Kevin Turner: Public Safety Symposium

KEVIN TURNER: Well, good morning. It’s great to be here, and it’s great to be able to spend a couple days with you all and really share and get your feedback and ideas, and ideas that you have for us on things that we can collaborate on and do better.

But it’s an exciting time for us as this is our first ever global event of this nature, and it is an exciting one, and one that we hope that is the first of many as Linda and her team continue to evolve it.

We’ve got over 350 of you that came from around the world, so it’s really an impressive group, and certainly some lively topics that we’re going to get into, and very relevant and timely topics as well.

And we’re going to hear obviously from worldwide law enforcement agencies. We’ve got experts across the Internet, and different border control areas. We’re also going to hear from some of our partners and different agencies, and it’s going to be a pretty exciting agenda. So, certainly I hope you enjoy it, and certainly we do want the feedback on how we can continue to improve it and continue to make it better.

I also want to thank you for your time. It’s certainly that time is the one thing that none of us has enough of, and clearly it took a lot of time and dedication to be here, and we certainly appreciate you for your time and making time with us, but we also appreciate you for your partnership and your business, and certainly we want to continue to work hard to continue to earn that and evolve our solutions with you as well.

We also realize that this is a different business than our other businesses. We certainly sell a lot of products to end users and consumers. We also sell products to commercial business. And then, of course, within our public sector area, public safety is an important area for us to continue to zero in on and get more prescriptive with our solutions and with our partners; so the expectation that we have, certainly we know that and get that.

And this is an area that’s really close and near and dear to my heart. My father was the senior U.S. Treasury agent. Unfortunately he worked in the Murrah Building in Oklahoma City when the bombing went off, and certainly he survived that particular incident but many of his coworkers did not, and it is something that quite frankly affected my family in a great deal, and it is one that certainly continues to live on in our hearts and minds for all those people in that particular disaster. But certainly this is an area that’s important to me and important to Microsoft.

You know, this is an area and this is a time that we’ve never seen anything or experienced anything like this from a global standpoint. Now, Microsoft is a company that sells products in 191 different countries around the world. We have a billion people every single day use our products. Only 500 million of them pay us for it — (laughter) — so that’s sort of an interesting business model, but it works somehow.

But clearly the amount of societal change, environmental change, political change is a very, very interesting time, and we’ve not ever seen or experienced certainly the global macroeconomic issues like this in our lifetime. So, this is a very big inflection point from a lot of different dimensions. I mean, you think about what’s going on and the amount of unrest and the amount of uncertainty quite honestly that the global economy is experiencing right now, it’s unprecedented.

And then you take that with certainly the amount and complexity of the security threats and the cybercrime continues to accelerate, and that’s a moving target, and one that we’ve got to stay very close to.

The increased number of disasters, whether they’re attributed to global warming or other factors, who knows for sure but certainly there’s a lot more focused impact and awareness around those things, and certainly the access of expanding information, there’s just a lot going on and a lot of forces converging that make this a very exciting, interesting, and also an opportunistic time for us to be able to do things that are important for the world and for society together; and that’s what really excites us to be a part of this particular forum and this particular work.

And so I’d really like to walk you through what is Microsoft, how are we embracing this environment, because I could stand up here and show you — you know, we have some really smart people here at Microsoft that have studied every single macroeconomic financial disaster since time, I mean all the way back to the 1600s, 1700s, 1800s, in different countries around the world that have experienced, including the U.S. In the U.S. in the last 100 years we’ve had seven different macroeconomic crisis situations.

But we’ve studied all those and looked at all those, and if you read all that stuff, I mean, it’s a pretty depressing outlook, because there is no short term fix, this is not going to be a V -shaped curve that simply bounces back, we don’t believe. We believe it’s going to be a reset in a lot of different ways, and then it will be one that certainly that we climb out of gradually. And it will take innovation to really drive that climb, and that’s what we’re doing to rally ourselves around.

But we really flipped and sort of moved from looking in the rear view mirror and studying the past, which is important to learn as many lessons as you can from that, but now it’s time to really position ourselves forward to be focused on what can we control, what can we do about the environment. We can’t change a lot of the factors that are going on from a global societal and macroeconomic standpoint, but what we can change is what we do, and we can change and stay focused on what we can control.

And at the center of what we do we’re a software company, and within that we are an innovation company.

So, I’ll walk you through how do we see and line up our business priorities, and it all starts with that foundation there of having a long term approach to innovation.

This year, this company will invest over $9.1 billion in R&D. A year ago, we invested $8.1 billion in R&D. So, while most companies, most all companies are pulling back, this is a company that is putting more in.

And by the way, not only is that the most of any technology company in the world, it is also a bold step because it’s not a popular one with financial analysts and the market, from the financial markets, et cetera, but this company is not run by financial analysts or the external market, we are run by doing the right thing for the long term. And I think that’s a real privilege of working at Microsoft and one that we as the employees here feel very good about that, because that’s an investment in our future, it’s an investment in the futures of our customers and our partners. And so we’re very focused on R&D, and we’re putting our money, so to speak, where our mouth is, and backing it up by putting more in.

Now, that puts a lot of pressure on us to make sure we develop great solutions and scenarios that really create value for people, but certainly it’s a risk and one that we’re willing to take.

And if I’m back here next year, you’ll know that we’re making progress on that, or some new guy will be talking to you about — (laughter) — the great new strategies that we have.

Now, where do we invest that $9.1 billion? We invest in four key areas. So, as I told you, Microsoft is a software company, but look, we’re not just a software company, we’re a company that sells from end users and consumers to the largest governments and countries and companies in the world, and every audience in between. That’s both a heck of an opportunity and a heck of a challenge, and something that quite frankly one side complements the other and vice versa.

But when you think about Microsoft, I want you to think about it in these four areas. This is where we’re lining our R&D resources up, this is where we’re lining our money for R&D up, and this is where we’re lining ourselves up for the future.

The first area we’re going to invest in is in the rich client area. We still believe that’s a very important part of the technology ecosystem. We’re very committed to that. We’ve got new releases of Windows coming out, new releases of Office coming out. We’ve got more releases of Forefront and our client security, the Microsoft Desktop Optimization Pack, et cetera. So, we believe the rich client is an important area for us to continue to invest in. Now, that’s the pillar, if you will, that built the company, and so we’re going to continue to invest in that.

The second area is the fastest growing area for us both from a revenue and a market share standpoint, and it’s the server and enterprise application space. That’s where SQL Server is, that’s where Windows Server 2008 is, that’s where our new virtualization technology is, certainly that’s where our systems management and tools, our .NET development platform, our Dynamics systems, et cetera, our Office Communications Server product, and then the fastest growing product in the history of Microsoft is in this particular area.

The fastest product that we’ve ever had to a billion dollars is not Windows or Office, it’s a product called SharePoint, which really drives collaboration in the workplace and collaboration cross-divisionally, and quite frankly it is a heck of a social networking tool that businesses, companies, and agencies have picked up on to really do magical things as it relates to partnering within themselves, as well as cross-divisionally. So, this is an important area for us. It’s our fastest growth area, and we’re going to continue to certainly invest in that.

The third area that’s in particular to us is entertainment and devices. And when you look at this particular area, certainly you know about Xbox, you would know about Windows Mobile – this year we’ll sell about 21 million copies of Windows Mobile – we’ve got a product called Surface Computing, and I’ll show you some of that in a moment, we’ve got some different auto solutions going on, and really what’s in this particular space, and when you think about it, think about it in the terms of lifestyle technology. This is important for us, and it’s important because where people work, how they work, and when they work continues to have more and more overlap between the workplace, computing on the go, and the living room or the home. And connecting those three things from a lifestyle and work style standpoint is really at the heart of our vision and technology.

So, we have to participate in this space, and we have to continue to get better, because the overlap of where people work, how they work, and when they work continues to have more and more overlap between the workplace, computing on the go, and certainly in the living room of the home.

The fourth area, software plus services, is the newest area for us. You know, when you think about software plus services and you think about Microsoft, I want you to think about it in two ways. We have two different types of services. The first services we have are certainly – let’s just start with consumer. Those are consumer services. That’s where Windows Live, Office Live, MSN, our search and advertising platform, all of those services live in the consumer space. We are not the market leader in that space. We certainly want to be, we aspire to be, and we’re investing to be for the long term, but that’s an area we’ve got to continue to do work and we’ve really got a lot of the resources and investments lined up to make progress in that area.

The second area I want you to think about when you think about software plus services is in the business space. And when you think about online services in the business marketplace, I want you think about online SharePoint and Exchange and Outlook, Office Communications Server, Live Meeting, and our Business Productivity Online suite.

In the commercial software plus services area we are the market leader by far with what we have in the marketplace today, and I’ll show you more about that model in a moment, but clearly this is a big area of emergence for us, it is a big area of uptake from our customers and our partners, and it is a big growth vehicle that we see and a trend that we see in the future that’s going to be one that we’re going to continue to stay close to. And it also includes our Dynamics CRM Online offering, too, that’s very, very hot at the moment.

The next part of our strategy is to continue to nurture and build our partner ecosystem, and we’ve got a heck of a partner ecosystem. We’ve got all kinds of partners. In fact, when you look at our partner ecosystem, we’ve got over 600,000 partners. And you think about the different types of partners that we have, because we do sell to a very, very wide breadth of audiences, we are really tuned.

Now, this is a company built with partners from the start, and they’re a very important part of our continued enablement of giving you more and more specific solutions that map to your business needs or your service needs as it relates to the solutions that you’re trying to get implemented.

So, we’re going to continue to invest in our partner ecosystem, we’re going to continue to work on delivering solutions to governments and agencies that really fit the profile that you’re looking for, and this is an important area for us.

As I said, software plus services, let me talk to you a little bit about this because it’s one of the platforms of our strategy. So, when you think about software plus services, certainly there are a couple of players in the marketplace you may know about today. One of them would be Salesforce.com, one of them would certainly be Google.

When you think about their software plus services strategy, it works like this: Let us host it or there is no software as a service. So, you have to give them your data, you have to give them your applications, and you have to let them host it. And for some people for some applications that may be a perfectly fine thing to do.

But when you think about Microsoft’s approach, I want you to think about it differently. Ours is built on customer choice. In fact, we have three different models. The first model we have is customer hosted, because we believe for some applications, for some pieces of data, for some sets of users, some companies, some agencies won’t want someone else to manage that, and they’ll want to control that, and we’re going to continue to enable that. That’s an important part of our strategy.

The second area I want you to think about is you may come to us and say that there’s a partner that does a great job on this specific set of applications for this specific user, and we want to enable that, and that’s the second business model we have in the marketplace.

The third model for things like Exchange, SharePoint or CRM, you may come to us and say, hey, Microsoft, these are your sweet spots, we want you to host that, and we’re building that model.

Now, what I do believe is that I don’t believe software plus services is an all-the-way or no-way proposition. I believe most companies, most governments, and most agencies will have some hybrid of this offering, not all the way one way or all the way no way. And so that’s why we’re building it centered on customer choice, to let the customer decide which applications for which users and which pieces of data and how do you want to host those in the cloud.

But we do believe the cloud-based strategy is an important part of our long term growth and certainly our ability to deliver innovation to the marketplace.

So, let me flip a little bit to some of the challenges that we hear from you on public safety, and I know we’re going to have a little bit of time at the end for Q&A, and I’m certainly got lots of help and support here from the team to also get into anything you want to get into, but let me tell you some of the things that we’ve heard that I think it’s important to really start to set the platform.

Certainly horizontal information flow is critical. We know it’s difficult to share information across agencies and organizations. The information exists, but it’s located in a silo or owned by another department or an agency. Getting to the data to make timely decisions can be a matter of life or death, depending upon the situation. And so we certainly know that that’s an important thing that we’ve got to continue to do to tune our strategy.

Information security and compliance: We know that you need to be able to share certain information with the right people but still protect other information, and you need to be able to give the right access to the right people in a reliable way that complies with the various overlapping jurisdictions and laws. And certainly that’s one that is market specific sometimes, it’s country specific, sometimes it’s regionally specific, and sometimes it’s locally specific, and we’ve got to continue to partner with you to make progress in that area.

And then certainly we’ve heard that you know what, the external marketplace is changing, the threats are changing, the vulnerabilities are changing, the scale and size of some of the disasters are changing; we need continuous innovation. We need the ability to stay out on the leading edge as it relates to the most cutting-edge technology to make sure that it can mean the difference – having the right technology we know from you that it can mean the difference in saving lives, and we’ve got to continue to invest in that. And in this mission critical environment that we work in we know that you can’t afford downtime and you can’t afford issues. But at the same time we’ve got to keep moving the platform forward.

So, these are some very big challenges certainly that are key, some of the key things that we’ve heard from you that we want to tune our strategy around, we want to align our development resources, and we want to make sure that our partner ecosystem is enabled.

So, certainly, as I said, this is our first ever worldwide public safety symposium, which is again it’s a start, we’ve got a lot of work to do, and we’ve got to continue to make progress. So, I don’t want you to think that we think we’ve got all those things baked, because we don’t. It’s a work in process. But we want to partner with you to continue to make that progress.

And we also know that we’ve got to continue to hire experts, and that includes fire chiefs, police officers, military intelligence officers, and former first responders, and we’ve continued to add those in the team over the last few years, and we’ll continue to do that so that we can get closer and closer with really meeting your needs, and that’s an important part of our strategy going forward as well.

And we’ve got a specialized group within our public sector organization to focus specifically on public sector, and that’s again a step at us aligning all of the different investments that we make in this space to make sure that we can provide those relevant solutions that you need.

And we also know that you need technology solutions to help you scale. And in the United States alone there are 10,000 public safety agencies with less than 70 employees – very, very difficult to scale that in a big way, and one that we’ve got to keep working with you to make progress on.

Some other ways that we’re continuing to listen to your feedback, we’ve created the Public Safety Technical Advisory Council, and they’re off to a very good start. It’s a forum for direct feedback from you. We started a trial here in Washington state. Nationally and internationally is what we have to come over the next year to two years, and we’ll continue to evolve that.

And then finally, I really want to launch the most exciting thing that I’m going to talk to you about is this Microsoft Citizen Safety Architecture. So, we’re coming out with a specific platform that we can continue to plug solutions into to really get close to your business and help meet your needs. And our services teams and product groups have worked with our partners to develop an interoperable set of open technologies to help you address the emergency and law enforcement situations that you face around the world.

Now, when you think about this, and through this Microsoft Citizen Safety Architecture we’re able to bring our extensive learning from years of experience and millions of customers to bear to provide a prescriptive set of architecture guidance to help you address the challenges you face.

Now, this is an off-the-shelf and best-of-breed software solution architecture that really is designed for quick deployment, and this architecture also tackles things such as agency management, helping give you real time awareness of your agency assets and operations, intelligence analysis and investigative support, providing you efficient analysis of large sets of disparate data across multiple agencies. Mission operations: This is where we help keep ongoing missions running smoothly and combining geographic data with real time views of local operations and events. And then emergency and event management, enabling you to quickly deploy and implement onsite presence with common tools, standard practices, and operational data.

And that’s exciting. As we flip to that, you know, there are some things that have resulted in a number of solutions as we continue to evolve this architecture that are very exciting that people in this room have rolled out and deployed, things like FusionX, Eagle, and the Single View Platform that provide you with reusable IP for your organization.

And, for example, the Single View Platform helps visualize your current situation in one consolidated view of multiple data streams, and today it’s being used by the UN International Telecommunications Union, the U.S. Department of Transportation, just to name a few, and we’re continuing to make progress with solutions like that in the marketplace because of the help of the people in this room, and that’s one of the things again we’re not there where we want to be, but we’re continuing to make really good progress in these areas.

And we’ve got more solutions coming soon. This summer we’re going to have the Computer Aided Dispatch and Records Management System, and soon to follow we’re going to have an integrated Justice solution with end-to-end digital justice systems. And we think those are major steps in this particular space.

But you know what, nothing really goes like seeing it, and one of the things that I wanted to show you today was a quick video on really our Citizen Safety Architecture in action. It’s a video that was used for Super Bowl 43 in Tampa, this Super Bowl we just had this past February. Please roll the video.

(Video segment.)

KEVIN TURNER: So it’s really great when we get to see those things in action. And the Citizen Safety Architecture is something you’ll hear a lot more about, and our evolution of that, over the next couple of days. So, we’ll really get a lot deeper on that. But we’re very excited about the start, and really want your feedback and input on how we should continue to evolve that platform.

Now, there are some very specific things, as I wrap to go into Q&A with you that I want to touch on. No. 1 is, I want you to know exactly that we want, and want you, to participate and we will listen and seek to understand your needs. We want your feedback. We think it’s very important. That’s how we get better is with your feedback and continuing to evolve our platform and solutions.

We’re going to build software and solutions for today’s government. Every government, every agency, every company in the world wants to be more efficient, and more effective, and certainly we want to partner in that regard. And we’ll also help you innovate reliably and securely. Ands o we think that that is important, as we continue to go through that, we will work on security, and have been working on security, and have been working on security all of our lives. And certainly the sophistication of cyber crime, and some of the things that we’re seeing in the marketplace continues to accelerate, and so we’ve got to continue to make leaps in that particular space.

But I also think it’s important that you understand our overall objective is to really work hard to earn the right to be your trusted advisor. And certainly we think that that’s the ultimate that we can achieve with customers, and with partners in the marketplace is having the status in your eyes as a trusted advisor. And that’s what we want to work hard on, and that’s what the team is goaled on as we continue to evolve our business.

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