Satya Nadella: Worldwide Partner Conference 2011

Remarks by Satya Nadella, President, Server & Tools Business
Los Angeles, Calif.
July 12, 2011

ANNOUNCER: Ladies and gentlemen, please welcome, President, Server and Tools Business, Satya Nadella. (Cheers, applause.)

SATYA NADELLA: Good morning and thank you very much. I’m really excited to kick off today’s keynote.

We’re in the midst of a massive transformation. This is the transformation from client-server to cloud computing. And our mission, simply put, is to lead this transformation by cloud-optimizing every business and really bring the benefits of this transformation to our customers.

At this point, the benefits are well known. It’s the ability of the customer to be able to focus on their core competency. It’s their ability to innovate with agility and it’s their ability to derive economic benefit that goes far beyond anything virtualization has achieved.

So, for us to be able to deliver this transformation to cloud, the thing that we want to build is a broad and deep platform. And this broad and deep platform has to reflect the realities of the IT infrastructure of our customers. So, that means it has to span the private and the public cloud. So, when it comes to the private cloud, for example, we have to have a great operating system and the hypervisor layer, which we have with Windows Server Hyper-V. We need to have a great management infrastructure with System Center, and a database. So, that’s what’s really needed in the private cloud environment.

On the public cloud side, we have Windows Azure, which has got both the core cloud operating system that you really can’t fake your way into it, you’ve got to build it by running the data centers that run the public cloud service.

And then on top of the cloud operating system, you also have to have the database capability that’s been natively built for the cloud.

But it’s just not the fact that we have a broad and deep platform that spans the public and private, it’s the commonalities that bring together this platform for our customers’ hybrid IT environments. The commonalities are identity, virtualization, management, and the application development environment. So, it’s that platform that’s really our strategy for really reflecting the realities of hybrid IT, which is going to be what our customers will demand from us as an ecosystem.

We already have great momentum as we speak. If you look at where we are on the private cloud side, we have System Center and Windows Server. Windows Server is the most-used operating system, with 76 percent share. Our hypervisor share in the last 18 months has doubled, close to 23 percent. We’re in the leaders’ quadrant when it comes to virtualization capability.

In the database side, we continue to lead in terms of usage, far outstripping Oracle and IBM with 48 percent, 47 percent share. We have a very secure database. We continue to lead the revolution when it comes to self-service BI and BI platform capabilities. And then with Windows Azure, we now have one year’s worth of progress with tens of thousands of customers who are deploying solutions, ISVs who are deploying solutions, and hundreds being added every day.

So, we have significant momentum, and it’s all really thanks to the investments that this group of folks have made over the years. We’re building on the core capabilities you already have across this broad product line, and the new capabilities you’re adding. So, if you look at the private cloud capabilities over the last year, we’ve got many, many of you who have gotten the capabilities to deploy private clouds, the proof of concept, the design wins are rolling in; the pipeline for private clouds is very, very rich, even in the last six months.

The SQL database is being incorporated by every ISV as part of their solution set. More important than that, we are now able to take those solutions that you’ve built on top of SQL Server and get design wins. We’ve had over 12,000 wins with SQL Server and your solutions over the last year.

And with Windows Azure, we have a great start in terms of the number of people who have gotten now competencies to build cloud solutions using Azure, so we have over 30,000 of you who have gotten trained on Windows Azure capabilities. So, that’s all fantastic momentum and we thank you very, very much for the commitment to the broad platform capabilities. (Applause.)

Going forward, let’s look at each one of these core competencies or core pillars of our strategy. So, the first thing, for example, is private cloud. To get grounded on the private cloud opportunity, let’s look at some numbers. The fact that virtualization is reaching an inflection point is not lost on us. Basically, last year in terms of the instances outstripping the physical servers is a well-known fact. This year, perhaps, the install base will cross over, but yet in 2014, there will be 14 percent physical servers, which over 2011. It seems a little counterintuitive.

The reason for that is because we, together, will be able to make this transformation beyond virtualization to building out of the private clouds and the public clouds in support of the applications our customers want to deploy. That’s what’s going to enable the customers in a friction-free way to consume both the infrastructure, the applications, and your services in order to be able to drive effectively additional appetites for these servers.

So, that’s really the opportunity in front of us. In order to really make sure we deliver on it, that’s the focus for the next wave of products for us, System Center 2012 being particularly the near-term focus for us in terms of the next product delivery.

The key design pillars for this next release of our product is to make sure that it’s all about the app, because that’s what customers care about. When it comes to the applications, the things that we need to take into account from a management perspective is the ability to configure it, ability to monitor it, ability to update it, ability to move that application around. Those are the things that management software in concert with the application needs to deliver.

Once you say that, things like cross-platform come naturally. So, of course we’re going to be cross-platform at the hypervisor layer. We’re going to be even cross-platform at the guest operating system layer because we recognize that customers are going to be heterogeneous. We also will span public and private because hybrid IT is what customers are going to have. It’s not as if they will only have private clouds or only have public clouds; both of these will be in parallel deployed in every customer’s case.

Lastly, we want to make sure that we have the best performance for our workloads on top of our hypervisor, bar none. Today with SQL Server, with SharePoint, with Exchange, we have great performance data and we’ll continue to push the envelope on it.

But, really, again, it’s about the application and the application management. To give you a flavor for this in terms of what we’re doing in System Center 2012, let me introduce up on stage Ryan O’Hara from our System Center team to show you the work that we’re doing with System Center 2012 on app management. Ryan?

RYAN O’HARA: Thanks. (Applause.)

Well, what we’ve seen so far is that the world is changing with respect to the applications and end-user experiences that Microsoft and our partners are delivering to the world. Now, in addition to these end-user experiences, we believe that the operations practices across the app life cycle will also change in the context of cloud computing.

Now, to give you a glimpse into what’s coming, I want to share with you a new capability in System Center, one that we call App Controller. System Center App Controller is a management experience for IT professionals whose job it is to manage business applications in cloud computing environments.

Let’s jump into the console and take a look at what’s here. Now, as we do, you’ll see that we land on this overview pane. And the first thing I’ll point out is the App Controller knows exactly who I am. You see, we’ve integrated an understanding of my identity across clouds. As a result, I have single sign-on visibility into both my private cloud resources as well as my public cloud resources. And now I can look across all of my clouds and get an aggregated understanding of the applications and the virtual machines that I’m responsible for.

If I go ahead and click to drill in here, I’m brought to a familiar virtual machine view. I’ve got this list view formatted of all of my individual application components, and from here I can take some pretty simple administrative actions against these virtual machines. I can remote into them, stop-start them, even drive some configuration change.

But this isn’t the promise of cloud computing. This is still too complex and too focused on the infrastructure. You see, in cloud computing, we have an opportunity to look beyond all of this and focus on the services and the SLAs that you’ve delivered to your customers to drive their business forward.

So, let me show you how App Controller changes the game. I’m going to navigate over here to the services view and as I do, I’m going to be met by a simplified tile layout of all of the applications that are running on my private cloud. But then, App Controller is going to reach out to Windows Azure and pull in the services that I’ve deployed on Windows Azure as well.

Now, while simple in their layout, these tiles really pack a punch. Let’s drill into this demographic application that I’ve got deployed on Windows Azure. Now, as I drill in, I get a services view showing me an end-to-end structure of the application, as well as all the components that make up this application.

From here, I can interact with things like the processing tier, the reporting tier, even this Web tier. Now, I can take some administrative action against individual roles here, or I can even scale it up or scale it out to accommodate incremental loads. Since we’re running on Azure, I’m going to take advantage of Azure’s scalability and increase this Web tier from two Web roles to four Web roles.

As I click through here and update, App Controller is going to help me by reaching out to Windows Azure and brokering this request on my behalf. Windows Azure is going to go ahead and spin up a couple of incremental Web roles and then rebalance all of the traffic across this expanded capacity.

As I refresh the interface, what you’ll see is that App Controller has already begun to drive the change into the environment, and that application is already under way.

Now, these services views are not just helpful in managing running applications; they also help me when I want to deploy new applications. So, let’s move over to my cloud environment here where, again, I can see my Windows Azure instances as well as my private cloud instances. And let’s go ahead and deploy a new application.

This time, App Controller is going to help me by allowing me to browse a library of best practices that we’ve gathered from throughout my organization for deploying new business applications. If I go ahead and select this BI service here, you’ll see that the design surface now is populated with all of the instructions and best practices that are going to ensure that my deployment is successful.

Now, we’re almost there ready to deploy this complex service. You see I’ve got a couple of things to impart into the system here, a couple of parameters, but you can see that most of these things are clickable, and in App Controller, if it’s clickable, it’s configurable. And with just those simple steps, we can deploy a new application.

So, that’s a quick look at how we think cloud computing is going to change the operations life cycle and how with System Center, simple gestures deliver powerful results. Thank you. (Applause.)

SATYA NADELLA: Thank you, Ryan.

Believe me, if you’re an application developer or a manager, this is as close as you’ll get to Kinect for your domain, and it’s fantastic, it’s revolutionary in terms of what it brings to application management. All of this is going to be part of System Center 2012 that’s going to ship later this year. You’ll also get a sneak preview of “Windows Server 8,” which is the next major release of Windows Server today in Robert Wahbe’s value keynote, and of course you’ll hear a lot more of this at our BUILD conference in September. So, a lot of stuff coming for the private cloud.

Let’s now switch to the database. Now, one of the core opportunities or the best way to think about the opportunity is to look at a few numbers in terms of the data explosion. The overall data growth is just stunning. The growth is expected to be 40 percent year over year, far outstripping any IT spend growth. The number of verticals in which you have more data than the entire Library of Congress is 15 out of the 17 industry verticals have that kind of data.

But yet, only 72 percent, or rather 72 percent of the people inside the organization do not have access to the BI capabilities to take all of that data and convert it into insight. Just because you have more data doesn’t mean you have insight. And that’s really the opportunity ahead of us in terms of the solutions we can bring to the marketplace, knowing that there’s going to be a data explosion, but the idea is to convert that into insight.

That’s what’s fueling the next release of SQL Server for us in terms of its design pillars. We’ll continue to push hard on the mission-critical readiness of SQL Server; that’s been what really has been pushing up our share position up into the tier one. High availability, we have many, many features in terms of active secondaries, multiple secondaries, application failover; these are all capabilities that are going to be part of SQL Server’s next release.

Cloud on your terms. One of the things that we have really taken care of is to make sure that the programming model and the key SQL capabilities are available as you span and migrate applications between the private and the public cloud, given SQL is available in Azure as well.

And lastly, it’s about continuing to lead with breakthrough insights with BI. We were the first to bring together the power of Excel with pivot views on top of SQL Server, and we’re going to continue to push that to the next level.

To give you a little bit of a flavor for what we’re doing with data and data insight, I wanted to welcome up on stage Amir Netz from our SQL team to give you a demo of the next release of SQL Server. Amir?

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

So, Satya is talking about the explosion of data. You know, data in the cloud, data on-premises, big data, little data, data everywhere. What I’m going to show you is how you can take all this data and create some tremendous value.

So, in SQL Server “Denali,” we are introducing a new BI capability. We call it Project “Crescent.” We’d like to think of Project “Crescent” as the PowerPoint for data.

Now, let’s take a look here. This is Project “Crescent” here on the screen. And on the right-hand side, you see the data model. The data model is something that you create. It’s assembling all the pieces of data that the user will need when they create their data presentations.

In this case, you’re looking at the car dealership data model. Once you’ve created that data model here, creating that presentation is a bit like magic. So, let’s take a look. We’re going to start by laying out the cars on the screen. One click and the table is showing up.

“Crescent” is really good with shaping up data. So, if I want to just make it look a bit different, all I have to do is just, you know, convert it perhaps to a card form. Instead of a table, we get a card. Looks much better, right?

Now, we’re going to continue and lay out a few more data items on the screen. We’re going to look at the sales for each type of car. Just like that, we’re going to put the table on the screen; the table is not so nice, so we’re going to convert it into a column chart and make it a bit larger; and we’re going to also look at the sales over time, that’s also a very interesting data point.

This one we’ll take a look and make it into a line chart. And just like that, I created a beautiful report, just in a few seconds. (Applause.)

Now, not only that it looks great, it’s also fully interactive. So, if I want to take a look at the sales of compact cars, all I have to do is just click on compact, and I can see the list of compact cars that I’m selling. I can also see the sales over time of the compact cars, you can see that it’s fluctuating up and down, but generally stable. Hybrid sales is a completely different story. You can see ups and lately going gangbusters. The SUVs? Dropping like rocks lately. So, that’s something I may want to explore a bit further.

Let’s focus here on this chart. And we’re going to plot the sales against the margin, the margin kind of represents the demand that we have. We’re also going to use the growth as the size of the bubble. And we’re going to take a look and see how it evolves over time.

So, with this, we can no play and take a look at how the sales of those various types evolve since 2007. It’s kind of moving, it’s a big small, so we can make it a bit larger. (Applause.) And you can see there was quite a lot of movement on the screen here. Especially I’m looking here at the hybrids and I’m looking also at the SUVs, you know, a lot of action going on here. I suspect it has something to do with the gas prices, but unfortunately, I don’t have gas prices in my internal database.

But this is where the Windows Azure Marketplace comes into play. This is where you can find a lot of data sets that you can make use of, your financial indicators, indices, including gas prices. And once you bring that data set from the SQL marketplace into your data model, you can use it just like any other data item. So, I’m just going to plot here the average gas prices from 2007 and beyond. I’m going to resize the axis here so we can try to see exactly what happened here.

So, we see here the bottom, gas prices on the top, our sales, and we’re going to start in 2007. SUVs, king of the hill, they’re selling the most. The hybrid, nowhere, zero points. But as we move forward in 2007, gas prices rising up, and SUVs are actually plummeting, hybrids are picking up. And gas prices at their peak, but now that the gas price is plummeting down in 2009, SUVs are picking up again and the hybrids are going back. But here we go and take a look here, 2009, gas prices going up again, the hybrids here are now going mainstream, and take a look at that, jumping up and really becoming our best-selling product. (Applause.)

So, you see here a glimpse of SQL Server “Denali,” how you can take the BI capabilities to use them to mash up data from the Windows Azure Marketplace and from other public sources together with your internal data sources, create some really interesting and fine experiences for the end user, creating some really beautiful insight, at the same time great business opportunity for all of you.

So, thank you guys. (Applause.)

SATYA NADELLA: Thanks, Amir. Thank you, Amir. Hopefully you got a good glimpse of what SQL Server can do in terms of bringing, if you will, data to life with insight. We have a new technical preview of the next release of SQL Server available today for download, so I would encourage everyone to take a look at that and get ready for this major next release of SQL Server.

The last thing I want to talk about is Windows Azure. As I said, we have over a year of progress with Windows Azure. Our core focus continues to be to build the best public cloud service for the enterprise. So, that means that everything whenever you’re building an application in the public cloud, you want to be able to connect back to things like the identity, or federate with the identity inside the enterprise. You want to be able to do data synch. You want to be able to do message passing between applications that are inside your four walls, but yet you want to expose the service end point, which is available on the public cloud. Those are the capabilities that we have focused on first and center with Windows Azure. And you see that when people are deploying solutions.

The second thing is we have built the richest set of capabilities beyond the core storage and compute capabilities. From the database itself, we have the richest relational database, supporting full database scale-out in the cloud.

We have things like the data market you just saw in the demo. We have things like the AppFabric and the system bus, which is a set of high-level services for applications to be built for this new share-nothing design pattern for scale-out.

The last thing is also we’re building a very broad tent when it comes to the application platform supported and development tools supported. For sure, we’re doing a first-class job when it comes to .NET and Visual Studio. But beyond that, we also want to make sure we have a first-class support for Java, PHP, and other frameworks as they become popular. So, we want to have Windows Azure truly reflect our big-tent approach to developers and development platforms.

We already see some great success, as I said, with the higher-level services; the data market you saw in the demo was a great example. So, the Windows Azure Marketplace today has a thriving marketplace and the leading marketplace for data. Today, we’re extending that for applications. We already have five partners who are highlighted on this slide who are able to transact in the Windows Azure Marketplace, and we’re now going to expand this far beyond that capability.

So, for example, Two Z is a partner of ours who has built a Facebook application and chosen Windows Azure.

IDV Solutions is a mobile application that works across Windows Phone, iPhone, and Android, and has chosen Windows Azure as the back end.

Pervasive is a data exchange ISV that’s, again, chosen Windows Azure as a back end. And they’re now able to transact in the Windows Azure marketplace, which is a capability that we’re launching today.

In terms of applications that are getting built on Windows Azure, there’s a huge diversity of these applications, applications that are extensions of what’s happening in the private cloud being exposed in the public cloud so that you can expand reach, very new-to-the-world applications that are taking native capabilities of the cloud and exploiting them.

In fact, these seven highlighted screen shots here are switchers from Amazon. These are ISVs who chose or applications that were first built on Amazon that moved over to Windows Azure. So, we have a very capable solution that now is competitive from any other public cloud. The reason for the switching is a lot of those enterprise capabilities, the reach, the development environment and the tools capabilities that we have.

Going forward, one of the things that we want to focus on is really making sure that these native services are exploited by new-to-the-world solutions. And one such example is Boeing. Boeing was able to reconceptualize their marketing by looking at Windows Azure and figuring out how, for example, to use a cloud back end to change how people think about test-driving a plane before buying it, if you will. So, let’s roll the video on how Boeing is using Windows Azure.

(Video segment.)

SATYA NADELLA: (Applause.) In summary, we have a huge opportunity in front of us to cloud optimize every business. We have the broadest and deepest platform across the private cloud and the public cloud. We have the workloads with Office and Dynamics, both on the private cloud and the public cloud to really help our customers with this transformation to cloud computing.

With that, let me introduce Kurt DelBene to talk about Office and the cloud. Thank you very much. (Applause.)