Chris Capossela: Microsoft Worldwide Partner Conference 2007

Remarks by Chris Capossela, Corporate Vice President, Microsoft Business Division Product Management Group, Microsoft Corporation
Microsoft Worldwide Partner Conference 2007
Denver, Colorado
July 10, 2007

ANNOUNCER: Ladies and gentlemen, please welcome Chris Capossela. (Applause.)

CHRIS CAPOSELLA: Well, good morning everybody. Good morning everybody! There we go. It’s really my honor to be back here at the Worldwide Partner Conference for, I think, the fourth consecutive year. Thank you everybody, obviously, for coming, and I hope to take the next 30 minutes to talk to you about what we call the business productivity infrastructure opportunity.

We think there are some wonderful partner opportunities for the business that I represent, which is what we call the Information Worker Business at Microsoft, which essentially represents the entire Office system — the desktop applications, the servers like Exchange Server and SharePoint Server and Office Communications Server, and new services that we’ll be bringing to the market in the coming year as well.

So, first of all, I just wanted to start off with a very, very big thank you to the many folks in this room. It’s been an amazing year for us, as Kevin talked about, in terms of the actual launch. We launched Windows Vista and the 2007 Office system together, we reached over 400,000 business decision-makers and technology decision-makers with the support of a tremendous number of partners in this room, and we’ve seen wonderful, wonderful momentum both with the product sales — Kevin talked about 85 million copies of SharePoint sold since the beginning of that business. We’ve had 6 million Office trial downloads, a million Exchange Server 2007 trial downloads — I could go on and on and on.

The business results this year for the IW business are just wonderful, and a lot of that was due to the 2007 Office System. And I pulled a couple of choice quotes here: PC World gave Office 2007 the most innovative product of the year award for any category, not a productivity category, but literally for the entire industry, which I think was a big surprise to people. No one would have thought that a productivity software product would actually be given an innovation award, and that was very exciting for us.

The other great quote here is that eWeek wrote: “It’s become much clearer that SharePoint will be the one must-have product released this year for any Microsoft-centric business.” SharePoint has really broken through into the mainstream. Now, in terms of partner momentum, we’ve got about 5300 IW-competent partners in our partner program. That’s about 16 times more than we had just a couple of years ago, I should say. And so that’s an amazing amount of partner momentum that we now have. Of those 5300, 2200 of them are SharePoint partners.

We’ve trained 20,000 people on Exchange Server 2007, partners on Exchange 2007. You see that we’ve rolled out the quick start for Microsoft Search around this time last year. And since that time, 3600 partners have enrolled in that program and are literally building search solutions and doing search implementations based on Office SharePoint Server 2007.

And then the big number for us was having a large number of partner solutions ready to go at launch. And today, we have over 1200 partner solutions on 2007 Office system. So on behalf of my entire team, I just wanted to take a second to thank all of you for the incredible work that you’ve done to launch this product. Thank you very much. (Applause.)

For those of you who may not be super familiar with what we’ve been doing in Office over the last couple of years, this slide really does a nice job articulating how Office has changed. Office isn’t just about desktop word processing and spreadsheets anymore. We talk about this as the business productivity infrastructure. And it’s really a single set of servers, a single infrastructure, that customers can bet on to deliver all of these capabilities.

We’re getting into the unified communications business, building on our messaging infrastructure on top of Exchange, adding unified messaging, instant messaging, voice over IP, Web conferencing, et cetera. With business intelligence, we’re bringing a new product to market that I’ll talk about in a moment, but we’re getting very serious about helping you plan and analyze and monitor your business. Not just with the work we do in SQL Server and Excel, but also with the work that we do with SharePoint and this new product called Office Performance Point Server that we’ll be bringing to the market.

Search inside of companies, very, very different than search on the Internet. And with Office SharePoint Server, we’ve got a wonderful way for customers to build fantastic enterprise search solutions to find experts inside their company, and to find structure line of business data, or to search inside of structured line of business data, as well as the unstructured information.

And we’re seeing wonderful search solutions. BearingPoint is about to announce a brand new product called Single View that’s built on top of Office SharePoint Server that will search your PC, that’ll search the Internet, that’ll search your intranet inside your company.

Enterprise content management is a big push for us as well. This means that we’re not just talking about helping you create content, we’re helping you manage content, expire content, publish content to your Web site inside your company and outside your company. Document management, records management, all of those capabilities, that’s a space that we are now fully in with Office and Office SharePoint Server.

And, of course, collaboration: Team-based collaboration, organization-based collaboration, cross-company collaboration. These are the things that we think we’re delivering with the 2007 office system, and customers are very interested in them because end users get to live in Office and, yet, IT professionals get to reduce the number of servers, the number of vendors that they’re implementing to deliver all of these capabilities to their end users.

In addition, we’ve built all of these on something that we call the Office Business Application Services. And for corporate developers and for many partners, these services are very exciting because you can build a new class of application called Office Business Applications, or OBAs. And I’ll talk a little bit more about those, but you let to let your end users live in Office and connect that to back-end systems like SAP or Siebel or Peoplesoft or Dynamics.

And, of course, all of this is built on top of Windows Server and SQL Server. So it’s all built to be secure and make it very easy for you to keep it well managed and operated at low cost. So if there’s one slide that our sales force is going to be presenting time and time and time again with one of our major go-to-markets, this is that slide for what we call the Business Productivity Infrastructure.

And one of the things I wanted to try to communicate is that the partner opportunity here is just massive, very, very different than it was five years ago with what Office used to be. And I want to talk about those opportunities.

First, I wanted to share a short video that shows what one of our partners has done to build a solution that uses just about every element of that prior slide. In this case, it’s called the M&S Learning Portal, and it was built by WinVision and REA College in the Netherlands to build a very creative, online education portal. Let’s take a look at that now.

(Video segment.)

(Applause.)

CHRIS CAPOSELLA: So, a great example of one type of solution, obviously in this case in the education space. But we literally have thousands and thousands of other solutions being built on the Office system itself.

One of the questions I get from partners all the time is, you know, hey, how do we actually help customers consume all of this technology? So what we’ve done is to build what we call the BPIO optimization model. A lot of customers tell us, “We love where you’re going, we love your vision, but you’ve got to help me actually adopt this in a way that our organization can consume it successfully because there’s so much technology here.” And in many cases, you may be far ahead of us in our own sophistication of the use of technology.

So we’ve built this optimization model that is part of our business productivity infrastructure where customers, with the help of Microsoft and with the help of all of you, can essentially profile themselves on where they stand on this four-stage continuum of basic all the way up to dynamic across the work loads of unified communications, BI, search, enterprise content management, and collaboration.

And what this allows us to do, partners as well as Microsoft, is to lay out a multi-year technology roadmap, an adoption roadmap, for a customer. So you shouldn’t try to go from basic to dynamic in one fell swoop on unified communications. You should assess where you are, you should discover what are the most important places for you to make progress first, and that actually helps to really lay out that adoption plan that might be one year, two years in the making, and it’s not just about selling the latest version of the software.

So this model, in conjunction with the business productivity infrastructure vision is something we’re getting tremendous feedback on, and I’d say that any partner who has a professional services practice that wants to do services around these spaces should really get smart about the business productivity infrastructure and the optimization model itself. And we’ve built what we call the BPIO University, which is a two- to five-day training class to help you understand this optimization model, how to apply it to customer engagements, and that’s a very major call to action that I’d give to everybody in here who’s interested in partnering with us as we go to market in this major, major go-to-market for us called Business Productivity Infrastructure.

Now, we do have some very exciting products that we’re launching. We launched the 2007 Office system, but there are two more servers that are coming this fall well before Windows Server launches. One of them is Office Communications Server 2007, which is all about software-powered VOIP, and I’ll show you that in a moment, and the other is called Office Performance Point Professional 2007 — or Office Performance Point Server 2007, and what that is is a server that really puts us in the performance management space for the first time.

It’s built on top of SharePoint, and it allows customers to use really any score-carding methodology they like, balanced scorecards or a P&L-based scorecard view, to plan, analyze and monitor and take action on their business. So two major servers that we’re bringing to market in the fall, wonderful partner opportunities for many people here to help us launch those products and bring them to market.

The Office Communications Server product is a really important one for us as we enter this unified communications space. And I thought it would be useful to give you a sense of that product with a short five-minute demonstration. I’m going to show you Office Communications Server and Office Communicator, and the technologies you’re going to see, you see on the slide.

I’m going to show you integrated presence, I’m going to show you multi-party video conferencing with VGA-quality video. I’m going to show you software-powered voice over IP, and I’m going to show you essentially using your PC as the phone.

So if you can go ahead and switch over, great. There’s my demo machine running right here. I’m going to go ahead and bring up Outlook, first off, and this is Outlook connected to Exchange Server 2007. And one of the things you’ll notice is that we’ve added what we call unified messaging to Exchange Server.

So right here inside of Outlook, of course, I have my e-mails, but I also have voicemail and faxes delivered right to my inbox. Here’s a voicemail from Paul Duffy, and you’ll notice I can actually play that voicemail right here, I can take audio notes on the voicemail as I listen to it so I can search later and find that voicemail. So we’ve got unified messaging built right into Exchange Server and surfaced to the end user through Outlook itself.

What I’m actually going to do is open up this e-mail from Paul Duffy, and here’s integrated presence. In the e-mail, you see Paul and you see a little icon next to Paul. Notice when I hover over it I can see that he’s in a meeting, I can see that he’s currently busy, but he’s free at 1:00 p.m., and I can see that he’s at the Worldwide Partner Conference. And all of that is just coming right out of Active Directory and Exchange Server.

I can also see the presence of all the other people on the mail. Lisa is busy and she’s enjoying coffee and getting her reviews finalized. Hugo’s done something different. Isaac is actually marked as “do not disturb.” But I see all that presence surfaced right inside of Outlook. And I can click on any one of those icons, of course, and then do all kinds of things like view their personal My Site or reply with an instant message, or call them on their mobile phone or what have you.

If I switch over to SharePoint very quickly, you’ll see that that same presence is integrated right inside of my SharePoint site. So there’s Michael, and the indicator next to Michael, and there’s Paul Duffy with that same indicator. When I switch over to Word, there’s Paul Duffy and there’s his icon right next to his name. Michael and I’ll see Michael’s icon right next to his name. So you see that integrated in all of these applications, and you can integrate the presence — the presence icon in your applications as well, as long as they’re using Office Communications Server to add presence to the underlying platform. And that’s a very powerful concept.

Let me switch back over to Outlook to that mail message, and I’m just going to IM Paul real quick. Notice the ribbon actually makes it very easy for me to do things that I would never have been able to do before, like start a conference call or maybe send an IM to him. So — Hi, Paul, a little typo — let’s make sure Paul’s online. In a second, he should type back to me. Good morning. Notice in the e-mail he said that he wanted to talk to me about something.

I’m actually going to show off a new capability in Excel — or in Office Communicator, I’m just going to copy some rich text from Excel, and I’m going to past that into my IM session and “Ooo” and “Ah.” Very nice. (Applause.) Office Communicator supports rich text so you don’t have to have those really basic just sort of text messages back and forth. And he says, “Wow, those are really amazing numbers.”

Right from within Office Communicator here, I can start doing much more sophisticated things. For example, I can click on a button to start a video call. And what you’ll notice is we’re going to bring Paul in — (phone rings) — and hopefully in a second here he’ll show up.

PAUL DUFFY: Good morning, Chris.

CHRIS CAPOSELLA: Hey, Paul, how are you doing?

PAUL DUFFY: Good.

CHRIS CAPOSELLA: Before we start talking, let me just show off a couple of things here. One is you see that the VGA-quality video here is really, really beautiful. Notice I can show this full screen, much, much higher quality video than you were seeing in the M&S Portal, which is great. (Applause.)

So, Paul, you wanted to chat about some things?

PAUL DUFFY: Indeed. And I wanted to say thank you for calling me “beautiful” to start with. Also to make sure that you tell all our partners, while you have a chance, about the great revenue opportunities that Office Communication Services are going to provide to them.

CHRIS CAPOSELLA: Great. So revenue opportunities, what are you talking about here? Show me the money.

PAUL DUFFY: I’m talking about greenbacks.

CHRIS CAPOSELLA: Great. So you can actually see that US$20 bill. I hope there’s more than $20 of opportunity in the business. We think there is. But you actually notice the quality of how well you can see that dollar. You know, this is a very international audience, Paul, you got anything for people who aren’t in the U.S.?

PAUL DUFFY: Well, I’m a very international person as well, so yes, we have some Yen.

CHRIS CAPOSELLA: Beautiful.

PAUL DUFFY: And also, I wouldn’t be doing the homeland a service if I didn’t show some good old British Pounds.

CHRIS CAPOSELLA: Great. Okay. I love it. Okay, this is great. You get to see that high-quality video. But the other thing that we really like to do here is to show off the multi-party conferencing. So I’m going to hit “escape” to exit full-screen mode. I’m just going to bring up my Office Communicator list of contacts over here. And, let’s see, who else do I have in my list? I’ve got my sales team. I’ve got other contacts. I’ve got some recent contacts listed out there.

Here’s Michael. He’s in a meeting, but I’d actually like to chat with him. All I have to do is drag and drop Michael, and let’s see what happens. Michael’s joining.

MICHAEL: Hi, Chris.

CHRIS CAPOSELLA: Hey, Michael, are you there?

MICHAEL: Hi, yeah. As you might know, I’m backstage here at the Partner Conference. Hey, can you do me a favor and let the audience know that they can take this amazing technology home with them. We have beta kits for everyone in the Office Product area of the expo hall, and in the Unified Communications breakout session.

CHRIS CAPOSELLA: So I don’t know if you quite caught that, but we’re giving the Office Communications Server beta to basically anybody who comes to the Office Pavilion, the products pavilion, or to any of the breakout sessions, because we really want all of you to be able to try out this technology. We think there’s a great partner opportunity there for us. Great, thank you Michael. Hey, Paul, are you still there?

PAUL DUFFY: Yeah, I am still here. So, hopefully, revenue opportunities are a great thing for our partners. They can come and see it at the booth, and they can even get an evaluation kit as well. Great stuff.

CHRIS CAPOSELLA: Great. So you notice when Paul started talking, we automatically recognized that he was talking and switched the video over to show him as the active speaker, which is a great technology. Okay, guys, thanks so much, that looks great. I’m going to say goodbye to you. Okay. (Applause.)

Let me go ahead and minimize everything except the Communicator. The last thing I wanted to show you here is really software-powered VOIP. So you’ll notice that I can use this for Web conferencing and video conferencing, but I can also use this, essentially, to control my phone.

So when I click here, notice that I can actually change this to forward all my calls to basically anybody I want. If I choose to forward this to Michael, then any calls that come in are automatically going to be forwarded to Michael. And notice it’s picking up something from Exchange Server where it’s saying it’ll only forward calls during working hours, which is something Michael is going to appreciate, I think.

So I can really do controls based on my PC for my phone that I might have not ever been able to master on my actual desktop phone because they were too hard. And notice it says I can type a name or a phone number. Let’s go ahead and just type in a quick phone number here — and let’s place a phone call to someone in the audience. (Phone rings.)

CHARLIE: Hello, Charlie speaking. Hello?

CHRIS CAPOSELLA: Hey, Michael — or, yeah, Charlie, are you there?

CHARLIE: I am.

CHRIS CAPOSELLA: Great, you can see Charlie right back in the audience there. He’s just got a regular old phone, I don’t really care what kind of phone he has. It could be anything I could call before. I’ve literally just typed in his number and talked to him. Are you excited to be at the Worldwide Partner Conference?

CHARLIE: (Off mike).

CHRIS CAPOSELLA: What I can do here, of course, is all kinds of controls that, again, I may never have known how to do on my phone, I can do it right here inside of this. So I can transfer this call to another person, I can put him on hold, I can end the call, et cetera, and I can also bring other people into this call itself. So, for example, I can add Michael just by dragging and dropping Michael and now we’re going to call Michael and actually do a conference call.

MICHAEL: Hi, Chris.

CHRIS CAPOSELLA: Hey, Michael, are you there?

MICHAEL: I am.

CHRIS CAPOSELLA: Great. So what I can do from here is actually launch One Note and start taking notes based on this call. And you’ll notice we’ll automatically pull in the information from One Note who the conversation is with, what the phone number was, what the time was, and I can say, “These are some notes.” And I won’t fix my typos, and I’ll close One Note down.

And I can say, okay, guys, I’m going to let you talk. I know you wanted to chat about a few things. I’m going to actually end this call, and off you go, you can have that conversation.

So that’s a very quick look at some of the integration that we’ve built in. We’ve got integrated presence across the entire Office system, and we’ve got software-based VOIP that allows you to use your PC as a phone. Obviously, you saw the multi-party video conferencing with VGA-quality video. And, again, we want you all to give this a try. We want that beta kit in your hands, so please come to the Office Pavilion or come to any of the UC sessions in the IW breakout. And that’s the conclusion of our demo, thank you. (Applause.)

I wanted to take my last five minutes to highlight a series of partner opportunities that we think you might consider when you consider the Office system. The first one is, of course, for anyone who has any kind of services business, any kind of integrators business.

What we’ve done is to take our BPI view across these workloads, and we built our specializations inside the IW competency to map to each one of these areas for business productivity. So we’re bringing new specializations this year to the IW competency. Unified communications specialization is new. Data visualization and performance management is new. We’ve got some other new ones around Office solutions development.

So as you think about building your competencies, your skills, you can map to whatever area of business productivity is most interesting to you. And we think that many of you will want to grow your business not just by doing one of these, like search or ECM, but starting with one of them and then expanding your business to actually do the adjacent solution, because we’re selling all of these as an integrated infrastructure, not as piecemeal point solutions. So we’ve built our competencies to map, and to give you an added incentive to essentially get multiple specializations.

I’m excited to announce today something that we’re calling the IW Partner Skills Accelerator. And this is built on top of the Partner Skills Plus Program that Kevin Turner talked about, and it’s specific to the information worker specialization. We’re spending about $5 million in free training and discounted certification exams for any IW-competent partner to get another specialization.

So if you’re already an IT-competent partner, you have access to this free training and discounted certification exam to get additional specializations that I showed you on that last slide. This is available starting in August and through the end of the year, December, so we’d love you to go after that. You can go to the partner portal to learn more about that and, of course, you can visit the IW Competency booth in the products pavilion to learn about that as well.

So we’ve got an opportunity for you to expand your professional services business around business productivity infrastructure. The chart on the left shows you what we think the professional services opportunity is across those different areas. And it adds up to over, you know, $140 billion of money that we think is out there for this entire opportunity. And notice the green one that I’m highlighting. That’s unified communications, $36 billion in professional services opportunity, and a huge amount of that comes from adding the voice capabilities to our existing Exchange or messaging business.

When you look at what we think an average large engagement in an average large enterprise would be, we think it breaks down into services dollars that add up to about $600,000 there. Now, that involves getting their infrastructure ready, deploying 64-bit servers for Exchange Server, making sure that Active Directory is up to date to enable Exchange Server and Office Communications Server. Then it’s actually migrating public folders to SharePoint. It’s introducing presence and instant messaging to enhance the collaboration of a company.

And, finally, it’s deploying unified messaging and integrating desktop voice and multi-party conferencing. So when you add that all up, we think this is a lot of services opportunity around a large enterprise engagement that we’re excited about.

The other big one that I wanted to highlight that I don’t think enough people know about that I really wanted to make sure you all know about is the opportunity around deployment. We have a huge opportunity to have our customers deploying software that they’ve already purchased. And we’ve introduced a program that already exists called the Desktop Deployment Planning Services Program.

What this is is every single customer who has Software Assurance, we actually give them money back to spend on their planning services that they can spend on any partner who has desktop deployment planning services. So this is Microsoft-funded for every software assurance customer. Many of the customers don’t even know they have this money available to them. So you can — when you’re working with a customer, you can make sure they’ve activated that and they’re spending the money.

In 2008, we’re actually adding Office SharePoint Server planning to that mix, and I really encourage all of you to participate in this program. We even have what we call the Hero Program where if you’re selected, you can actually win a video case study from Microsoft.

SHI has done a wonderful job actually realizing the value of this program. And I wanted to just share some of their thoughts on the opportunity here. Let’s take a look at that video.

(Video segment.)

CHRIS CAPOSELLA: Great. So very simple. This program already exists, there’s already money out there. I really encourage you to consider that. We find that it leads to many other opportunities once you’ve done the actual deployment.

The other thing I wanted to mention for all of the partners in here who actually build solutions, who have developers, is what we talk about as our Office business applications opportunity. This is the opportunity to use the Office desktop and SharePoint as the front end to line-of-business systems. So we have lots of people who tell us, “Look, I spend all day in Outlook. If you can connect me to my CRM system through things like MSCRM, if you can connect me to SAP using Word and Outlook and Excel, that’s hugely valuable to me.”

At the same time, we know that there are lots of business analysts and IT professionals who are really trying to get at far more of the value of the massive investment they’ve made in SAP or Siebel or Peoplesoft, and they want their end users following actual business processes as part of their job. With Office Business Applications, we really have an opportunity to link those two worlds together. And here at the show, we’re announcing the Office Business Applications On-Ramp Program.

We’re spending millions of dollars providing sales and marketing and technical materials for all of you to get up to speed on how to build these OBAs. At Microsoft, we’ve already built a few of them. We’ve built Duet with SAP, which lets you live in Office and do business processes directly with SAP. And, of course, the entire Dynamics strategy is built on using Office and SharePoint as the end-user tool, connecting to, obviously, the line-of-business solution. And we’ve got, essentially, the Dynamic Snap Applications which are these OBAs that do this exact thing: front end, back end, connections.

So go to OBACentral.com to get access to all of these materials. It’s a great community site where developers can share the OBAs that they’re building, the things that they’re learning while they’re building them, it’s a very exciting opportunity that we think over the next couple of years is going to see huge amounts of momentum. We’re already tracking over 200 Office Business Applications that ISVs are building in the marketplace today, and we expect that number to go up.

The other thing I wanted to talk about, for all of the partners here who do the traditional transactional business, we know that when people buy a new PC, about 20-25 percent of those folks, maybe 30 percent of those folks, also buy Office at the time of that PC, or within two weeks of purchasing the PC. So the OEMs in this audience today, a lot of that actually goes through retail. So there’s a missed opportunity for you to attached Office at the point of sale of your PC.

So with the 2007 Office system, we’ve introduced a brand new program called The Office-Ready PC Program, which allows any OEM and any system builder, for free, to pre-install Office on all their machines, and then as that machine is moving through the channel, you have multiple attach points to sell Office by selling an actual key that unlocks the image that you’ve pre-installed.

If you’re not able to actually sell Office, the PC goes to the customer and Office is actually in trial mode where people get to use Office for 60 days. And then at the end of those 60 days, they have the opportunity to buy. And we’re starting to see feedback like this from OEMs and resellers who are telling us, “Hey, customers have actually been calling us on the 59th and 60th day as their trials are getting ready to expire to tell us we need to buy this product.”

So it’s giving OEMs and system builders another touch point to customers, making it far easier for them to attach Office as it moves through that transactional channel. Another great opportunity.

Now, as we think about what comes next with enabling the future of information work, there are a lot of things that we think Microsoft is uniquely positioned to do that nobody else in the industry is positioned to do. And this slide talks about them at a very high level. The key thing I wanted to leave in your heads is: We are investing incredibly heavily in clients, in servers, and in services.

We don’t have a vision that it’s all moving to one model or it’s all going to stay in another model. With Office 2003, you saw the huge investments in servers with SharePoint, with Exchange, now, of course, in 2007, you’re seeing that same investment in the server side, in the desktop side, and we’re investing very, very heavily in services as well.

I talked last year on this stage about Office Live and how we’re bringing services to small businesses, we’re going to expand that out and bring those to, obviously, end users over time. We’ve gotten into the Exchange business where we have Exchange-hosted services to protect your servers at the edge.

The one thing I want to leave in your mind is we feel like the future of software is software plus services. Clients, server, and services. And we’re really going to be delivering on that over the coming years. But 2007 already shows you where we’re headed in that space.

So in summary, I’d really hope I’ve opened your eyes a little bit about what we’re investing in and how you can hopefully make money with us as we go to market with the Office System. I really think you should think about expanding your capabilities through all of this curriculum that I’ve talked about, build your office solutions, and then, of course, you’ve got to connect with Microsoft and help us help you be successful. Profile your solution, get those competencies that help tell the world that you’re good at this technology, go to the BPIO University and then align to the BPI customer campaigns. And, obviously, don’t just think about it as a siloed approach. You’ve got to expand your services across the entire BPI stack.

The place to go, of course: partner.microsoft.com/office, thank you very much for your time, and enjoy the conference. (Applause.)

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