Bill Gates: Japan Premium Forum

Remarks by Bill Gates, Chairman, Microsoft Corporation
Tokyo
May 7, 2008

PARTICIPANT: Please welcome Chairman of Microsoft Corporation Bill Gates. (Applause.)

BILL GATES: Thank you and good afternoon. It’s great to be here and have this chance to talk about how you can use software for business advantage.

The history of software as a great business tool goes back over 30 years ago to when my co-founder Paul Allen and I saw that with the microprocessor software would be far more powerful, and, in fact, we could create a tool for everyone to do their job in a better way.

Well, that became the personal computer, and a very large industry grew up around it, an industry that includes hardware and software and solutions, and now it’s become an indispensable tool of business.

I think it’s fair to say that other than the people you’ll hire, the key decision you make in a company about your effectiveness will relate to software and data, and how you use that, and that will be a key point of differentiation.

I also want to point out that over the next decade the opportunities to use software well, to have the right kind of data about your customers and your quality and your sales, that there will be more opportunities for that than ever before. So, I entitled this talk “the next wave of business productivity.”

Now, at the center of this big advance is the miracle of the microprocessor. The microprocessor has doubled in power every two years, and now provides a machine that’s very low cost, and that, together with its connections to the Internet, has really changed the way we think about business. It’s changed the way we think about collaboration, it’s changed the way we think about searching for products, about storing the knowledge of an organization and making it available to the other employees at different points in time in different locations.

This hardware performance improvement is continuing. So, in the decade ahead the power of the machine will be even better than it is today.

Now, when the Internet first arrived, it was used for very simple things, taking paper brochures and simply putting them online, but over time people figured out that the Web site was a very important business asset, that that Web site presenting to customers, to prospective employees, to partners, that that would be a key way that they’d presented themselves; so, for example, simple things like ordering or checking on the status of an activity, that that should be made very, very simple.

And so having the right software tools to allow people to make great Web sites became a very big thing, and that is an area that Microsoft has invested very heavily in.

Over the last 10 years, the Internet has become more and more important, and so it might surprise you to hear that we still have a long ways to go in terms of getting all of the catalogues online in a better way, getting the government to use it so that transactions with the government are not paper-based and they’re very efficient, getting all the standard information easily accessible, even inside a company, that there’s a lot more potential available.

We talk about this as the digitization of the economy, as you’re able to track the things that are going on with your customers, even looking at where they’re going on your Web site and what they’re finding interesting.

For Microsoft this belief in software as a key element and these new opportunities has us investing about $8 billion a year in research and development. That’s larger than any other company in the world, and it’s because of our optimism about these new opportunities.

Now, software will be running in many locations. It will run on your Windows PCs, it will run on your Windows Servers, it will run in your phones, and there are more and more places where intelligence is being provided.

But perhaps the most important is this Windows PC that either in a portable form your salespeople can carry with you or in a desktop form is always there for somebody to get access to, that is the primary device, a large screen device, but we’re doing a lot so it works together with the phone in a very seamless way, and so any information you have on one we can make available on the other.

So, all these advances — new software, new hardware, customers going online more and more — they mean that your strategy about your empowering of your workers is becoming important.

Now, I spend a lot of time thinking about the future and how these things will change, and so I decided that maybe the best way to show how work will be different would be to take a sample scenario and put together a video. I challenged our team at Microsoft that works on Office to do this about six months ago, and I think they did a great job, and this will really stimulate you to see some of the changes ahead. So, let’s go ahead and take a look at this video of envisioning the future of work.

(Video segment.)

BILL GATES: I always get excited when I see that, because everything you see there is software work that is going on today, and, in fact, the hardware advances, the touch, those large screens are things that clearly within the next five years will all be very feasible, projecting onto the desktop, onto the wall, touch screen type interaction.

And a lot of the rich software capabilities you saw there are already available, not in quite that visual format, but in the work we’re doing with the Office SharePoint Server, the ability to model things, to keep track of metrics. We’re already in the early versions and getting lots of feedback on how we build systems that are empowering, as you saw there.

That example, of course, was a car company organizing their design work in a digital way, organizing their supply chain in a digital way, and allowing somebody to customize the end product and having that connect up to the whole manufacturing apparatus; so I think very representative of a scenario that will be very typical in the future.

So, how is this business productivity different than we have today? One element is unified communications. Right now the mobile phone, the desktop phone, the e-mail that you have on the PC, or instant messaging, these are all very different things, and the issues about how much of your information or your schedule, your current activity you share with people who communicate with you is not well designed.

By bringing together all of these kinds of communication, we can greatly simplify them. We can get rid of phone numbers, have it so when you say you want to contact someone, based on who you are and where that person is, they can decide whether to take the call or take a message about that, and so a great efficiency improvement that can be made there.

By taking things like video of meetings, we can redefine teleconferencing. Today, we have RoundTable that’s starting that, but as you saw in the video, that can be made even better.

Social computing and enterprise search, those are about connecting employees together so they can find each other, find information that they want, and then business intelligence is presenting things in rich visual ways so that every team understands their metrics. And when something is a problem, they can drill down on that information, not just executives but every employee empowered to see the quality, the sales trends, the profitability and get down to individual transactions where that can help.

Now, the frontiers in communications are really very different, because it’s moving from being hardware driven to being software driven. Putting everything onto the Internet, the wireless Internet and the wired Internet, is part of what enables that.

It means that the capabilities of the phones will be a lot better. If two people are connected, they can share documents and edit them together; as long as they both have a screen, that type of connection will be very, very easy to set up. And so there’s a level of integration here where your list of contacts and people you work with a lot is used across all these applications in the Windows environment. So, this is a level of communication that drives productivity.

Now, when I say social computing, you may think about consumer activity and young kids kind of goofing around, but, in fact, we can take some of the ideas there and map them into the business world. Of course, it can’t be the same infrastructure because you have to have protection and backup and these things, but some of the ideas of having a dictionary of company terms, being able to look up who an expert is, being able to tag information, mark it that you think it’s particularly good; when somebody is trying to find something, not only showing them the documents but showing them the people who are expert about those things, having an easy exchange of information, some of those ideas carry over into the business environment.

So, this is our big investment taking place in the collaboration platform called Microsoft Office SharePoint Server (MOSS). It really takes what many people thought of as different categories — search and portal and document libraries — and brings it into a single, low-cost, high-volume product.

In the world of IT keeping things simple and having less variety is one of the key principles. So, what we’re saying is that for employee collaboration of all types, all portals, from the smallest to the largest, search, document management, collaboration, workflow, all of these things are accommodated.

It’s very similar to what we did with Microsoft Office, where we moved from a world where people had to think about individual applications, the word processor, the spreadsheet, and by having it all in one package at low cost, a common interface, we allow that to become a standard tool.

It was standard in the sense that if you hired a new employee they were familiar with it, if you worked with a partner company they understood those formats, and that same thing is happening now with this MOSS product with the popularity it has, it’s becoming the tool of sharing and collaboration.

Another trend that’s very interesting is that you have a choice of whether to run the software on hardware that’s on your own company premises or simply to pay a monthly fee and have another partner or Microsoft actually run those applications on hardware that we provide. This is called a hosted service, and, for example, for things like SharePoint or Exchange e-mail it’s becoming a new choice that people have.

Now, for the next decade people will want the flexibility to do this either way, and so what we’re showing in this diagram is that by designing the software the right way, you can run what we call on-premise where you have the hardware and then switch to do it a different way or switch back without any change to the investments you make in user training, in applications extensions or things like that, very straightforward.

And most companies will be a mix. It shows traditional being 100 percent on-premise and pure plays, software as a service, as being 100 percent off-premise. I think very few companies will fall into either of those 100 percent categories that in order to simplify some IT things that this software as a service approach will start to be used for certain things, giving people a real flexibility there.

More and more we can make all the management of the devices very easy, because by connecting over the network things like making sure there’s no problems, updating the software, they can be done without the user getting involved or without the IT people having to visit the device. So, software running things automatically, that’s a theme that you’re getting here is that instead of having to focus on low level things like updating or different versions of things, that you get simply the focus of your people is on the business application, what are the metrics that matter to you, what are the customers that matter to you, how do you want to model your future sales.

Now, all these devices are what are called service connected; that is, the Internet is being used to keep them up to date, and to make sure that as your employees move between devices, that their information shows up automatically, that they don’t have to personally move the data down onto the phone or a different PC. Even if they’re at home, they can connect up through their PC, and yet the information can be secure, and so that simplifies the overall effort of managing these devices.

Now, one of the things that we saw in the video is that we weren’t using the keyboard and the mouse as the exclusive way of interacting with the computer. This is what we call natural user interface. And this will not happen overnight, but I think if you take a five to 10 year period, the majority of interaction will actually move to be these new techniques.

What are these new techniques? They’re talking to the computer so that you have speech recognition. They’re having a touch surface, either a flat, horizontal surface like your desk or a table; or a vertical service, which in the past would have been a chalkboard or a whiteboard.

As you can touch the information and move it around, it’s a lot easier to interact with, to go into more detail, to take a little pen and write a note. Inking is another one of these natural interfaces that we think is often really good.

What you’re seeing in this picture is that you see two people sitting with the table there. They’re simply touching a map and looking at different things, places they might go. That’s simply a Windows computer, but it has a camera. It’s watching their hands and so it’s reacting to what they’re doing.

You saw this in the video, but we’re actually shipping this as what we call Microsoft Surface, and it’s being used in a number of places, including in retail stores where people can walk in, say, to a phone store, and when they put their phone down, it looks at what it is, recognizes it, and tells them about different buying plans, or if they put another phone down it would compare those two.

So, this natural interface really will bring computing to be more approachable when you have multiple people or whatever application.

This will be important in the office and it will be important at home, so it will touch computing everywhere. You’ll see on your phone, of course, we’ll have touch and the pen as well. You’ll see on the portable computer we’ll have a tablet-like device that will have touch and that’s where the pen with the ink and ink recognition comes in.

So, what we do is we simply build these capabilities in, in a compatible way, so that you don’t have to change what you’re doing in your software, you just have new flexibility in terms of the way that you’re doing things.

So, when we bring all this together, the idea is that it really is making these jobs more productive, making these jobs more interesting.

We obviously partner with application providers who are providing vertical applications that relate to each of these things, and they connect in to the latest advances in Windows. The success of Windows broadly drives hardware innovation there, drives competition to give you choice on PCs and servers, and it drives the widest range of application software, including incredibly specialized software.

But those software vendors connect in not just to Windows, they connect into Office, they connect into this SharePoint capability, and so you can get the best of both worlds, the horizontal research that Microsoft does, and the very specialized work that they do. Your choice is you can do very little — you don’t need to do a lot of software yourself if you find the right vertical package connected in here.

Many of these things make it easy for people to do custom ways of looking at information without writing any software. More and more people shouldn’t have to write specialized software.

The device you see on the slide here is called the RoundTable, and that actually lets people who are in a meeting — it’s got cameras around, all around, 360 degrees, as well as microphones, so it lets somebody who’s not physically present connect up to a meeting in a very productive way. So, this is how teleconferencing that’s been discussed for so long is really coming in and becoming an absolutely mainstream thing that we’re providing.

We as a company, Microsoft, we come in every day and think about making workers more productive. More than anything else we do, that’s what we think about. Some of that is very scientific, going out and interviewing people about their frustrations and where they’re not able to get at information, how much time do they waste in meetings that they don’t think they should have to.

Things like training; by putting the video online and making them interactive, Microsoft has been able to take the amount of travel we have for training and cut it by 75 percent. The part that you don’t need to be in a group doing we just do online with the Windows video capability. The part that you want to do in collaboration, that’s the 25 percent, so there’s still some of that that’s very, very valuable.

But as you look at business processes across the company, things like personnel review where you want to get a lot of input from people and make it very paper free and straightforward, if you look at HR benefits, if you look at customer meetings, expense management, digitizing every one of those into a standard SharePoint template allows you to work in a very different and better way.

The processes that really matter inside a company will vary from industry to industry. For that car company we saw it was having a digital model of the car so they didn’t have to actually build a prototype, and so their design times were far shorter, much quicker turnaround for them than in the past. For many other companies it would be their customer database or their manufacturing capabilities. So, all of these things can be represented in this software environment.

So, looking ahead, I see the digital work style continuing to improve. I see the basis of competition being people who are seizing this opportunity. For example, for Microsoft we have to work on a global basis, and so software empowerment is what’s allowed us to have employees around the globe find each other, get in touch, share the latest information, and it’s been amazing to us as software has helped us to do that, we’ve realized even for our employees that are in the same location, we should have been using software to assist our work.

The kind of social aspects, the rich visualization of business information, the connection up to not only the PC but the mobile phone, and this arrival of natural interface will be things that make software different.

So, I’m excited we’re here today, and that we can start a dialogue about how software can really help your business and drive this next level of business productivity.

Thank you.

(Applause.)

END

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