Remarks by Bill Gates, Chairman, Microsoft Corporation and Jeff Raikes, President, Business Division, Microsoft Corporation
Unified Communications Launch
San Francisco, Calif.
Oct. 16, 2007
ANNOUNCER: Ladies and gentlemen, please welcome Chairman, Microsoft Corporation, Bill Gates.
BILL GATES: Thank you. Well, it’s exciting to be here this morning. Welcome to our Unified Communications Launch. What’s this all about? Well, Microsoft is all about the magic of software, taking software and letting people be more productive, and more creative. And what today’s announcement is about is taking the magic of software and applying it to phone calls. We don’t just say phone calls because, of course, once you get software in the mix, the capabilities go way beyond what anybody thinks of today when we think of phone calls. But really the milestone that we’re at is that we’re finally bringing to this idea of trying to get in contact with somebody, knowing what number to call, knowing how to connect many people together, knowing when they’re available, we’re bringing the magic of software.
In fact, this is a complete transformation of the business of the traditional PBX. The PBX in some ways is almost like the mainframe was many years ago where all of the functionality was there in that one piece. And the way that you had flexibility to add value, to customize, to bring in third parties to do new things, it just isn’t there in that structure. And so by moving phone calls onto the Internet, using the powerful industry standard servers, we’ve got a very different way of being able to do things. And that can lead not only to lower cost, but far more effectiveness in how your employees work within your company, or with customers and partners outside your company.
So what are the factors that are driving this forward? Well, we have some very big mega trends. We have the incredible performance improvements in hardware, the magic of Moore’s Law, that exponential improvement where the chips get twice as many transistors every 18 months. It means that the speed of your network continues to go up. In fact, the people who put information on optic fiber see no limit in sight to the constant improvement they make. So you’ve got the capacity in the network.
The performance of the computers in terms of doing things like taking and processing the video, or processing the audio, we now have the full capacity to do that. So hardware is not holding us back at all. In fact, you’ve seen the explosion of audio and video essentially being an essential part of experiencing the Internet. The Internet in the beginning was about text, slowly but surely pictures came in. People with dial-up didn’t like that, but there were less and less of those people. That came to be taken for granted. And now, music, video are a standard data type, and that’s the performance in bandwidth that we’ve got available here.
The digitization of the economy means that as a company you’ve got digital records about your customers and what’s going on. When they call in, of course, that should just show up on the screen. If you pass the call around the information about who is doing what, what the issue is, all of that should just pass around. So as we digitize, the idea that the phone call is outside of that structure becomes more and evident that it really is the one thing that hasn’t been pulled in and subject to the software and hardware revolution.
The advances in software are very important here. The way that we do this redundancy to make these systems incredibly high quality. The way that we can take, even when the connections aren’t happening, find new ways to make those connections, so we get extreme reliability. And then finally the end devices themselves, the portable computers you take everywhere. PC sales are growing, but portable PC sales are growing as a share of PC sales. So not only the phones themselves being far, far better, but the Windows PC that you’ve got with you on the road also being far more pervasive and far better than it was. So these are the trends that we build on in order to be able to say that now is the time when communications will be revolutionized.
So starting with the phone call, but bringing in screen sharing, bringing in video, bringing in collaboration, bringing in the ability to put even in a business application the richness of this unified communication.
We can look around our office and say, there’s a lot of changes that have taken place. If you go back 30 years, the computer of 30 years ago was either hidden away in the data center, or it was a kit computer. I’ve shown there the Altair, that’s the computer that got me to drop out of school. Looks good, it’s got switches, and lights, and it had paper tape. Very impressive. So you’d have to say that even every 10 years or so what you think about that personal computer has been very different. In 1987, by then the IBM PC style with MS-DOS was standard, so called 16-bit computing. By 1997, the graphic user interface had come in, and the Internet was starting to be central phenomena. And here in 2007, we’re starting to get speech and video and ink and things that go way beyond even just 10 years ago.
Likewise with your mobile phone, 30 years ago only a few people had these huge briefcase things. Ten years later, the first big device came out. And then in 1997, you could say things like the Motorola (Starpack ?) really brought mobile telephony into the mainstream. And today we have devices that have little keyboards, and cameras, and that’s pretty phenomenal the software revolution that’s taking place on those mobile phone devices. In fact, the key players in that mobile phone business over time are more likely to be people who are great at doing software. It’s not just the hardware of connecting up a voice call, it’s a lot more because that’s the device you carry with you.
In contrast to the great innovation we’ve seen with the PC in that mobile phone, consider the business phone that you’ve got in your office. It still looks pretty much the same. Most of them have, if they have any display at all, it’s a fairly small display. They do have a lot of buttons, and you look at those buttons and say, wow, I wonder who uses those buttons? These things, because it’s so opaque what’s going on, and because you don’t like dropping a phone call, people really don’t even use the features that’s there. It’s kind of frozen, and there’s nothing a third party could do to make it richer, or to make it better. So it really jumps out as the element in our life of rich digital communications as the thing that needs to be changed, and it can be changed.
We surveyed people recently about how they think about that desk phone, and we found that one in three have successfully transferred a phone call. Now that’s the most basic functionality you can imagine. Even less people have been successful at setting up a standard kind of conference call. So the buttons, adding the buttons, and all that, that’s just not going to work. In the PC world, with things like Exchange and Active Directory, the idea of knowing who an employee is, their relationship to other people, being able to figure out what information they’re granted access to, this idea of a directory as an important tool in the company, having groups and things like that, has become mainstream. While the PBX has stood out by itself, where that directory, in terms of keeping it up to date, managing it, has been very, very different. So this has been in its own world, not touched by the magic of software. So that central power of innovation, software innovation is being brought to the business phone experience.
Now, this is also not just a technological change, but it’s a change in the business structure so that the opportunity for people to come in and do new things is much larger. In the older world everything changed in a kind of vertically integrated communications stack. The person you bought the server from, the person you bought the directory software from, the person you bought the applications from, the person you bought the hardware device that sat on the desk, that was one company. And that model worked just fine, because the pieces worked together, and this was a fairly large market.
But, it meant that once you picked one of those PBX vendors, that was it. And, in fact, often the business model there was that even if they didn’t make a lot of money on that initial sale, things having to do with, oh, you want to move a phone, now we’re talking, now we can make some money off of you, because you want to move that phone. For Microsoft just to set up, say, a new office with a phone was over US$700, and the lead time was about a week.
So that actually became a critical task. We move people around a lot, as we’re getting people working together in different groups and things like that, it’s a real point of frustration, because we think of it as just, hey, it’s an entry in the directory. You type in their new office number, and tell them to walk over there, and that should just be done. But, because of the way this had its own network, its own directory, its own even wiring, the way it was connected together, there wasn’t much you could do. And so people just accepted it in that form.
So how is that going to change away from a vertical model? Well, the answer is that we’ve seen this before. This is just like the computer industry was before the personal computer came along. And the change agents there were Microsoft, as a software platform, Intel and the other chip companies that took the magic of doing the hardware piece and brought that down to the chip level, did a fantastic job on that. So it became a horizontally oriented structure.
So we can take that vertical approach and turn it on its side, and now say, okay, at each of these layers somebody can specialize. We’ve got the servers, which will be standard Windows-type servers, that you already have to run many, many other things, so that’s something that’s well understood, how to set up and manage. I’ve got the communications platform, which is software running on those servers. You have standards like the so-called SIP, which is the way on the Internet calls get initiated. And that’s a very rich standard, very different than the normal sort of PSPN network phone call.
Then above that platform layer, the ability to put in different pieces of software that’s totally flexible, to connect into your business applications, to connect into something like this SharePoint, and have the presence show up there. In fact, it’s our view that whenever you show the name of an employee, of course you should see the presence, and be able to right click, and go and get in touch with all of the different communications modalities. So any application that you’ve got internally can benefit from this communications stack, just by you put that name in the application display, you just use the little piece of software that we offer.
Then the hardware itself, we can see an explosion of activity. We’ll see people actually being able to use their mobile phones as a first-class client on this business phone network. Traditionally that was not the case, because those handsets, desktop handsets, had a special relationship to the PBX, so getting at the events, and the information, you couldn’t do that on your mobile phone. You couldn’t do that on your PC. So when you come back to your office, just seeing who called, people didn’t expect to be able to do that. But, they have that big screen, their PC screen in the Office, and that can be done.
Now, I’m showing this as kind of a revolutionary change, from the vertical to the horizontal. In fact, this is happening in a way where it’s an evolution, you can actually take the software that we’re talking about, and put that alongside the traditional PBX, and by having software that takes the events in and out of that PBX, a lot of these scenarios you can get without changing that out.
Now, over time the lowest cost structure will be to not have the PBX, to simply rely on the software and the Internet connection as the way that communications works. But, we have customers who are going through this evolution in many different ways. It’s quite flexible, and what you’ll find is that as you start down the path, every step along the path there’s opportunities for increased productivity, and cost savings. So you don’t have to take it all as one leap, nor the individual steps, kind of painful steps that involve very difficult things.
So this transformation to software-based communications is going to be profound as the shift from typewriters to word processing software. Moving from a dedicated piece of hardware to the general purpose, personal computer that happened over 20 years ago, and now we simply just take that for granted. Even 10 years from now, when people think about telephony, they’ll if you see like in a movie that old desktop phone you’ll think, oh yeah, we used to have things that looked like that, wow, that was intimidating to have that.
So there are many elements that come out of getting it onto a software platform. The level of innovation you unleash when you do this is always amazing. Some of it is, say, people understand a particular scenario, what should happen with the phone call in, say, a hospital setting. Well, there is special logic about how it gets passed along, how if something doesn’t happen it gets alerted to somebody, what information, what context should go with that call. Software developers, small companies or in-house experts, should be able to take that scenario and do the special things that you want to do.
In some financial situations all the phone calls need to be tracked. You need to be able to have a record of what went on with those phone calls. And so this infrastructure makes it very straightforward to do that. One great thing about this infrastructure is you have a complete log that you can keep or not keep of the different activities. So understanding how the pieces are interacting is very straightforward, because it’s up at this software level.
One example we have is that when you’re interacting you can even have software bots that are sitting in there, looking at customer requests and things, and adding value to that. Of course, software is getting way more ambitious in this will be more dramatic over time, doing things like voice recognition and video recognition. We have some elements of that in what we’re doing today, but as that gets better and better the benefits from being in the software environments gets stronger.
So we’re excited that applications companies, services companies, people who do great hardware they’re all coming in to participate in this. In fact, at the event today many of those partners are here making announcements how they’ve made a bet on this software opportunity around the revolution in communications that we call unified communications.
Now when we think about the cost savings here, you might say, well, how does this add up? Well, partly it’s you reduce phone tag, and people being on hold, so that’s a productivity benefit. You get the flexibility that, many times, because of the richness of screen sharing, you actually reduce the need for travel, the kind of conferencing, even the kind of charges you might have, those costs should go down quite a bit. And then just the whole business process where you’re collaboration with different teams, it can be more effective. If you want to find an employee and just talk to them, you don’t have to think about their four or five phone numbers, you just look at their name, see their presence, initiate that contact, and depending on what they’re doing, they’ll see who you are, if their context is one where they want you sent to voice mail, that will happen. If they want to go ahead and take that call, you don’t even have to know which phone they’re at, that works very easily.
Microsoft is a great example of this, where we have software development, and our customer field sales force all over the world, and the fact that now people, even when they’re at a hotel, wherever they are, you can contact them and call them if they’ve chosen to be available. That’s just an amazing thing, and it’s one of those things that we’re almost starting to take for granted it’s so obvious that that should be done.
We had Forrester do a study where they looked at all these cost savings and how those came together, and they saw a pretty amazing number, over 500 percent return on the investment over a three-year period in getting this software in. Now part of the reason that’s so high is that you’re leveraging investments you’ve already made. You already have an Internet connection, you already have the personal computers. And so the additional cost of taking in and putting in an additional server or two, some people want a handset for their PC, or you just buy the software that interops with the current handsets, as you go through and do those things, you’re taking advantage of the infrastructure that was built up for asynchronous communications, things like e-mail, and SharePoint type collaborations, and so this sits on top of it, and therefore can have a very, very high return.
I mentioned some of the innovation. A good example of that, both in hardware and software, is a thing we’ve done called Roundtable. Now this is just one of the devices you can connect up to the environment. This is the Roundtable itself, if you haven’t seen it, it’s a fairly light device. This costs $3,000. And what you have here, and there are six different microphones here, and when I pull this top off, there’s a camera that’s got five different faces that can look 360 degrees around the room. And so you just take this, put it in a conference room. You connect it up to power, and the Ethernet, and then if you have our Office Communications software, it immediately hooks up. Then you can do calls where you’re connecting up with people who are remote, and they can see everyone in the room. It automatically is like having somebody with a camera, who is a very good film director, because they understand when they ought to show the whole room, when they ought to zoom in on the speaker. It’s actually the first software that uses both the video and audio to know where the focus ought to be to pick exactly the speaker. By using both the video and audio, it does a very precise job similar to if there was somebody there moving the camera around.
I’ve got a great example of a customer who has been using Roundtable, and them talking about what this has meant for their effectiveness. So let’s go ahead and take a look at that.
I think Roundtable really is a great example of how this has all come together, and I really encourage you to sit down and see a demo in person to understand the impact for what that’s like for meetings where you have remote participants. You saw that the screen there they had at the bottom, a 360-degree view of the entire room, so those people were actually sitting around a table, but the software is able to take that and make that a flat presentation, so you can get a sense of what’s going on with everyone in the room, and then in the upper left it had the person who was speaking. So it would focus in and switch that depending on who was talking. And then, of course, most of the screen was for screen sharing there, where they could bring up documents, edit them together, bring up a PowerPoint presentation, bring up a video, and those kinds of things. So it’s a great example why we can’t just say this is software telephony, it’s much, much more than that.
Now this is an area that we’ve been investing in for a number of years to get to today’s milestones, and pull the products together. It’s a big bet that we’ve made, one that we feel great about, because it ties back to the software which is exactly our strength, and the center of everything we’ve done. The person who’s led that investment, really driven the business, really shown us the great opportunity that’s here is Jeff Raikes. And he’s the president of our business division. And so let me welcome Jeff to the stage to tell you more about today’s announcement.
JEFF RAIKES: Hi, Bill.
BILL GATES: Welcome, Jeff.
JEFF RAIKES: Well, I want to thank all of you for being here with us today. You know, for me, 15 months ago, we were here in San Francisco sharing the roadmap of what we were doing in this whole world of unified communications, building around Office Communicator, and Communications Server. And it was a very, very exciting time. But it’s great to be back here today, Bill set the context for you, and this is an exciting milestone. We really believe that this is not just a milestone for Microsoft, but it’s really a milestone for our industry. And I think you got a great sense of that with how Bill shared the overall context, how the velocity of innovation in our industry is accelerating. The next wave of Microsoft voice over IP and unified communications products is here.
Today I’m very pleased to announce the launch of Office Communications Server 2007, Office Communicator 2007, a major update to Exchange 2007, Live Meeting and Microsoft Roundtable. Now collectively these products, these underlying technologies form the backbone of software powered communications. That’s the experience that we’re searching for. It’s a big R&D bet for Microsoft, and it really is underscored by what Bill said to you earlier. Today, from Communications Server, our Presence Foundation Service with the added software powered VOIP and Web conferencing capabilities, now to Office Communicator, which is the unified communications client, it enables streamed video, it enables great voice, it enables instant messaging communication, right from the applications that people use most to the update of Exchange. So a very important update that deepens our investment in built in protection, anywhere access, better operational efficiency, and, of course, Roundtable, the immersive meeting experience that Bill showed us. Live Meeting, our hosted Web conferencing service, with added capabilities like built-in voice over IP, video and advance conferencing support for very large events.
Today, we’re delivering revolutionary economics in VOIP, and increased productivity, and quality in voice communications. So the era of dialing blind, the era of playing phone tag, the era of voice mail jail, the era of disconnected communications, that era is ending. A new way to communicate starts today, unified communications software that will transform business communications as fundamentally as e-mail did in the 1990s.
Now I want to put a little emphasis here on identity and presence, because it really is at the core. It’s a software foundation that allows us to put you, allows us to put people, instead of technology and devices, at the center of your business communications. This is a very, very key concept, a single identity for your people is a foundational element for all the ways, all the different ways people will communicate, and it sets the stage for the next generation of communications systems.
Step back for a second, think about how many different phone numbers you have, different identities that you have in the communications tools that you use. Phone numbers are an artifact of technological limitation. I don’t want to get in touch with your number, I want to get in touch with you. And so identity and presence is at the core, it spans the key methods of business communications like e-mail, voice over IP, instant messaging, and conferencing, each of the ways to communicate work together around this single identity. And that is what puts people in control of how they communicate. They have the ability to manage their conversations, to redirect calls, to set the availability to manage how and when they are reached. And it also lets other people, both inside and outside of an organization, connect in the right way, the most effective way. By checking a colleague’s presence, I can tell immediately whether she is available for an instant message or a voice conversation, or perhaps if I should send an e-mail that she can respond to later. In fact, I no longer blind call at work. I simply check the presence of the person I’m trying to reach. Our research indicates that the average information worker spends 37 minutes per week in voice mail jail or playing phone tag. And that ads up to more than 30 hours of productivity per year. But by using identity and presence at the core, you recapture that time, you increase the productivity. And it’s not just the lost time that’s important, it’s what it means in terms of the business, and having people have the impact that they need to have to be able to respond to that important customer opportunity, or that key competitive challenge, or the issue that will satisfy the customer or partner.
So by using these technologies at the core, by using identity and presence at the core, people miss fewer conversations, they miss fewer calls, they can reach the people they need faster, they get to better decisions faster, and they get business done.
Now, I really want to bring our investments to life with a demonstration. So I want you to welcome Eric Swift, he’s the senior director in our UC group, and he’s going to give us a closer look. Welcome, Eric.
ERIC SWIFT: Thanks, Jeff. (Applause.)
JEFF RAIKES: Great to have you here today. So what are you going to show us?
ERIC SWIFT: Well, what I’m going to show today is how a typical sales rep can us the technologies announced today to be more efficient, meet customer needs, and get business done.
JEFF RAIKES: Great. Well, that’s what it’s about, get business done. I’ll let you get to it.
ERIC SWIFT: All right, thank you.
Well, this scenario, I’ll be a sales rep who is returning from customer meetings in Chicago, and it’s early in the morning so he’s speeding back to the airport, and wants to check any messages that might have come in perhaps from the East Coast or even Europe, because he’s got the rest of the day in front of him, and wants to make sure he’s well managed. So, safety first, of course, so he puts on a headset device as he’s driving in in his rental car to get back to the airport. Now in order to be as efficient as possible, he wants to check all of his messages, and that can be done with Outlook Voice Access, where he can call in and check e-mail, voice mail, calendar, all with simple voice commands. Now, what you see on the screen is actual Outlook Inbox, so that you can follow along, as I use the interactive voice commands to call into the machine. So let me do that right now.
VOICE: You are connected to Microsoft Exchange.
ERIC SWIFT: Eric Swift.
VOICE: Please enter your PIN then press the pound key. You have one new voice I heard you say goodbye, do you want to end this phone call?
ERIC SWIFT: No.
VOICE: You have one new voice message.
ERIC SWIFT: E-mail.
VOICE: Opening your mailbox. First an unread message from Rebecca Lazlo, titled Fabricam, arrived yesterday at 3:31 p.m.
Hi, Eric. I’m in meetings all day. Please send me an e-mail when you get Fabricam’s response to our proposal, thanks. End of message. You can say
ERIC SWIFT: Voicemail.
VOICE: I didn’t catch that.
ERIC SWIFT: Main menu.
VOICE: Sure, returning to the main menu. Please say voice mail, e-mail
ERIC SWIFT: Let me hear my voice mail.
VOICE: Opening your voice mail box. First new voice message from, Jennifer Yust arrived yesterday at 3:27 p.m.
JENNIFER YUST: Hi, Eric. Thanks for sending over the proposal. I discussed it with out CFO and we feel the priced charged for cabling and installation is too high. We’d like to see a better price by the end of the day, thanks.
VOICE: End of message. You can say, play
ERIC SWIFT: Main menu.
VOICE: Sure, returning to the main menu. Please say, voice mail, e-mail, calendar
ERIC SWIFT: Now, this was a critical voice mail that came in from one of my customers, and it’s about a proposal that I provided, and there’s a pricing issue. I want to be able to focus my entire day, right when I get back into Seattle, on this. So now I can go in and modify my calendar to accommodate for that.
VOICE: And to hear e-mail messages or send voice attachments
ERIC SWIFT: Main menu.
VOICE: Please say, voice mail, e-mail
ERIC SWIFT: Calendar for today.
VOICE: Opening today’s calendar, you have
ERIC SWIFT: Clear my calendar.
VOICE: A meeting that you organized from 10:30 to 12:00, titled
ERIC SWIFT: Clear my calendar.
VOICE: I didn’t catch that. You can say, reply to all, attendants, details, forward, previous, first, last, next day, or more options.
ERIC SWIFT: More options. So you get the idea how I can work through had communicate by voice with my calendar and have all of my options available. Now, in the busy traffic, early morning Chicago, perhaps I can’t be picked up that well. But, you could hear the voice mail be played back with text to speech recognition. You have the intuitive voice commands, and a very nice person there interacting with me while I’m on my phone. So now when I arrive into the airport I want to continue to work with my communications technologies. I don’t have a lot of time, because I’m jumping onto the airplane quickly. So I simply pick up my Windows mobile device, let me show this on the screen so that you can all see it, just projecting the screen from my mobile device right here onto the screen on my side here, and you can see all of my e-mails right here in Outlook Mobile.
We’ve added some great new features into Outlook Mobile, so that I can do things like very rapid searches, simply by typing in a few letters. So if I type in, in this case, CAB, it narrows down all of my e-mails that have that string in them. In this case I’m looking for all the cabling issues, because of that customer issue that came in.
I can also do server-side searches, and I can click into the e-mails, and see rich e-mail, and even look up corporate contacts in that way.
But, now that I have the information that I need, I do want to give my manager a head’s up. If you recall that first e-mail from her was regarding the Fabricam account, and to make sure to keep her posted. I can simply move back to Communicator Mobile. Communicator Mobile right on my mobile device provides me presence information for my entire organization, and any of the contacts that I’ve added. So I can look through who is available and what have you, but I need to talk to Rebecca Lazlo down there at the bottom. And I can see with her presence icon, and her notes, that she’s out of Office.
Now, I have many ways that I can communicate with her, but you’ll notice that, being out of office, she’s left a quick little message there that says, if there’s anything urgent call her mobile. So rather than looking up her phone number, or switching out of applications and hitting multiple buttons, I know exactly how to reach out to her based on her presence, and I can do so with a simple click and a call, which allows me to dial out to her and communicate to her, seamlessly and in a streamlined fashion.
REBECCA LAZLO: Hello, this is Rebecca.
ERIC SWIFT: Hi, Rebecca. I’m just about to get on my flight, and I wanted to let you know that Jennifer from Fabricam called, and she’s not happy with the price in the proposal.
REBECCA LAZLO: You know, Eric, this is a big customer for us, it can make or break the quota for this quarter. When you get back into town, please be sure to resolve this with the rest of the team, but I do appreciate the update, thanks.
ERIC SWIFT: All right, Rebecca, consider it done.
Now, my manager is a hard driver. She wants to make sure that I deal with this customer issue. So now as I jump onto that plane I want to make sure that I can take care of business as quickly as possible.
So as I arrive back in Seattle, it turns out I checked the little monitors that they conveniently have in the airport, and it shows that traffic is congested downtown. Well, I need to get to work more quickly, and I don’t want to waste time sitting in traffic for a couple of hours, so I’d rather just head right to my home. And as I drive to my house, I notice it’s a rare sunny day in Seattle. We haven’t had too many of those, so I’ll work right in my backyard.
Now, what I have here, this is my picnic bench. In fact, I’ve got the barbie already fired up here, but more important, the tools that I’m going to use today, my laptop, a wireless connection, and I have a simple Web cam. Now, you can see on the screen my e-mail, now wirelessly connected without even requiring a VPN, I have all of my communications capabilities right here with me, connected over the Internet, right from my backyard. In this case I’m looking at Outlook, where a lot of us spend out time, and you can see, I’m looking at an e-mail about the Fabricam proposal, and the Fabricam account mentioned that there was an issue with cabling prices, making it too high. They didn’t want to go with those prices. So as I look at that I realize that the best person for me to contact on this is Moz, my finance manager. And he can get to the bottom of what the issue is.
Now, I can see from that icon there that Moz is available, and ready for a ready to have an instant message. I can reach out to him, and connect with him immediately, because I know how to find him and where he is. Allow me to put on my headset here just for a moment. Now, sending an instant message right from this e-mail is as simple as clicking and replying with an instant message. Now, notice a couple of things about this. Right from the context of the application that I’m using I’m able to initiate an instant message, and you can see that the subject line for that instant message was picked up automatically from the e-mail.
Now, this makes it easier for Moz, who might be occupied otherwise right now to see what I’m contacting him about, but there’s more. He can simply click on this link and it brings up the entire e-mail for him, so that he can see exactly what context I want to discuss with him before he even decides whether he wants to accept my IM. There might be other sales reps trying to get his attention, and I want to make sure he knows that this is a priority.
So I send him a quick note and ask him if we can chat about this, and you can see that he’s typing a response back. Fortunately, with that full context that he had, he’s already got some ideas. Now, here’s where the power of software really comes in. I was able to go right from an e-mail to an instant message, but now I want to go to a phone call. Studies say that the majority, in a business context, of instant messages actually result in a phone call. Now, rather than going and finding a phone, and oh, I’m outside, I hope my cordless is long enough, or give him a call on my cell phone and dial numbers, once again, I simply click and call, and it initiates the phone call with Moz.
So Moz is connected to me in a streamlined fashion just like that, and you can see in the user interface there, with the little phone, that he’s picked up the phone. Hey, Moz, let’s chat about this.
MOZ: Hi, Eric, yes. I’ve been working on it. I looked over the numbers, and I think the problem is that our subcontractor Kevin is using higher rates than we contracted for cabling.
ERIC SWIFT: Subcontractor, huh, well let’s conference him in. Now, Bill mentioned before how complicated conferencing can be with traditional systems. Here’s how it is with the power of software. I simply open up my Communicator contact list, and I find Kevin. I’ve added him as my own contact, and I can see that he’s available. If he weren’t, I might instant message him, or use some other mode of communication, but because he’s available, I simply drag and drop him right into the conference call.
Now, how many of you are able to make a conference call with that kind of ease? Not too many? Well, we can see that Kevin (applause) it’s those simple things that show the power of software, streamlining communications. Kevin is now in the call with us, and we can see that he’s there. Kevin, this is Eric and Moz, so we talk to him now. On our latest proposal to Fabricam we believe that your cabling rates are just a bit too high.
KEVIN: I don’t know, Eric, those are the best rates I can offer. I don’t think there’s any more room for discounting.
ERIC SWIFT: I don’t know about you all, but when I work with vendors, I like to look them in the eye, make sure they’re giving me the best deal. And video has always been an exclusive thing that has been relegated to point-to-point conference rooms, or something like that, but now right from my backyard, with a Web cam, I can simply click to add video to our conversation. And that now enables us to have a multi-party call, with text, voice, and video.
So, Moz, can you share with Kevin what you saw in the numbers?
Kevin, I checked the figures, and it doesn’t look like you’ve built in the pre-negotiated discounts with we have with your company.
KEVIN: Really, well, I’d be surprised if that’s the case, but let me look and reconfirm that I gave you the right prices. Well, it appears I’ve looked at my figures again, and you’re right, I failed to include the 20 percent discounted price we had in the contracting. We’ll certainly provide you with that lower rate.
ERIC SWIFT: Excellent, Kevin, I appreciate it. That gets us the price the customer needs, and let me inform the Fabricam sales team about that.
Moz, is there anything else we need to move ahead with these new pricing numbers?
MOZ: No, I think that’s great. We definitely have enough to move forward.
ERIC SWIFT: Okay. Now, I can another aspect of software-powered communications is I can further manage this conference. Kevin, who is a subcontractor, I might want to have some follow-up with Moz about perhaps not having Kevin be our subcontractor anymore if he’s going to make errors like that. So I can simply right click, and remove Kevin from the conference, and now Moz and I can continue having a private conversation about other topics, knowing who is in the conference, who is speaking, and then having the dynamics of added video and interaction. So it’s a great example of how bringing the technologies together not only simplifies and streamlines communications, but makes them far richer.
In fact, if I wanted to drag the entire Fabricam sales team, which you can see most of which are available, I could simply drag and drop the entire group into the conversation, and the service would dial out to them and connect. However, Moz, thank you very much, I’ll talk to you later.
We actually have a previously scheduled meeting with the sales team, using Microsoft Live Meeting. It’s very similar to what you saw in the presentation with Virgin Megastores, we have a meeting in progress here I decided to attend from the coffee shop now, because maybe the traffic did clear up, but I have an excuse. So while I enjoy a cup of Joe I can sit here and participate fully with my account team in an Office Live meeting session.
Now what you see in this session, I’ll show a couple of the items that you have. You have, of course, the content window where you can show documents, could be a Word document, in this case it’s an Excel document. You can show video, you can show images, you can even do ad hoc whiteboarding. And so we can have a fully interactive conference. The panorama view down at the bottom of the screen shows the individuals that are in the conference room, and the active speaker, you can see, it switches to those who are talking actively, not only the people in the conference room, but the remote participants. You’ll see Kevin just flashed up there when he started talking, because he is dialed in as a remote participant. So you can have everybody in the meeting room, and remote attendees, those that maybe don’t have the stamina to go through the traffic, they can attend right from wherever they can get a connection, having the full power of their communications right from their applications, and the devices that they use.
So let’s actually join into this conference call. I’ll take myself off mute, and we will quickly assess where we are with this contract, and make sure all the loops are closed. So, hello everybody, are we ready to get this started? Diane Mera, what do we need to do to finalize the revisions?
DIANE MERA: I think we need to factor in the 20 percent discount. I actually reworked the model already, and factored in that 20 percent, and we’re able to hit Fabricam’s price point, as well as our quarterly revenue projections.
ERIC SWIFT: Okay, my apologies again for my earlier mistake in the cabling document. If you’ll go ahead and give me control of the document, I’ll update the numbers to reflect the 20 percent discount. Let me put them on mute again. It looks like Kevin, well, perhaps he’s repentant enough for us to keep using him as a subcontract, but you can see who bringing everyone together in an immersive meeting environment can help us get business done more effectively and more efficiently regardless of the connection that we have, and where we’re located.
Now, I’m a sales rep, I’m very excited. In the process of we’ll just say goodbye to our friends out in the Live Meeting and let them continue with their business. Once again, I’m a sales rep, and I’m quite excited. I want to close out this deal, so I’m reviewing the final proposal that you can see here on the screen. Now, it’s not just about specialized applications that can initiate communications, this is a Word document, and as you can see the names are automatically recognized by the software, and as I hover over them I can see the status of the individuals. I want to contact Jennifer and let her know immediately, so, again, right from the document I’m working within, I can simply click onto her icon, call out to her. I’ll call on her mobile phone. I have those options. And wherever she is, I’m able to find her, evaluate what her presence is, and reach out and connect to her regardless of location, so that I can let her know this great news that we were able to get the right price on the proposal. I think I hear a ring in the audience. Jennifer, hey, I didn’t know you were here with us today, one of our best customers. Glad you’re here. Just wanted to let you know that we were able to get the price that you needed on the proposal, and I think we’re ready to move forward.
VOICE: Great. Thanks, Eric. Consider the deal closed.
ERIC SWIFT: Excellent. Thank you Jennifer. So closing business with Unified Communications. (Applause.)
So with that, I would like to invite Jeff back on stage to continue the presentation. Thank you very much. (Applause.)
JEFF RAIKES: Great job, Eric.
ERIC SWIFT: Thanks.
JEFF RAIKES: That was super, super.
Well, I want to thank Eric for the great demonstration of how these capabilities come together, and I want to remind you, these are capabilities that are available to you, all of your employees, your customers, your partners, they’re available today. And you can see some of what Bill was saying, not only in terms of the increased productivity, but also how we are revolutionizing the economics. Take for example Roundtable, and that immersive meeting experience, this is not something that’s confined to the board room. This is not something that’s only for the elite. This is not something that costs $300,000 to get started. There’s two orders of magnitude difference here. This is a $3,000 device. You saw what Eric could do with his laptop, with the Web cam, with the simple headset. These are things that cost $15, $50, $75, and it opens up all of that value for a great communications experience, and he was able to close the business.
So his demo really highlights the way in which Microsoft’s Unified Communications approach streamlines communications for your people by providing that quick to communicate capability right from within the Office productivity applications, right from within the business applications, and by providing better conferencing. We know the opportunity for software to make a difference is tremendous. According to one study by Harris Interactive and Microsoft, the average information worker gets almost 100 messages a day, and they’re arriving in up to seven different places. Now that 100 messages is up about 30 percent over just 18 to 24 months, and so you can imagine what this communications explosion is doing. And so people want is they want to be in control of their communications, they are getting too many communications from too many sources. They want that unification. Our vision is simple, increase productivity through communications convergence.
Now, in addition, we’re going to be delivering these unified communications capabilities in a number of Microsoft applications. Already today with the Microsoft Office System and SharePoint, SharePoint is becoming the place for people to collaborate in business, and now you have presence integrated right in. You have the unified communications capability, the click to communicate capability right in the application.
Another great example is Dynamics, Microsoft Dynamics CRM 4.0, coming out later this year, it really represents the next phase of software plus services, where you can be on premise, or partner hosted, or subscription service for Microsoft, and with the out of the box capability, the support for presence and click to communicate. What that means is, Dynamics CRM users are able to instantly see the availability of the people, the users, the contacts, anywhere they are, and use the CRM user experience as a way to get in touch with the right people at the right time. With a single click they are able to initiate a voice call, or an IM conversation with the people that are both inside and outside their organization, and they could be using the IP gateway, or an IP PBX, so the Dynamics CRM product is delivering this capability. The ERP product will deliver the same capabilities in their upcoming releases. And this is a great example of what is oftentimes called communications enable business processes.
Just as you saw in the Microsoft Office System area, we are bringing these capabilities very broadly to the market, very broadly to what it is that people do in business. And at the same time that we’re delivering this business value to the people who need it in their job, we are also, with the Microsoft Unified Communications offerings providing IT, the information technology organization of your company, the operational efficiency that it needs, allowing organizations to build on top of their existing software foundation to reduce infrastructure cost.
As Bill explained, these capabilities are really just an extension of what you’re doing today with Active Directory, what people are doing today with Outlook and Exchange. So, for example, because unified communications products such as Communications Server allow you to extend the investments that you’ve already made in Active Directory, the administrator productivity will increase, while your overall infrastructure costs are reduced, a win-win situation.
In addition, our new innovations offer built-in protection. According to a recent Radicati Survey or study, nearly 70 percent of all messaging traffic today out there on the Internet is comprised of spam. So Exchange Server helps protect against this spam, as well as other viruses, and malware functionality through in the box anti-spam, virus, and phishing tools capabilities that are automatically updated. Now, as you invest in unified communications, it’s important to build on a future ready software foundation that will evolve with your organization. You heard Bill explain that, the importance of being able to bring the capabilities that Eric showed into your organization around your existing infrastructure, enabling integration into applications development, communication enabled business processes, whether it’s third party applications, or advanced Web and video conferencing, or software-based voice telephony solutions, you can today begin to deliver the next generation of communications to your people while building on a platform that will continue to deliver on that velocity of innovation.
Communications Server deliver high quality software-based voice, and it works with your existing PDM, or IP PBX, while setting the stage for you to move to a completely software-based solution for all of your organization’s communications needs in the future. So invest today, get the value in the context of your existing infrastructure, and have the benefit of what will come in the future. At Voice Con I predicted that within three years more than 100 million people in their information work will be able to click to communicate, and this voice over IP capability, the complete unified communications capability, will be 50 percent less cost in three years than it is today because of that revolution, because of that change in the industry structure that Bill explained to you.
And a number of customers are already seeing these benefits today. Today we already have more than 150 customers that are using the Microsoft voice over IP and unified communications products to click to communicate. They’re using it for voice, for IM, for e-mail, for video. And they estimate 25 to 30 percent savings over the traditional communications approaches. You saw Gibson Guitar here today. They did a wonderful job of helping kick off the event, but we are particularly appreciative of the way in which they have adopted our technologies, and they see their estimate is at 25 to 30 percent savings in their own business, and our goal is that 50 percent cost reduction within three years. We have customers like Intel, as of last week all of Intel, all 104,000 people are using Communications Server, and Office Communicator 2007. Another great customer example is End Bridge. End Bridge estimates using Communications Server will save three weeks of time per year by getting people and the information they need by being able to get to the people they need, and to the information they need faster.
So, again, within three years over 100 million people will be able to click to call from within their Microsoft Office productivity applications, from within the business applications, from within the business applications from third parties, or ISVs, or what they’re building internally. They’ll be realizing better communications, increased productivity, and reduced cost.
Now I wanted to give you a chance to really hear from one of our customers that is already seeing the benefits of our newest innovation, and he’s traveled all the way from the south of France to be with you here today. So please join me in welcoming Etienne de Verdelhan, the CIO of L’Occitane.
We’ve now exhausted my ability on French. Fortunately, Etienne is a fabulous speaker of English as well. So please share with the audience a little bit about your company, it’s a fabulous company, you’ve been growing very rapidly. I’m sure they’d like to learn more.
ETIENNE DE VERDELHAN: Thank you. Well, L’Occitane is a global retailer of natural ingredient cosmetics made in the southeast of France with over 320 million Euro in annual revenue. We have over 900 stores in over 60 countries in nearly every time zone from the U.S. West Coast to Japan. Nearly all of our products are manufactured in our unique plant located in Manosque in Provence. And we are proud of having maintained for the last few years growth of 25 percent annually, and exporting more than 85 percent of our products outside France.
JEFF RAIKES: Wow, that’s fabulous, Etienne. So how have you dealt how have you, how has the organizational leadership team dealt with these growth challenges?
ETIENNE DE VERDELHAN: Well, the global scale of our business creates many distribution and communications challenges. Our teams need to work more and more closely, exchanging ideas, and sharing common objectives via e-mail, phone, and sometimes travel, and it is not easy. We are spending a lot of time trying to track down people across different regions and time zones. But at the end, it is true that two of our best practices in our business remain local to a company or to a subsidiary, and that they are acting without leveraging all the materials being produced by our headquarters.
But as we grow, we want to keep very simple and direct communication between people, and our ability to make fast decisions even on a large scale international project.
JEFF RAIKES: So that’s a great example of what we like to call our People Ready Business. You want people to be at the center, to have the communications capability. How do you see the technology aiding you in taking on these challenges, and keeping your people at the center of what you do?
ETIENNE DE VERDELHAN: We believe that technology is key for us solving this issue. That’s why we’ve been using Microsoft Unified Communications for the last three or four months in Europe and the U.S., and we use unified messaging, video conferencing, Web conferencing and voice over IP. The technology makes it easy for the end user, and to implement for the IT team. The main advantage that we see using UC is that it makes all kinds of communications available from the user on the desktop with just one click. We used to have video conferencing rooms, or to do a Web conference, but this was very complex for the end user, and costly for the company.
JEFF RAIKES: And inconvenient.
ETIENNE DE VERDELHAN: The fact that you see is integrated with Active Directory and Exchange makes it very easy to use for the end user, and also it has the IT management has been dramatically simplified.
JEFF RAIKES: Well, that’s fabulous. And we’ve learned a lot from you in terms of how you’re using the technologies. In fact, recently some of my team had the opportunity to visit you in L’Occitane in the south of France. Unfortunately, I didn’t get to make the trip to the south of France, but they did bring me a video. So, let’s take a look.
ETIENNE DE VERDELHAN: You are welcome to come whenever you want.
JEFF RAIKES: That’s a great example of what these technologies can do, and your company is such a successful company. Tell us a little bit about what the benefits you’re seeing from the use of the technology?
ETIENNE DE VERDELHAN: People using the UCS in our organization, quickly adopted this new way of communicating and they love it. They would never go back to the old way. We see more collaboration between teams, and at the same time we believe we can keep travel expenses under control, which is also a good way to preserve the earth. As you saw, our business is very much related to nature. And preserving the nature is one of our priorities. The end user, also is seeing time savings in organizing meetings, and significantly increased efficiency in their business communications. Last, but not least, as I was told recently by someone from the marketing team, this technology has made the IT department more popular in our organization.
JEFF RAIKES: Mr. Popular, very good, very good. You had the chance to meet with Bill, and you heard some of his comments today, so you know we have a vision that you should be able to use these technologies today and get value, but also be on a path for further innovation. How do you see your infrastructure evolving?
ETIENNE DE VERDELHAN: The first thing we are trying to do is roll out these technologies to all users around the globe, in each partner and distribution subsidiary, which will make about 550 people connected together. So then we want to deploy links between Exchange and PBX, on all out sites, which will bring us to more integrated communications. And part of our long-term plan might also be to remove the PBX systems, first on the small sites, and maybe longer term on the large sites, to only use computer-based communications, because this would lead to significant savings in our infrastructure costs.
JEFF RAIKES: That’s great. Well, you’re a tremendous model both in terms of your core business, but how you’re using information technology in this global economy. You traveled a long way. We really appreciate that. Merci, beaucoups.
ETIENNE DE VERDELHAN: Thank you. (Applause.)
JEFF RAIKES: That’s great. Thank you.
Well, in addition to the great values that we are investing in to deliver to you, we have a fabulous ecosystem of partners. Partners that are trained and ready to help you, the rest of our customers, deploy and use our unified communications technologies. This is all the way from ISVs, to service providers, to devices manufacturers, and the traditional PBX vendors. In fact, for every dollar of Microsoft revenue on our unified communications products in 2008, our partners are going to add an additional $3 of value.
To help underscore that, here with us today we have over 50 companies announcing new products and services that are built around Microsoft’s unified communications software, including systems integrators, ISVs, hardware partners, and telecommunications companies. And also, we have almost 800 partners that have attained the UC specialization since we launched, just less than four months ago. And that means you have companies, you have partners that you can count on to help you get the most out of your investment in Office Communications Server.
In addition, there’s an incredible array of applications for unified communications, because it’s a platform for companies to develop on. In particular, I’m pleased to announce that three global telephony leaders are announcing their roadmaps for software applications built around Microsoft’s Open Unified Communications Platform. First, and they’ve really taken the lead with our Innovative Communications Alliance announcement over a year ago, is Nortel. Nortel has introduced a fully software-based roadmap, and plans to build software applications that enhance Communications Server as part of our innovative communications alliance.
I also want to mention and emphasize Ericsson. Ericsson has announced a mobility server that will be built on the voice over IP call management capabilities of communications server. And that brings office telephony to mobile phones. And I also want to emphasize Mitel. Mitel has announced plans for a server that would be built around Communications Server, and that will help to meet specialized needs in telephony, in particular on the small and medium-sized businesses, and special vertical markets.
And all of these are great examples of the industry shift that Bill described earlier. It is the kind of platform, software platform history that we have as a company. We know that this overall ecosystem, not just the vertically integrated technology stack, the software platform, with the ecosystem is what builds the velocity. Velocity behind the software transformation in voice communications is accelerating.
I’m pleased to share the news that SAP is announcing that they are working with us to build presence, and click to communicate capabilities into the Duet application set. Now, Duet is the joint product from Microsoft and SAP, that enables users to quickly and easily interact with SAP business data, and processes all from within the Microsoft Office System experience. And Communications Server is a great platform for building presence-enabled business applications. And SAP is an example of a leading ISV that is embracing this opportunity for their customers, bringing that value of a software-centric approach to communications.
We are working with SAP to enable presence in Duet applications, such that people will be able to now see not only the SAP data, but also the rich presence information side by side with that information, all of which is going to be available within the widely used Office Applications Suite. So in this context, people will be able to see critical information at a glance, and will also be able to take the action, the best actions for instant collaboration to address needs, to solve problems, and to make decisions. These capabilities are going to be available to customers in this next version of Duet.
Well, this is an amazing day and time in communications. As I said earlier, it’s truly a milestone, and Bill really helped to explain that. The technologies that we’re delivering, the unified communications platform, puts people at the center. It’s what really delivers on this next phase of a People Ready Business, putting people in control of their communications, and how they will collaborate.
These product capabilities will help millions of people to be more productive, both in and out of the Office, while bringing greatly improved IT efficiency and control to communications. Today, with the release of our unified communications solutions, customers are already taking advantage of their communications investments to bring the power of unified communications into their organizations. And partners can build on a platform with more than a half-billion users to deliver new solutions and create new opportunities.
The innovation we’re delivering today is really just the start. This is a multi-year, multi-dimensional commitment on behalf of Microsoft, and our industry partners to deliver on the future of communications, because we know that software will power the future of business communications.
So I’d like to invite Bill to rejoin me on stage, as we wrap up, to share some additional thoughts on how the transformation and communications is going to change how we connect and do business. Thanks, Bill. (Applause.)
Bill, you and I have been working together a long time, 26 years in my case, and we’ve been aspiring to change the world of information work all throughout that time. I was very lucky to get a chance to work with you on Office in the early days, and continue our effort. In terms of its significance, if you were to kind of look back into that past, how would you compare this shift to unified communications?
BILL GATES: I think it will be a lot like the revolution that took place with graphic user interface, where at first some people didn’t participate, some people didn’t know that was going to be the mainstream, and then it will become something that’s so pervasive it will just be expected. Of course, what is your presence, we’re working together on a team, and the whole boundary between how you do asynchronous things, documents, SharePoint sites, and things like that, e-mail, and how that connects up to this real time world, that’s going to be a very straightforward thing.
JEFF RAIKES: I think it’s very exciting. I think part of what you emphasized today, and what Eric was able to show, is how software is going to democratize the communications experience, how we’re going to be able to get it out to the masses. I know when I joined Microsoft in 1981 we had a dedicated word processor, and if we said that there were going to be 500 million people doing word processing, most people thought you and I were crazy, but here we are today. And it’s because we made those capabilities available. We are going to do that with communications, and that’s very exciting, just being able to contact the person, software will take care of which mode. It’s going to be cheaper to do. It’s very exciting. And as we saw with Roundtable, innovations based on software are going to bring video conferencing to the masses.
BILL GATES: Yes, we really see this for customers of all sizes, small businesses can collaborate better, big businesses with multiple locations likewise. What kind of feedback are we getting as people have been using it?
JEFF RAIKES: I mentioned some of the exciting things that are already happening. You had a chance to meet Etienne and learn about L´Occitane, and End Bridge said that they were going to see three weeks per year in regained productivity. I like the example from Global Crossing, where they were able to do communications enabled business process. They were able to integrate Microsoft Unified Communications in what they were doing in their customers service and support capabilities, and they saw an 80 percent improvement in response time. So I think that’s one of the things that’s very important . It’s what we are as a company when we say software platform is how people can build on top of that.
When we look at the market more broadly, and you mentioned this, that Forrester study that showed a 500 percent return on investment is very exciting. We already have a few million, or several million people using the previous generation of Office Communicator, and Communications Server, but today I think it’s well, it surprises me that there have been 80,000 downloads, we’ve got over 300,000 people who are already today using the most recent version. So that the acceleration is very exciting.
Many of our customers really do want to get the value today, but also understand how we see the unified communications experience moving forward into the future.
You, throughout our work together, have seen some very exciting advances, and of course, you understand the architecture very well, the importance of pervasive identity and presence, voice quality, video conferencing. Where do you see this taking us in the future?
BILL GATES: I think that the whole Office environment will be quite different. That is, today we think about a white board, well, that will be a digitally enabled white board. We think about a meeting room table, and just putting documents on it, well, that will be like a Microsoft Surface, where you can display anything, touch, move things around, zoom in on the information. So as we get big screens, we get touch, we get cameras, we get ink, we get speech, the ability to make all of this pervasive and natural is much stronger.
Just to give a concrete example, with the Roundtable, of course, you can take the meeting, you can keep a record if you choose to. The ability to have software go in and identify who spoke, let you navigate and find those things, and build the transcript very easily, so people who aren’t in the meeting, they can skip over the parts that aren’t important to them, watch the parts that they care about, they can actually watch it a little faster than it took place during the meeting, you can save those people a lot of time. So the natural user interface things, I think those are really being underestimated by people today, because they are finally reaching a stage of maturity. And as the investments in our research group, where we’ve been working on those tough problems, as those advances get into these communications products, you’ll capture more scenarios.
JEFF RAIKES: Well, as you said earlier, because of the software platform, the pace of innovation is going to increase dramatically in velocity. It’s really accelerating. And I know I’m personally very excited about this. I appreciate the trust you’ve placed in me to lead this area for the company. I know the team is very excited. We want to thank you for sharing your perspective. And Bill and I want to say thanks to all of you for joining us on this important day. It’s truly a milestone in the industry, the future of business communications. Thank you very much. (Applause.)