Kevin Turner: Worldwide Partner Conference 2012 Day 3 Keynote

ANNOUNCER: Ladies and gentlemen, please welcome Microsoft Chief Operating Officer, Kevin Turner. (Applause.)

KEVIN TURNER: All right! (Applause.) Good morning! (Crowd responds.) Let me try it again. Good morning! (Crowd responds.) Let me try it over here. Good morning! (Crowd responds.) All right!

Great to be at WPC. What a year we’ve got that we’re just wrapping up, and what an opportunity we have this next year to really take it to a new level.

You know, I thought a lot about this session today, and I love coming to WPC and I love spending time with our partners. You all know, many of you know I travel to 30-plus countries a year, spend a lot of that time when I’m not in the field with our partners understanding our business, trying to figure out how we can grow our joint businesses together, and I love working on the same side of the table as our partners. So, I’m thrilled to be here, I’m thrilled for this opportunity, and I think it’s really, really a special time, a unique time, ladies and gentlemen for both of us in FY13. And I couldn’t be more excited to talk about that.

Now, when you think about the opportunity that we have coming into this new era, I really think the opportunity we have is how do we leverage this new era together? And what I told you a year ago when I stood on the stage of WPC was that we really had a four-point game plan together in FY12: We’re going to lead with the cloud; we’re going to drive Windows 7, Office 2010 and IE9; we’re going to grow our share by competing to win; and we’re going to drive customer satisfaction.

Now, those of you who know me know I like to check in on how did we do. So, I’m going to start out today by saying, “How did the four-point game plan work for Microsoft and our partners?”

Let’s look in. Well, cloud revenue grew more than 100 percent across most all of our offerings in all of our geographies this past year. A tremendous accomplishment that wouldn’t have been possible, ladies and gentlemen, without the fantastic work of our partners. So, we knocked it out of the park on cloud, and guess what? We’re just getting started in that area.

No. 2: Deployment is at an all-time high for Windows 7 and Office 2010. Over 50 percent of the desktop PCs in the enterprise are deployed on Windows 7, and the opportunity we have is to go get the rest together with our partners. This is the fastest-selling release of Office of all time. And so that’s, again, another unique opportunity to continue to accelerate.

Hyper-V: Won share versus VMware for the very first time in the history that we’ve been on this particular quest together. (Applause.)

And I’ve got some special tidbits for those partners who are kind of holding out, still flirting with the other guy that we’ll get to a little bit later.

SQL is the worldwide unit share leader in database now, phenomenal progress we’ve made with SQL. (Applause.)

Our customer satisfaction, the thing that we measure for both our ultimate customers, is at an all-time high across every audience we track. We grew it five points this past year together collectively. Give yourselves a hand for that. (Applause.)

And our emerging market growth is exploding. Brazil, Russia, India, and China are fantastic businesses. But you know what? So is the rest of Asia-Pacific, so is Latin America, so is the Middle East and Africa, so is Central and Eastern Europe. We’ve got some fantastic businesses happening together, and markets are getting made specifically in our emerging market growth.

So, ladies and gentlemen, I’d say across that four-point game plan, we had a heck of a year together collectively. On behalf of Microsoft and all of our employees and everybody that’s here, I want to make sure you know how much we deeply appreciate and thank you for the partnership and for the awful hard work that was done this past year. Thank you so much. Great year in FY12. (Applause.)

Now, there’s four key business trends that we see going forward. And these, I think, you’ll see these pretty universally because I get asked a lot by our partners: What trends do you see in the business?

Well, we see these four. Certainly, the economy continues to have opportunity, whether it’s in Europe. We certainly see a lot of opportunity there, some in the downsizing, some in the Nordics, we see growth. So, there’s a mixed bag as it relates to the economy.

Latin American economies, again, a mixed bag. We see some up economies, we see some down economies.

Geopolitical issues are permeating throughout the world, and we’re certainly dealing with those and the opportunity that comes with that. We saw a lot of that, particularly in the Middle East and Africa this past year.

Businesses are going more and more multichannel; the ability to have multiple revenue sources and multiple ways to bring your product to market we see is a really unique opportunity in the business trend area.

And then the reality is, with the Web, the Internet, the number of people that are connected, we actually see a very unique trend and opportunity as it relates to customer feedback, customer knowledge, and engagement. And so these four key business trends we think are important in how we set up FY13.

And to complement that, we also see eight technology trends. And of the eight technology trends, certainly, the cloud is no surprise, the explosion of data, social computing, natural interaction, how people engage with technology continues to have more and more opportunity across and pervasiveness across technology platforms.

The ecosystem of computers and the fact that everything is connected and you can connect everywhere.

The consumerization of IT, which I’ll touch on a little bit later. Connectivity is getting better and better, and we still have some ways to go, but certainly it’s all going mobile.

And then machine learning, which we think is the most significant trend on the page. The reality is computers and technology have to continue to get smarter and anticipate opportunities for people to be able to enable them to do things that they never dreamed of with software, with hardware and the magic of technology. So, we think these are eight very important technology trends.

Now, with that, there are a couple of things when we think about FY13, as we ground ourselves, sort of, in the business trends and with the technology trends, we think this is a unique year because there’s a new era of technology happening, and there’s also a new era at Microsoft happening. Because in the past, in between product cycles, this will come as no surprise, ladies and gentlemen, we’ve been in grind-it-out mode. We’ve been grinding it out, and we’ve been doing a great job grinding it out. Winning share, all-time highs in customer satisfaction, getting after deployment, really embracing the cloud, on and on and on. Those are wonderful things.

The reality is: In FY13, we think we’ve got to rethink the approach. We think our partners need to rethink the approach that we take to this year and this unique opportunity.

When you look at it, FY13 provides each and every one of us a new day, a new day to really figure out if it were our first day in this business, what would we do differently than what we’re doing today? It’s a new opportunity. It’s a new opportunity because there’s new revenue streams, there’s new business models, there’s new customer segments that each and every one of us can go after.

We also think that this is a new era. Webster defines new era as a “period of time.” And I think in our business careers, it’s really unique when you have a period of time to where you can really make an impact and make a difference. And so we really believe that this is an incredible opportunity in FY13. And I hope you’re as excited as we are about really embracing it and leveraging it to the next level.

Now, a couple of things in Microsoft aren’t going to change: No. 1, we’re still going to invest in innovation for the long term. And No. 2, we still believe execution is strategic, and we’re going to drive great, long-term execution.

You all know we’ve been on a multiyear journey of improving our execution over the last several years, and it just continues to get more and more refined and fine-tuned, and it’s allowed us to really get through a period of time that opens up the opportunity for this new era.

That investment in innovation runs deep throughout the company. And if you had any doubts about Microsoft and our commitment to the cloud, please let me put them to bed today because our vision and aspiration as an organization is we aspire to have a continuous cloud service for every person, every device, and every business. That’s what we’re about at Microsoft. And we want to connect up with software and services to every person on the planet.

And we’re proud of the fact today that over one and a half billion people use our products every single day. I feel a great sense of responsibility about that and a great sense of pride. But you know what? There’s another five and a half billion people we need to go get together with our partners. And that’s the opportunity that we have together.

And that investment in innovation is an interesting one. And I really want you to take note because you’ve seen a lot of the products and a lot of the lineup and what we have coming. What enabled it was in FY08 and FY09 during the global macro-economic crisis, most every company in the world pulled back on R&D an innovation but Microsoft. Microsoft increased our R&D and our innovation. And as a result of that, this year we’ll spend over $9.4 billion in research and development.

And if you look at that, that’s $3 billion, ladies and gentlemen, more than the next closest technology company. That’s an investment in your future and in our future. And we’re committed to it for the long term.

And so that investment in ’08, ’09, ’10, and in ’11 has enabled this innovation wave like we’ve never seen before. It’s unprecedented in the history of Microsoft. For the very first time, every single product in our portfolio, ladies and gentlemen, is getting refreshed and re-launched in a 12-month cycle. That’s unprecedented. And when you look at the lineup and it just goes on and on, with all of the different opportunities we have together — you heard about System Center yesterday, SkyDrive, and the importance of that going forward as a cloud service. The Dynamics releases. Lots of Bing releases. Kinect for Windows. Windows Azure getting into infrastructure as a service in a huge way in over 48 countries. Windows Intune continuing to make progress in new releases. Windows Server 2012, which I’ll talk about, which I think is absolutely one of the best releases of any product we’ve ever had. And you’ll see why in a moment.

Office 365, continuing to update it, and we have an education offer that hit the market last week. Certainly Windows 8, new browser hitting the market, Surface, Xbox SmartGlass, new releases of Dynamics across the board, Windows Phone, Visual Studio 2012, .NET, Halo IV, Kinect, Xbox LIVE, Office 15, wave 15 in SharePoint 15. And it just keeps going on and on and on and on. It’s the largest single release cycle in our history. (Applause.)

And the energy and the momentum from that is unbelievable. I mean, it is just so exciting to be able to show customers and talk to customers about what we’re doing in the world with technology and the magic of software. This is a company that’s very committed to that for the long term.

And when you think about the opportunity we have from an execution standpoint, the reality is in this new era, we’ve got an awesome responsibility to make sure that we do our best work together, that we collectively execute together better than we ever have.

So, in many ways, all of the work that we’ve been working on the last five, six years is really so that we can leverage that momentum, the work, the energy, and harness it for this year. It’s all been in preparation for the opportunity we have in FY13.

And so our execution, I’m going to take you through the whole company’s execution today across businesses, which many of you always want to know, what is your focus as a company? Consumers, which I get more and more questions, and we have a lot of retail channel partners here, and advertisers. And we have some of our agency and display advertising partners here.

You always want to know: What’s the total company focus for this year from an execution standpoint? So let’s jump into it because I do believe our collective execution this year is critical for the next five, six, seven years for both of our well-being.

When you think about, first and foremost, for businesses, it’s about Windows 8. It’s about making sure that we land Windows 8, that we excite businesses, we get our partners excited, that we have great devices out there in the OEM ecosystem, and that we really get after apps. And we’ve got a great story across all three.

It’s about making sure as we get into apps that we’ve got great enterprise apps. And making sure that that ecosystem for Windows 8, Windows Phone, and Azure is all ready to go.

It’s about winning with Office 365 every time. And we’ve got a real opportunity to take 365 to the next level.

It’s about the cloud and winning with the datacenter — private, public, and hybrid. And we’ve got an unprecedented cloud story, ladies and gentlemen. And the beautiful thing about our cloud story is when we talk about it, it’s what we have in market today. I love the fact that Office 365 is available in 88 countries and going to more all the time. So, when you look at how we’re setting ourselves up, deployment remains paramount. And I’ll touch on deployment in a moment and the importance of continuing to drive deployment.

The consumerization of IT, embrace and evangelize and leverage the story that we’ve got on consumerization of IT.

SQL, SQL 2012, getting after the database so that you can build applications and services on top of it so that we can rescue people from Oracle, IBM, and others is a really important part of the SQL story.

Dynamics, winning with AX and CRM and getting after it in the marketplace is something that we’re very, very excited about. So, this, ladies and gentlemen, is the company’s agenda on driving great execution in FY13 with our partners.

And when you think about the single greatest and biggest launch in the history of the company, it comes back to Windows 8. And something I’d share with you about Windows 8 that I think this makes it very unique is for the very first time in the history of operating systems, we will have the same user experience across the smartphone, the tablet, the slate, the laptop, the desktop, and the television with the Metro user interface — a huge deal. (Applause.)

Windows 8 is Windows reimagined, and unifying that user experience we all know is going to be magical in the ecosystem. Nobody’s ever done it before and we’re doing it. It’s been an ambitious goal and it’s a reality today.

We’ve announced the availability of Windows 8 at this conference, it’s a reality, it’s happening this year, and the opportunity we have is to take advantage of that. That’s why landing Windows 8 and the apps are so important to both of us. And the beautiful thing about Windows 8 is there’s absolutely no compromise. Is it a tablet or a PC? It’s both. Is it good for consumption or is it good for creation? It’s good for both. Does it have touch and pen, or can I use a mouse and a keyboard? Ladies and gentlemen, with a simple push of one button, you can move in and out of your desktop world that you know and love today and seamlessly into the Metro user interface world, but with one button, back and forth, seamlessly doing it.

It’s both beautiful and functional. It will support the current apps and the future apps. Is it good for personal use? Yes. Is it enterprise grade? Yes, it will be the highest-quality, most-secure operating system in the history of Microsoft. (Applause.) This operating system will be. (Applause.)

And will it have great end-user flexibility and give you great security and management? The answer is yes, it will do both.

I love to share this slide with customers. This is what they’ve been waiting for. This is what you’ve been waiting for. This is what we have. Getting behind it, embracing it, getting us — helping us get after apps is exactly what we need your help to do. And we’ve got an answer for consumerization of IT. We’ve got four components to our strategy. The first one is we’re going to have great devices that people love. Our OEM hardware ecosystem has an incredible, incredible lineup of new hardware coming that’s got great form factors. Tami showed you some of those earlier in the conference. We’re excited about that.

We’re going to have that Metro user interface all through the ecosystem. We’re going to leverage that, we’re going to drive that. We’re going to make sure that we’ve got great security and management. System Center 2012 is not only going to manage our stuff, it’s going to manage the other guy’s stuff as well. The ability to have that System Center product be a total inclusive enterprise-grade systems management tool is something that we have with System Center 2012 that no one else does. Very, very strategic for us.

And then we’ve got the greatest productivity story of all time. When you think about where we’re going with Office, the new releases of Office 365, where we’re going with Word, Excel, PowerPoint, SharePoint, Yammer, Skype — we’ve got the greatest productivity story of all time. And the beautiful thing is, we’re going to continue to leverage it and continue to use it and continue to make sure that customers understand the value of it.

And we’re going to do it with a unified application development process. If you use IE9 or 10 and HTML5, you can develop an application, ladies and gentlemen, in the language of your choice — Java, C++, .NET — you pick, you decide. And we’ve opened it up, and we have an app store that’s out there. And the ability to have applications and put them in the store is important for both enterprises and for consumers.

So, this is our four-point strategy of really getting after the consumerization of IT. And for those of you who are partners who sell to businesses, I know you get asked. This is the strategy. This is a winning strategy, and I’m excited about leveraging this strategy and bringing it to life with you over just the next couple of months. We’re going to have a lot of fun leveraging the consumerization of IT.

Now, on April 8th of 2014, we’re going to have a huge birthday party. We’re going to celebrate the 15th anniversary — one five — of Windows XP. And then we’re going to put it to sleep. (Applause.) May it rest in peace.

So, we have between now and April 8th to help all the XP PCs out there get upgraded, get upgraded to Windows 7 and Windows 8. We’ve got to do it now, and we’ve got to drive the deployment. XP has been a wonderful operating system with great ROI. The reality is: It’s time for it to go. When you look at when we started engineering that product to the fact that it’s still running in market, it’s an incredible product with incredible ROI, but the world’s changed. Every customer understands that, every business understands that, every partner I talked to understands that, and it’s time for it to go. We are not going to extend the end-of-life for Windows XP. This is it. No more security updates. You won’t be secure if you’re running it. We have to move people off the platform. It costs us and them way too much money to continue to support it this far into the ecosystem.

Now, the fastest way to Windows 8 is through Windows 7 because we have publicly stated for any device that’s running Windows 7, it will successfully run Windows 8. So, for anybody out there that says, “Hey, should I wait for 8, or this or that?” Get them on 7. That’s the fastest way to Windows 8. Get the browser updated. Get the new release of Office updated so that they can take advantage of all of the solutions and technology and investments that we’re making across the portfolio. This is a $12-plus billion partner opportunity, ladies and gentlemen — $12-plus billion. A huge opportunity for you to be able to take advantage of. (Applause.) And I’m very excited about that. So, let’s get after it.

The cloud. I love our cloud solutions. I love our cloud story. No one has a comprehensive cloud offering like we do. We’ve got a great productivity experience with Office 365 and the investments that we’ve made recently in the social enterprise, and I’ll talk about that in a moment. The database platform with SQL Azure. The business applications space with CRM and ERP and where we’re taking, continuing to push that Dynamics platform to the cloud. And the infrastructure space with both Windows Azure and Windows Intune and the ability to manage it in the cloud. Very, very important for us.

And we’ve got common technologies across identity, virtualization, management, and certainly development. But it’s really important that our partners understand that there are two key things to helping every customer get ready to go to the cloud. The first one is: Do they have Active Directory completely deployed and up to date? Completely deployed and up to date. It’s really important that we get those AD implementations finished, that we go back in there with services and solutions and help customers get AD completely deployed.

Second, getting System Center completely deployed and up to date. When we have these two things, ladies and gentlemen, we can take a customer to the cloud any minute that they’re ready, whether they’re ready today or whether they’re ready tomorrow. They can go with us to the cloud. Two key things that I want you to continue to remember.

The second thing is: We have three distinct types of clouds. We’ve got a private cloud, and we love the private cloud, and we’ll help customers build the private cloud all day and all night and every day and every week. But we also have a public cloud offering. And some of that’s partner and syndicated partners are hosting that, in addition to ourselves. And there’s revenue opportunities that Jon just talked about for partners. And the most commonly adopted cloud we have is the hybrid cloud offering and the ability to have some things that you want to manage on premises and some things that you don’t want to manage in the cloud. That’s what we have at Microsoft. We, with our partners, help customers build the cloud on their terms. We’re not trying to push them to our cloud or somebody else’s cloud. We want them to go at their pace, and the cloud on their terms. Very, very strategic differentiation for us versus our competition and our partner ecosystem makes it that much more impactful.

So, I love our cloud services story. I love our solutions, and I hope each and every one of you — I know that Jon gave some numbers about, well, we’re signing up about a thousand a month are coming to the cloud. I don’t want a thousand a month. I want 10,000. I want 30,000. I want 50,000 partners a month coming to the cloud.

Many of you haven’t made the shift. The train is gone. Jump on. You’ve got to get on the cloud if you’re not because it is the future. It’s where the customer is going, and that’s how we have to build our business model. And thank you to all those partners out there who have gone with us because, like I showed you, our revenues are up over 100 percent across the board and in the geography. It’s amazing the traction we’re seeing. Millions of seats are being signed up across our cloud services story, and we need you with us. We need every single one of you with us all the time in the cloud. Office 365 is our collective future.

And make no mistake, Google is out there pitching our customers; our joint customers are hearing from Google. Whether it’s in Gmail or their calendar or docs offering or whatever it may be, they’re pitching our customers. Fortunately, they don’t win much. But they’re pitching. They’re trying. And the reality is we’ve got a great story to tell on our own. But one of the things I want to make sure you know and you’re equipped is when they pitch Google Apps $50, you’ve got to look below the surface. You’ve got to really dig in there with the customer and understand that it’s really an iceberg. That there’s a whole lot of costs that go into making their solution work.

And when you think about that, we’ve got a great story relative to them both on cost. But more importantly, ladies and gentlemen, we’ve got a great story on functionality, on enterprise-grade credibility, on the future of where we’re taking the platform from a productivity standpoint. And that’s why winning with Office 365 is the single most important thing that we need to do inside the enterprise. It’s critical to us.

Office 365 is both of our collective future, ladies and gentlemen. I need you to get knowledgeable about our products and services and what the competition is pitching. I need you to be proactive. Don’t wait to talk about the story with the customer. Get in front of it. Drive and own that customer agenda. It’s really important that we get on the front foot and lean into it. Get aggressive on the high-risk workloads. Non-Exchange environments, Exchange 2003 and older, and large task worker environments are at high risk. Make sure that we know that. Make sure that we lean into that and make sure that we’re addressing that proactively.

Be tenacious. Compete and escalate to me, Kevin Turner, if needed, if you need help winning a deal versus the competition. There are no victims in this particular space. We have to win every single time. And the importance of that is throughout both the Microsoft employees in the room and our partner ecosystem. And that’s how we’re going to build our collective future together.

One of the big things that I’m super jazzed about this past year is the progress we continue to make together in the virtualization space. You know, this is a journey where we got started a little late. Well, guess what? We’ve got almost 27 points of share now in virtualization. And if you look at our growth rates, we’re growing at over twice the rate of VMware. Twice the rate. (Applause.) Twice the rate.

And I know there are some partners sitting out here in this room or watching the Webcast that are still hanging on to that VM world, still hanging onto the expensive, high cost of VMware. Well, guess what? Look at what you’re about to see. The last quarter, for the first time, to see we’ve been growing our share fast and faster than they have for the last two years. But now our momentum is picking up, and we grew it at such a rate that they lost share, that they actually lost share this past quarter. (Applause.)

So, for all those that are still hanging on, you’re late, but we still love you. Come on. Get on board. We’re ready to go with you. Come on. I don’t care where you are. We’ve got partners out there. We need you to get on board with us. We’re going to win in virtualization, we now have the product, and I’m going to show you in a minute. If you’re not convinced on this slide, I’m going to show you another slide in a minute that’s even going to be more convincing, but we need every single partner we’ve got in the infrastructure space on our side driving virtualization.

With Windows Server 2012 and the new Hyper-V release, this is a busy chart, borrow somebody’s glasses if you need to, but I need you to stay with me right here because I haven’t had the opportunity to really show you, line for line, how we stack up across ESX and how we stack up their enterprise-plus offerings. This is straight across with Windows Server 2012.

When you look at it, bam, logical processors per host, double. Physical memory per host, double. Virtual CPUs per virtual machine, double. Just go down the list — active VMs per host, maximum nodes in a cluster, maximum virtual machines in a cluster, native disk support, maximum virtual disk size — just down the list, every single one. Every single one. (Applause.)

So, those share numbers I showed you weren’t on the new platform. What do you think my chart is going to look like next year with this release? All I’ve got to say is: Happy birthday, VMware, welcome Windows Server 2012. You’re going to love it. (Applause.) And we’re still a third the price, and I don’t know of any customer that doesn’t want to save money.

Now, SQL, let me talk about SQL. Look at the usage share, the worldwide leader now in database usage share. Our SQL product is on fire, growing very high double digits. When you look at this particular product, it’s now two and a half times larger than Oracle in this space. We’ve moved up the stack on critical workloads including with our partner SAP.

When you think about where we are with 46 percent of the worldwide usage share, what an incredible opportunity we have with SQL Server 2012. I’m so proud of the mission-critical progress we’ve made in this space. What an opportunity it is for you to build solutions and applications on top of and services and support.

And there isn’t any customer out there that doesn’t want to be rescued from Oracle. You know that, I know that. They all do. And so the opportunity we have with this next release is to really show them the value. Look at the price differentiation we have when you look at a four-core processor comparison. Straight off the website, straight off the website. I mean, basically, it’s dramatic how much money we can save customers with our platform and SQL 2012.

I mean, when you look at what we have built in with enterprise security, performance and scale, data availability, Enterprise Edition — all the different things that you’re talking about. And let me take it one step further because I get asked a lot of, “Hey, where are you at in the TPC benchmarks?” Well, guess what? The number-one database on TPCE benchmarks for price, performance, and energy power savings is SQL Server. What a huge opportunity we have to continue to grow that business. (Applause.)

This SQL 2012 release is amazing. And we’ve got an amazing opportunity to really bring that infrastructure to customers, and I’m so excited about the potential.

I also get asked by our partners a lot, “What are you doing in big data?” Well, guess what? We’re shipping a Hadoop-based distribution on premises and in the cloud for structured and unstructured data. We have a great story across Office, SQL, SharePoint, Azure, Bing, SQL Server, Windows Azure, Windows Server, System Center — we’ve got the story to take big data and boil it down into great insight, great knowledge.

We’ve got an incredible story to share, and the team would love to work with you if you have an interest in building and developing this business model, reach out to your partner account manager. We’re going big in big data. We’ve got the products, we’re mission critical, we’ve got the best price — value proposition in the market, and we’re going to win big in this space as well.

I get asked a lot about collaboration, and you all know the success of SharePoint. It’s the fastest-growing product in the history of Microsoft. It may actually get knocked out. The fastest-growing product in the history of Microsoft will likely be Office 365 next year. The reality is we’ve got an incredible opportunity together with our partners to bring the social enterprise story to life. When you think about the assets we’ve got across Office, SharePoint, Lync, Skype, and our newest acquisition of Yammer, think about it. What an opportunity we have across voice, video, data, and the convergence of email, the telephone, video, all the data feeds, internal, external, what an opportunity we have to really light up an incredible, incredible experience for customers.

This social enterprise space is a hot, hot commodity. We’re there. We’ve got the platform. We need partner support. We need partner capacity, and we need your help to go bring this to life with our customers. They’re asking for it, they’re waiting on it. And I can’t tell you, I get more notes per week on this topic than any other. We’ve got the solution, ladies and gentlemen; let’s get after it this next year and win in the marketplace.

I want to talk about CRM and show another opportunity for partner capacity. With CRM Online and Office 365, we’ve got the right value proposition; we’ve got the right technology. We need partner support. We do not have enough partner capacity. We need your help.

We get asked all the time, “Hey, we need an alternative to this or that.” There’s still a lot of Siebel customers out there that are miserable. Go get them, every one of them. We need an alternative to Salesforce. This is it. We’ve got a better value proposition. We’ve got a more extensive solution. We’ve made a ton of changes to it. Get onboard with CRM, it’s red hot. That product is growing 30-40 percent for us on a per annum basis, and going to continue to accelerate. A very, very exciting area for us.

I get asked a lot about security, and are you guys really committed to security? Are you making progress? Well, I’m proud to be able to report today that if you look at this past year, there’s a report produced by Secunia that shows all of the vulnerabilities that are catalogued and captured. Oracle had 497 this past year. Apple had 360 this past year. Google had 324 this past year. And who do you think was best in class? Who? That’s kind of an IQ test here at our WPC, isn’t it? (Laughter.) Yes, Microsoft. (Applause.)

Think for a moment with me how significant this slide is. Think of our footprint relative to theirs. Think about it. We had 231 vulnerabilities this past year. We don’t want any. We want to keep driving that number down. But when you think about our surface area, and you think about our footprint, and the fact that we led the other guys. There’s one company on the page that gets it, and that’s Microsoft. We’re committed to security. We’re committed to enterprise-grade credibility. And we’re going to keep driving that.

The thing I also want to make sure that our partners know is that we have economies in the world that are going crazy, they’re still growing, still investing, still high GDP. We’ve got things for those markets. In up markets, we’ve got great solutions to help people become more productive, bringing big data, bringing the social enterprises, bringing CRM, so that they can continue to grow and accelerate the business.

We’ve also got markets that are tough. They’re tough economies. They may have currency issues, or they may have geopolitical issues. Guess what? We’ve got great solutions in a down market. We save customers money. If you look at it, as I said, we’re a third the price of VMware. You saw the price differentiation and value prop relative to Oracle with SQL. We’re going to replace another three, four, five million Lotus Notes seats this year. And Lync, relative to Cisco Unified Communications, is a tremendous value opportunity.

So, we save customers money. That’s what we do, bringing great value. That’s how we get in the market share game. That’s how it works. So, whether you’re in an up market or a down market, or whether you’re working with a company that’s in an up market or a down market, we have a solution. Make sure that you tailor your offerings as such. That’s the most effective way to grow your business.

I want to pivot a bit, and I want to talk about consumers, and what are we doing in the consumer space, because I get asked a lot by a lot of our partners who call on businesses, and we have some partners here, candidly, that are retail channel partners. But we’re certain Windows 8 is going to be a huge deal. We’ve got a very significant advertising campaign that’s coming out this year. We’re going to get after it. We’re going to excite retailers. We’re going to excite consumers. We’re going to show the Metro story across hardware, across the ecosystem, across the device. Xbox, we’ve got smart glass, we’ve got all kinds of things. Halo 4 coming out. We have a new release of Office. We’re going to keep driving that. We’ve got a new release of the phone. We’re going to keep pushing that. Skype continues to accelerate, almost 250 million people use Skype every single month, and average over 100 minutes per month on the product. And we’re going to keep deploying our stores, and telling the Microsoft story to make it easier and easier for people to understand what we’re about, and what we’re doing.

So, when you think about the phone, I get asked a lot about the phone. We’ve got a great product with Windows Phone. This was the PC Magazine’s Reader’s Choice award. Now, look, Apple makes a great product. They’ve got a great phone. The reality is, no one had ever beat them in a customer survey that we had ever seen until Windows Phone did it with the PC Reader’s Choice Award. The first time that’s ever happened. (Applause.)

We’ve got great phones. But I don’t want you to take my word for it. You know what we should do? We should just ask Siri, “What’s the greatest smartphone?” What’s the best smartphone ever? We should just ask Siri, “What is the best smart phone ever?” Have a listen.

(Video segment.)

You can’t make this stuff up. This was the funniest thing ever. Now, what happened shortly after that was all actual. What I showed you was all actual footage, it actually happened. Apple sent out an update after that hit the wire and went viral, very shortly thereafter Siri got a gag order. (Laughter.) So, they’ve suppressed Siri, and it’s now brainwashed into something else. But we did have a lot of fun until they sent out an update and changed it.

Still, let’s talk about the new Mountain Lion OS, because Apple has a new OS coming. And I think this is really important for our partners to understand because we’ve got a different approach, a different idea. And I want to make sure that everybody who hears me, Apple makes great hardware, they’re a very good hardware manufacturer. The reality is, though, in the OS we see things differently. These are some reviews that they’ve had on this OS, this new Mountain Lion. It’s not the future. It’s a patched-up genetic experiment anchored in Apple’s past and present successes. The new OS raises the terrifying brace of thoughts that Apple has run out of ideas, or worse Apple is too afraid to implement new concepts fearing it will kill the company’s golden goose.

So, if you go back a few years, you can actually change the company, and that would probably sound like somebody else. It’s a very interesting irony that’s happened with where we go with the future of a reimagined Windows. When you think about the new release, I want you to know we believe that Apple has it wrong. They’ve talked about it being the post-PC era. They talk about the tablet and the PC are different. And the reality in our world, we think that’s completely incorrect.

We actually believe Windows 8 is the new era for the PC plus, and we think that’s very strategic for us going forward. And we believe that you can’t have a great content consumption and creation device be one and the same. We believe with a single push of a button you can move seamlessly in and out of both worlds. We believe that you can have touch, a pen, and a mouse and a keyboard. We believe you can have end user security and management. And we believe that the reimagined Windows is a game changer. It’s a game changer for the hardware ecosystem. It’s a game changer for how people use technology.

And certainly we’re excited about Microsoft Surface and the opportunity we have there, of being able to provide a piece of hardware that shows the ability to have great content consumption and content creation. And as I said earlier, our hardware ecosystem and OEMs have tremendous products also coming out this year. And so there’s dozens and dozens and dozens of new form factors. And we’re going to explode that hardware ecosystem across both Intel and x86, and ARM and system-on-a-chip. And we think it’s a really unique point in time for us to have a different point of view, and to do that we’re going to continue to tell the Microsoft story at our stores. And our stores have been an incredible success. The service that we get back, the scores that we get back from customers are off the charts, higher than we ever dreamed of for the Microsoft Store.

We’re going to continue to build and roll out more stores. In fact, I’m really proud to be able to tell you today we’re going into Puerto Rico this year; we’re going into Canada this year and we’re bringing it out. More and more markets around are going to see the Microsoft Store, and this holiday on the heels of the Windows 8 launch we’re going to do some holiday pop-up stores throughout. And we’re going to keep going more and more pervasive. And you’ll see the store brand continue to go out and go out into the world with the opportunity we believe we have to tell the Microsoft story. So, it’s a really unique time for us to be able to take back the dialogue, to be able to tell our side of what we believe the importance of technology is.

Now, let me shift to advertising and the opportunity we have with advertisers and Bing and search, and driving the new MSN experience. Again, Windows 8 is front and center because we’re going to have ads in the availability in the Windows 8 applications. So, if you look across our solutions, there’s that Windows 8 thread across businesses, consumers and advertisers and the importance of it. And we’re going to continue to fight, scratch and claw, and get after every single piece of share that we can. And you know our big competitor in this space has also had its fair share of criticism.

This is from the San Jose Mercury News, and you all can see the opportunities they have with ads, FTC concerns, which are well documented in the press, search bias, privacy changes, Safari issues, various things they’ve got. The reality is, they’re creating surface area for us because people are getting tired of them illegally collecting private information on the world’s people and exploiting it to target ads. People are tired of that, until there’s a huge opportunity for us to continue to innovate and differentiate against this very good competitor. And the reality is I couldn’t be prouder of the Bing team and Dr. Qi Lu and what they’ve done, as we just keep finding and grinding out share, over 25 points of share now against them in the marketplace.

But I’ll go one step further. We’ve got something that’s never been done with our search product before. For the very first time Bing is now leading Google in search relevance, very, very significant. If you haven’t used the product, check it out. We’re better more of the time than they are at the result you’re asking for. That’s an incredible opportunity for us to really continue to grow share and take it to the next level.

So, now let me talk about one of the most important topics, customer satisfaction. How do we continue to work together to earn the right to be the trusted advisor for our customer? We’ve been doing it. We’ve been on a journey. We’ve been making progress. The reality is, we will work on this all the days of our lives. The customer is why we’re here. The customer is what it’s all about. We have to deploy the most current versions internally. If you’re not running the latest and greatest, fix it. You can’t sell it as well as you want if you’re not running it yourself. That’s a reality.

Drive customer deployment and adoption. We have to stay on this adoption and deployment momentum that we have and, if anything, accelerate it and eradicate XP. We have to lead those customers to the cloud, create that business value. We’ve got something for a customer in an up market. We’ve got something for a customer in a down market. We’ve got to leverage our strong R&D story. And something that I was reminded of recently is we’ve got to all remember, and this is to all the Microsoft people in the room, as well as a message to our partners, we’ve all got to remember the customer is always right. The customer votes by what they buy.

A long time ago I met a guy named Stew Leonard. Stew Leonard has a grocery store chain in the Northeast. And outside the Stew Leonard store he had this giant rock of granite with this inscribed in the side of it. And they have a policy at Stew Leonard. Rule No. 1: The customer is always right. Rule two: If the customer is ever wrong; reread rule one. But, we all know the customer is not always right. But, the reality is, ladies and gentlemen, something is always wrong. So, if we all adopt and embrace what I’ll call the golden rule of business, when in doubt apply it. The customer is always right.

Let’s take this to the next level. No one thought we’d turn Microsoft, seven years ago when I came to the company, into this great customer satisfaction breaking records. Guess what, we’re just getting started. We’re going to take it to the next level and the next level and the next level because I get up every single day thinking about customers, and I go to bed every single night thinking about customers and what can we do to better serve them. And your help, your support makes it possible and for that I’m very grateful and I want us to continue to stay focused on that together.

So, with all this technology and everything that we have, I also believe we’ve got to change ourselves. As individuals I believe we’ve got to change personally, as individuals and organizations, as much as the technology and the environment is changing around you. And this new era means a lot of exciting things, ladies and gentlemen. And I want you to know that it means that we’ve got to make sure that we’re real sensitive and conscientious to the stories that we tell ourselves.

It’s about focusing on what we can control. It’s about telling the story of the new day, the new opportunity and the new era, because you know what, the stories we tell ourselves are the stories that we eventually tell others. And it’s been said before that the greatest conversation that each of us ever have, ladies and gentlemen, is the one that we have with ourselves, making sure that you make the transition, that you’re all in with the transition, requires us to make a shift.

We’re moving out of grind-it-out mode. We’re moving out of playing defense at times, to completely playing offense, to completely playing to win and working to win in every single thing that we do. Making this shift requires that we act differently, think differently. If not, you’ll leave this conference and say, “Yes, that was another good event at WPC.” If that’s what you come away with that’s not enough.

I ask you today to really think about how are you going to leverage this new opportunity? How are you going to double your business? How are you going to grow 30 percent? How are you going to improve your profitability? How are you going to improve your customers’ satisfaction? How are you going to grow share versus the competition? Ask the question. Zero base it. This is a once-in-a-lifetime opportunity. And we’ve got to make the most of it. And I think that’s the opportunity that each and every one of us has.

You know what, as a company, as a culture, and I would say largely as a partner ecosystem, we’ve got a piece of DNA within us that says we’re self-critical. I’m OK with that. But what I would like you to do is make sure that you see things as they are, but not worse than they are. I want you to make sure that you embrace the fact that when you see things differently, when you embrace things differently, you can then see change and progress. And I think it’s important to continue to stay self-critical, but at the same time making sure we embrace this new, unique opportunity.

And we’re going to have competition, VMware, Google, Apple, Oracle, they’re wonderful competitors. They make us better. I love competing with them. I may give them a little bit of a tough time, and call them on some stuff, but they call us as well. The reality is, we’re going to respect them, but we’re not going to fear them because this is a new era. We are playing offense. This is our time. This is our time to take back the dialogue, to get more offensive.

We’ve got to build the enthusiasm and the energy. And I’m not talking about blind optimism, and I’m not talking about positive thinking. I’m talking about a deep-seated collective belief in our collective future. That’s what I’m talking about. And the reality is, we’re going to set the tone, we’re going to be grounded in our beliefs, we’re going to live our values, we’ve got the innovation, the momentum is building. You can hear it. It’s like thunder. It’s like rolling thunder. It’s getting louder and louder and louder. Everybody can feel it and sense it. You can feel it and sense it at this conference. Our collective momentum is building, and we’ve got this opportunity together.

And we’ve got a four-point game plan this next year to win with our partners. No surprise. Win with Office 365 and cloud services, embrace it. Land and deploy Windows 8, drive apps. Drive deployment and improve customer sat. And make the shift, speed, play, work, compete to win. This is the four-point game plan for next year. I’m really excited to be able to think about the opportunities we have collectively together. You know, I like history. I like to study history. I like more to think about the future, honestly. And there’s a real thing when you think and you study history about how many times it repeats itself. And it often does. But let me also warn and remind everybody that while history may repeat itself, opportunities don’t. And the opportunity we have this year, right now, is to seize the moment and seize the day. That’s the opportunity we have. And I want to know if our partners are ready? I want to know if the Microsoft partner ecosystem is in the house, and they’re ready to go take it this year? I want to know if you and your company and your people are in it to win it? I want to know if you can embrace this new opportunity and leverage the new era that we’ve been given? Are you in? (Cheers and applause.) Are you ready? (Cheers and applause.) Are you ready? (Cheers and applause.)

Microsoft is ready. Let’s go seize the day. Let’s seize the day. This is our time, our collective time, Microsoft and our partners, this is our time.

And I’ll close by saying, I’m proud to be here before you today. I’m proud to represent you with our customers. I’m proud to take the feedback I get regularly from partners. I’m a resource to each and every one of you. And this is a day, this is a moment, this is an era that we’ve worked hard for, and that we together have earned. It’s going to be a lot of fun the next 12 months, ladies and gentlemen. I’m looking forward to it. I hope you are. And I thank each and every one of you for everything that you do for our collective businesses. And if I can help you in any way, [email protected]. Thank you very much.

(Cheers and applause.)