Bob Muglia and Tony Scott: Tech•Ed 2010 Keynote

Remarks by Bob Muglia, President, Server and Tools Business, and Tony Scott, Chief Information Officer
New Orleans, Louisiana
June 7, 2010

ANNOUNCER: Ladies and gentlemen, please welcome President, Microsoft Server and Tools Business, Bob Muglia. (Applause.)

BOB MUGLIA: Morning. Let’s give a big hand for Rockin’ Dopsie and the Zydeco Twisters, all right. (Cheers, applause.) Taste of New Orleans on Monday morning. And we are so glad to be back in New Orleans. This week at Tech•Ed we’re going to have some fun. We’re going to do some learning, and we’re going to have some fun learning.

What I want to do today is really start by talking about both the transformation as well as all of the delivery that’s happening. We are at the cusp of a major transformation in the industry called cloud computing. It’s a transformation that’s going to affect us all, particularly as software developers and IT professionals. But to get from where we are today to where we’re all going to go in the future with the cloud, there’s a lot of execution and a lot of delivery that it’s going to take. There is still a lot of change that’s coming.

What I want to show you today is all of the things that are happening, all of the things that Microsoft is doing together with the rest of the industry to help take you there, to take the investments that you have today in your environment forward into the cloud. We’ve been working with you for years, and we appreciate all the learning that you’ve provided to us in understanding what your environment is like. And we are focused and committed to working with partners across the industry to move you forward into the cloud.

Let me start, before I get to the cloud, by going back a little bit and talk about the journey that we’ve been on with dynamic IT. We first started talking about dynamic IT in 2003. We talked about it as a vision that would focus on connecting developers and IT operations together with systems and processes, enabling things through services, providing unified and virtualized infrastructure, building a model-driven environment, and focusing on the end user, connecting the entire IT development life cycle together.

In 2003 when we first talked about dynamic IT, we said it was a 10-year vision. We said this is not something that happens overnight, but we’re committed to working with you, learning from the industry, from all of you, and take you step by step to do a better job of simplifying and making IT and operations more effective, and overall the development process.

We’re seven years into that. We’re seven years into that and now we’re delivering. We’re delivering on this vision. And what I’d like to do is invite Stephanie Cumbertson up to show you some of the products that are here today that you can experience at Tech•Ed, bring back home, and use in your business because they’re fully shipping. Stephanie.

STEPHANIE CUMBERTSON: Thanks, Bob. Something that’s always been too hard today is updating applications in production, like this one, my Blue Yonder application. When you’re making updates to apps like this, it’s very difficult for operations, testing, and development to work smoothly together. I’d like to show you today some of my favorite features of Visual Studio and System Center that make this better.

I want to start with a bug that we’ve got filed. We’re going to have to fix it before we deploy, so let’s take a look. It’s going to start in Visual Studio with my bug. And one of the first things you’ll notice is that this bug has incredibly rich information attached. This was filed from the new test manager. It has all the information that I need to reproduce the bug. So, you can see there are steps, what passed and failed, even video.

Now, what’s so great about this is normally, you guys know, as a tester, when you file bugs, you often hear back from the development team, ah, no repro, I can’t figure out what’s caused that bug. And what’s great about this is it’s almost like you can call in the developer to look over your shoulder and say, all right, this is exactly what happened. So, he’ll be able to find and fix the problem.

BOB MUGLIA: So this is a recording of the exact steps the tester went through when looking for and finding problems.

STEPHANIE CUMBERTSON: That’s exactly what it is, Bob.

So what would be even better than this would be not just the video we had, but if we could, as a tester, hand off to the developer and say, you know, this is the exact line of code where the application failed.

There’s another new feature we have as a part of 2010, and that’s something called IntelliTrace. You can think of IntelliTrace almost like a recording on your television, only instead of recording TV, now it’s recording your application. So, here you see this incredibly rich diagnostic trace from the testing machine was captured automatically, has all the information a developer needs, including exceptions. So, I can click on this exception, it’s going to drop me into the exact line of code where the exception took place.

BOB MUGLIA: So this is a picture of what was happening on the system at the time the developer found the bug?

STEPHANIE CUMBERTSON: That’s right. So, what’s great about this is remember I mentioned this is a recording. So, if you think about your television, you can go forward, you can also go backwards. So, watch this, I am walking backwards up the execution of the application. That is pretty cool.

BOB MUGLIA: You have all of your trace variables, you have the ability to really fully debug the application, even though it hasn’t been running for hours or days?

STEPHANIE CUMBERTSON: That’s right. So, let me just go ahead and fix this and we will rebuild. So, now that we fixed the bug, I want to switch over into testing and make sure that this fix is actually going to work. So, for that, I’m going to switch from Visual Studio into the new testing center. And one of the biggest problems testing has is its difficult to replicate production environments, especially if they’re multi-machine.

What you can see here is I have my database server, Web server, and the client front end. Now, all this was built leveraging virtualization technology, so anytime you need to run test, you can spin this back up, use it again, just great for validation.

BOB MUGLIA: So one of the features of Visual Studio 2010 is a full lab virtualization test environment that builds on Hyper-V and System Center to provide a simulation of production and allows you to leverage the test resources that exist within your own data center.

STEPHANIE CUMBERTSON: Yeah, that’s exactly right. Now, it’s deeply integrated with the testing center as well, but here you can see all the tests that I can run, including the one that failed and caused that bug. So, let me just rerun that test. You’ll notice it’s going to bring up this very cool sidebar application that’s going to walk me through the test. Now, I could go through each of these steps manually, but I want to show you guys one more cool feature, which is something we call fast forward for manual testing.

What this will do is walk through each of the steps I performed last time. You can think of it like a simple UI recording. And what’s great about this is as a tester, I don’t have to perform my test manually. I can do this like this, as a recording, or I can even work this up so every time I get a new update, it’ll automatically run my test and tell me if they pass.

BOB MUGLIA: So this is a step towards automated testing where we’re actually replaying the test that the tester had done.


BOB MUGLIA: And it really is great for things like smoke test and validation.

STEPHANIE CUMBERTSON: That’s exactly right. In fact, you can even run this for smoke testing in your production environment if you wanted to. So, I’ve got no hands on the keyboard, pretty cool. So, let’s wait, we’ll see if this passes. All right.

BOB MUGLIA: That’s good.

STEPHANIE CUMBERTSON: So it looks good, looks like we’re ready to deploy out into production.

Now, for deployment, I like to switch over from Visual Studio and the test center into System Center. And here what you can see is the new dashboard, part of the Operations Manager 2007 R2 release. In the top half, you can see my service maps for my Blue Yonder travel site. I can see the databases are running, applications. I particularly like — it’s got a couple of synthetic transactions that are checking booking flights from Seattle into Baton Rouge, make sure everything’s working great.

In the bottom half of the console, you can see the new Opalis Web page. Now, Opalis is an automation engine for automating work flow deployments. What’s great about this is that when you think about deployment today, you can do it using scripts, but that’s something that can take a long time, and it’s also a little error prone.

BOB MUGLIA: What Opalis is is it’s an orchestration engine. This is part of the System Center data center suite. So, if you own that within your environment, you already have the right to use Opalis. And what it provides is a very general purpose orchestration engine that can orchestrate processes within IT. It works certainly within the Windows environment, but it also extends into heterogeneous environments such as Linux and UNIX and it really works very well with PowerShell. So, it’s a suite that — a product that allows you to really put the process pieces together.

STEPHANIE CUMBERTSON: That’s exactly right. And so what you can see this is doing now, it’s pushing my virtual machines out into staging. From there it’ll validate and then push to production. Each one of these work flows actually contains a nested mini work flow doing things like updating my load balancer, re-registering my virtual machines, really doing everything I need to push out.

So what’s fantastic about Opalis is it allows you to automate and make your deploy process really repeatable. Now, if you’re interested in learning more about these features and about Visual Studio as well, there will be a foundation session on Visual Studio and .NET following this keynote as well as several other foundation sessions.

Thank you very much, Bob.

BOB MUGLIA: Great, thanks a lot Stephanie. (Applause.)

So what Stephanie just showed is dynamic IT live and real today with products that are already shipping. Connecting development to operations is really designed to orchestrate that process from beginning to end, and most importantly to provide a mechanism to communicate between the developer and the operations staff so that there’s an understanding of what needs to be done.

So dynamic IT is an important step. It’s a step we’ve been working on for a long time. As I said, it was a 10-year vision that we first announced in 2003. But as we look forward, we see dynamic IT as being an important step that will carry all of us forward into the future. Now, I won’t say that in 2003 we had predicted where dynamic IT was going to go, but I will say that we had thought very clearly about what sorts of things are necessary to move us all forward.

So with dynamic IT, what we’re doing is creating the predecessors, the precursors for the cloud. And when we look where we are today, when we look at what we need to do and all of the things that the industry is focused on, the cloud is a major, major transformation.

Now, the cloud has a lot of different dimensions to it. In fact, when we think about the cloud, we think about how it can transform IT in a very, very fundamental way. At the very base level, the cloud is about delivering IT as a standardized service, freeing you up to focus on what’s right for your business.

Now, today, there’s a lot of work that you wind up doing in your environment that could be delivered as a service. The cloud provides an overall environment that can provide services to you and allow you to focus on what you can do to differentiate yourself.

In thinking about the cloud, there are a number of different dimensions. We think about the cloud very, very broadly at Microsoft. It affects a very, very broad part of all of our businesses. In fact, we think about five different dimensions to the cloud.

Let me sort of start with the first one, which is really the centerpiece, the centerpiece of cloud computing. And that first dimension is really the server and how the server is being transformed and advancing the way clouds can be delivered. Remember, clouds are built with servers. The entire environment is built with large server data centers, and at Microsoft, we’ve been learning by building these cloud scale, these very, very large data centers, and we’re learning what it takes to deliver cloud computing into the future. We have that with services such as Bing and our MSN properties, and we’re beginning to develop that with services such as Microsoft Online, Online Exchange and Online SharePoint.

So that foundation is very critical, but what is the essence of cloud computing, what’s the core essence? Well, there’s a couple of basic things. In its raw, basic fact, cloud computing is about just-in-time provisioning and scaling of services on shared hardware. There are a lot of other attributes to the cloud. There are many, many other things that the cloud brings with it. It brings with it an always-available environment. It has key things like identity federation associated with it. There are many attributes. But at its center, the cloud is really about scaling of services on shared hardware.

And the benefit that that will deliver is really a self-service environment to you that allows you to accelerate the speed of delivering applications and lowering the cost. So, it’s a very fundamental transformation. This sits at the center of the transformation to the cloud.

Now, when we think about this, I think about the cloud as having three different core models: a new hardware model, a new applications model, and a new operations model. And when we buy hardware, we buy it in very, very large containers, and it transforms the way hardware is purchased and brought into the data center. It makes it very, very standardized, and it lowers the cost.

The applications model is designed for scaling, like I just described, designed to allow applications that are always available, and that expedites the ability to release applications into a production environment and speeds the amount of time — and lower the amount of time it takes to build new systems and deliver what you care about for your customers.

And the third piece is the operations model, how we actually can stage and deliver applications in this environment, where potentially hundreds or even thousands of servers are involved.

Now, you can’t work with and build applications that require that many servers the same way you do today in your environment. You have to have this new model, this new operational model. And we’ve learned from things like Bing about that. We’ve learned what it takes to deploy these things at scale.

So what I’d like to do now is invite Anders Vinberg up to show you how we’re taking some of the learnings that we’ve had from our large-scale cloud data centers and bring them back into our environment. Anders, good morning.

ANDERS VINBERG: Good morning. Obviously you’ve heard a lot that virtualization is a key technology for automating and improving operations. But we’ve found we can take virtualization further. So, what I’ll show you today is some new things that are coming into System Center that illustrates how we can take these learnings Bob talked about and bring them to the enterprise data center where we cannot always rebuild all the applications from the ground up.

If you look in the library module here of Virtual Machine Manager, if you feel as though you recognize some of the existing things. We have the virtual hard disks, the VHDs. In this case, we have three OS images, a standard Web image that contains IIS, a standard database image that contains SQL, and the regular image.

But we also have a few other assets up here. And at the top we have what we call App-V, application virtualization, and this allows us to virtualize not just the machine from the hardware, but the application from the OS. And similarly, we have what we call a DAC, which is a description of the data tier application, and then the Web tier. So, we have taken apart the application, the overall system into intelligent components that can be combined dynamically, and this is the way we operate in the cloud centers.

Now, to create an application out of these smart components, we need a blueprint. So, we need to define that, and that’s what we call a service model. So, we go into the model designer here. And the model designer comes with various templates. So, let’s say we want to build a scale-out, three-tier app here. And then we get an outline of what the app is going to look like.

Now, down here in the corner, let me show you this. We have a few templates that describe systems that we’re going to put in there. And if you take, for example, the application tier, we can see up here we’re describing the machine we want, we describe the requirements we have up there. Then we specify the OS image, and in conversional virtualization, this OS image would contain the application, and that’s fine, we can still do that. But in this case, you’ve taken it apart and we have the application in a separate image. So, this application tier we’re going to put up here —

BOB MUGLIA: And really what that application — what we’ve done is we’ve used application virtualization, a server version of application virtualization to provide state separation that allows you to deploy these things at scale.

ANDERS VINBERG: Right. If you look at the database template, it’s the same approach. We have the OS, we have the data tier description. Here we have requested a slightly more powerful machine, we have more memory and a high-performance storage subsystem that makes sense.

BOB MUGLIA: And with the database in SQL Server 2008 R2, we’ve already shipped something called a DAC, which describes all of the configuration data for the database and keeps it really separate from a running instance. And so here what Anders is showing is a model that brings those two things together, an instance of an operating system together with a running instance of a database.

ANDERS VINBERG: Right. And we have the equivalent thing on the Web. Now the interesting thing about the Web here is that we’re also going to make that scale out. So, I go down here and say we want to scale it out. Let’s say we want to have a maximum number of 10, that’s my budget, I can’t afford more than 10. I want to start with three. And, in fact, I never want to go below three because that gives me the reliability.

So now I’ve created a blueprint that describes the service that I want. And we could click on this button up in the corner and deploy it.

BOB MUGLIA: So but by showing that scale-out capability, that’s really the cloud in action, that’s that core elasticity that I talked about earlier, the ability to have the system figure out how many instances of an application is required based on the load that’s happening on the application. In this case, what Anders has shown is a minimum of three, a maximum of 10.

ANDERS VINBERG: Right. Now, I want to show you an even more interesting scenario, though. So, instead of actually deploying this right now, we’ll do just like in a cooking show, we already have a service in the oven here and we can go look at that. Here is that same Web store, and you can see the three IIS servers in the app tier and the data tier.

Now, let’s think about servicing, about maintenance of this app, that’s a more complicated scenario. So, let’s say that we have received some patches. We go back to the library, and we say we want to scan the library images for compliance with a security baseline here. Now what happens is the system is starting a scan of these images, but this happens offline. We’re not touching the production systems at all. And this, again, is the learning from the cloud. You don’t mess with the production systems. So, you’re scanning the images offline, and the system comes back and says, OK, one of them is affected by one of those security patches, we have to remediate that. OK, that’s easy, we can start remediation. And, again, this happens offline. We have not so far missed anything in production. And when the packing process is completed, we may run through testing, we may do all kinds of rigorous stuff.

But the important thing is that because we have the service model, we can now trace the lineage of our production system. So, we can know which services are affected by this. So, if we go back to the service list here, we can see up here four of the services are affected, four of them have an update pending. And if we go back to our Web store that we were working with, we see that, sure, just as we expected, it’s the app tier that needs to be updated.

BOB MUGLIA: And we could tell. We know that those services are affected and need to be updated because we have a service model that describes what underlying operating system images need to be composited together with the actual application. We know that in this case, one of the operating system images has changed, it’s been patched, and thus, it requires an update.

ANDERS VINBERG: Right. Now, ordinarily, with conventional systems, it wouldn’t be easy because we can’t just slide in the new operating system under a running application because when we install an application, we may change it. We put things in the registry, the app may put stuff in the file system and so on. But because of application virtualization, we can actually start that process because what the system does is it lifts up the application, captures all of the states that we have because of virtualization, put that aside, replays the OS image with the patched one, personalize the OS, which means giving you this identity and security credentials and so on, set the application back down, and continue running. And this brings these conventional applications into the model that we have learned from the cloud. Very exciting.

BOB MUGLIA: Great. Thanks a lot, Anders.

ANDERS VINBERG: Thank you. (Applause.)

BOB MUGLIA: So what we’re showing there is really learning that we’ve had from running these very large, Internet-scale data centers. When you run applications like Bing, we don’t patch thousands and thousands of servers, we do it offline just like Anders showed and then we deploy and re-image those systems back into production. And what that does is it ensures that the system stays up and running the entire time.

So now when we think about the cloud, it’s real important to consider where the cloud is running. Clouds will run and be built in multiple places. They’ll be built in your data center with private or sort of do-it-yourself clouds that you’ll create. Partners in the industry will build clouds. They’re creating both public as well as really dedicated clouds that are dedicated to a given customer within partners or hosting data centers. And of course Microsoft is building an Internet-scale cloud with Windows Azure.

What we’re focused on here is taking all of the learning that we have, all of the learning that we have across from the past with the work that we’ve done for many, many years with you in Windows Server and SQL Server and System Center and the work we’re doing now with things like Windows Azure and bringing that together.

And, in fact, what we’re focusing on is taking all of the features and capabilities that exist today in Windows Server and SQL Server and bringing that into Windows Azure and the SQL Azure environment, and we’re taking the service learning that we have from Windows Azure and other properties like Bing and bringing it back into Windows Server, SQL Server, and System Center.

What Anders just showed you is exactly an example of that. It’s an example of learning that we had because we’re running Internet-scale data centers being brought back into Windows Server, SQL Server, and System Center.

A key to all of this is that we think there should be only one model across it, one platform across all of these things. So that all of the learning, all of the skills, the tools, the management environment that you have today is leveraged, regardless of whether you’re building clouds within your own data center, whether you’re working with partners that are providing clouds and you’re running applications in that environment, or whether you’re building and deploying applications on the Windows Azure environment.

So we’re focused on taking the tools, the management environment, the applications that you have today and enabling you to bring them forward. A common identity model based on Active Directory, a common set of application models, certainly with .NET and the leverage in all of the work that you’ve done in that space, and a common management model across with System Center. So that commonality is very, very critical to provide you with the launching pad into the future.

And now with that, I’d like to bring up Doug Purdy to show you how all of this comes together, how you can take with the tools and things that you know today, how you can take and really build some cloud applications. Doug, good morning.

DOUG PURDY: Good morning. Good morning, Bob.

BOB MUGLIA: Good morning, good to see you.

DOUG PURDY: Good morning. Welcome to Tech•Ed. What I’m going to show right now is we’re going to show an application that takes advantage of what Bob just talked about, the ability for you to take the same set of tools, the same set of skills that you have and apply it directly to the cloud.

And so what you should see on the screen here is an application. It’s a shipping application running up in Windows Azure. It’s called Fabricam Shipping. Many of you may know Fabricam, they’re a large conglomerate that likes to do a number of different things. And what this application allows us to do, it’s provided by an ISV, and enterprises can use it in order to do shipping.

And so what I’m going to do is I’m going to log into this application and I am going to be an enterprise, Adventure Works, which is another firm you may be pretty familiar with. And we’re going to ship some bikes out to a number of different folks.

So we’re going to do that. I’m going to go ahead and click this button. And when I do that, it logs on utilizing my identity from Active Directory. In fact, if you look here, you’ll see it says Doug Purdy. I didn’t even need to log in at all. And what this is is me extending. Extending my identity from my on-premises Active Directory up to a cloud-based application. And this is a very powerful way for you to reuse existing assets.

So the next thing I’ll do here is I want to create a new shipment. And what I’ll do is I’ll go ahead and click the button. And I’ll hit a couple of different just very simple options. I’ll go in and go ahead and pull in some details from my shipment. This is a real application running in Azure. And then I’ll hit next, and what you’ll see here is identity not only includes the identity you give to log onto an application, but it also includes things like address. So, I can flow that information from Active Directory up to the cloud as well.

So then I hit the next button here. And then what I want to do is determine what customer I’m going to ship to. So, I want to ship something out to Bob. And I’ll go ahead and type in Bob’s name. And what this is doing, it’s doing some other additional connectivity between my on-premises system and the cloud. This is going out and going and accessing an existing CRM system that I have running behind my firewall that has all of my customer information. But because of the power that we have with AppFabric, we can do connectivity back to that system and pull the data here in this cloud app.

I’ll go ahead and select that. I’ll hit the next button. And when I do that, you see on one screen, information coming from Active Directory and information coming from a CRM system, both of which are on-premises. And at Microsoft, we love to ship things. So, what I’m going to do here is hit the “ship it” button. And you can see, we are now shipping the application and bringing all that information together in an app in the cloud.

So the next thing I’ll show you is I’m going to go home, and then I’ll hit the “manage existing shipments.” And what’s really cool about this is I want to see where we have some orders near New Orleans. And I’m going to hit “search.” And what’s going on here is another great feature of the cloud, the ability to do composition. I am taking data from the cloud, I am taking data from on-premises and I am mashing up with Web APIs, here the Bing map API where I can track my existing shipments that I’ve just placed. And so this is a very powerful, real-world application taking advantage of the elasticity, the reliability, the scalability of the cloud, and at the same time, taking advantage of all the different assets that I have on premises.

So let’s show how we’ve implemented that. I’m going to open up Visual Studio 2010. We just shipped this product, and you can see on the right-hand side: I have my solution, I have a common breakout, a nice, good architecture for this with a good separation of concern.

What I’m going to do here is I want to show you one thing. And the first thing I want to show you is the fact that this application, which is running in the cloud, is running .NET Framework 4.0. So, today, I’m very happy to say that you can, beginning this moment, start to write .NET Framework 4.0 applications in Windows Azure, and that’s available today. (Applause.) Great, we’ll take some applause for that.

Great, so I have an ASP.NET MVC2 application running, running the .NET Framework 4.0. And what I’ll do here is I want to show off a couple things about the .NET Framework 4.0, as well as our cloud tooling.

So the first thing is I’m going to open this up and I’m going to show you the Entity Framework 4.0 designer. And what this is – EF4.0 is our ORM, it’s our premiere ORM solution for the .NET Framework. And this gives you a very nice model to go in and develop applications against SQL Azure and against SQL Server, all utilizing one programming model and one design surface that is model driven.

And going across that same theme of model driven, something that we just recently announced and have full support for inside of SQL Azure is a thing called DAC. And what DAC is, it’s a model-based way of designing databases. And what it allows you to do is set properties declaratively to talk about your database in a declarative way. And then once you’ve constructed your database, you can make a deployment decision on whether or not you’d like to go to SQL Azure or you would like to go to SQL Server. And Visual Studio 2010 provides you that full capability.

The last thing that I’ll show here inside of Visual Studio is the fact that we’ve added – and today I’m happy to announce that we have a new set of tools that are available for Windows Azure, and you’re seeing those right now, and what this is is a nice designer that allows me to go in and specific my instance count, how large of a VM I would like to have so I can control the number of cores in order to get parallel extension support and what have you. And all of this is available inside of Visual Studio 2010, and all of that is available for download.

And what a really cool feature of this tooling is is for me to have the ability to just go into Server Explorer, something that I really love to use and I use on a daily basis, and look at SQL Azure databases just like you would look at SQL Server databases, which you see here. In addition, I can also see SQL Azure compute nodes, and I have full control and full capability of looking at SQL Azure storage inside of Visual Studio itself.

And the last thing that I’ll show you here is I can simply go into Visual Studio and I can deploy directly from Visual Studio. And what’s very interesting about this is not only can I deploy, which is a capability that we had previously, but today we have IntelliTrace, which you just saw a few moments ago, that sort of VBR for debugging is directly available inside of Windows Azure as well, and all I need to do is check this checkbox and I’ll get it as soon as I deploy. And so we’re very, very excited both about having .NET Framework 4.0 as well as the new tools that give you access to all these powerful capabilities of Windows Azure.

So the next thing that I will show off here is what we’ve done is we are doing this connectivity. The connectivity from our CRM system back to the cloud, and allowing full access. And how we’re doing that is we’re utilizing a thing that we call AppFabric. And what the AppFabric is, is a set of application services that make it really easy to go build cloud-based and on-premises applications. It gives you support like good hosting so you don’t have to write your own host, good management support so you can really understand what’s going on with your services and workloads, and of course connectivity and security up to the cloud. And then actually what we’re leveraging here, what you see on the screen is the AppFabric IIS plug-in, so we’re taking advantage of IIS as well, and you can see this is the actual service that I’m using to go pull all that CRM information out.

And I can click on that and I can go in and look at the number of calls that are available, et cetera. And I’m very happy to tell you today that we are now shipping AppFabric RTM, it’s fully available for you to download on the download page as well as part of Web PI, and so you can take advantage of the same functionality inside of your applications.

So the last thing I’ll show is many of you that are in the audience who do operations or DBAs may say, Doug, that’s great. I understand that developers now can utilize Visual Studio and take all those powerful capabilities and extend it to the cloud. But what about me? What about the job that I do on a day-in and day-out basis?

And so what we’re going to show here is SQL Server Management Studio. And we just had a release SQL Server 2008 R2, and as part of that release, what we did was we ensured that SQL Azure was a first-class target of all of our tooling. And what you see on the screen is me talking to three different SQL Azure servers, one inside of North America, the other in Europe, and the other in Asia. And of course if I had some local SQL Server databases, I can communicate with them directly inside of this console.

And what this means for you as a DBA and you as an operations person is you can take your existing set of tools and go manage all those assets that are up in the cloud.

And the last thing that I’ll show is System Center. I love System Center. System Center is a very powerful capability – even as a dev, I love System Center. And because it really allows us to work with operations and IT pros to make sure that applications stay up. And one of the things that we’ve done is we’ve extended System Center in order to be able to allow you to manage cloud instances.

And so you’ll see on the screen here, I am looking at a set of Web roles that are fully available, and I can see that there’s an alert here. I can get alert information inside of Operations Manager, and I can also click on that and take appropriate action based on whatever the problem may be. And this piece of functionality we’re going to make available to you by the end of the calendar year, and we think this will be a fantastic addition to your suite of tools to allow you to take System Center and extend it up to the cloud.

So what have we seen? We’ve seen an ISV application that takes advantage of the cloud, takes advantage of the reliability, the scalability, and the cost advantages of the cloud. We’ve seen us taking on-premises data, our existing systems and identity like Active Directory, like the CRM system and ensuring that those things will work up with the cloud. And we’ve done that by taking the same tools, the same frameworks that you know as a developer and that you know as an IT pro or operations and bring that to bear to the cloud. And we’re very, very excited about this, and we think that this is the way forward for how people should think about the cloud.

And with that, I’m going to invite Bob back up on stage, thank you very much.

BOB MUGLIA: Great. (Applause.) Thanks, Doug, that’s great. Thank you very much.

So delivering, Doug shows all sorts of things that we’ve been working on with Windows Azure. We’ve been very busy with Windows Azure and SQL Azure. We’ve been busy also with continuing to deliver for you in your on-premises environment. With Windows Azure, new things Doug showed like the .NET Framework 4.0 now available on Windows Azure. IntelliTrace, the same thing Stephanie showed, now available in Windows Azure. The CDN, the content delivery network, it’s a checkbox. So, to be able to get the caching efficiency of being able to have content local to your users wherever they are in the globe. With Windows Azure, this is the sort of thing that becomes possible with a cloud service, things that used to be very difficult are now easy to extend your application like a CDN. And our Visual Studio tools continue to improve.

And Doug also showed AppFabric and the important attributes that that can bring to the applications that you’re building, and that’s available as a part now of Windows Server. So, an ongoing set of execution and delivery.

We’ve also been executing and delivering on the Windows environment, on Windows Server 2008 R2 and on Windows 7. We have seen unbelievable success with Windows 7 since it was initially shipped, and Server 2008 R2 has also skyrocketed. It’s been a phenomenal set of releases for us. The releases are rock solid and stable and ready to deploy, and yet we’ve been working on delivering the first service pack, SP1, and today I’m announcing that SP1 of both Windows 7 and Windows Server 2008 R2 will be available in July. And with that SP, in addition to fixing the minor problems that might have been found, we’re also delivering some key new features in Server 2008 R2. Hyper-V brings with it dynamic memory, a very important scenario being enabled in Hyper-V, and we also have a new capability for the VDI scenario called Remote FX that provides HD-quality remoting for VDI terminals. And it’s something that we’re working together with the entire industry to bring to market — to really simplify and improve the experience for end users as VDI is delivered. So, all of these things you can look forward to coming in the near future, and it’s just an example of the delivery we’re doing.

Now, thinking about this, we think about the platform. I said that it spans all the work that we’re doing in the Windows Server and SQL Server environment in System Center, together with the work that we’re doing in the Windows Azure and SQL Azure environment, we’re bringing those together into one common platform across your data centers, across partner data centers, and then of course within the Microsoft data centers.

The partner piece of this is incredibly important. We are working with hosting partners and service providers all around the globe to build, to enable them to deliver to you the best possible solutions. We have over 10,000 solution provides, service providers that are running Windows Server and the SQL Server environment, building applications using System Center and Hyper-V, virtualizing and providing and creating clouds that can be delivered to you. So, that work is starting, the work of having clouds that are available not just from Microsoft, but also from our partners is a very important thing, and it’s happening every day. And that partnership will continue to grow. We expect to see these service providers continue to provide, and in fact become more important in the years to come as the cloud becomes more and more predominant.

What I’d like to do now is take a minute to show you some of the great things that are happening in this cloud environment. It’s always fun to watch what customers do with our products and to see the exciting innovations that they deliver. That’s really one of the joys of being in this industry. And it’s really interesting when we see customers adopting and doing leading-edge things. What I’d like to do now is show you what Chicago Tribune is doing with the Windows Azure platform. Run the video.

(Break for Chicago Tribune Video.)

BOB MUGLIA: (Applause.) So the Chicago Tribune is using Windows Azure very effectively within their production environment. And as I say, it’s always great to see when customers adopt leading-edge solutions and really do things, sometimes not what you really expect.

We’ve had a lot of success with Windows Azure. We only brought Windows Azure to market in February, so it’s only been four months since the platform was launched, and we have thousands of active users running on Windows Azure and they are having, overall, an incredibly good experience. People are finding that with IT delivered as a service and cloud platforms like Windows Azure, they can get things done faster than they ever did before. They can get applications to market in a fraction of time that it would take to run and build them in the traditional way. And so it’s fantastic to see all of the momentum that’s been happening around Windows Azure. And one of the great things is we get a chance to talk to a lot of these customers, a lot of these developers and understand what it is that they would like to see. And I’ll tell you, there’s a list of things and features and everything that people want in Windows Azure that is this high, and that’s what I love is hearing from customers the things that they want us as a vendor to provide, and then I can assure you that Microsoft is fully committed to taking and delivering what you need to run your business critical applications on Windows Azure. We’re off to a great start on this platform, but it’s really, really just the beginning.

So that’s one dimension of the cloud, the server, and how the server is at the heart of the cloud. But there are many, many other aspects of the cloud that are incredibly important and let me turn now to the way people work together, the way the cloud can enhance people’s professional and social interaction. We’ve see the way the cloud has transformed the consumer world and the way people are connecting and working and socializing together with applications like Facebook and Twitter.

And what we see is a tremendous opportunity to bring that same connection back into business and enable people within an organization as well as across organizations to collaborate and share information in much richer and new ways. We see that with services we’re providing today like Exchange and SharePoint, our hosted versions, our cloud versions, the online versions of Exchange and SharePoint, which have grown and are becoming very widely accepted. We’ve got over 40 million customers that are paying for online services, Exchange, SharePoint, Live Meeting. People are moving to the cloud at a very rapid pace and experiencing some incredible new capabilities with SharePoint 2010 and Exchange 2010, allowing that same sort of social interaction that you might have in a consumer-facing world to be brought into your business environment.

We also see a tremendous opportunity for new styles of interactions to emerge, for people to work in different ways, particularly in the real-time space where there’s so much opportunity to leverage the connectivity and the interaction that the cloud brings to bring people together in real time in much, much richer ways than was ever possible before.

So with that, what I’d like to do is invite Gurdeep Singh Pall up to show us some of the work we’re doing in the next version of Microsoft Communications Server, Communications Server 13. Gurdeep, good morning.

GURDEEP SINGH PALL: Thanks, Bob. Communications Server 14 is a very big release for us. It’s the next release Office Communications Server, it’s all about communication and collaboration and of course enterprise voice. Communications Server 14 is integrated deeply into Office, SharePoint, and Exchange.

So I’m going to show to you for the first time the full feature set of Communications Server 14. Now, that’s what we are disclosing here at Tech•Ed, but today, this demo I’ll show you some key new features that are there.

Now, what you are seeing here is the new Communicator application. Communicator has emerged as a major new Office application in this decade, and it’s broadly adopted by customers. Now, what you will see if you’re familiar with Communicator, earlier, you used to see those round presence indicators. Now, Communicator is a lot more personal, and you’ll see pictures wherever you saw just the names which came from Active Directory before.

And these pictures actually come from SharePoint. So, you don’t have to go create a separate store. We automatically pick those up, and also you will see that the whole experience is a lot more social. Now, let me quickly give you a quick run through this, and then we’ll talk about some features. So, this is, of course, the view where you can find contacts, whether they be in Outlook, whether they be from your GAL. This is also the next place is where you can look at activities of the people in your contact list.

Now, this is a lot like what you would typically see in applications like Facebook where people are either changing the nodes or changing their status or you can see their picture being changed, their location being changed. Communicator will automatically pull that information together and display that to you in the activity feed.

We also have a communication history which is right there so that you can pick up on all communications that you might have had in the past, whether they be instant messages, conferences, audio conference calls, video sessions, you can simply click on them and continue that conversation.

And then, of course, last but not least, Communicator is a complete soft phone. Now, lots of customers are already adopting Communicator for voice as a soft phone. In fact, inside Microsoft, we have 74,000 users no longer on a PBX who are using Communicator and the hard phones that are there for their voice capability.

BOB MUGLIA: I use it every day. In fact, this afternoon I have a conference call back to Microsoft and I will do actually a full video call back with my PC is the way I connect back and communicate with another meeting.

GURDEEP SINGH PALL: Exactly. And you can not only do it from your laptop, of course, but the conferencing capability which is in Communication Server 14, and in R2 before that, Microsoft has 93 percent of the global audio conferencing traffic now being supported by Communication Server, which represents about 59 million minutes of audio conferencing a month, and it’s saving us more than a million dollars a month just on that capability.

Now, inside this phone environment, you also can see your voicemails which are coming straight out of Exchange, so unified messaging, and you can of course play them here, or you can click on this and it will take you to the transcribe voicemail message, which is there.

So let’s talk about some of the new features that are there. Now, in the past, you were always able to look up people in this list. You could look up distribution lists and so on, but one of the new capabilities we have is trying to find people who are sort of experts in a particular area, but you really don’t know their names. For example, you know, I came into Tech•Ed last night, so I want to find out if there’s somebody who can help me with the ways around Tech•Ed. So, let me type in Tech•Ed here. And let me type skill. And of course now using SharePoint, we’re going to try and find if there are people who are skilled in Tech•Ed.

Now, this expertise can either be published by the person themselves, or they can go put in keywords that they’re experts in, but also SharePoint has an engine built into it where it infers expertise about people, and it does that based on the documents you write, the documents you read, the e-mails you’re writing, et cetera. And using some Bayesian engine which was developed inside Microsoft Research, it will infer expertise about you, so all of it can happen automatically.

So I got a few people, I can see their presence. Let me find a person who at least claims to be a guru about Tech•Ed. Well, I see one person here who is Jamie Starr. Now, one of the things you will also see here is this contact card which pops up right next to when I hover over the name. Now in this contact card, you of course see the node that the person has sat in, and you will also see that with one click I can start different kinds of communications with this person.

Now, one of the good things about this contact card is that wherever you are in Office, wherever you see a name, you can hover on that name and you will see a contact card. And with that contact card, you can with one click get into a communication with that person. So, presence is right here. You can see the note, and then you can start different kinds of communication. If you open it up, you can see the contact card is also getting some information out of Active Directory and displaying it right there for you. It even picks up the org chart if it’s been populated in AD.

Now, let me see – I want to talk to this Tech•Ed guru to find out some stuff, so let me make a phone call to Jamie.

JAMIE: Gurdeep, how are you doing?

GURDEEP SINGH PALL: Hi, Jamie. How are you?

JAMIE: Oh, I’m well, great to hear from you.

GURDEEP SINGH PALL: Yeah, are you sure you’re well? I heard that you stumbled into your hotel lobby at seven in the morning from Bourbon Street asking for a wake-up call at 6:00 a.m.

JAMIE: Very funny. Well, let me just prove to you here with a little bit of video –

GURDEEP SINGH PALL: Oh, great, well, I guess you do look OK. The makeup lady did a good job on you.

JAMIE: Yeah, no worries. We’ve got a little bit of coffee this morning.

GURDEEP SINGH PALL: That’s great. Well, so you see, you know, video capability is just a click away right inside from your contact card which is all built into Communicator. But we also have the ability to do more higher-resolution video. What you’re seeing here is high-definition 720p video, which is built into Communication Server 14. Now, this isn’t supported with the $300,000 solutions that you might have seen, this is there for every user to use on their laptop or desktop using a camera from one of our partners.

Now, in this case, this is a $50 camera, capable of doing 720P. He’s using another camera from another partner which is slightly more expensive, but now you can see a whole ecosystem of cheap, high-definition Webcams that is going to happen around Communication Server 14.

BOB MUGLIA: I guess what we’re trying to do is make sure that everybody has the ability to experience a great video conferencing system, regardless of cost. So, making it available at a very cost-effective way. And as Gurdeep said, really building an ecosystem to make these things available. And we do expect in the not-too-distant future to see HD cameras being built into laptops.

GURDEEP SINGH PALL: That’s exactly right. And in this case, Jamie is using a handset because we wanted to make for the audio performance given the sound from this room is actually visible, but you can actually be speaking hands free as well right into your laptop.

JAMIE: Yeah, even better, you know, you as administrators have the ability to put policy all over your network to where video calls and voice calls, you know, can be managed such that if you have wide area network connections that don’t have sufficient bandwidth for tight enough video, you can make sure that that’s a policy, in the same manner you policy Exchange and SharePoint. So, it’s a really, really flexible solution for the network as well.

GURDEEP SINGH PALL: That’s great. So, let’s go back to a more collaboration experience. Now, you mentioned that you wanted me to look at something?

JAMIE: Yeah, you know, you’ve got a presentation coming up here in a few hours, and marketing has been looking for it as its first deployment that we wanted to talk through with you. So, since we’re in this conversation, of course, now we can just drop it in PowerPoint here. I’m uploading it into our conference. You should be seeing it shortly. We happened to notice just a couple of little things that we wanted to address here.

GURDEEP SINGH PALL: Now, no, I don’t mind. Now, while the PowerPoint is being uploaded, you can see that there is a totally different experience for collaboration. Right into one application, you have both starting from instant messaging and more capabilities which are around PowerPoint, whiteboard sharing, et cetera, et cetera. So, it seems your computer is a little sluggish this morning.

JAMIE: Yeah. My computer hasn’t had the same amount of coffee that I have had this morning.

GURDEEP SINGH PALL: So let me do this, let me take us through another part which I wanted to actually find out, which is what I need, and I am more important. I want to find my way around Tech•Ed, so let’s talk about this whiteboard here. A whiteboard is also built in and now I want to basically doodle or share some pictures or create some content here. The whiteboard capability is right where – a click away from me. So, Jamie, do you want to show me how I can find my way around Tech•Ed?

JAMIE: Yeah, absolutely. So, this is the third floor of Tech•Ed. And I just wanted you to be aware that the escalators are going to be right up here. And then from there, you’re going to be cruising around, walking from a set of escalators over to a set of rooms. So, it’s a short walk, you shouldn’t have any big issues. You should still give yourself a few minutes to be able to make that trek.

GURDEEP SINGH PALL: Jamie, that was most helpful. I don’t know what I would do without this picture that you had. Oh, OK. Great. Thank you. (Applause, laughter.) That’s great.

JAMIE: Unfortunately, the machines here aren’t quite as up to speed with the mochas that I’ve got going on here.

GURDEEP SINGH PALL: Well, anyway, thank you very much. I just wanted to share a glimpse of this. I have a session today a couple of hours from now where you’re going to dig into all the other features of Communication Server, everything from E-911 support, policy for call admission control, PowerShell, and a whole lot of other enterprise voice features.

BOB MUGLIA: Great. Thanks a lot, Gurdeep.

GURDEEP SINGH PALL: Thanks, Bob. (Applause.)

BOB MUGLIA: So we will be shipping that later this year. We’re very excited about the potential capabilities, though, that this environment brings. As Gurdeep said, we have switched over the vast majority of our conference calling to Communication Server inside Microsoft, we’re saving millions of dollars a year by doing that. People are now traveling around the world, using their laptops to communicate back to friends and co-workers, again, saving phenomenal amounts of money in long-distance voice calls, and we’re very excited by the new scenarios that will be enabled with high-definition video and all sorts of new collaboration scenarios that will come with the next version of Communication Server.

So the cloud does change the way we can interact. It changes the way we interact together, and there are new ways to do that, and that’s true today with features like Office 2010 and SharePoint 2010, but it’s also a very important part of this is the way the cloud works with a wide variety of devices. One of the attributes of having clouds is that it connects to people wherever they are and shares with them the information that they care about. And it does so with the device they care about. And so the idea of working with a wide variety of devices is fundamental to the cloud. And I think those devices, there’s no question those devices have become smart.

By smart, what I mean is that they run applications. A smart device can run an application. And the cost of these incredibly powerful portable devices has come down so far that they can do so many things and run so many interesting applications. And we’re very excited about how Microsoft can help provide businesses with portable devices, smart phones, that can really transform the way your workers work across the organization, sharing and working with information as if they were working on a PC.

And with that, what I’d like to do is invite Augusto Valdez up to show us Windows Phone 7 and some of the new collaboration scenarios that will be enabled with this new phone. Augusto.

AUGUSTO VALDEZ: Good morning.

BOB MUGLIA: Good morning.

AUGUSTO VALDEZ: Hi. So, what I would like to show you today is a little bit of Windows Phone 7, which is a different kind of phone designed to bring together all you care about most.

So what I’m going to do is I’m just going to turn on my phone. As you can see here, this is my new start screen where I can personalize it, bring in the pictures of my kids in here, and it tells me what time is it, what is my next appointment, how many notifications I have received the last time that I actually looked at my phone, how many missed calls, text messages, and e-mails that I have received.

So I want to open up my phone. It’ll ask me to enter my PIN, my super-secret PIN. This is coming actually from Exchange Server, which is pushing down the policy for securing the phone, so if it’s lost, nobody can actually get access to the information.

Now here we have the first screen of the phone, which is called the start screen. And this is where we show the concept of a smart design. It is a smart design because these tiles are called “live tiles” because they show information that I care the most about. Like, for example, how many missed calls I have here, or text messages that I received or my Outlook account coming from Exchange Server, and then another Exchange Server than I have out here that is an Exchange Server online that I have. So, you can see, we support now more than one Exchange Server in just one phone.

And then I have my office hub which is basically the place where I can go and check all the information that I have around Office documents. And this is kind of my work area on the phone. I have set up this phone this way, and I can personalize it. So, if I scroll down, I can see all the things that I have, like for example, my pictures, the Internet Explorer, my Xbox Live hub where I can actually go and check my achievements, my avatar, the games that I have played and things like that, and I even have my personal e-mail account with Hotmail. So, I can switch from work to live really quickly, one from the other.

Now, just to show a little bit of the integration that we have, we are going to show you the other concept, which is the concept of integrated experiences. And this is the people hub that allows me to show the people that I have been interacting with most recently, I can scroll and see all the people that I have coming from both Exchange Server, and also Facebook and Windows Live. So, we are integrating all the contact information in just one place. And then I also have here RSS feeds coming from those social network is telling me what people have been posting in their status updates.

So now let me go back into my home screen. So, I just click on this button here, which is a Windows button that always takes me back into this home screen. And I’m going to open my e-mail. And in my e-mail, I can quickly see all my e-mail. I can scroll down and up for looking at my e-mail, and I can quickly filter by unread – these are the e-mails that I haven’t seen yet. I am filtering really quickly, checking in to flag e-mails. These are e-mails that I have flagged on my PC that I want to follow up later on, and using Exchange Server, both online or on-premises, we can synchronize the flagging so the flagging appears on the phone as well.

So let me open up this e-mail coming from Jim Wilson which is asking me to review a document that we have on SharePoint. And this is the other interesting integration that we have with Windows Phone 7. We fully integrate with SharePoint Server. So, if I click on this link, instead of opening that up in the browser, it’s going to open our SharePoint work space mobile client on the phone that allows me to connect to that SharePoint and show these announcements and all the different things that I have in the SharePoint Server.

BOB MUGLIA: That’s one of the great things about a smart phone like Windows Phone 7. We can build applications that really integrate back into your business into the things that you care about in your business. We also will have a fantastic development environment with Visual Studio and Expression that allows you to build your own applications that will run in a very expressive way on Windows Phone 7.

AUGUSTO VALDEZ: Absolutely. So, let me go focus right now on that document that I’m supposed to be reviewing. So, I’m going to click on shared documents. And here I can see all the documents that I have access in this SharePoint site. I’m going to open up this spreadsheet, and as you can see, I have an Excel spreadsheet that is resembling completely the fidelity of the Excel spreadsheet on the server. I’m just going to click on this column because this column is asking me for revenue by month. So, I want to put a comment here. We added comment functionality here because we know that people doesn’t really want to do full edits of documents on Word on phones, even though we support the functionality. Comment is more important because it’s something that you can do really quickly.

So I’m going to say “fill this column.” Right? And of course I didn’t want to say full, I said feel. So, I can go back and this allows me not to type the thing again, it gives me also the opportunity to actually make corrections without actually entering the full word again.

So I’m just going to go back, and then it’s asking me to save the document. So, now the document is being saved back in that SharePoint site. So, just to show you how we actually manage the whole integration, let me reach into this machine where we have the same SharePoint site that I’ve been seeing with the phone, and I’m going to open this Excel spreadsheet that I just edited with my Windows Phone 7. So, if I open it up, hopefully, my comment is going to appear there. And there you go, there it is, Augusto, this is what I just entered into the phone, fill this column. Now I’m back in the office so I’m going to basically just add a quick formula which is the total revenue divided by 12, now I have the revenue by month, and I’m going to fill these down here. And then I’m going to save this document back into the SharePoint.

So good, I mean, now we are working this collaboration. Now somebody is working on the office actually modifying the spreadsheet so I can have the latest one that I need for my meeting with my customer. Now I go back into the phone. And if I open – you see I am in the same screen I was before. If I open up this spreadsheet, it’s going to open it up really quickly so I can look at it, but soon it’s going to actually connect to SharePoint, as you can see, and it’s telling me there is a new version.

If I click on yes, it’s going to bring down now, as you can see here in this column. I’m going to zoom again a little bit more so you can see bigger. Now I have revenue per month or revenue by month which is the information that I really need in this phone.

BOB MUGLIA: That’s great, thanks a lot, Augusto.

AUGUSTO VALDEZ: Thank you. (Applause.)

BOB MUGLIA: So, we’re very excited about what Windows Phone 7 can do to help people share and work with information, and one of the things that I think is most interesting and important in a business environment is the integration with your business systems, and in particular your Office environment.

What Augusto showed there was how you could get full fidelity Excel documents, Word documents, basically a portable phone version of the Office suite available for you, and you can really work with those documents and see them in a new way that like really doesn’t exist on any other portable phone platform. So, pretty exciting stuff, and as I say, the cloud really cares about smart devices.

So, looking across those devices, clearly one device that’s amazingly important is the PC. And the PC is alive and well, it’s growing. We’ve seen incredible strength in the PC market. In fact, it’s one of the fastest periods of growth in the PC market in history since the release of Windows 7. The adoption that’s happened in the consumer space has been fantastic, and the adoption and the interest in adoption in the business space is also fantastic.

Very literally we are having conversations with every major customer about their plans to move to Windows 7, and it is a universal thing that the industry is moving forward. The PC is thriving like really never before.

Now, we’re doing some good things across the board here. We’re focusing on how we can take and using standards and HTML5, enhanced Internet Explorer, the next version of Internet Explorer, which today is in a platform preview version. IE9 is coming. It’s something we’re very excited about. It will have full support for HTML5, very, very standards compliant. It will be an incredibly fast browser. And for the first time, this browser will take advantage of graphics acceleration to provide some brand new experiences in the browser environment like you’ve never seen before.

So, this is a major step forward, and yet at the same time IE9 will retain the manageability that’s been so important for business environments. So, it’s a browser you can trust, an environment you can trust and you’re familiar with, and yet it will be fully modern, taking advantage of the latest standards, and some of the most amazing performance and new scenarios on the planet.

Windows 7 going gangbusters, and one other thing I wanted to mentioned, which we’ve entered beta on a cloud management service, a cloud service called Windows Intune. Windows Intune is a complete environment to manage and take care of your PCs, to keep it up to date, and to allow you to manage your environment.

We’ve now entered this beta. We’ve had a lot of excitement around this. Windows Intune provides things like inventory management, patching. You can understand what software is deployed in your environment. Anti-malware is integrated in. And we think that in the long run this is going to be very, very interesting for businesses of all sizes.

It’s sort of a glimpse of the future ahead. You know, we see cloud services like Exchange and SharePoint being mature and taking off. We’re now seeing new cloud services such as managing and doing desktop management of your desktop and PC environment as being a new opportunity going forward. So, exciting stuff again, all delivered with the cloud.

So, the cloud runs devices of all types: Smart Phones, as well as PCs. It also enables some very interesting new scenarios. And those scenarios have to do with business insight and understanding what’s happening in your business environment.

The cloud can bring with it sources of information that you couldn’t possibly have within your on-premises systems, because the cloud has the ability to look across the world and bring to you all of the information that might be relevant for your business.

At the same time, there’s a vast amount of data that your business systems have created, and in general there’s a lot of opportunity to unlock that data and put that data in the hands of the business professionals that can take action based upon it. They can get the insights for things.

Microsoft’s approach here is different. It’s different than others in the industry. Our approach is to take and make this ability to have business insights, the ability to do business intelligence, and put that in the hands of every end user, using tools that they’re familiar with like Excel and SharePoint.

So, with that, what I’d like to do is invite Amir Netz to show you how these tools – and what we’re going to show you is shipping today – how these tools can unlock these insights for you in your business. Amir, good morning!

AMIR NETZ: Hi, Bob. Hi, everybody.

So, today, I’m going to show you a bit of what is possible when you combine BI and the cloud. So, let’s get going. We have in front of us a typical BI application. A BI application is very good at showing data in various forms. They are very good at allowing you to view exceptions in the data, in the red and in green. They’re also very good at allowing the users to interact with the data, to slice and dice.

The dataset we have here shows the sales of movies from an online retailer. As a user I can go in and explore the data. I can take a look and see, you know, show me the sales of the movies that are older than 40 years, and I need to get that kind of slicing information.

I can see here the titles that are old and I can pick one of them. Let’s go with one of the greatest, “Gone with the Wind.” Click on that, and immediately I can get some insight. I can see that “Gone with the Wind” had a great holiday season in 2007. I can see that it’s been the purchases are typically done at the late hours of the night. I can see it’s a drama. I can see a lot of information, OK? So, it’s a great way to interact with data.

And what’s really wonderful about it, that all this application was done without a single line of code. It was all done just by using Excel 2010, built in, out of the box, this kind of functionality.

Now, what’s really interesting is how we assembled all this data. We used PowerPivot for Excel. What PowerPivot for Excel allows us to do is to go and grab information from all sorts of places, a lot of information. In this case for this application you can see we have about 12 tables which we’ve brought from all over the place. Some of them are really large tables. We’re going to take a look at the purchase table. This is a table that contains all of our transactions, the sales transactions, and look at the size of the table. It has over 100 million rows. This is 100 million rows running on a laptop here inside Excel.

BOB MUGLIA: So, being able to work with a vast amount of data on the PCs that you already own is one of the great things that we’re delivering with Excel 2010.

AMIR NETZ: Yes, and working with a lot of data is nothing if you cannot work interactively with it. And look at the speed of that system. I’m going to sort 100 million rows by the price from the largest to the smallest, or I’m going to just go and filter them by – let’s go filter by the location we sell, by let’s say look at the sales in Great Britain, in Great Britain pounds. So, we leave only 2.6 million out of the 100 million.

BOB MUGLIA: It’s instantaneous.

AMIR NETZ: Wickedly fast, wickedly fast.

The other thing that you can do with PowerPivot is bring data from a bunch of places, not just relational databases on-premises, but from SQL Azure, and from anything that is supporting the Open Data Protocol.

One of those places is a project that we call Project Dallas, and this is a data marketplace for premium data. So, you can get your news clips from Associated Press, you can get here information about geography, you can get here information from the UN about demographics. And, in fact, for our analysis we need to use some of the UN data to get the information about the population of the United States.

BOB MUGLIA: So, this is one of the great things that the cloud can do. It can provide access to information that otherwise would be very difficult to get.

What we’re doing with Project Dallas, which is built on SQL Azure, what we’re doing is we’re taking and making that data available in a format that can be consumed by a broad set of business applications.

The technology that enables it is called OData, and what we’ve done with Excel and PowerPivot is enabled them to be able to reach out to any OData data source.

AMIR NETZ: At the moment I have here the query that I wanted from Azure, from Dallas. I can just go in and put it inside, and I have here, for example, the population data in PowerPivot. Just like I can get it from Project Dallas, I can get it from any other source.

One of those sources that went in here is the Netflix database. The Netflix database is now opening itself using the same OData protocol, and we’ve brought a bunch of information about the Netflix titles. For example, one of the most interesting for us is the average rating, the star rating that Netflix has. So, we brought it all in here.

So, we compile all this data. It’s all available here in the Excel workbook using PowerPivot.

And now what we want to do is to share it with others. The way to share it is just simply to save it to SharePoint. When you save it to SharePoint , you get this nice experience of browsing the data, but the other thing that happens when you save it to SharePoint is that the dataset itself that we assembled in PowerPivot is now uploaded into SQL Server Analysis Services, and it becomes a regular database.

And as a regular database you can start sending your own queries, and you can build your own reports using other tools. In this case you’re seeing a report for “Gone with the Wind,” that same movie, that we built using Reporting Services. And we just send a query to Analysis Services that holds the data that was assembled in PowerPivot, and we get the results and build that report.

BOB MUGLIA: So, this really speaks to the commonality of tools that people are familiar with. The applications, the BI applications can be built in, in literally just a few minutes using Excel 2010, saved up to SharePoint, and then with the power of SQL Server be made available to anyone within the organization.

AMIR NETZ: Exactly. And we can build reports one by one for different movies, or we can use a completely different experience. And that’s something that we call Pivot Viewer. Pivot View is an experience that allows you to look at a lot of movies together, and you can see here a lot of thumbnails. Each one represents a movie.

BOB MUGLIA: Amir, let me just say, so what we’ve shown up to now is all things that are shipping today as a part of Office 2010, SharePoint 2010, and SQL Server 2008 R2.

AMIR NETZ: That’s right.

BOB MUGLIA: What you’re now switching to is a new control, a new way of looking at information that we’re also making available starting now.

AMIR NETZ: Yes, about now, a couple of weeks.

BOB MUGLIA: This month, this week.

AMIR NETZ: This week, not this month.

And what you see here is a lot of thumbnails. These thumbnails have some color coding in here. The red thumbnails represent movies that we are selling a lot of. The red ones are movies that are not selling too well, and the yellows are the ones in the middle.

And what Pivot View allows us to do is to go and explore the data in different ways. For example, we can see the breakdown of the movies by the rating, or you can see most of the movies are R rated or PG13. Or can go and look at the movies by the genre, and you can see that if you’re doing documentaries, don’t expect to make a lot of money, almost no greens here. Action and adventure, almost half of them are green, so that’s pretty interesting. Maybe that’s where we should invest the money.

We can go also drill down. Let’s go drill down into dramas, and now we get this broken down by the star rating that we got from the Netflix dataset. So, you can see four star ratings, the five star ratings. We can filter the data using the histogram filtering here. So, we just look at those that are making a bit more money.

Drill down into the five-star movies, look, for example, at “Walk the Line,” the German version I guess, or we can go in and look at our friend “Gone with the Wind,” Clark Gable, Vivian Leigh kissing, Atlanta is burning. And why is Atlanta burning? Because we have this hot scorecard of BI underneath setting those on fire. (Laughter.)

And I could just go and play with it forever and ever. It’s just a great way, a great way to analyze data, but we have to move on.

So, what we want to look at last is what we can do with the cloud assets of Bing Maps. And what Bing Maps now allows us to do is to build our own applications to overlay our own data onto the maps using a new SDK that they are just releasing today.

We actually built a couple of those applications, and one of them we are overlaying the data from PowerPivot onto the map. We have here the movie purchases, and this is going to show us the purchases of classic movies per capita per state. And you can see here, for example, that California has way more movie purchases per capita for the classic movies than Nevada or Oregon.

And we may want to figure why. So, we can get the data from Project Dallas, the news articles, and we look for news articles that are just for mentioning classic movies, overlay them on the same map, and now we can see that in California, a lot of articles in California about it.

Now, the thing that we can do is now use the Bing Maps for regular searches. So, I’m just going to put some – let’s look for theatres in New Orleans, movie theatres. We’re here, right, so let’s look for that. And here we go. Go into the theatres in New Orleans. Here are the theatres. We’re going to focus on one of them, look at the Fine Art Theatre, and let’s look at the Streetside View that we have here.

Now, what’s really nice about the Bing Maps is not only that you can build your own data, there’s a bunch of applications that are built on it already, so you can overlay additional data, data, for example, about health, about traffic. And the one that we are looking for is overlaying and looking at the latest pictures that we have for the location.

BOB MUGLIA: So, pictures people have taken that are geo-tagged.

AMIR NETZ: Yeah, it’s called Photosynth, I want to use it on, and we can see that we have some here. So, you can just take a look at the street view, but the thing that I’m going to look is actually take a look at what’s latest in the theatre. I want to dive in, see what’s new. And here it is, this is the latest picture for that theatre. We can actually drill in, see if anybody is home. No, nobody is there. Look at the side of the theatre, see what’s going on. And what’s showing here, again our friend “Gone with the Wind.”

So, a little bit of the possibilities that we have here when you go in and just use BI and the cloud together.

BOB MUGLIA: That’s great. Thanks a lot, Amir. Thanks.

AMIR NETZ: Thank you, Bob. (Applause.)

BOB MUGLIA: So, the cloud brings all sorts of ways to take new data and bring it to you and allowing you to combine that with the incredible amount of information that is being collected from your systems, but it only works and it only makes sense if you can actually bring it to your end users, and allow them to visualize and work with the information in a way that makes sense to them.

Now, we showed a lot of interesting new ways to work with data, but I think over the next two years we’ll see these become very commonplace, just like today’s spreadsheets are or PowerPoint presentations, we’ll see these become commonplace in the way people interact and share data.

We showed a lot of new features, again delivery, delivery, delivery. What Amir showed today is some very new features, and there are some great new things we didn’t show. SQL Azure now supports 50 gigabytes of storage, so much larger databases in SQL Azure.

We’re supporting synch now, data synch as a capability to keep devices in synch with SQL Azure and keep things together.

Spatial data support, a very important feature that we actually showed connected to the geospatial views that were connected in the Bing Maps that was there, so the ability to have that geo connection.

With Silverlight this month we’ll make available the Pivot Viewer that Amir showed that had some very interesting ways of visualizing data.

And Bing Maps now has an SDK available to allow you to build applications like Amir showed off. So, all of these things are new, all of these things are delivered.

It’s great to see – like I said, it’s great to see what customers can do when they work with these tools, and the kinds of applications they’ve put together. What I’d like to do now is show you what James Cameron’s team is doing in terms of using products like Windows Server and SQL Server to manage the incredible amount of information that goes into films like Avatar. Let’s go ahead and show that video.

(Video segment.)

BOB MUGLIA: So, we look forward to working with James Cameron and his team as they move forward and begin to take advantage of cloud computing with platforms like Windows Azure and SQL Azure. It’s pretty exciting stuff that can be done, and clearly those are very, very interesting scenarios.

So, lots of ways of working with data, working with information. The cloud helps you to learn and work with information in new ways.

So, the fifth dimension, the final dimension of the cloud is how the cloud creates both opportunities, as well as responsibilities. We’ve talked today about some of the new solutions that can be created with the cloud, and how those solutions can allow you to get products to market faster, and save you money.

And what I’d like to do now is bring up Tony Scott. Tony is the chief information officer of Microsoft. He was formerly CIO at Disney. He’s got a lot of experience in the industry. And I’d like to let Tony share with you some of his experience that he’s had at Microsoft as he’s begun to adopt cloud computing within our own environment. Tony.


BOB MUGLIA: Good morning.

TONY SCOTT: Good morning. Thanks.

You know, I was chief information officer at Disney before coming to Microsoft, and this digital asset management thing that you saw from James Cameron is one of the big challenges in the industry.

As one of the exec sponsors for James Cameron, I can tell you that there’s more to come on that front, and it will be pretty exciting.

Now, there’s a picture of me here with some dogs, and let me explain that a little bit. In Microsoft IT we run our environment on Microsoft technology, and often it’s based on products very early in their lifecycle, all the way – and we run Microsoft on them all the way until the product ships to customers, and then we start with the new round. We call it dog-fooding.

One of the nice things about that is that not only do we get to experience the value and the technology early on in the lifecycle, but we work with our product teams to make sure that there’s no bugs, that it works, that it scales, and that everything is as it should be.

One of the things that I’ve noticed in this move to the cloud is how much easier things are going to get. I’d like to just share a couple of our quick dog-food stories with you.

You know, we always used to have to start from a very traditional starting point, which was we had to go get hardware, we had to set it up, and often it was not just setting up a development environment, it was setting up a test environment, and then a preproduction environment, and then finally all the servers and the technology required for a production environment. And often that experience could run into weeks or in some cases months by the time we got things set up, procured, provisioned, configured.

And then when we got all done with that, we had pretty poor asset utilization. You’d see low percentages in terms of efficiency of CPU and the other assets.

And then with virtualization we got faster at provisioning and configuration and better asset utilization, but often we didn’t get still the flexibility that we needed, particularly with applications that had very high variability in terms of usage.

I’ll give you just two examples. In Microsoft we do people reviews twice a year. What happens is during that period of the year, it’s a few short weeks where we have everybody doing their people reviews, we need a lot of capacity. The rest of the year we just need a little capacity. And yet in the traditional environment I would have had a development environment, a test environment, a preproduction environment, and a production environment that would have had to scale to that high load. And we don’t do that anymore.

A second application, one that we recently ported to Azure, is our auction tool. Every year, during the month of October, Microsoft employees raise a lot of money for charities. We had an online auction tool where people could donate services or things to be auctioned off, and other Microsoft employees would bid on those items.

When I first got to Microsoft, what I noticed was that at the end of October when the auction was coming to a close, let’s say the application slowed down a lot. It didn’t crash, I don’t use that term, but it delivered less than optimal performance.

So, last year, we decided to move this onto the Azure platform, with outstanding results. Not only did we move it over and we redid the front-end in Silverlight, and we did all of this in about six weeks, but when it came time to run the action tool last year, we provisioned it in the cloud and it ran successfully, and on the last two days where we often see the peak loads it never slowed down, and the results were phenomenal. We actually raised twice as much money as we had in any prior year, just because of the performance and scalability of this platform.

The picture that you see up here is from a calendar that we auctioned off on the tool, and I love it because it talks about our dog-fooding efforts.

But if you’ve been through this journey, what you know is that in the traditional model, relatively speaking, the costs associated with the benefits were upside down. When we got to the virtualization model with raw VMs, those became in more equilibrium. Today, with cloud and managed applications on the Azure platform, we’re seeing the benefits in proportion to the way they should be. And that’s our real live experience every day.

Our starting model for the cloud is cloud first in Microsoft IT, and everything that we do from here on out we’re designing for the cloud first. So, it’s a pretty exciting time for us at Microsoft.

I wanted to give you one more example of something that we’ve just moved to the cloud. This is a website where it’s on, and people can search for and view videos around our products.

This was something that we had developed in a very traditional environment, and yet we wanted greater scale and greater flexibility, and also greater cost proportionate to usage. So, we moved it to Azure, and now we can scale the services based on demand versus based on peak capacity, and we’re pretty happy with the way it’s performing.

So, I have a little bit of advice for you, one coming from this experience of dog-fooding our products, and the first is get started now with what I refer to as the finished services. Mail and SharePoint, that’s an easy decision. I think in some period of time we will have figured out that’s game over, and my job as a CIO is a lot easier taking advantage of these finished services. We run Microsoft on the same mail services, and we run Microsoft SharePoint on the same services that you can buy or that you can deliver to your customers.

And then lastly, get started on the Azure platform. It’s time now, and everybody has applications that are ready to move right now onto the cloud. And you’ll love the journey.

So, that’s my pitch. Thanks for coming, and let me bring Bob back. (Applause.)

Thanks, Bob.

BOB MUGLIA: Thanks, Tony.

So, Tony is leading Microsoft to take advantage of the cloud across our applications. He showed a few examples of things that we’ve done. There are quite a few others that we’ve moved or are in process of moving. And, in fact, his team and my team have a plan to move a very large percentage of the applications that we run within our own IT department to Windows Azure and SQL Azure, and largely that’s because we eat our own dog food. We want to learn what we need to have in the cloud environment in Windows Azure and SQL Azure so that those environments will deliver exactly what you need.

So, as Tony said, there’s all sorts of opportunities associated with the cloud, and the cloud brings all sorts of great things that can be done. And that’s a very, very exciting attribute. That’s one of the things we have to love.

At the same time, the cloud also creates some responsibilities. And we feel this very much so as a leader in the industry and as a very trusted partner to all of you, and a trusted partner to so many others across the industry.

You know, we think about how can we take all of the work that we’ve done together for you forward into the future, taking the investments that you have today forward in as compatible a way as possible. That’s a responsibility we feel very acutely; it’s very, very important.

We know that you have compliance requirements, and regulatory requirements you need to consider. And as we move forward with the cloud, we are very much taking into account those sorts of environments, and thinking about how we can support them for you as you begin to move key applications to the cloud.

From a security of data and information protection perspective the data that you have in your organization is yours. We’re not confused about that; that’s your information, and it’s incumbent upon us to help you protect that information, and to protect that information for you.

A major part about the cloud is ensuring the integrity of the identity of the people. As you move to cloud services, you’ll be having a number of vendors you work with, and you need to be able to have a common federated identity system so that as new employees come onboard and employees leave the organization, the integrity of that identity system is maintained, and federation is a part of that. We are already shipping the technology, the enabling technology in Windows Server and Windows Azure that enables that identify federation.

And finally, I talked about how the cloud provides a new hardware model, and with that hardware model is an opportunity to do computing much more efficiently and save energy for a greener planet. The new datacenters we’re building, the way we’re purchasing servers are much, much more efficient than the traditional way that IT is running systems. An example is we have now got containers with 2,000 servers that we can cool with a garden hose of water. Just a tiny amount of water can keep this thing cool and save a tremendous amount of energy, and the systems themselves are much more energy efficient.

So, the cloud brings with it tremendous opportunities. It also brings with it a set of responsibilities that we hold very dear, and consider to be very important.

We’ve now talked about and covered the five dimensions of the cloud. We’ve covered across quite a bit of space. So, where does that leave us? Well, where I want to end is with you, and the impact that this transformation will have on you, on all of us.

The cloud is absolutely a major transformation of the industry. It is a transformation that Microsoft is fully committed to, to helping you go from your current environment into the future. And while I believe the cloud affects everybody, it has a particularly important impact for developers and IT professionals. And that’s why I’m so glad you’re here today so you can work with us to learn from us, and we can learn from you what’s needed to help take you there.

The cloud will change many things in IT. Some of the things that you’re doing today will be delivered as a service, but that’s OK, because there will be all sorts of new things that your business needs, that the cloud will enable you to do.

That’s what I find so exciting; I fundamentally believe that business opportunity is unleashed if we can simplify the process of enabling you to build business solutions that meet the needs of your end users and meet the needs of your customers, and the cloud holds tremendous promise towards that.

Tony gave you an idea of where to start. He said that there are some workloads like e-mail and collaboration where the cloud is already mature. And many companies across virtually every industry, financial services, manufacturing, pharmaceutical, oil and gas, across wide varieties of industry, have already moved to the cloud for those workloads. It may not be right for you, but it’s something that you should consider.

At the same time, the cloud is now maturing so that you can begin to start writing business applications and move some of your business applications up to Windows Azure and SQL Azure. The time to start is now, because it’s important to begin this learning process.

So, the cloud is a transformation that affects us all. It requires a lot of execution and delivery. I want you to know that Microsoft for as many years as I can remember has been your partner in helping you to run your IT systems. As we move together on this journey, yourselves, the entire partner ecosystem, the entire industry towards the cloud, we will continue to do everything we can to support you in driving your business forward.

Have a great time in New Orleans, have a great time at Tech•Ed. Thank you very much. (Applause.)