Steve Ballmer: Government Leaders Forum

Remarks by Steve Ballmer, Chief Executive Officer
London, United Kingdom
November 4, 2010

STEVE BALLMER: Well, thanks very much for joining us today. It’s a real honor to be here, and I’m very inspired to see leaders from all across the region who have come to discuss the opportunities that are ahead for Europe.

I’d like to start by recognizing the U.K. for hosting today’s Government Leaders Forum. This is the first we’ve done in Europe in two years, and we’re excited to do it.

I’d like to thank the vice president of the European Commission, Neelie Kroes, and Deputy Prime Minister Nick Clegg for taking the time to share their thoughts with us today.

Deputy Prime Minister Clegg, it’s a great honor to have you here. Your government faces perhaps its most difficult challenge in a generation as you grapple with tough decisions that must be made in a way that confronts a difficult economic situation, and you have all of our best wishes.

Microsoft as a company is deeply committed to doing everything we can here in the U.K. to support the British government, and to help foster economic growth.

We recently signed a Memorandum of Understanding to provide a framework for cooperation and partnership as we work with the new government to deliver technologies that will improve public sector efficiency and help cut costs.

And through our Britain Works program we continue to play an active role in helping to we hope put people back to work by providing some of the training and skills and apprenticeships and support for startups that were so important in the remarks that you made today.

We’re one year into a three-year program. We’ve had a chance to work with government, work with business partners, leading NGOs, and to help today more than 100,000 people already in Britain to develop skills that we hope will lead to great jobs.

I think Britain Works is a great example of the government’s Big Society program in action, and it’s a pleasure to have a chance to participate.

I’d also like to thank the vice president of the European Commission, Neelie Kroes, for her leadership and the role that she has played in crafting the European Union’s digital agenda. It’s a very forward-looking vision that I think recognizes the critical role that information technology innovation will play in creating conditions that make sustainable economic growth and social development really possible.

Like vice president Kroes, I also believe that digital inclusion, e-learning, and sustainability must be key pillars in the plan for Europe’s future.

We see at Microsoft extraordinary potential from an information technology perspective in Europe. The combination of interconnectedness, education, and diversity is, in fact, a huge competitive advantage for the region.

This is not new for Microsoft. We’re not just waking up to the promise of Europe. We’ve been strongly committed to economic success in Europe since we opened our first subsidiary right here in the U.K. almost 30 years ago. Today, we operate in over 30 countries in Europe, and we have more than 16,000 employees across the region.

In Europe last year, we invested over 440 million euros in R&D being done in Centers in Europe by European people, and we have initiated a datacenter in Dublin with construction costs and equipment costs estimated at close to 400 million euros.

In addition, and perhaps even more importantly, we work with nearly 150,000 business partners in the IT industry here in Europe that directly employ over 2 million people — over 2 million people in independent IT companies working with Microsoft here in Europe.

And for every euro of revenue that Microsoft generates, these partners, who are European companies, are making more than nine euros in business, providing the real solutions that will solve I hope the opportunities and challenges that businesses and governments face here in Europe.

Together, we’ve seen the positive impact that technology can have on society, and together we’ve played a critical role in driving sustained regional growth.

But I believe we’re just really starting to discover the value that technology innovation can deliver here in Europe. As the French writer and poet, Anatole France, commented about 150 years ago, and pardon me for my accent, [phrase in French], which in English means, “To accomplish great things we must not only act but we must dream, not only plan but also believe.” I dream and I believe in the future here in Europe.

Today, I hope I can spark some new dreams about the potential impact that next generation technologies will have one people’s lives, so that we can play together to drive a new wave of economic growth in the region.

Let’s start with a little bit, just a little bit of a taste of things to come. I want to show you just a brief video of some of the kinds of advances that we’d like you to imagine. And I think for our panelists we’ll probably have them on the screens here down below so we don’t strain your necks. But let’s roll the video, please.

(Video segment.)

STEVE BALLMER: Hopefully, some of you were wondering how long in the future — three years, five years, seven years further. Actually, I would say there’s nothing in that video that’s even that far off. All of the things you see are already in development at our company, and I’m sure many other companies around the planet. Many of the experiences that you just saw are going to be possible over the next very few years.

We already have many screens in our lives, big screens like television sets in our living room, conference rooms and classrooms; medium screens, PCs, tablets, e-readers, desktop, kitchen counter or in the car; and small screens, phones, portable media players, and the like.

Those screens are powered by intelligent software that are becoming better at predicting what we’re trying to accomplish, and they can utilize more natural ways for us to interact with them, touching them, gesturing to them, speaking to them.

What makes these devices so valuable is how they can connect us to the information, the services, and the other people who are important in our lives.

Information is no longer today bound by the constraints of any one device or any one location. It is instantly accessible through a variety of devices in a variety of places.

And at the heart of the transformation is the most important technology breakthrough of our generation, something we call cloud computing. Cloud computing combines the most powerful forces that have propelled our industry for the last decades, intelligent devices like personal computers and smarphones, the Internet and the enterprise datacenter.

Already we’re beginning to get a sense of the power and the potential that cloud computing offers as cloud-based applications begin to transform the way people access tools for education, for health care, for public administration.

But the future is really starting to take shape in the home. We’re launching today I think a product we call Kinect. It’s a set of sensors, cameras and microphones, attached to our Xbox 360 entertainment system that essentially turns you, the human being, the player, into the controller.

The sensors, the cameras and the microphones, they recognize your movements, your voice, even your facial features. When you jump, your character on the screen jumps. If you tell the system to pause during a movie with your voice, it pauses. If you wave your hand to look for a song to play, the on-screen choices scroll by. There’s no need for any hardware or any training, any education.

And these systems will be about more than just entertainment. We have a product we call VideoKinect that will literally let you have a home video conferencing system, chatting through your TV with no controller, no handset, no remote control.

These systems are launching. They’re launching in the U.S. in a few hours, and in Europe next week, and you can take a look at one in the expo area.

This is just an example, an advanced example in the consumer area of the trend towards making technology more natural, and letting human beings interact the way they behave, no keyboard, no mouse, but also no menu structures and commands that we’ve relied on up to now.

You’ll also find a variety of other new technologies that we’re launching out in the expo area, phones and a variety of other things. Take a look at them. There are a lot of great products from a lot of great companies, us and the people we compete with, and all of that will help push things forward at a very much accelerated rate.

Cloud services, Web e-mail, instant messaging, social networking: All of these things started in the home about 15 years ago, and today the impact of cloud computing is beginning to move to the enterprise and to government.

With professional services like a number that we’ve launched, our Office 365 service, our Azure services, business can take advantage of the best productivity and collaboration tools through a monthly subscription instead of with a bunch of upfront costs, capital, labor, setup that simply slows things down.

Technology like this has the potential to give Europe’s 23 million entrepreneurs, startups and small and medium enterprises an important edge in the global competition for new markets and customers.

For a region where 99 percent of all firms are small and medium enterprises, and 90 percent of Europe’s workforce is employed in smaller organizations, this edge can make a huge difference.

Cloud computing is also creating greener ways to manage business technology infrastructure. Consider that applications today often run on servers that typically only use about 10 percent of their capacity. By using cloud computing to drive greater efficiency, we can increase server utilization and achieve significant savings in energy use and carbon emissions.

In fact, a recent study that Accenture and WSP did found that when organizations move business applications to a cloud, they can reduce their energy use and their carbon footprint per user by at least 30 percent. For small businesses the result is even more dramatic, with potential savings of up to 90 percent.

In essence datacenters enable server utilization to go up, energy consumption and carbon to go down.

But utilization is just one area where we see significant gains. There are also economies of scale as more and more organizations use cloud services.

Think of this like public transportation where the energy savings for moving thousands of people around on shared infrastructure instead of single-occupancy vehicles has a significant environmental impact. The same is true with cloud computing.

Efficiency starts with smart, innovative datacenter construction and management. In September of last year, we were honored to be recognized by the European Commission’s Sustainable Energy Europe campaign for innovative achievements in the design and operational strategies that are driving greater sustainability and efficiency in our Dublin datacenter.

With technology advances of this scope and scale there is strong potential for significant impacts across Europe in critical areas like education, health, and science.

Starting with education, imagine what will happen when students have access to the latest technology, coupled with the ability to explore the world using rich digital tools on a PC or a netbook instead of a textbook.

In the video that we showed you earlier I particularly liked the scene where the children are communicating through an electronic whiteboard, each speaking in their own native tongue. They’re communicating with each other, they’re teaching each other, they’re exploring one another’s world and interacting in ways we could barely even imagine a few years ago.

With cloud computing students will have unlimited information at their fingertips, and access to classmates and teachers from around the world without the limit of geography or language, a single digital market of course being very important.

Think about the impact on health care. There are so many opportunities to unlock personal data, so we as patients can access our own data and share it with our health care providers, doctors, researchers, as we see fit. There are inefficiencies driving up the cost of health care that technology can help reduce.

But the impact of technology will go beyond data access and efficiency to play an important role in transforming care and improving outcomes. Soon it will be possible to build an operating room with technology that’s similar to that found in this Xbox Kinect that I described, but it sophisticated enough to enable a surgeon to manipulate a three-dimensional model of the patient’s organs on a screen just by tilting her hand, so she can get the best view. The surgeon will also be able to call up patient data, or consult with other experts immediately, right in the middle of a surgery, just by using her voice.

Or consider how intelligent devices that connect people and information through the cloud can change the way that patients recover once they leave the hospital.

Think of a person who has a stroke and has lost mobility in half of his body. There would be huge benefits if he could do physical therapy in his living room using a device that observes how he’s exercising, and gives corrective guidance.

And what if that device could store data on his progress and send it to his doctors, so they could adjust the exercise regimen as he progressed through rehabilitation.

These are technologies that go beyond cost-efficiencies. They are advances that have a significant positive impact on people’s lives, and these technologies are being tested today.

Interestingly, the operating room surgery example I gave you is being prototyped by research at Microsoft in Italy and in Cambridge, who have prototyped these interesting concepts.

Lastly, I want to talk to you about the impact on scientific advancement, and specifically how the cloud is enabling a transformation in the way we visualize and democratize information and research.

An example of this is a partnership that we’ve done with the European Environment Agency. Together, we’ve created a cloud-based application called Eye on Earth that enables more than 500 million citizens in 32 countries to visualize water and air quality from sites in Europe in real time. By making this data available through the cloud, citizens can make more informed decisions. Building that application was a partnership between the agency and Microsoft technical and cloud staff.

This could be very useful to a parent of a child who has asthma and has to decide what activities to let the child engage in. With Eye on Earth, parents can check air quality in various locations at home or with their phone to make the best choice. And they can update information on the website and provide their own feedback on air and water quality.

A somewhat similar approach is currently being used in London to address problems like graffiti and illegal dumping. It’s a free online portal called Love Clean Streets — Love Clean Streets, I love that name — that lets people upload messages or photographs from their phone or computer to point out community problems that the local authorities can then go take action on. Londoners can view the reports on search engines like our Bing Maps, and then track the progress. This service has helped reduce graffiti complaints by 30 percent and improve cleanup time by 87 percent.

You can see how we have the ability to use data from a variety of sources, from citizens to satellites, and layer any information we want to, with appropriate respect for privacy, anything from deforestation information to data about biodiversity, pollution, or graffiti. The result is an interactive way to merge, to visualize, and to use data so that anyone, from a scientist to a policy expert, can make fast and informed decisions.

As Anatole France said, we must dream but also plan and act. For Europe to realize the full potential that comes with the promise of cloud computing, it’s going to take strong partnerships, public and private, reaching across industries, and extending across this region and to other regions around the world.

Achieving this kind of alignment we believe is critical to fulfilling the goals of the 2020 EU agenda in key areas where technology and policy meet.

We’re pleased to have the opportunity to convene this forum to talk about issues like broadband capacity, data privacy, security, sovereignty and interoperability. And ultimately success will depend on great entrepreneurship in a context of a great policy framework.

I thank you again very much for your time and your attendance, and we’ll look forward to I’m sure what will be an active panel.

Thank you very much. (Applause.)


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