STEVE BALLMER: Welcome. Welcome, welcome, welcome. It is my privilege to have a chance to really open things up today.
I don’t know exactly what happened, actually. I woke up this morning very nervous to address you. And I was trying to go through and say, why is that? These are the folks who are out there every day working with Microsoft products, bringing them alive, showing customers what you can really do and delivering the full value of our product line.
And I said, well, maybe that’s it. This is the group that cares most, that has the most at stake in really what we’re doing, and how hard we’re driving, and what we’re doing with the product. And it’s really important for us to really bring it alive to you very, very vividly today. So we’re going to try to do absolutely our best.
We started really our partner program now about 20 years ago. Twenty years ago, it became absolutely obvious to us that the only way for us to scale out the value of our technology was to find people, big companies, small companies, startups, that wanted to take technology and make it into something bigger and better.
And you all sit here because we share that vision, you all sit here because we want to build business together, but you all sit here because you share that love and that view of the information technology.
There’s 15,000 of you here in the room today, and to all of you I want to start with a simple message of thanks. Thanks for your support, thanks for your good work, and thank you every day for taking care of our customers. (Applause.)
We have a total of 750,000 partners around the world, but about 90 percent of the revenue that we do is actually represented in some way, shape or form with the partners who are here today: systems integration partners, resale partners, hardware partners, development partners, software partners, cloud partners, framing partners, distribution partners. The range in breadth of the activities in which you engage are amazing.
This year, our partners in aggregate had really quite a good year. Growth in the businesses from our partners was about 6.5 percent year over year, but on a base of $650 billion. That’s the total revenue of our partner network, $650 billion, and you still manage to grow at 6.5 percent. Congratulations everybody. (Applause.)
A year ago at WPC, I made a promise to you. I made a promise that we would have an unbelievably fantastic product lineup over the course of our Fiscal Year ’13, and boy did we deliver a lot of product. If you look at what’s happened with Office 365 in the last year, the improvements, the agility, the speed, the Office 2013 replatforming that we did on Office 365, really stunning.
Windows Server 2012, both the product and what you have done with it, is nothing short of amazing. I think it is the most significant server release we’ve done in many years, and you’ve used it to really build out private cloud infrastructures, virtualization platforms with Hyper-V in some amazing ways. System Center that goes with that. Dynamics, particularly Dynamics CRM as we’ve moved into the cloud. The work that you’ve done helping to really automate our customers with the new technologies that we’ve brought to market. Azure, it took us a while to deliver IAAS and Azure, but we delivered it. A heck of a good implementation in Azure. And you have really embraced Azure, and we’ll talk later today about its growth and the incredible progress that you’re making both in the public cloud and the private cloud with our Azure infrastructure.
Of course, this was also the year of 8, Windows Phone 8 and Windows 8. And Windows 8 was nothing short of the most remarkable replatforming of Windows basically since 1995. And we’ve gotten a lot of feedback on Windows 8. I think we did a heck of a good job on Windows 8, and we’re going to spend a lot of time today also talking about Windows 8.1, because we listened and we learned, and as good as Windows 8 is I would just encourage you to really take a look at the Windows 8.1. It really speaks to the feedback that we’ve gotten. It builds on the exciting new user interface, the embrace of new platforms, the new programming model. But we’ve also suggested the feedback that we’ve gotten from people on how it works in the enterprise, what we need for serious desktop users, and I think you’ll be incredibly impressed by the work on Windows 8.1.
Windows Phone 8, I’ll just tell you, there’s no phone in the market better today than Windows Phone. I say that with all the objectivity of the CEO of Microsoft. It’s unbelievable how objective I am on the topic. (Applause.) But it is a little known secret just how unbelievably amazing those phones are, what they allow you to do for productivity, the quality of the cameras, the screens, the work that particularly Nokia has done on that dimension; the integration with Office, and everything that goes on in that environment; the ability to really get work done on a Windows Phone is nothing short of amazing. And so I will encourage you to make sure you spend time and really look. We’re going to continue to push hard with the consumer, but we think we have a very compelling proposition for our enterprise customers, particularly in the hands of our partners.
It’s a very exciting time. We look out at the next year, and the pace of innovation isn’t going to slow. It’s going to get faster and faster. The move to the cloud means that there will be more new things coming to market that you can mobilize and use to create value for your customers every year. And so I want to give you a little bit of a self-portrait of how we’re trying to embrace these new opportunities, and then we’ll spend some time this morning really showing you the specific products that will come to market.
We spend a lot of time as a leadership team thinking about the remaking of Microsoft. About a year ago in our annual report, we talked about the move from being a “software company” to a “devices and services company.” What that really means? It means that the world, and I’ve been saying this at our partner conferences here for a while, the world we grew up in was a world of software. When I dropped out of school and joined Microsoft, I had to explain to my mother and father what software was and why I was joining a software company. That was a long time ago.
And software development, I believe, is still the most valuable skill that anybody on the planet can possibly have. And yet the way in which software innovation gets really packaged and presented now is through a set of devices that include the software, and through a set of cloud services that deliver that software.
Just about six or seven years ago, I started talking about the cloud here at WPC. And it was highly unpopular the first time I talked about it, because it looked like an end around. And yet I think today everybody understands that this is the future of innovation. Even Windows, if you think about it, has really always been much more of a device than a piece of software.
Windows defined a class of devices called the PC. And we are certainly incredibly determined to have Windows define new classes of devices, tablets, phones, two-in-ones, living room devices, defined by Windows as a piece of software, but purchased and implemented by our partners as tested software. So we’re in the transformation from delivering our software value one way to delivering it in a new form, and we need our partners to come with us on that journey, whether you design and build computers, whether you deliver systems integration services, whether you provide custom development, there’s a place in this journey for all of us.
At Microsoft we say, what’s our unique point of view. Our unique point of view is on delivering high-value experiences through our software value-added devices and experiences. We think we understand the tools, the technologies that it takes to help people get work done better than anybody else on the planet, whether you are an employee, whether you are a customer or a trading partner, whether you are an IT person or a developer, we build experience that help people get stuff done. You need to do a piece of analysis, we’re going to have the best tools, the best devices and services for helping people do analysis. You want to participate in a virtual meeting, nobody is going to give you a better experience to participate in a virtual meeting than Microsoft does. You want to ensure information integrity in your customer, because no matter what happens with consumerization, it’s still the IT department that has to protect the integrity and value of corporate information. We together understand these things, and we together, Microsoft and our partners, will deliver the devices and services that really bring these things alive when people want to be productive.
Now, we have another side of ourselves at Microsoft, too. That’s the fun side. I refer to it as serious fun, because unless you’re hardcore about fun, the Xbox probably hasn’t been the product for you. But when it’s serious fun, or serious business, we’re going to make sure that we provide the core experiences through our devices and services, and through the value add of people in this room to really bring that alive. That’s not easy. It takes a lot of core technology investment in operating systems, in user interface, and particularly now natural user interface, in machine learning, in cloud infrastructure.
If you just look at the capital expense that we now put into the ground every year to build out the Azure kind of datacenter and server footprint, and operate these services, it’s in the billions of dollars today in order to bring these things alive. So serious R&D, serious CAPEX, and serious understanding, together with our partners, of the high value experiences that really let people get stuff done, that’s how we define ourselves. And then the question is how do we in a laser-focused way apply those to the things that are most on all of our customers’ minds.
So what is on our customer’s mind? These are the four big trends that I think in particular our IT customers, but businesses in general, want to speak with us about every day. They come to us and they say, what about the cloud? They say it to you. They say it to us. They say, hey, I hear about big data, or I understand big data, or I’m afraid I’m missing out on big data, how are you going to help me get there, they’ll say to the two of us.
Social, part of the consumerization theme of the day is how do we apply techniques and software services that people get to know in their personal lives, how do we apply those to enable business productivity? And we’re going to show you a lot today of what we’re doing with social so that people can come together in what I would call human ways to do superhuman tasks at their work.
And last, but certainly not least, is mobility. I get to do something that the rest of you don’t do, because I sit on the stage, I get to count the number of mobile devices that go up for pictures and various other things during my speech. We’re at about 25 percent would be my gauge this year. I’m sure everybody has got a mobile device with them, but what it says is that the range of applications of mobility just continues to increase. And I want you to really understand just how rich our mobile offering has become, both in terms of the Windows devices that you can use as part of your solution, and the work that we are doing to support some non-Windows devices. So let me dive into each of these in turn.
First is the cloud, the cloud remains a little bit of an amorphous thing. But, at the end of the day, the task of the cloud probably means, and it might be 5 years, 10 years, 15 years, 20 years, it is really a path that leads for almost all companies to the public cloud. And that puts a lot of pressure on providers, whether it’s Microsoft, folks we compete with, our service provider partners, it puts a lot of pressure on us to make sure that we have world-class scaled, low-cost, low latency, high-bandwidth cloud infrastructure across the world. How do we, from a public cloud application, deliver with incredibly low-latency and with exactly the right data security and privacy and protection? How do we deliver information, whether it’s in the U.S., or Australia, or China, or Malaysia, or any place else in the world? And we are investing in that infrastructure.
We actually started the investment process in that infrastructure in order to support our own applications, to support Bing, to support Office 365. And what we would tell you is that our cloud infrastructure, Azure, is being proven out, is being battle tested, and is being advanced on the backbone of our own first-party applications, but then that infrastructure, that Azure infrastructure, is there for all of you to use, to deliver solutions to your customers.
I claim there really are almost no companies in the world, just a handful, that are really investing in scaled public cloud infrastructure. We have something over a million servers in our datacenter infrastructure. Google is bigger than we are. Amazon is a little bit smaller. You get Yahoo! and Facebook, and then everybody else is 100,000 units probably or less. So the number of companies that really understand the network topology, the datacenter construction, the server requirements to build this public cloud infrastructure is very, very small, very small. And the number of companies that are at the same time seriously investing in the private cloud, which is not going away, and in these hybrid clouds is really just one and that’s us. We are building in a compatible way private cloud infrastructure based on Windows Server, and public cloud infrastructure based on Windows Azure, and we will talk to you about that today.
Sixty-three percent of customers surveyed will say they really want a single vendor who can provide them both public cloud and private cloud. We think we are the only solution and certainly the best solution for customers who want that. We continue to advance with our cloud applications, our Bing search service has made progress each and every month, improving not only its market-share and its quality, but also the speed and performance with which we deliver our results, which should be a key indication to you on just how rich our cloud infrastructure is.
Through your good work our Office 365 service has literally exploded. For the last few years we were saying SharePoint was the No. 1 fastest growing product at Microsoft. Then it was Lync, the No. 1 fastest growing product at Microsoft. Through your good work it’s Office 365. And what all of that means is our mutual customers are ready for the cloud, and our product line is ready for the cloud. People want full, familiar, world-class productivity tools in the cloud. Only we give people those tools that really let you get work done. There are pretenders who come from the consumer world, but there’s only one set of tools for your business customers who really need a productive, high-security, high-reliability, infrastructure in the cloud for their applications.
No. 2, big data, big data is I think one of the areas that is still very, very early actually in its exploitation. Big data means a lot of things to a lot of people, and it’s very important that we continue to push forward on these big data themes. You’re going to see demonstrations today of some of our tools, some of the work that we’ve done with Excel, and SQL Server, I guarantee you for people who have a lot of data, there is no question that the No. 1 sort of most familiar, easy-to-use toolset to get insight out of data comes from Excel and SQL Server.
Ninety percent, literally, of the world’s data, this is a very interesting fact, ninety percent of the world’s data has actually been created in the last two years, 90 percent of all of the online data in the world in the last two years. What it says is there’s an explosion in this data. And so tools that let people mine it, get insights from it, and understanding from it are essential. We’re going to show you a demonstration of some of the things that you can do with our big data and BI suite later on today that I think will absolutely blow your mind.
But, we’re also providing you with the infrastructure that lets you build out automated solutions for your customers, because over time most of the value in big data will actually be in having the data learn from itself and take automated actions on our joint customers behalf. We’re building out our Hadoop infrastructure on Azure, so that you can do a mix of things with structured and unstructured data. We are certainly doing a lot of work on SQL Azure, so that you can access the structured data in the cloud. Because of our investment in Bing, we know we have a lot of data. We are putting that data in a structured form, where you can use it as part of the applications you deliver.
One of the key things that we showed at our developer conference a couple of weeks ago in Windows 8.1 is the way we’re starting to take entities that Bing understands and make them part of a platform for you to use as developers in your applications.
Last but not least is the Azure Data Marketplace. There is going to be a lot of data that people are going to want to use inside their applications that don’t actually live inside the enterprises you serve. If you want to write a forecasting application for one of your customers that forecasts how many raincoats they need in each of their retail stores, I guarantee you the weather data is a helpful input. And yet most of our joint customers don’t keep the weather data in their enterprise systems. And so we want to let you mix and match public data and private data. We want you to be able to bring that data together in structured and unstructured ways. We want to bring it together in ways in which humans get the insights, and we want to give you the machine-learning infrastructure so that the computers themselves can actually help your customers respond to their customers in real time. The work we’re doing here you’ll hear about throughout the morning, and particularly the demonstrations you’ll see I think will really bring these things alive.
Social. Some people think social is one product. I don’t. Social is a way of working. How do four of us come together and collaborate on a project? How do we collaborate if we work in the same company? How do we collaborate if we work in different companies? How do I reach you if you are in my customer base and I want to do a seminar for you? Or I want to put on and have an event where we communicate real time? All of these are social activities that are involved in business. So it’s people to people, it’s people to businesses, it’s employees to employees, it’s all of the constituents, consumers, employees, customers, and partners. How do you bring them together naturally? Sometimes you want to do that on a real-time basis, and sometimes you want to be able to do that in a way in which people can participate asynchronously.
I’m glad to have 15,000 people here today, but many more people will watch the video of this section in our partner community around the world. And it’s part of, if you will, the social infrastructure, letting people participate the way they want when they want. And we’ve woven this into the fabric of everything we do. Windows devices come from the get-go with integrated communications and social capabilities like Skype. Skype and Lync are being brought together to allow the consumer and the businessperson to interact together in real time.
We continue to push forward in Outlook, adding more social capabilities directly into the e-mail client that is the base station from which most of us would communicate with other people. We acquired Yammer over a year ago, and you’ll see the way we’re using Yammer both inside companies and now enabling it to stretch between companies and their partners to involve real-time communication that feels very much like what somebody would do on Twitter or Facebook, but in a productivity context. We continue to push SharePoint social capabilities forward, and even in our Dynamics product line, even when we’re talking about line of business process, it is very important to collect the information from the social realm, and to be able to let people in formal line of business processes actually connect to social environments. And we’re going to show you some of that later on in the demonstration.
Last but not least is mobility. This is an area where we’ve made huge strides in the last year. I had a chance to beat my chest a little bit, get excited about Windows Phone, but we’re also going to show you today what we’ve done with Windows 8.1, and what our hardware partners have done with Windows devices. You can buy beautiful Windows devices today in so many different shapes and forms. Windows PCs, everybody has a notion of what we mean by a Windows PC. But we’re going to show you small Windows tablets. They’re still all Windows all the time, but they’re hard to mistake for a PC.
We’ll show you Windows two-in-ones, devices, which depending on how you configure them at any time will feel like a PC or can feel like a tablet. I happen to think this will be the most popular configuration for business people because they’ll want the ability to seamlessly go back and forth between their productive life, their consumptive life, and their personal life.
I talked about Windows Phone. You’re going to get a chance to see the Surface. Hopefully many of you will choose to pick one up, but what we’re doing with Surface I think is also amazing. We’re trying to really lead the way on products like Surface Pro, and the use of the pen, which I think is pretty fundamental in mobility.
While we’re making these investments in sort of Windows mobile form factors, if you will, we also continue to do work to support non-Microsoft devices. You’ve seen us certainly move with SkyDrive, with Lync, with OneNote, with a number of our offerings to embrace Android and Apple phones. We’re going to show you some technology today for managing mobile devices that apply outside the Microsoft sphere. So our mobility strategy, as centered as it may feel in our Windows devices, and they are beautiful, and they are the most productive, for those people who just don’t happen to have one, we’ll also show you a little bit of some of the technology that we’ll give you so you can stay well anchored in Windows and Active Directory as the center point for managing devices of all shapes, sizes and forms.
At the end of the day we may see ourselves focusing on high-value experiences, and our customers may ask us collectively about cloud, and big data, and mobility, and social, but at the end of the day we deliver to you some products. And with those products in hand you turn around and try to serve our joint customers.
Windows, we’ll show you 8.1 and I couldn’t be more pleased with the progress. Windows Phone, if you haven’t checked it out recently you must. Surface, I hope you get the opportunity to delve in and really explore at the partner conference. Office 365, including Yammer, and Skype, and Lync, and SharePoint and Excel, and BI, and all of these phenomenal capabilities, the footprint of what you can do with Office is continuously expanding. And when you leave here, we want to make sure you leave here understanding completely the breadth of footprint that Office is embracing. Windows Azure, and when I say Azure today I include Windows Server, and the full on-premise product line. Your ability to go out and articulate a hybrid cloud story with Windows Server, SQL Server, and Windows Azure is incredibly important to us. So we are going to try to equip you to do that by the time you’re done today.
And then last, but not least, is Dynamics. Dynamics continues to evolve in its footprint, in its embrace of the cloud. Dynamics is an amazing business for Microsoft. I’ll bet we get less PR on the business that is billions of dollars for Microsoft, and where we probably have the most loyal committed partner base in the world, and the most loyal committed customer base. And for those of you who have not come back and looked recently at the amazing work that we’re doing in business applications I hope you’ll feel enthused to go do that by the end of the day.
We will only succeed as a company if we arm you to go approach these challenges. You need to see these products. You need to understand their potential. You need to believe that they can help you serve our joint customers. You need to know each other. Some of you are experts in hardware. Some of you are experts in systems integration, some are developers, some are resellers. Bringing you all together and equipping you with the common base, so you understand where we’re going, what we’re doing, and collectively how we can serve our joint customers that’s what WPC is all about, and if we take advantage of this opportunity and certainly with the phenomenal product lineup that we have today, and we’ll roll out over the next month, we know absolutely that we can succeed together.
Thank you all very much and enjoy WPC.