KEVIN TURNER: Thank you very much. Appreciate it.
Well, good morning!
AUDIENCE: Good morning.
KEVIN TURNER: It’s great to be here. It’s great to be able to come back to CeBIT, and I want to thank you all and the committee for having me here. It’s great to be back at what I think is the world’s largest IT trade fair. So it’s exciting to be able to share a lot of the technology and innovation that we’ve got to talk about.
A year ago, I talked about a lot of products and innovation that we would have coming to market. This year, I’m talking about a lot of the products and innovation that we have in market, and I’m going to talk to you about some of the big bets that we’re going to make for the future, and I think that are important as it relates to R&D investment and where we go from there.
As I jump into that, I do want to say a couple of things. One, I want to start with thank you. Thank you for your partnership, thank you for your time. I certainly appreciate the investment from our partners as well as our customers. We do what we do for you, and it wouldn’t be possible. So I want to make sure that you know upfront how much we appreciate both your time, attention and partnership to our partners and to our customers.
You know, Microsoft embraced the new era, the new era of technology a year ago. This year, we’re embracing the fact that as a company we’re changing dramatically. We’re changing to a devices and services company. And our primary focus now is delivering devices and services that people and consumers love, and that businesses need. And we’re working to fulfill that promise of a continuous cloud service for every person and every business as much as we possibly can.
But one of the things that makes our company very, very unique is that we’ve got a very broad and diverse customer base. We’re really the only company out there that really has a deep investment with consumers, a deep investment with businesses, and a deep investment with advertisers. And when you think about that, there’s certainly great competitors in each of those spaces, but no one really has a deep understanding of all three except Microsoft, and that’s something again that we take very seriously and one that we’re going to continue to invest in, in a very, very important way.
We think that there’s insights across each of those customer segments that are accretive to one another. We think that when you think about the 360 degree view of what it takes to be able to have a business that spans consumer, businesses and advertisers, the opportunity for us to leverage that and make it significant exists and it’s one again that we take very seriously.
Now, I want to talk to you about some mega trends, some mega trends that we see in the industry. So as we become forward-looking and think about where we’re headed as a company, where we’re headed as a devices and services company, there are some trends that I’m going to touch on today: cloud, social, mobility, big data. And I won’t spend a lot of time on big data but I will tell you that we’re deeply investing with Windows Server, with SQL Server, with Azure and what we’re doing with both Office and Excel and where we’re taking SharePoint in the big data space.
But I’m also going to talk to you about what we think is a fifth trend. It’s touch, the ability to really start a touch revolution, started with the Windows 8 launch, and it’s one that I’m going to highlight.
So when you see that, I’m going to touch on these trends today, and talk about how we help our customers and our partners harness these trends to make their business even more productive, more efficient, more competitive, and more connected to their customers, because at the end of the day, this is a connected and digital world that we all live in, and clearly this is where we think the customer is going.
Now, the first one I want to talk about is cloud. When you think about the cloud, there’s a big trend that’s happened there. I’ve been up talking about the transition of Microsoft to the cloud for a long time. We now have every single important product, solution and service cloud-enabled in the company.
And when you think about what’s happened there, you think about 2013 where 80 percent of the new apps are going to be delivered and deployed on clouds going forward, you think about 90-plus percent of the CIOs are actively and aggressively embracing cloud computing.
I just left a cloud partner roundtable here, some of our very best partners that we have in Microsoft, and independently and individually they talked about the train has left the station for the cloud, and I couldn’t agree more. We see great adoption of cloud services, particularly across businesses.
Consumers don’t even generally realize how much they already have in the cloud, and how the technology that they’ve come to depend on is so cloud-enabled.
And so when you think about that opportunity, we think it’s a huge opportunity for us to continue to drive.
And we’ve got a deep investment with Skype. As you all know, Skype is an important part of our product, solution and service portfolio, but what I thought might help is that a third of the worldwide phone traffic goes across this particular cloud service that we have. Over 280 million users use Skype more than 100 minutes each and every month, as an example.
And you think about all the other cloud services, we’ve got hundreds of millions of people that use our Outlook.com, our email service, we’ve got tens of millions of people that use Xbox LIVE, we’ve got tens of millions of people that use SkyDrive. Our browser, and particularly what we’ve launched with IE10, just continues to set the pace and grow share each and every month and is something we’re very proud of. Hundreds of millions of people use MSN on a regular basis, and Bing, our search product, continues to make wonderful progress.
So we have some really, really substantial and big cloud services out there, and that ability to have those that span across consumers, businesses and advertisers again gives us a unique point of view and a unique perspective in a cloud-enabled world.
Now, one of the things that I certainly want to highlight is the fact that regulatory issues are more prominent than ever. As more and more people and businesses move to the cloud, it’s really getting government attention. Unprecedented amounts of personal and sensitive information in the cloud creates that heightened concern for privacy, security, and data moving across borders.
Governments are motivated to protect their citizens and government data from cyber-security threats, and cyber-security should be on the mind of every single business out there, because it’s becoming a bigger and bigger issue each and every day.
The challenge is how do we balance the business needs of businesses with regulators that promote privacy and security and user confidence in the cloud, and I think while still enabling those businesses to have that great flexibility and get huge economies of scale. That’s something Microsoft wants to work with our partners on. That’s something Microsoft wants to make sure we work with our customers on. We’re very committed in our cloud solutions to be enterprise-grade and credible, and have the best available privacy, security, and cross-border data flows.
Now, when you think about some of the opportunities that we have with cloud, we know we have a very, very comprehensive cloud strategy. In fact, we have four huge cloud services that we offer businesses across three distinct types of clouds. And when you think about those four big services, it’s Office 365, it’s Windows and SQL Azure, it’s Dynamics and CRM Online, and it’s Windows Intune, all talking from productivity and collaboration across the database, across business applications and across the infrastructure.
And we offer it across a private cloud — if you want to build your own cloud, we certainly will help enable that. In fact, our Hyper-V product and virtualization product is the fastest growing virtualization product out there, and we’re winning share every single month. And we’re also a third the price of the largest competitor in that particular space. So we’ve got a wonderful opportunity to help you build a private cloud.
We’re taking a lot of the big services to the public cloud. The ability for some sets of users for some workloads that customers don’t want to manage, the ability for us to take those directly into our cloud exists. And so we have an awesome public cloud, and I shared with you a lot of those big services a moment ago.
But the No. 1 cloud adoption we see continues to be in the hybrid cloud. The ability to have some bits of data for some sets of users that customers want to manage and control, and the ability for them to have some bits of data for some sets of users that they don’t want to manage, and run that seamlessly is something we can provide and provide very uniquely. Because you see if we have Active Directory and System Center completely deployed, the ability for you to do single authentication with a single user ID and navigate your own private cloud and a public cloud exists on the Microsoft platform.
So we’ve got market-leading and comprehensive cloud product solutions and services in market today, and it’s the fastest growing part of our entire business at Microsoft.
And as I said, we have an enterprise-grade cloud, the ability to have globally redundant datacenters. We’ve got over 2,000 people in our infrastructure and operations division alone that manage hundreds of millions of seats and services around the world. And that datacenter footprint means we have the right capacity at the right time at the right location around the globe. And the ability for us to monitor the network 24 x 7, 365 days a year exists.
And we operate in 100 percent consumption-based chargeback model, which allows our customers to have access to the actual COGs real time that they’re consuming across our network.
And security and compliance is paramount for us from a strategy perspective. We go after the certifications needed on a country-by-country basis, and we work within the industry consortiums on security and compliance, and we’re committed to doing that in every single country that we operate in.
We also deploy a dark fiber network, which guarantees that we can scale capacity on-demand for our customers and the services that Microsoft deploys.
So across all these areas we want to give our partners, we want to give our customers high confidence that when they want to go to the cloud they can bet on Microsoft with an enterprise-grade and credible cloud.
Now, when you think about the new Office that we just launched very recently, there’s a couple of things that I really want to highlight.
The new Office simply revolutionizes productivity for people and businesses. It has significant innovation across four key areas: the cloud, social, devices, and IT control.
It works great on all of your devices, but it really lights up on the Windows 8 devices.
Office 365 is a full suite of the Office applications delivered as a cloud service on-demand, always up to date, and certainly personalized and licensed per user with simplified management for IT. No one else can offer you that comprehensive portfolio within that product.
Office 365 is now available in 69 markets and 17 languages around the world.
So we’re very, very excited about this new release of Office that is the most game-changing release of Office that we’ve ever put into market.
And I also want to emphasize the fact that we remain very, very dedicated and committed to security. When you think about vulnerabilities in the marketplace, this is a third party named Secunia that actually provides this. This is the latest data that they have, that in this particular year Oracle had 497 vulnerabilities, Apple had 360, and Google had 324. Across the Microsoft platform we had 231.
Now, what’s most remarkable about this piece of third-party data and input that tracks all the security vulnerabilities around the world is a couple of things.
One, we’ve been working diligently on security, privacy and data protection for more than a decade.
Two, our surface area relative to these three competitors, with over a billion and a half people around the world that use our products each and every day, is dramatically larger than any of these guys, by a multiplier.
So I want you to know we don’t think we’ve arrived as it relates to security, but I want you to know we’re committed to it. And the bad guys get smarter each and every day, and we’ve got to continue to work harder and harder on that. But the progress we’ve made over the last 10 years is nothing short of remarkable, and I want you to know we’re committed to this space for the long term.
Now, let me also talk about social being a key mega trend that we’re investing in. Think about how the world’s changed. Two-point-eight billion tweets per week on Twitter. That’s the equivalent of 400 million tweets a day. Think about that, 2.8 billion times 240 characters. That’s a lot of words. Think about the fact that the consumerization of IT integrated with this particular tool and asset.
What is the role of features like groups, feeds, customer comments, follows, likes, hashtags, all of those things in the enterprise?
Think about the opportunity we have with Facebook users, over a billion users strong. It took 38 years for radio to have 100 million users. It took 13 years for television to have 100 million users. It took four years for the Internet to have 100 million users. It took about nine months for Facebook to have 100 million users.
The speed at which things are happening is very, very dramatic, and it causes us to step back and say, hey, what’s the role of social in the enterprise, how does this consumer phenomenon of technology in the digital world, how does that translate to business? It’s really about enabling and empowering employees to connect to people they need to connect with, and to have that conversation that they need to have. It helps people become more productive, get more done, and do more business and become faster across all facets of their business.
And so one of the things that I’ll highlight for you today is that 85 percent of the Fortune 500 companies we track are really and actively deploying social solutions for the enterprise.
What we’re seeing right now is that the barriers between internal workgroups are disappearing. Leveraging this only improves your business, while driving deeper and deeper operational effectiveness and efficiency.
And so when you think about the Microsoft stack, no one is better positioned than we are to take enterprise social to the next level. The new releases of Exchange and SharePoint have feeds built into them to help you leverage Facebook information, Twitter information, LinkedIn information. We have a robust enterprise social offering to help you connect with all of your customers, your employees, and your partners.
And these hooks that we’ve built into the new Office platform give you an incredible opportunity. Think about Skype and the leverage of Skype to Lync from a unified communications perspective. Think about Yammer and the ability to take workgroups and that information to the next level. Think about our integration with online CRM from Dynamics and what you can do with that, and enterprise search built in to SharePoint.
Having the social tools across social, collaboration, email and unified communications that connect and reach outside your firewall and inside your firewall across a connected platform give us a very, very unique advantage at Microsoft, and one that we’re going to continue to take up to the next level, because for identity, security, management and analytics we’ve got a great story to help you pull the end-to-end story for enterprise social together, and it’s one again that we’re very, very excited about from a bet standpoint and where we’re going in the future.
The next trend I wanted to touch on is mobility. One billion smartphones worldwide, four years ahead of when the industry analysts predicted. In China smartphones outnumber computers six to one, in the fastest and largest mobile and PC market in the world.
The speed and volume of growth in mobile devices and applications is simply astonishing. The effects are everywhere, from productivity to shopping to media to search. And certainly we think from a mobility perspective Office is going to be key to that.
In the new Office the best Office mobile experience is on Windows Phone 8 with the Office Hub, but Office is also available across other mobile platforms. We provide a great experience on iOS and Android phones. For iOS, Office Web Apps for Word, Excel, PowerPoint and OneNote enable high-fidelity document viewing on iPhones and some editing on iPad; and on Android, Office Web Apps for viewing, as well as some editing.
So the ability to get the keys to Office across all mobile platforms we think is important, and with the new release of Office we’ve lit that up and enabled that.
Now, we’ve also done something about device management, enabling users to be more productive responsibly. We have solutions to help you manage bring your own device on-premise or in the cloud. We help enable IT to manage end user devices in the world that they live in, while enabling end users to use the mobile devices they want to use responsibly.
You see the new release of System Center not only manages our devices, it also manages the other guys’ devices, and we’re very excited about the recent and rapid adoption of the new release of System Center that we launched last fall.
Now, when you think about one of the mega trends I wanted to touch on is touch. With Windows 8, and the launch of Windows 8, we want our entire Windows ecosystem to move to touch, and we certainly took a bold stance with the implementation and development of Windows 8.
And it’s not going to happen overnight. The OEM ecosystem has to catch up. But we’ve started and launched and we’re officially in the touch revolution, the ability to make all platforms, all devices touch-enabled. And the OS of Windows 8 brings touch to all form factors, across tablets with productivity, across laptops and convertibles, across all-in-ones, across TVs. The ability to take Windows 8 touch devices to the world across the ecosystem is where we are today.
And we also launched our own hardware with Surface and Surface Pro, and we’ve sold out of Surface Pro two different times since we launched that product at the end of January.
People want more types of devices and they want more and more from their devices, and the industry is creatively solving for that.
In fact, when you think about our ecosystem, the ability for us to have an ecosystem with more innovation than ever now exists, because this Windows 8, as I talked about, is very unique. We have a consistent user experience across the phone, the tablet, the slate, the laptop, the desktop and now the TV. No one else has that.
We took the bold stance that it needs to not only run on x86 but also run on ARM and system-on-a-chip.
We took the bold stance that said let’s create a new app and client-side development model, and we did that.
We took the stance that said we need an app store, and we did that.
We took the stance that says, hey, people only want a consistent, one user ID to be able to get at all their preferences and all their data, and with Windows 8 we did that.
We took the stance that said, hey, people want to have online cloud storage built-in. With the new release of Office and Windows 8 we did that with SkyDrive.
And on and on and on we took a bold stance with Windows 8, and the ability to get that operating system and have the hardware ecosystem catch up is what’s happening now.
If you think about it, in the first 90 days of that particular product being in market, 90 days, we just launched it at the end of October, but at the 90-day mark we had sold over 60 million Windows 8 copies. So the ability to get rapid adoption exists and it’s something that we’re seeing right now, and we’re very excited about that.
And I would also highlight that one of our device competitors has a different point of view. They believe that the post-PC era has begun. They believe that the tablet and the PC are different.
Well, with Windows 8 we have a different point of view.
We don’t believe that people want a different user experience across the tablet and the PC.
We don’t believe that people want multiple IDs.
We don’t believe that people want an OS for ARM and a separate OS for Intel.
We don’t believe that people want the complexity and the seams between platforms. We believe they want a unified experience across the phone, the tablet, the laptop, the desktop, and the television.
And we think that Windows 8, sparking the ecosystem from a hardware and innovation standpoint, gives us the capability to do that.
And we also think it’s important to call out today that XP — we love XP, but on April of 2014 XP is dead. Now it’s a 13, 14-year-old operating system that still has a whole lot of users. And so we want to work with all of our customers and all of our partners to help retrofit your XP environments if they exist out there, and we’ve made great progress across mostly the big enterprises in this particular space, and we want to continue to drive that.
Now, at Microsoft, the company this past year we invested US$10.1 billion in research and development. We know that’s larger than any technology company in the world. We also believe it’s larger than any company in the world, than any industry in the world.
So there’s a huge and significant investment there.
And we’re going to continue to invest going forward, just like we’ve done in the past with bold technology bets, in the areas we’re going to invest in across cloud, social, mobility, big data, and touch, the trends that I just went through.
And we’re going to continue to amp up what we do from an innovation perspective, because Microsoft is an innovation company first. And this money going toward these what we call mega trends is what we believe our future is.
Now, when you think about the role of the CIO, it’s changing dramatically. To date myself ever so slightly, I started in IT when it was data processing. Then it became information systems and then it became IT. And if you look at where we see that CIO role changing with the cloud, with the magic of software, the ability for a CIO to have strategic business leadership has never been greater than it is today.
And we also know that speed is the most important thing that CIOs are being judged against today. And so we want to lean in with all businesses, all CIOs, and we want to partner with them to help them bring in that future, with devices and with services. But it wouldn’t be possible without a partnership.
And our objective for every customer and every partner is to continue to work very, very hard, and we’ve done it in the past and we’re going to continue to do it in the future, to help you create that business value. And we want to earn the right to be your trusted advisor.
And with that I’ll conclude, saying Microsoft had an unbelievable year in the past 12 months on innovation, and we think with these mega trends going forward the future of technology has never been more exciting and it’s never been brighter, and we’re excited for the privilege and honor to be a part of it.
Thank you very much. (Applause.)