Steve Ballmer: Global Energy Forum

Remarks by Steve Ballmer, CEO of Microsoft
Microsoft Global Energy Forum
Westin Galleria Hotel Ballroom
Houston, Tex.
Jan. 21, 2010

STEVE BALLMER: It’s a real honor and privilege for me to have a chance to be here today. I’ve had a very full day, which I’m excited about, talking to mostly customers in your industry here in Houston, although I had a chance to see some folks in the medical business, healthcare business, and a number of other industries. But primarily I’ve spent some time on and with the issues that I know all of you confront.

For me, being in the IT industry, it’s particularly interesting to have a chance to engage with folks in energy and oil and gas because your industry is actually a leading-edge user in pushing, in a variety of ways, the state of the art in information technology – whether it’s the way you need to model the physical world in the virtual world, whether it’s the amount of real-time data that’s coming back through a variety of either drilling processes, geological processes, transformation processes. There’s a lot of data, a lot of visualization, and a lot of collaboration amongst and across company boundaries, inside individual companies, and to some of the strangest and most remote and distant parts of the world. All of that pushes the state of the art in information technology, and your industry has also been a good user of the kind of stuff that we, and the rest of our industry, make.

So, it’s a pleasure to have a chance to be here to close, if you will, for today the Global Energy Forum. I know everybody has put a lot of time in today. I’m going to try to be relatively brief so we get to a question and answer session that I hope will allow us to focus on the things that are most interesting to you.

My job today is to tell you a little bit about oil and gas, but also tell you a little bit about IT in a way that sparks new ideas on new applications and new things you can do with information technology. And rather than start at the here and the now, I want us to kind of just lay back and think a little bit about what’s going to be possible over the next several years for communication, collaboration, and visualization with information technology.

So, let’s take a small look.

(Video segment.)

That’s for next year’s deliverables. (Laughter.) Well, that just gives you a little bit of a feel of the things that I think are going to be absolutely possible within the next three to 10 years, and absolutely mandatory in terms of using information and collaborating in exactly the ways people are really going to want to to push the limits. Full, wall-sized screens that can be used for communication, collaboration, visualization, biometric security you had a chance to see, real-time translation between our friends in America and in Thailand in the particular case that we chose to bring to life in the video. Enhanced reality, you look at something and you get feedback about it just by pointing your camera. Advanced use of sensor information in a variety of ways to enhance our view and model of the world.

These are all technologies that really are under-development at our company, in our industry, and are on the horizon for the period of time that in a sense we all have to plan, because like your business, in our business things happen quickly, and yet the big R&D efforts, those are not three month and six-month R&D projects. Those require serious investment over a period of time and, at least in our labs, we’re hard at work at those scenarios, which I think will make a big, big difference.

When we talk about kind of some of the galvanizing changes that will permit what we’re talking here, sometimes we like to use this expression now three screens and a cloud. It talks about the notion of bringing intelligence to small-screen devices, we can call those phones, if it’s more familiar; medium-screen-sized devices, which we usually call a PC; and large screen devices, which we think of as a TV, but as I showed in the video we can think of almost as a wall-size. Certainly all of these screens in conferences like this will all be intelligent displays as opposed to what we have today as an intelligent PC projecting on a very dumb screen that has no camera, no voice recognition built into it, nothing. And that will all continue to evolve.

So intelligent devices increasingly that you control with what I might refer to as a natural user interface, just like the move to Windows from DOS was a move to a more natural user interface, we’ll use speech, we’ll use voice, we’ll use gestures, and vision. We’ll use natural language to control these devices, and while certainly some machines may get less intelligent as things move to the cloud, many of these devices will be more and more intelligent, in order to bring this processing to you.

They may be easier and easier to manage. The problem today with most of the devices people have is, it’s hard to manage these smart devices, but smarter devices that are fed from and managed from an increasingly smart cloud. And the cloud refers to two things. It’s the new architecture for how software gets built, and it’s this notion of pushing it out into the Internet in a way that is accessible across company boundaries, out to individuals, whether those are freelance consultants.

Somebody was talking to me today, we need our security system to go all the way down to the guy who runs a logging truck in rural Siberia. Well, that actually makes sense to me, and the notion of how we weave security and identity, in addition to just improve the ability to build the kind of high-scale applications that exist in this industry out into the cloud.

So, this paradigm shift to natural user interface in smart devices, working with a smart cloud, all of which is essentially implicit in the video I showed you, it’s a powerful thing in motivating a lot of these innovation and information technologies. And the ways in which it will transform the way information gets used in the oil and gas industry I think is pretty interesting, and pretty pervasive.

That’s where our technology base is going. What are we hearing from folks in your industry about the specific kinds of business problems and challenges and opportunities that people see here, whether it’s from up-stream activities, through production, transport – I probably should put kind of trading in a whole separate bucket – trading has got a whole separate set of systems and complexity about it, down through refining and marketing and selling. And we’re hearing about opportunities and challenges in information processing and information technology across the board.

High-performance computing, simulation, modeling, we talked about the technologies today that we’re investing in from the cluster through to the desktop, new tools that let – I think we showed you the Smart Pivot stuff today, where you can really put incredible data right there in front of an individual engineer.

I had a chance to talk to some of the folks who build some of the most important systems for exploration, if you will, and the chance to bring together some of the things that live in those systems with the kinds of things that are going on in SharePoint and in Excel to help with modeling and business intelligence around that I think is quite amazing.

Collaboration, we can talk about between trading partners, joint venture partners, the service companies and the production companies, but in a sense you could say even starting in an individual organization. I’ve spent a lot of time with one of the big five really working on a transformation to a very modern infrastructure for voice, for video, for real time information, for published information in their collaboration environment. With Shell we’ve made a big investment together to really drive down that path of the next generation collaboration platform, particularly just given the dispersion of people who were involved in these important activities.

Project management, business insight, risk, and compliance, and safety, particularly on the downstream activity, running a complex plant, reporting on what’s going on, being in a position to provide real time data to appropriate regulatory and safety officials is a big opportunity that people talk to us about.

So right across the cycle there’s a set of issues where information is the key leverage point, and if you look at where we’re trying to drive Microsoft Office, and SharePoint, and Exchange, and if you look at what we’re trying to do with SQL Server, and business intelligence, it’s squarely in the shooting sights, if you will, of where we think things are going.

When I talk to non- oil and gas customers about one of the most important areas in which information technology is going to make a difference in the next 10 to 20 years, it’s been in the ability to model the real world in the virtual world. And because you can model the real world in the virtual world, we’ll do a better and better job of letting scientists in all industries run fast experiments. Our own search team thinks that one of their mission-critical investments is to make sure we can test new algorithms that really serve up the right results when you test a query, but we’ve got to match that against the real world of what people are interested in.

When you talk to people about what’s going on in pharmaceutical science, how do you map, how do you model the body and test new approaches in the virtual world before you get down the full drug discovery process?

When we talk to folks in your industries, how do we model the physical world in the virtual world to allow people to do simulations at a much more rapid clip. So squarely, and there’s new tools, new technologies, we’re investing in new modeling, languages, and approaches specifically to help drive these things.

Every one of these things gets improved both in user interface, in the agility and speed with which we can help you deploy as we translate next generation solutions to the world I described of three screens and a cloud.

This is an industry in which visualization is a big deal, in which remote control, and user interface is a big deal. And certainly one of the things that I have to say most tickled my fancy when our folks were briefing me for the day today is some work we’ve done with one of the software vendors in the industry bringing the Xbox controller with Landmark, bringing the Xbox controller into the world of software and exploration in this industry.

And you say, what’s the game controller got to do with it? The truth is, people are exploring, and desiring, and seeking new methods of interaction with the computer in addition to getting both for input and getting rich visualizations back out. And certainly there’s a set of investments that I think are extremely important, and we’ll talk a little, bit about some of those as we move forward. But this is interesting, because I often tell our folks that the kind of investments we’re making in the gaming business really are quite relevant to the stuff going on in industry. And people say, no, no, no, not really. And yet I get pushed for 3D in the browser in this business. How do we do three-dimensional presentation within the context of the browser? How do we take better advantage of it? And those are the same technologies we’re getting pushed on to do photo-realistic simulation in the video gaming business. So a lot of these advancements will apply from the consumer world back into even the most advanced commercial environments that we see in oil and gas.

I didn’t sit through the full day, but between what we had to say, and what you were able to hear from some of our customers and partners in the breakouts, we regaled you somehow with stories of various technologies, and products, and how they can be applied in this business industry, SharePoint, Windows 7, Office Communications Server, et cetera. When you look at kind of the design point we have for these things, we’re really looking at a few basic principles which can be applied broadly across industries. We’re trying to help people get everyday tasks done easier and anywhere. And that was certainly a guiding principle behind Windows 7 design.

Next generation information security and control. Security has got two important aspects that we’re working on. No. 1, we’re trying to avoid creating problems, or giving you the tools to manage and protect yourself against that. Today, of course, being an interesting day for us on that front, and we’re pushing forward strongly.

The other thing that’s particularly important in this industry is not just helping identify who is who and what’s what, and avoiding the chance of incursion, but actually providing data level security. How do I take this model of what’s going on in this location under the ground, and how do I make sure I only share it with these six people inside my company, and these eight people in my customer, and these four people in my supplier? That’s not a question of just knowing that I’m Steve Ballmer at, but right down to that important geophysical model, how do you say who has access to use it. And we’ve made big investments in sets of technology, we use the word “information rights management,” to really help you all the way down to that level.

Improved productivity. Productivity can mean, I want to express myself, I want to do a set of analysis. I was hearing a lot about the way Excel spreadsheets are used to manage production engineering information, and the need not only to let people be personally productive around that data, but to make sure it’s got a level of control and management that ensures the quality of the data, given the huge decisions that are being made in terms of capital investment and other around it.

Everybody in this business and a lot of other businesses are pushing for better cost and better agility, and certainly if you look at what we’ve done around Windows 7, streamlining PC management, so that you’re dealing more with your business problems, in terms of your cost profile and your time profile, is very important to it. And last but not least is collaboration, we grew up in collaboration through e-mail, instant messaging, presence, voice, video, screen sharing, because a lot of what you want to do is take, for example, two people, maybe somebody in Kazakhstan and somebody here in Houston, you really want them to share that same geophysical data, you want them to be able to have a video conference around it. You want to be able to find out who else is available, who are the experts.

We talked about social media and the importance of social media in the consumer world. The truth is, there’s friends of friends of friends, and there’s also colleagues, and colleagues of colleagues. There’s the expert database. We talked about those expanded bases, if you go to the social network world. But, you want to know who is the expert on a given topic. That all relates to the collaboration environment that goes around what’s going on in this business.

A lot of what people want to do in the oil and gas industry is to tie into the SAP environment, that many, many of you have implemented and how do we let you do –  excuse me, ad hoc collaboration, take an invoice, take a piece of information out of the SAP system, have some ad hoc collaboration around that and put it back into the SAP environment so it can track and go back into business process. We’re partnering with SAP on a set of scenarios around that.

So, it’s a broad set of let me call them horizontal scenarios. They all have applicability in industries outside oil and gas, but I think a lot of the core investments we’re making in Windows, and Office, and SharePoint, Exchange, in SQL Server are highly relevant to the business opportunities and challenges that you’re talking to us about.

I said the cloud is the future and it really is. In this business I think there will be a little bit more conservatism, in terms of how quickly to embrace the cloud, because of the focus on security, the huge level of investment that’s going to be made. And yet in my conversation today I was surprised at how open-minded people were to the possibilities of the cloud. You’re going to kick the tires. You’re going to ask questions. You’re going to say, hey, when is this really right for us. You’re going to say, can I instance this cloud architecture inside my own environment somehow. We refer to that as the private cloud.

But, if you look at where we’re going with our Azure environment, Windows Azure and SQL Azure, if you look at what we’re doing with Exchange, and SharePoint, and Office online, what we’re trying to do is give you the most seamless path forward from today’s traditional data center environment, whether you choose to virtualize it with things like Hyper-V or not, on to a world where you really can move to the cloud. You will move, there’s no question, to private cloud.

I know when we talk to the CIA, or the NSA, they’re not likely to move to the public cloud any time soon. So, we have to have an architecture that will serve you in either of these ways. And we’re driving very actively to make sure that our cloud environment can support the full range of deployment options that are of interest to you.

Let me just before I wrap up give you one other example, which we might call cute, but I think it really ties everything together in terms of the user interface futures that will affect the industry. We have a product that we’re working on that we said will be available in Xbox this year called Natal. Natal is a camera and a microphone kind of peripheral, if you will, that goes with your Xbox. As it shows on here, the camera does full body motion capture, blah, blah, blah, blah, blah.

Essentially what it is, is you talk to the darned thing. You walk in and it recognizes me. It’s got enough intelligence in the camera and the Xbox to say, hi, Steve. If I smile it knows what I just did. I start playing the soccer game. I don’t go for the controller, I don’t go – I just start, boom, kicking and it recognizes what I’m doing.

I say, hey look, I’m tired of soccer right now, what I really want to do is talk to grandma, and my wife comes in, and my kids probably in that case. We’re all talking to grandma. We’re standing together. The thing is being projected. It’s not one of these goofy teleconference things. It’s got enough intelligence in the software so that if I’m looking left and my son is looking right, and it all just kind of comes together so grandma always feels like we’re looking just at grandma as we go through that experience, because we have enough intelligence on both sides.

We’ll have Natal. We’ll have games that take advantage of it for Xbox this year. Now you take that same peripheral and you bring it to the PC world. And you put it maybe on a rig in the middle of the – some deep-water environment where you want to actually control these systems in exactly that way where you want to communicate in exactly that way, a big screen touching is kind of a tough thing, keyboard is kind of a tough thing. But, we’ll get these technologies really solved.

If somebody wants to show you how to do a certain repair or service procedure, they literally can do it and it’s reenacted precisely in the right way, because we’ve got enough intelligence in this process to model that out so really.

So, I think a lot of the things that are coming to the cloud, for smart devices like the Natal device, can really be a applied very well to this industry and really lead to a world in which the kinds of software and solutions we’re working on can really help drive the next generation of productivity and innovation, not just broadly in the consumer world, not just in industry overall, but specifically to the kinds of things that are going on here from exploration to production, to refining, to signals, and of course through to the trading and financial side.

It’s been a pleasure for me to have a chance to make a few remarks. Most of the time we have now is  the rest of my time is certainly dedicated to the chance to do a Q&A. I guess there’s three mikes. We’d appreciate it if you used a mike. But, before we do that I want to say thanks, again, for your business, thanks for your time. I’ll look forward to your questions. If we don’t get to a question that’s on your mind, my e-mail address is [email protected]. Please feel free to follow up afterwards on e-mail. Just write a piece of mail that’s interesting enough to Outlook to not look like spam and I promise I’ll get back to you in pretty short order.

Thank you all very much. (Applause.)