head on is all this had different scenarios that could come up and how do we resolve those.

So we did a lot of situational planning, as well as discussions, and quite frankly, the regular rhythm will be Ann and I talk regularly, as well as we meet regularly, so that will be part of the follow-up and part of the cadence and rigor that we put in our HP alliance frontline partnership meetings that we have, and we’ll continue to not supervise but certainly oversee the activity, as well as monitor the results and hopefully push both teams to do more. That’s the intent.

PETER BOIT: And we’ve got 20 years of history working together, use a good foundation on how we do that.

QUESTION: Great. Thank you.

ANN LIVERMORE: And to your point, you know, there’s also at the region level some similar things, two executives, a Microsoft lead and an HP lead who are members of Kevin and my organizations, and they own the resolution in the regions as well if there are any issues that come up.

JOHN McCAIN: There’s great, I’ll call it executive interlock in the companies, too, in the regions and the global business units that have a real cadence today that support the whole business structure.

KEVIN TURNER: Well, we brought – I brought all of our area managers into HP’s headquarters in the summer timeframe, and we sat down, they sat down peer-to-peer, and with their counterpart, the same parts of the world, and we really hashed out a lot of the details that we’re talking about today. And the partnership is very deep throughout I think both organizations, certainly on the Microsoft side it is.

QUESTION: Great. Thank you.

PETER BOIT: I think that’s it for questions. And so I just want to say thank you very much for joining us today.

I also want to thank the team for the hard work they’ve done to get us to this moment. And I’m going to thank the teams in the field going forward for the work that they’re going to do on behalf of the customer value that we think we can deliver together, and I’d just like to thank John, Kevin, and Ann for being here. Thank you very much. (Applause.)