STEVE BALLMER: It’s my pleasure to welcome you all to this press event, and certainly it’s an exciting first day here for Mobile World Congress. It’s a real pleasure for me to have a chance to be here with you today. So, thank you very, very much for your time.

We debated a lot how much we should position, and talk about from whence we’ve come, and what we’re going to show you, and I said, stop, stop, stop. This is a  no, I’m not talking about the photographers. We said, let’s just really get on with the show. At the end of the day, this really is all about the phones, and how the consumer will react to these devices.

So, it’s our pleasure to have a chance today to share with you the next generation of Windows Phones, the Windows Phone 7 Series. And I’ll come back and talk about it in a minute, but for now, we want you to have a chance to take a look, and see what you think. So, please welcome Joe Belfiore, who is going to have a chance to show you for the first time. (Applause.)

JOE BELFIORE: Thank you.

Good afternoon. My name is Joe Belfiore, and I’m the VP in charge of the program management and design for the next generation of Windows Phones. I’ve actually been at Microsoft about 20 years, and I’m super-excited about today.

In my career at Microsoft, I’ve focused on user experience and design. I had the opportunity to lead the UI design for Windows XP. I managed the team that did Windows 95 UI design. I worked on Zune and Media Center. But for me today has got to be the biggest day in my career to unveil for you the new experience around Windows Phones.

And I want to just give you a little bit of context, a tiny bit, and then we’re going to actually jump right in and show you the product. When I came over to the team, which was about a year or year-and-a-half ago, the group was thinking about all the things that were happening in the industry, and where Microsoft was, and really noticing that it was an opportunity to change.

We looked at the trends in smartphones. We saw that phones were getting more and more connected, and that there was more and more power and capability out on the Web with Web services. We saw that developers were piling in and doing more and more applications. And all of this coming together created great opportunity for users, but also some complexity. And we didn’t see the UIs of phones updating to keep up with all the changes in infrastructure and capability. And from our perspective, and sort of particularly from mine, we kind of felt like the phones, they looked like PCs.

Now, don’t get me wrong, I love the PC. But a phone is just not a PC. It’s a smaller, more intimate device, and what we wanted to do, as we looked at all these other phones, which in our opinion they started to kind of look the same, we wanted to go back and revisit how we thought about that design, and come up with a user experience that’s new, and different.

As we looked at those phones, we wanted to move beyond that metaphor that has worked so well on the PC to a metaphor and a design that’s a little bit different. So, we sat back and asked ourselves a couple of questions. We said, how can we build a phone that focuses on the end user and the things that matter most to them, the individual, and those custom things about you that make the phone reflect your unique personality and needs. And then, second, with this explosion of functionality and applications and Web services, could we bring that together in a way that helps the user see that power and capability in a way that’s more organized and task-centric with destinations for the most common things you want to do.

So, that’s what we said to ourselves. And with that context, what I’m going to actually do is step aside, and just let you see the new user experience for 7 Series phones.

So, here we go. We’re going to jump right over and take a look.

(Video segment.)

(Applause.)

Thank you. Thanks very much.

We are also super-excited to bring the design and user experience and feel of the phones really forward. We like to think that what we’re doing is building and delivering a different kind of phone that’s modern and takes advantage of people’s complex lives and their personalities to deliver something that’s unique and individual. And we think about two parts to this. And I’m going to go and show you the real code, and I’m going to show you some more videos, and give you some depth around how this works. And the two parts are, first, we want a smart design that puts the user at the center of their experience and moves beyond the phone as a PC-like item, that moves beyond separate applications and brings together some of the key things that are most important to people.

And then second, we wanted to design integrated experiences, which become destinations for your most common tasks, things like pictures, and music and video, and productivity, so that users have one simple place to go and access their Web services, access the functionality in their applications, access the data on their phones. Those are the fundamental ideas behind this new user experience. What I’m actually going to do is go through these and then show you some more demos.

The first idea, smart design, we break that down into a few components. The first is, we wanted to really get into depth in thinking about the user experience all the way from the hardware to the software on the device, to the service on the back end. We’ve tried to make hardware and software that work in unison the way people want.

So, for example, every Windows Phone 7 Series device will have three buttons on the front. Start, which gives you quick access to those “live tiles” you saw, glanceable information, and ways to find out things that are most important to you. Search, because the phone in your pocket is the way you’re going to find phone numbers, and locations of restaurants, and all kinds of great things out there in the real world. And back, because as you navigate from one experience to another you want a simple, intuitive way that’s consistent with your experience on other devices to go back to where you came from. Hardware and software that work the way you want.

Further, all of these devices will be capacitive touch-enabled with big, beautiful screens that let people really get the most out of their experience on the device. Second, we wanted the software experience to sort of fundamentally focus on what’s most important to each individual user. We want the device to know the people that you care about, to be deeply personal and be relevant to your daily life. It should dynamically change to address where you are physically and what’s happening with your friends and the people you care most about.

And last, we wanted this experience to be delightful and fun. A phone is an intimate piece of hardware that you carry with you and you don’t just use it for functionality, as a work tool and as a home tool; it’s an expression of your personality and who you are. It should be delightful and engaging and it should make people smile when they use it. So, that’s our idea behind smart design. What I’m actually going to do is show you a real live demo of a real live device.

So, what I have here is prototype hardware, and I’m going to hold this up so you can sort of see a camera shot. In the hardware down on the bottom you see there is start, search, and back. And what I’m going to do on that screen over there, it’s going back to sleep, on that screen over there we’re projecting the video output from this phone. You see that white dot; that’s my finger and where I’m touching it. I’m going to slide up the lock screen, and here we are looking at start. So, what you’re seeing over there is exactly what I’ve got on my phone screen here. It’s a projection from the phone. And I’m going to walk you through some of the experience.

As I mentioned, what you’re seeing there we call live tiles. Think of these as, they’re sort of super icons that have a connection to the Internet, so they update to tell you what’s going on in your life. Up in the upper right that’s my People tile and those pictures you see are the actual photographs of your friends and contacts coming from lots of different services, including social networks like Windows Live and Facebook, but also your Exchange contacts and the contacts that you store with your Web-based e-mail.

As I scroll down you’ll see there is the Outlook icon that tells me for my corporate mail I have one new message. But, I can use this phone for life as well as work. And if I’m using Hotmail, or Yahoo! Mail, or other Web services I can have a live tile available for those, too.

My calendar gives me glanceable information to see what meeting I should be going to, and where it’s at. Oops, that was an accidental touch on my part. And as I scroll down you’ll see there is the Pictures tile, which automatically shows me recent pictures I’ve taken or synched. The Games tile has my Xbox LIVE avatar, and further you see there’s tiles on there for the people I care about most.

If I scroll down here all the way to the bottom, on the lower right, that’s my wife. It’s her Facebook profile. She uses a picture of one of my twin daughters, and so I can keep my wife right up on the start menu of my phone. And when she updates her photo, or updates her Facebook, or Windows Live, or other social network status, it shows right there on the live tile. So, I’m always up to date with what’s going on.

And, of course, this doesn’t just customize itself automatically as you’re seeing here, but you can customize it manually. So, it will be a great expression of who you are.

So, let’s take Kim Akers up there in the upper left. Maybe Kim has been a friend of mine, maybe we’ve had a bit of a falling-out. I can press and hold on the tile, and if we’re not BFFs anymore, I can just touch the broken heart, and say goodbye to Kim. Goodbye, Kim. And maybe what I should do, the right thing to do would be to take my wife, and we’ll move her and put her up here in the spot where Kim was. And now that’s as simple as it is to customize these live tiles.

And you could put lots of things on here. You can put people on there, which is an obvious thing to do. You can promote applications as a live tile, and they’ll give you data and information. You could promote a playlist of the music that you most want to listen to. All those things are possible.

Now what I’m going to do is jump in and show you some of the experiences that are built into the phone. I’m going to jump to the calendar first, and you’ll see here the calendar provides multiple views. There’s a day view. There’s an agenda view, which shows me all of my appointments in sort of a list form. And one thing you might notice is that in this screen  oh, I lost my connection, sorry about that. There we go. Sometimes we lose the video connection. So, I’ll tell you again what I was showing you.

Here’s the calendar in agenda view, and the items in red are my personal meetings on a Windows Live calendar. The items in blue are my work meetings on an Exchange Server. And we support this theme of your work life and your home life coming together on the phone in an elegant way. I can switch over here to day view, and now I’m looking at all my appointments in sort of a time-oriented view, so I can see how long they are.

Down on the bottom of the screen is an element we call the App Bar. It’s sort of like a toolbar that centers all the commands for an application in one place on the phone, with the most common commands at the top. But any time I can pull it up and get extra, slightly more advanced commands. It’s a way of keeping the user centered so they always know where to go to find functionality.

I’m going to touch the month view command right there, and we’re going to navigate to month view. You see the nice animation that shows me the day I came from, and if I chose another day, we’ll zoom right in and get the view of that day as well.

Now what I’m going to do is scroll down. You’ll notice I have the press conference here at 3:00. There’s a little bit of time I have to meet and talk to some of you, and then I have a meeting with Steve at 6:00 p.m. So, let me jump in here and show you some of the other ways we’ve thought about trying to make the design smart, and anticipate what people want.

So, this is a meeting that actually my assistant set up for me on my Exchange Server using Outlook. And the second line there, the line in orange, is actually the address for Microsoft Iberica; this is our offices here in Barcelona. And she just typed that in as text. What the phone does is it detects phone numbers and addresses throughout the user experience in the browser, in your e-mail, in your calendar, and it automatically turns them into hot hyperlinks, so you don’t need to select, copy, navigate, and paste. That’s a lot of steps for a phone. We wanted to make the phone streamlined and smart. So, in this particular case, I can just touch that link where the phone has recognized the address, and it’s jumping off to the built-in experience for mapping, Bing Maps, on the Windows 7 Series phone.

And now the Bing Maps experience is subsequently showing more and more detail. As I zoom in here, I’m just touching the zoom, the phone will be connecting to the service, and pulling in ever more detailed tiles of the area I’m looking at. I can pan around here. I’m going to keep zooming in a little bit. And what you’ll see in a second is the map getting smart about how it changes its visualization for what the user is likely to want.

As I get close in to street level, the map changes to show me satellite photography of this particular area, so I can really get a sense for what it might look like when I actually get there. And as I pan around, you see the detail fading in with ever more clarity.

This map experience, as well as a bunch of other places, on the phone not only supports that sort of — I was zooming by touching with one finger, but as you’ll see, I can get my two dots on there, and I’m doing a pinch zoom to zoom out, and I can zoom out and I can zoom out, and zoom out, and so on.

So, we support multi-touch and all these rich multi-touch gestures throughout the experience in a way that’s consistent with the Windows 7 PC multi-touch experience. If you get a Windows 7 PC that has touch, and then you get a Windows 7 Series phone, both support multi-touch in the same way.

And, again, down here on the bottom you see the app bar, which lets me get directions, or do more advanced commands like showing the traffic, or turning the aerial view on and off. Not particularly advanced, but it’s a nice way of organizing things so the most common things, the highest-priority things, are seen first and are up on top.

So, now I’m going to go back. I was looking at my map and you’ll remember, I was looking at my calendar. And now I’m thinking, OK, now I know where the address of this place is. And I’m going to go back to my calendar and you’ll note I’ve got some free time there at 5:00 p.m. So, what I want to do is think of a way that I can use my free time.

I will tell you I’ve been here rehearsing this for a while, as you might imagine. I’ve really not had that much time to get any lunch. And I’m pretty sure that when I’m done I’m going to be hungry. So, here in Spain I’m a fan of sushi. I’m not really sure where to go to get sushi. I touch the search button, that’s a button in hardware, super-easy to navigate. And here I am in the Bing search experience. So, I’m going to type sushi, go. And now Bing is doing a search based on very little information that I typed in, sushi, and yet Bing as a decision engine is trying to help me be effective in what my task is.

In this case I want to find a place to go have sushi. So, Bing was smart enough to return the results in local form first. And if you look at the results, the way the results are displayed is very intentional. The first thing you see is a map of these places all put together, and I can touch that and navigate to the map and see where they all are, or as I scroll down the rest of the results are shown as a list. And the list is sorted by distance, so I can see the sushi restaurants that are closest to me. Now, even more, if I want to pick one of these I’ll choose Sushi Films, I’m not sure what that is. The Bing engine tries to provide enough data so with instant touching you can find more about each one of these places.

Now, here in Spain we have not filled out all the data for these items. I want you to imagine more stuff, which is what you’d see in the U.S. And as we fill the service you’ll see that here, as well. I can get directions to this place from here. I can dial the phone number. If I pan to the right I can read reviews and on the back end Bing is filling up with reviews from lots of different partners like Yelp, so that reviews are available right here instantly as you look at each item. I can pivot over and look at places, businesses that are near this one. So, here’s a list of nearby businesses, so if I want to find parking, or a bank to get cash, the service is optimizing to make those tasks really easy.

So, now that I’ve found a place that I might want to go, you can imagine I’ve used the map to get there, I’ve maybe used the phone number link to make a quick phone call. Maybe I get there and I’m with a friend and we’re having a debate about what sushi is good. Well, there’s another context in which I might have meant the query sushi, which is to get information about sushi.

So, right here you see the Bing results also give me information to help me make smart decisions. And what I’m going to do is navigate down here; one of the three results you’ll see is a sushi guide. So, imagine I’m sitting here in this restaurant with a friend and we’re having a debate about what the right kind of sushi is to get, or what fish a particular type of sushi is made from. I can just touch that result. I’ve typed sushi. I’ve moved to Web results, found a site, and now here I am in the browser. So, I want to give you a look at the browser.

The browser that’s built in to new Windows Phone 7 Series devices is a much more advanced browser than any we’ve shipped on a phone before. It’s based on the desktop Internet Explorer code, so it’s highly compatible with tons and tons of Web pages, and it performs really well, as well. You can see I’ve got two fingers on there. I can do my pinch zooming. I can double-tap. I’m going to double-tap to zoom into this column. I can double-tap to zoom into that picture. The performance is good. I can scroll around. And then one other thing I want to show you, sort of to give you sense for attention to detail.

I’m going to zoom way in on this text, because I want you to take a look at how these letters look. We’ve tried to pay real close attention to great visualizations here. The curves are very smooth and the positioning of letters in the word is very exact. This is a step beyond ClearType. It’s called sub-pixel positioning. And what it does is it makes Web pages really, really legible. So, if I zoom back out you can see on this screen we have a high-resolution WVGA screen on these phones. The text is super-legible, and that makes browser pages on a small device feel really big.

The combination of the technology that makes text look good and the high resolution makes reading Web pages really, really legible. So, if I zoom back out you can see on this screen we have a high-resolution WVGA screen on these phones. The text is super-legible and that makes browser pages on a small device feel really big. The combination of the technology that makes text look good and the high resolution makes reading Web pages really a pleasure on these phones.

Down at the bottom you might notice, again, the app bar. I can add this page to my favorites. I can go navigate to my favorites. I have browser tabs, which let me operate more than one Web page in the background, or as I pull it up you’ll see there’s other commands like take this page and pin it to my start as a tile. So, if I’m frequently visiting this Web page it can be super-available to me, just as making a phone call or texting my wife is. So, that gives you a look at the browser.

Now, I’m going to go back to the start experience here with my live tiles. And I want to show you a little bit about the communications features of the phone. So, what I’m going to do is navigate in; the tile there that says Outlook is the mail experience of the phone connected to my work Exchange e-mail. And, as I said earlier, thematically we’ve tried to build this phone experience so it works great both for your work life and for your home life outside of work.

So, this mail experience, which is very rich, and high-performant, and you’ll see I can pan through these messages really quickly. I can pivot from all my mail to my unread mail. I can pivot over to flags. It works just like Outlook on the desktop. It operates against a local cache of data so it’s always very fast, and if you lose some network connectivity it’s still fully featured. And it gives me features like flags that enable me to operate in a way that’s super-consistent with Outlook on my desktop.

I can pivot over to urgent. I can pivot back to all. And again, we’ve tried to really pay attention to the details. One example of a place where we actually modified our user experience design was in the way people triage and delete mail items. Over here on the left if I want to delete one message, I can choose one and hit the delete icon. But, if I want to delete three I can choose three and hit delete and it’s as easy as that. I don’t have to learn two different modes, and the number of touches is greatly minimized so that the phone is efficient and fun for people to use.

OK. That gives you a look at sort of the state of our actual software running on the phone, and there’s a whole second area that I haven’t talked about yet, which is this idea of integrated experiences. I mentioned early on that we looked at the state of the industry and the way people were using phones and saw Web services and applications and data, and we wanted to bring those things together in a way that there was a destination for each of the most common tasks that people wanted to perform. A destination for pictures, a destination for people. And so, we’ve designed this idea of integrated experiences. We call these hubs.

The idea of a hub is to organize data on the Web, and data in an application, and data on your phone into a single place that you can go visit and have real efficient, fast, fun, ease of use. And the idea is that when you bring those things together that the combination, the whole is really greater than the sum of the parts individually. And that the experience will be meaningful, delightful, and work the way a phone should in the small moments of your life where you only have a little bit of time available.

I’m going to actual walk you through five of these hubs. So, we’re going to start first with People. Really, the phone fundamentally is a device that ends up being primarily about communication and connecting with people. And the way that we connect with people has evolved a lot in the last few years. If I think about the experience that I have — I’ll take the PC as a first example — there’s lots of ways I manage lists of people. I have Outlook where I have a whole bunch of contacts that are work-related and stored in a server. I’m a member of Facebook. I’ve got like 650 Facebook friends that I interact with. I use Web mail services like Gmail, or Yahoo!, or Hotmail, Windows Live Mail, and I have contacts there.

And on the PC it’s really OK for me to switch between these things separately. I’m generally sitting in a comfortable chair. I have a big screen. But, the phone is just not a PC. And we thought we could do better than making people go deal with all these things individually. So, let me introduce to you the People hub. And the idea of the People hub is to bring together the most common tasks for the people that you care most about.

Over here on the right you see the recent people that you’ve communicated with; whether you called them or texted them, they’re bubbled up to the top so they’re instantly available. Here in the middle is the list of all your people. And we bring together people from Windows Live, from Facebook, from your Exchange Server, from your online mail accounts. And here in the middle, that’s you. We’re looking at an example of a phone owned by a woman we call Anna. That’s her latest social networking picture and status and over there on the end is the What’s New.

Now, I want to show you how this actually looks on a phone. The idea is, it’s a panorama, and you move back and forth in the hubs. So, we’re going to touch up there on the People tile. And the first thing you see is your recent people. They are quick and easy to get to. They show you what’s up with all these people. If I pan to the right, there’s the list of all my people instantly available. And if I pan to the right again, you’ll see the What’s New feed, which is aggregating Windows Live, Facebook, and other social networks into a single list.

Now what I’m going to do is pan back over here to the all list, and you can imagine these lists get pretty long, so we’ve provided some nice ways to navigate. I can touch the letter C and get a quick look at the alphabet. So, if I want to jump down to the Ws, I can simply touch W, and I’ll choose Anne Weiler. Now, of course, there’s stuff on here you’d expect. I should be able to call her or text her right from there. But if I pan to the right, I can see what’s new with Anne on all these social networks together.

So, I see she’s updated her Windows Live status. She’s at the beach playing with her twins. And so if I want to add my own comment, I can just do this right here for Windows Live, for Facebook, or for other social networks that connect to Windows Live. I hit enter; my comment has been posted. And now I’m communicating. I’m having a conversation with one of my people.

And now what I’m going to do is press that Pin button to take Anne and add her to my start experience, because if she’s someone important to me, she’s readily available. And you can see right there, she’s updated her Facebook or Windows Live status, and now I have that new information available to me in a glanceable way.

That’s the idea: Bring together discrete sources of data, Web services, applications, functionality, into one place that’s simple, glanceable, and is fun and efficient.

The next one I want to talk about is Pictures. I personally am kind of a photo enthusiast. I have twin girls who are two-and-a-half, so as you can imagine I’m taking a lot of pictures. And the way I use them on the PC is very rich and full-featured. I use the Windows Live Photo Gallery application to manage all the pictures that I store on my PCs, and I have thousands of them. I post a lot of them to Facebook to share them with my friends. And my posting on the Internet is not limited to Facebook, to other Web services as well.

And on the PC using these different applications works OK. But a phone is just not a PC. It has a small screen. I’m carrying it around with me. And the things I want to do are a little different. So, let me introduce you to the Pictures hub. You’ll get a sense of the theme here. The Pictures hub lets me see all the pictures on my phone. The Pictures hub lets me see the pictures I’ve been taking recently. And it lets me see what’s new with my friends.

So, what we’re going to do is come over here, and see how that looks on a real phone device. I’m going to touch the Pictures tile right here, and navigate in. And this part of the hub is the gallery, where I can view all the pictures that are available for me to look at on my phone. I’m going to pan to the right, and the phone has picked the latest album of pictures that I synched from my PC or that I’ve taken with the phone camera, so they’re available for quick viewing. I’m going to pan to the right and, again, a What’s New feed that shows you all of the activity of my friends as it relates to photos. So, if my wife has posted new photos, or my sister in Florida has posted new photos, they’re instantly available to me on the phone right there.

Now, I’m going to touch the All item in the gallery, and you see the phone gives you a really nice view of all the pictures that are available to you to look at on your phone. I’m going to touch one of these up here, and of course I can pan from one picture to the next in a simple, natural way. But the functionality doesn’t stop there. If I choose a picture, there’s a way to integrate in functionality from other services or applications.

In this case, I’m going to touch Upload to Facebook. I can add a caption. And the picture is posted to Facebook for all my friends to see. And I was able to do that as well as see the What’s New feed, as well as have Facebook integration in my People just by adding my Facebook account one time.

Now, I’m going to come back here and go to the albums list. And what you see on the screen are albums of pictures that — these up here are folders that I’ve stored on the phone by taking them, or I’ve synched them from my PC. And at the bottom, you can see two examples of albums that are online. There’s an album down at the bottom called Hike, which I’ve posted to Windows Live. And there’s an album at the bottom called Road Trip, which I’ve posted to Facebook.

So, again, all these pictures, whether I took them with the phone camera, whether I synched them from my PC, or whether really I did nothing related to the phone, but one day in the past I posted them to one of these Web services, all these pictures are available for you to look at, view, consume, comment on right in your phone in a simple, straightforward, consistent way without having to do any extra work. That’s the Pictures hub.

Next I want to talk about productivity. It sort of wouldn’t be a Microsoft event if we didn’t talk about productivity. And this phone is great for business users as well as being great for your life outside work. Certainly most of you have probably used Microsoft Office, and you know that it’s a full-featured suite of applications that doesn’t just let you create and modify documents, but Office also is good at things like taking notes. I’m a huge fan of OneNote. I love taking notes in OneNote. And that’s a scenario that’s great on a phone.

Office also provides services. SharePoint is a terrific experience, whether you’re a company that has SharePoint Servers inside your firewall, or a small business or individual and you want to store documents in SharePoint as part of Windows Live. So, what we’ve tried to do is take that experience from the applications, and documents, through note-taking to the service, and bring it together on the phone. So, I’m happy to introduce you to the Office hub.

The Office hub, together with the Outlook experience of the phone, brings all of these functionalities together in one place. So, let’s take a look at what that looks like on the actual phone device. I’m going to pan down here and touch the Office tile. And you’ll see the first thing over here is my note-taking area. I can create a new note and type. I can create a note with a picture. I can create notes with my voice. And these notes are synched between the phone and your PC. So, if you like to use OneNote on the PC, those notes will show back up on your phone.

In the middle is the document area. These are all the documents that you’ve saved or synched to your phone. And on the right is the SharePoint area. And I can access these documents on a SharePoint Server within my company or online, and do real collaboration with pinged people, synching offline, and then having a terrific consumption and editing experience that’s completely consistent with upcoming Office 2010. So, we think the productivity experience, the Office hub, as well as the Outlook component of the phone, are going to really make this device absolutely terrific for people who have work infrastructure and want to be productive as well as have fun.

OK. I have two more. Let’s move on and talk about some of the sort of moments that we want to fill with fun and delight. Music and video are two scenarios that people are using increasingly on phones. And if I think about my own usage, I mentioned I worked on Zune before I came to the Mobile team. On my PC, obviously, I use the Zune client to manage my music collection, which is large. I acquire new music through it. And the truth is, my experience with music and video doesn’t stop there. There’s lots of other services that I use; Pandora is a great example. I’m a fan of Pandora, I like creating new radio stations and streaming my music. And on the PC, switching between these different experiences really works just fine. But, again, phone, not a PC. So, we wanted to do something that brought those things together in the user experience.

So, let me introduce you to the Music + Video hub. First, it’s worth mentioning every Windows 7 Series phone will be a Zune, and it will work just like Zune HD, giving you a full, rich way of synching your music and video content onto your device and consuming it. But we go beyond just that, because the Music + Video hub also provides a way for third-party applications and services to integrate in, so there’s one-stop shopping for everything the user wants to do with music and video. Let’s take a look at how this actually will look on the real device.

I’m going to come down here and touch the Music + Video tile, which you might have noticed is actually showing me an image of the last band I was listening to, and it’s in the background of the tile here as well. You saw the Zune area. I could navigate through my collection. But as I pan to the right, you’ll see there’s history — that’s stuff I’ve been playing recently — and new, just like on the Zune HD, but both of those in this case work with third-party apps and services as well.

You notice the Pandora Train radio station available, which is a new one that I created. At the far right I have a quick way of launching into those third-party apps and services. So, truly, the Music + Video hub becomes a one-stop shop for all the things that I want to do with music and video, whether it’s the built-in Zune experience or other third-party experiences.

Now, what I’m going to do is show you another demo. And this time I’m going to show you how this would work for someone who has a Windows Phone and a PC. Now, you probably notice, as I’m describing these things, a lot of the way the Windows Phone works is connecting directly to the cloud. So, it’s not necessary to have a PC at all, but if you do have one there’s a lot of extra benefit you can get.

So, I’ve got my Windows Phone right here and I’ve got my USB cable. That’s my PC; nothing special happening on the PC. I’m going to just plug this in. And you’ll see pretty much instantly the phone is recognized and the Zune software pops up and is displayed. The Zune software has been around for a while, but I know some of you, particularly here in Europe, might not have had a chance to see it. So, I’m going to walk you through and show you how easy it is for people to put content on their device.

I’ve landed here in the collection view. That’s my music collection on my PC. I can look at it by artist, or genre; I can switch over to album view. Zune lets me look at music, videos, pictures.

Over here is the device tab. When I plugged in my phone the Zune software immediately recognized it. I get a photo of the phone right there. It tells me the last time it synched. On the bottom is a bar graph that shows me how the space is being used, and I can even browse the content that’s actually on my phone. If I touch the music tab right here, these are the music albums and artists that are stored on my phone, and also available videos, pictures and so on. So, if I want to free up some space, because my phone is getting full, I can just right-click, choose Delete from Joe’s Demo Phone, say OK, and voila, that’s going to get deleted as it syncs.

Now, the Zune software does lots of things. And I wanted to show you this view right here called quick play, which lets you create smart DJ playlists for lots of different artists. And down here you’ll notice some parallels in the way the phone works and the way the PC works. There’s items that I can pin, like the ones on my start menu on the phone. There’s items that are new, that I’ve recently acquired. And then there’s the history of what I’ve been playing lately. So, the metaphors are constant from one device to another.

OK. I’ve got one more hub to show you.

The one topic I haven’t talked about yet: games. If you look at the explosion in applications that are getting created for phones, by far the most popular category of those applications is games. And as I think about my use of games today, I play games on my phone, I connect to games on my PC using casual services and, of course, I play games on my Xbox console as a member of Xbox LIVE.

And using those separate devices works fine, but what we wanted to do was bring that whole experience together for people in a unique way on the new Windows Phones. So, let me introduce you to the Games hub, which features Xbox LIVE. Yes, we are bringing the Xbox LIVE service and Xbox LIVE games to the Windows Phone as a built-in part of the value proposition. So, the phones are not just effective and functional, but really fun. And what I want to do is show you how the Games hub with Xbox LIVE actually looks and works on a real phone.

So, let’s come over here and take a look. I’m going to touch the Games tile, which as you saw, our example user Anna had her avatar right there in the tile. The spotlight here gives you announcements about new games and new information available on the service. I’ll pan to the right and you’ll see, I can see Anna’s Gamerscore, a recent achievement that she’s earned, ether on the console, or on the phone. And I can see her avatar, as well.

There are requests, because we think of games really fundamentally as a social experience. You can see it’s Anna’s turn at a card game, or someone is nudging her to come join a new game with her. And on the far right is the collection of games, featuring premium titles authored to Xbox LIVE, which on the phone will support achievements, letting you increase your Gamerscore and letting you do multi-player interaction with people on other phones, but also on the PC, and on the console as well. So, when we look at Xbox LIVE, and the amount of fun and experience that more than 23 million people are having on the console, we think it’s going to be a terrific addition to the family of experiences on these new Windows 7 Series phones.

OK. That’s our tour of the product. And I want to sort of emphasize that I showed you some code. There’s a lot more code that’s worth seeing if you come over to our booth we’ll be doing demos, and you can look at more of these things in more detail. And if there’s anything you take away from this I hope the main things that you’ll take away are, we’re trying to take this rich capability of stuff out on the Web, and applications, and bring them together in a design that’s smart, but prioritizes around the things that are most important for each individual user. So, the phone becomes a unique and intimate reflection of who they are.

We wanted to create integrated experiences, as well, around the most common tasks, pictures, music, productivity, people. And we think that this all together is really a different kind of phone that will work great for busy people whose lives are constantly in motion, and who want to make the most of every little moment they have available. We want it to be easy to use and delightful and something new.

And with that I’m going to play a quick video and then we’ll turn the stage back over to Steve for more details. Thanks very much. (Applause.)

(Video segment.)

(Applause.)

STEVE BALLMER: I gave you no context, and I hope after having a chance to see a little bit of the product and what our hardware vendor partners will be able to do in terms of creating next-generation Windows Phones, you share some of my excitement for the opportunity.

There’s no doubt that this phone market is A) highly competitive, B) highly dynamic, and C) super-exciting.

And there is no question in our minds as we go back a couple years that we needed and wanted to do some things that were out of the box, clearly differentiated from our past, and hopefully you’ll agree clearly differentiated from other things going on in the market. And I think that’s valuable to have that kind of differentiated point of view.

You’ll see us continue to invest in our Windows Mobile 6.5 offerings, but we start a whole new generation here with the arrival of Windows Phone 7 Series.

We built, if you will, with three fundamental changes in mind as we were thinking about the differentiation. Some of these should have popped clearly during the course of Joe’s demonstration, some of them probably less so, and I’ll have a chance to talk a little bit about those.

First, we really wanted to lead and in a sense take much more complete accountability than we had in earlier versions of the Windows Phones for the end-user experience. We worked hard to say what’s the minimum hardware definition that’s required to allow us to do great experiences, how do we make sure that we really do have a set of smart design facilities in the way that Joe discussed, and that those get consistently implemented across a range of Windows Phones; how do we take the next step in terms of really integrating experiences for the end user into the phone. And you saw what we’ve done with hubs and some of the built-in experiences.

So, the user experience that Joe showed you is a baseline on top of which there will still be a lot of innovation — and I’ll talk about that in a minute — from developers, from hardware manufacturers, and certainly from our operator partners; but that kind of complete, comprehensive, and consistent design experience for the end user was a fundamental principle of what we’re trying to do with the Windows Phone 7 Series.

Second, at the end of the day, I think we all understand that in the business of information technology, software and creativity and the innovation of developers is absolutely fundamental. And with the 7 Series of Windows Phones we really raised the platform on which people can built, the operating system and the set of integrated services that people can extend; a new foundation with a rich set of development tools that we’ll have a chance to describe at our MIX conference next month: built-in and consistent service availability, Bing, some of the Live Services, that software developers can assume as a foundation and not have to re-engineer and repeat themselves. And Joe showed you some of the kinds of experiences that you can build around search, around the identity, around the integration with social networks and other things.

So, we’ll talk a little bit more about what developers can do and the toolsets and opportunities for developers next month, but certainly we wanted to take a very big step forward on that.

And third, but perhaps as significantly, although it doesn’t come out, so to speak, in the demonstration itself, is we really wanted to take a step forward in terms of our approach in working with partners: the hardware vendors who build Windows Phones, and the operators who do so much to add value and bring these things to market and deliver the key service.

With our hardware vendors we want to raise the bar, we want to have a little bit more consistency in the hardware platform, and a little bit more consistency in the user experience, but we still need to enable their innovation. We want you to see lots of different form factors of Windows Phone 7 Series, lots of different diversity. And I think with the new way we have of collaborating with those partners you’ll see greater consistency and almost more innovation in terms of what you can expect in terms of form and feel and industrial design and the like.

With our mobile operators it was absolutely critical that we had a model that raised the bar, but gives the operator a chance to show off the unique capabilities in their network, the unique service offerings that they have available, and to be able to do that in a way where the customer can still get a uniform experience for things like billing from the operator where the customer already has a very deep and important relationship.

We decided that those two anchor points, rich relationship and partnership with the hardware community and with the operator community, was going to be fundamental to what we did.

And in some senses you could say there’s a bit of a conundrum there: We’re trying to raise the experience for the user and integrate more, but enable developers, enable the hardware community and the operator, who looks a little bit like everything — the operator provides the service, develops their own services — we wanted to make sure that the innovation of all of those communities could be supported but on a much richer and a much more consistent platform.

So, those were really the sort of three fundamental design principles, if you will, beneath the covers, the ones that every user are going to interact and the ones that Joe had a chance to show you, but I wanted to describe a little bit kind of the motivations and where we were coming from.

There’s no question that we had to kind of step back about a year and a half, two years ago, recast and reform strategy, design approach, and I think we’re well on our way to making progress to something that can be pretty exciting.

The changes that we’re trying to make in the ecosystem broadly are very important. To talk a little bit more about those I want to invite onstage Andy Lees. Andy runs our mobile communications business. He’s going to talk a little bit more about some of the partnerships that we have in place, and some of the partnerships we will be putting in place as we bring the Windows Phone 7 Series to market. Please welcome Andy Lees. (Applause.)

ANDY LEES: So, I joined the mobile group at Microsoft just under two years ago. I’ve been at Microsoft for about 20 years. And when I did, we used that as an opportunity to re-examine everything about our strategy, the role of services, to even building our own phone.

Now, we have changed a lot of things, but one of the things that we’ve kept constant is our belief in the partner model.

There are three reasons as to why partners are fundamental to our business. Firstly, they add rich experience and expertise across a broad spectrum of areas: hardware, software, services. They have knowledge and insight of the markets that they serve across years and years of experience. And it’s when we add that together that we deliver the total value to the user.

The second thing is amplification and scale. There are more than a billion phones that are sold every year, and there’s this massive shift over to Smartphones. We need partners and to work together with them to help develop, market, sell, and support Windows Phones at this scale.

And thirdly, partners can meet the diverse needs by providing customers with choice. And here the adage is true: One size does not fit all. People want different types of phones, different form factors, some with keyboards, some without keyboards, big ones, small ones; they want them with different capabilities, they need that choice.

So, we have not changed the importance that partners have to our overall strategy. What we have changed, though, is how we work with them.

In fact, the goal with Windows Phone 7 Series is to significantly improve the quality, consistency, and enable more innovation across OEMs, developers, and network operators. We want to strive for synergy where the whole is more than the sum of the parts. In fact, we’d say that Windows Phone 7 Series is more than just a product, it’s a new way for the ecosystem to come together.

So, I’m particularly pleased to announce the hardware partners that we’re working with to deliver Windows Phones 7 Series.

We have worked with these partners to redefine the way that we build phones from the ground up, redefining every step. We started with Qualcomm on the core silicon. We have a new architecture, the way that drivers are developed, a new core operating system, and we’ve worked hand in hand to make sure that hardware and software are fully optimized.

The result is better quality, better performance across all of the phones, enabling things like the graphics, the animations that you saw in the smart design of Windows Phones 7 Series. It’s something that we’ve never done to this level of detail.

And building on that, we’ve worked closely with these OEMs to define a core hardware specification that is common across all Windows Phones. This means that we’ve done it very, very comprehensively to a lot of detail: screen resolution, touch technology. Not only do we know that all of our phones have touch, they have four-point multi-touch, enabling people to develop new types of games, make the user experience as rich as it can be, defining how sensors like accelerometers and compasses are going to work consistently across all our phones.

We’re also developing more of the total software inside of each Windows Phone 7 Series phone. We developed system components like drivers. We include the user interface in a consistent way on every phone. The result: cheaper and faster in ways that OEMs can build phones.

Now, don’t get me wrong, we still love the innovations that OEMs will add to what we provide. They will differentiate, but do so in a way that is synergistic with what we have provided.

Now, each of these OEMs will be providing a range of Windows Phone 7 Series when we launch, and so I’m looking forward to showing you those with those OEMs when we get closer to that date.

Having predictable and optimized hardware is certainly key for ourselves to deliver the delightful Windows Phone 7 Series experience, but it’s also important for the rest of the ecosystem. This is especially true for developers who want to write applications and games that fully exploit the hardware possibilities.

We’re delivering a new platform for developers with new tools and new services in the cloud, and as Steve said, we’ve going to announce and provide full details of those at our MIX conference that’s going to take place in March.

The third piece of the puzzle is how we work with network operators. Now, they will benefit from the new way in which we build phones and the software platform so that they can add their own software and services.

I’m particularly pleased to announce the mobile operators who are committed to delivering phones to their customers at launch.

For mobile operators, Windows Phone 7 Series provides a choice of unique phones with rich user experience and a broad ecosystem of applications and games. Of course, mobile operators provide the network and market and support the phones.

But mobile operators also have tremendous value to add; they’re not just dumb pipes. Our model is about enabling those innovations so that they can add software and services and benefit from our hardware and the platform and what we provide with Windows Phone 7 Series. So, working with these mobile operators to range phones, but also so that they can add their innovations on their networks for their customers.

I’m also pleased to announce that we’ll be working particularly deeply engaged with two mobile operators. We are investing together to bring the full Windows Phone 7 Series experience to the market across a range of phones. We’re working with them side by side so that they can provide their differentiation through unique software and services on their networks.

So, I’d like to ask Steve to come up and join me in welcoming AT&T and Orange.

Firstly, with AT&T, AT&T has been a valued partner of Microsoft since we first introduced Windows Phones in the U.S. In fact, they were the first to deliver Windows Mobile Smartphones into the U.S. in 2003.

Therefore, it’s natural to introduce David Christopher — he is the chief marketing officer for AT&T Mobility and Customer Markets — to join us today. He’s responsible for products and marketing for all of AT&T’s wireless and wireline business, and including their U-verse IPTV platform. So, he chooses the handsets and sets the strategy for more than 80 million customers.

Please welcome David Christopher. (Applause.)

DAVID CHRISTOPHER: Great. Thanks, Andy. Thanks, Steve. It’s great to be with Microsoft here today.

You know, as Andy said, we’re super-proud to have been the first operator to launch Windows Mobile back in 2003, and we’re thrilled to be the premier partner for the launch of Windows Phone 7 Series in the U.S.

Our strategy is all about offering the best and the broadest array of Smartphone choices for our customers, and Windows Phone will be a significant part of that strategy.

If you look at the market in the U.S., we’ll ship roughly 66 million Smartphones in 2010, according to IDC consulting company. That’s double what it was in 2008, and that number will double yet again in 2013. A huge driver of that growth will be Windows Phones.

The reason why I’m so excited about Windows Phone is it brings all the critical elements that our users are demanding in a Smartphone: a smart, integrated user interface, integration with social networking, a broad catalogue of applications, and of course a rich platform for games and media.

So, I’d like to congratulate Andy, Steve, and the whole Microsoft team. At AT&T we can’t wait to get Windows Phone into market. Thanks. (Applause.)

ANDY LEES: The second partner launched the first-ever Smartphone based on Windows Mobile, the Orange SPV back in 2002. Orange helped us break new ground in the Smartphone market, and is here to help us break new ground again with Windows Phone 7 Series.

I’m therefore pleased to introduce Olaf Swantee, who is the senior executive vice president for their personal business. So, he runs the worldwide mobile business for France and Orange Telecom, representing 130 million customers in 34 countries.

Please welcome Olaf Swantee. (Applause.)

OLAF SWANTEE: Thank you, Andy. Thank you, Steve. And congratulations from my side; a very great demo, very great product.

We are proud of the partnership with Microsoft. We have been working many, many years, and it was good to find out today that we were actually the first in 2002 with the Smartphone, just one year before AT&T. (Laughter.)

We’re even more excited about the next stage, and to be a key partner in distributing, servicing and supporting the devices running Windows 7.

And we’re especially excited because today out of 30 million customers that we have, only 25 percent of them are really going to the mobile Internet today. And in 2010 and in 2011 we have the opportunity to get the 75 percent to the mobile Internet.

And with Windows Mobile 7 we will be able to democratize the Smartphone and to get it to a much broader group of customers in our footprint.

And I think what is important to say is that this partnership that we have is more than pure devices. What we have agreed to do is to not only work together on the distribution, but also on the services and support role, to make absolutely certain that at launch customers will receive technical support, support to get up and running with our Orange cast product portfolio.

So, with that, I am convinced that together we can get more and more people to the mobile Internet, and I’m excited about that. Thank you. (Applause.)

ANDY LEES: So, in creating Windows Phone 7 Series we’ve redefined how we work with the ecosystem across hardware, software, and services. We’ve worked closely with partners who could bring customers the choice they desire and experiences they can’t resist. Here we truly believe that the whole is greater than the sum of the parts, and that Windows Phone 7 Series is more than a product, it’s a new way for us to work together with our partners.

Back to Steve. (Applause.)

STEVE BALLMER: I hope just across the board we’ve given you something of a sense of the direction that we’re taking. We’re taking a step — I think it’s a big step — and certainly the chance to share this new generation of Windows Phone with you is really exciting for me.

Building on kind of the concepts of Windows and Internet Explorer, Bing and Office and Zune and Xbox, I think we really do have a unique opportunity, if we bring that together in the right way, if we understand and kind of recognize and appreciate the differences between the phone and the PC, with the new user interface metaphor that we’re bringing to Windows Phones, I’m enthusiastic about the direction that we’re headed.

It’s a step, it’s a big step, but together with top talent inside Microsoft, and the best talent that we get a chance to work with in companies like Orange and AT&T and others, I think we really get a chance to have a major impact on the market.

We talk about a strategy that says three screens and a cloud, and the phone is absolutely one of the critical screens: phone, PC, TV. Our PC position is kind of rolling along with the reception the market has had with Windows 7. We hope 7 is our lucky number, and Windows Phone 7 will have the same kind of positive reaction, but a lot of great things are also happening in the TV environment. And particularly in our partnership with AT&T around U-verse and the opportunity to take that and see where it goes next, I think just kind of rounds out this notion of all three screens playing together, with the seamless infrastructure to support them.

I think what we tried to show you today with the new generation of Windows Phones is a truly customizable experience, as Joe said, a really different kind of phone built for lives that are in motion, people who are moving, switching between work and office, real-time information, older people, younger people. We’re trying to embrace the totality of our customers’ lives, and really deliver smart design with integrated experiences.

Why are we here today? When will we have Windows Phones in the market? And I want to answer both of those questions actually.

Our plan is to have Windows Phones in market by the end of this year for holiday season 2010. Because we’ll be sharing our work so broadly with developers, with hardware manufacturers, with operators, we thought it was important to get out, show you what we have, rather than have it drip and drab out with various different kinds of leaks.

So, we wanted to set a milepost today at Mobile World Congress, but you can look forward to a lot of information coming on various aspects of the phone, but we’ll be in market with this new generation of Windows Phones, with our operator partners and our handset partners, for Christmas of this year, calendar year 2010.

And with that, I want to wrap up. We’ll have a chance to take a few questions, but it’s been our honor and privilege to host you today, and we hope you enjoy the conference. Thanks. (Applause.)

MODERATOR: Ladies and gentlemen, we have a couple of minutes to do a question and answer. There are three microphones coming down the sides and down the center. If you put your hand up to ask a question, and we’ll try and come to you. Would you introduce yourself and ask your question?

QUESTION: Hi, good afternoon. Georgina Prodhan from Reuters.

With such a proliferation of rival platforms, all of which are free, all the major ones of which are free, would Microsoft ever reconsider its policy of charging a license fee?

STEVE BALLMER: I think there’s something clean and simple and easy to understand about our model: We build something, we sell that thing.

I might take a different point of view that most of the major platforms are free. I would say today we have two kinds of competitors, what we refer to as vertical competitors who make hardware, software and service. I think their model is actually also reasonably clear: They sell devices. We sell software to people who make devices.

I think we really only have one or two competitors you could say who are on a model of free. My parents, like most other parents, said if something is free, you should take a look and find out where the real cost is.

Our model is clear and direct. We plan on staying with the model that we are on. We think it’s not only in our best interests, but it’s probably a simple model that’s easy for developers, handset manufacturers and our operator partners to deal with, to understand, and to build from.

MODERATOR: Any other questions? It’s very quiet today.

QUESTION: Hi. I’m Maggie Reardon with CNET News.

I guess my question is, with Windows 7 there’s going to be consistent — you’re talking a lot about consistency. How are you going to allow your partners to differentiate? I mean, if you want to have that same consistent look and feel, that totally goes against what Sony Ericsson was saying last night, that they want the user interface to be a Sony Ericsson-looking user interface.

ANDY LEES: What we want to do is that we make it so that by user experience it’s extensible rather than it has to be replaced.

The problem with things being replaced is the ecosystem is fighting with each other. If you replace the user experience, then what does a developer design for? Do they develop for the design that was before it was replaced or after it was replaced?

So, having consistency provides an overall better user experience, but we’ve made it very extensible. Live tiles are extensible, making it so that, of course, you can add applications on that. And so you can do a lot of different things to add a lot of different value, because we’re a platform down below. And so that’s how we allow extensibility without having the chaos of everybody trying to compete and change the same thing.

STEVE BALLMER: Let me just — as an old-timer let me remind you of maybe the first time I heard this discussion is when we moved from DOS to Windows. There was consistency about Windows that we didn’t have in DOS, and it turns out everybody wound up creating a bigger pool of opportunity through that transition.

I think when we look back three, four, five years from now, we’ll see great diversity and great innovation, and everybody will actually be quite pleased we could do that on top of a higher foundation instead of having everybody re-plumb the lower-level guts of the user interface.

MODERATOR: I think we’ve got chance for one more question. We are over on time. So, the gentleman here in the jumper with his hand up.

QUESTION: OK. Hi. My name is Tovash Koagin (ph). Just a short question: Are you going to support Adobe Flash in any way?

ANDY LEES: We don’t have Adobe Flash support in Windows Phone 7 Series out of the gate.

STEVE BALLMER: We have no objection to Adobe Flash support, however, but in v.1 there will be no support.

MODERATOR: Thanks very much. I’m afraid that’s all we’ve got time for.

STEVE BALLMER: Thank you all again very, very much for attending. We look forward to talking to you more. (Applause.)

END