Steve Ballmer: Heroes Happen Here Launch Keynote

Transcript of Remarks by Steve Ballmer, Microsoft Chief Executive Officer
Launch Event for Windows Server 2008, SQL Server 2008 and Visual Studio 2008
Los Angeles, Calif.
Feb. 27, 2008

STEVE BALLMER: Well, I certainly want to thank Tom for his inspiring opening remarks, and really setting the stage to get us to focus in some senses on what I consider the heart and soul of this event.

You know, for me, the heart of our industry is the software developers and the IT professionals who go out every day and make great things happen whether they’re building new products in companies like Microsoft and Oracle and others, or whether it’s the folks like the people featured in the opening video and throughout the videos today who are out there working every day to make their companies better, to make their institutions and their organizations more capable, building new solutions, getting them deployed, riding certainly the heart and soul of this industry.

Tom talked about a lot of places and sources of inspiration. In our industry, I think we can all take inspiration from the kinds of heroes that we celebrate today and the kind of impact our industry, all of us, are having on society today.

Today, we get a chance to launch three of the most important new Microsoft products. And I see each and every one of them as simply an enabler of the kind of heroes represented here in this room and in the IT and software development community around the world. We hope heroes happen here, but we certainly feel confident with the technologies that we’re launching that heroes can start here with the best technologies to facilitate people doing their very best work and having the very maximum impact that our industry can have.

We talked today about our dynamic IT strategy, our dynamic IT strategy focuses in essentially one thing: enabling the productivity and the agility of software developers and IT professionals around the world. And hopefully as we have a chance to walk you through the new technology and the way some of our early adopter heroes here today have put them to use, you’ll be inspired by what’s possible, what’s simple, what’s low cost, that simply was too hard to think about in the past.

Before I take off, I want to make sure to say thank you to our platinum sponsors. They’re sponsoring this event and similar events like it around the world, and they’re all important partners with us and us with them in really trying to provide you a set of infrastructure and tools that allow you to do heroic work: AMD, Dell, HP, Quest Software, Intel, Computer Associates, Cisco, Citrix, Fujitsu, Hitachi, Business Objects, an SAP company, Unisys — all very, very important partners of ours — and SAP I would say — in many, many ways in terms of trying to work together to give you a foundation where the whole is bigger than the sum of the parts. So I want us to have a chance to recognize and thank all of our platinum sponsors not just for their participation in these events, but more importantly for the kind of collaboration that I think is really instrumental in our industry today.

Dynamic IT

I want to talk a little bit about dynamic IT and what we mean by it. And I think there’s always two different ways to take a cut at any strategy, any perspective, any vision that you’re going to talk about. One is to take this perspective of the customer, and I think that’s absolutely essential. There’s kind of this mantra people like to repeat in business, you know, we’re all about our customers, we just listen to our customers. And I want to talk today about what we’re hearing from you and what it’s telling us and how it is driving us.

But I’m also going to take a cut at what I might call the technology perspective. All of us in this room are drawn to this industry because we know technology’s changing, changing even in ways that current customers, current users can’t anticipate. So I also want to talk about the technology trends that will drive this dynamic IT strategy and environment.

As we talk to you, we hear four things that are really on the top of your mind: Number one, you really want us — you really want other participants in our industry, vendors in our industry to help you achieve agility and manage complexity. How do you do more with less? That’s a marketing theme, in fact, we used a few years ago. But it really represents in some fundamental way a lot of what we’re hearing from you. The pressure, the opportunity, shall I say, to drive business value with IT has never been higher, but the need to move quickly and at the same time maintain lower cost through reduced complexity is very high.

Number two is to focus in on protecting information and access to IT systems. That’s a fundamental need that has essentially only grown over the last several years as the Internet and interoperable systems, collaboration, all of these things have made it simpler and simpler in some senses to have information move around. That information must, nonetheless, be protected and controlled properly.

Number three: how do we really deliver business value? At the end of the day, business value comes from applications. It’s the new field service system, it’s the new customer billing system, it’s the new system that helps the advertising agency and the marketing department collaborate more quickly to get insight about customers and next-generation creatives. It’s about better financial understanding, and it requires a real collaboration between the developers who build these solutions and then the people who actually have to deploy them and manage them.

And last but not least, how do we make sure that people who are in the IT world are not the cobbler’s children without shoes? How do we continue to give people in information technology the tools to maximize your impact in addition to the tools that will allow all of the users of IT and the companies represented in the room today to achieve their goals?

A company like Microsoft responds to that impact essentially in two ways: number one, we go forward and drive the next generation of our product set, and we’re going to have a chance to talk about that today. But between product cycles and releases, we also think you put a big premium for us to come up with ways to help you improve your productivity with the technologies in market today.

We’ve worked hard on something we call the infrastructure optimization model. And we’ve tried to work hard to say: what are the basic states in which we find IT organizations today? How do smart organizations progress from what I would call basic IT shop to IT shops that are somewhat more effective, more standardized, something we call rationalized IT shops, and finally, to dynamic IT shops in which IT is really the strategic asset.

As all of us do our jobs, observe our own organizations, look at other players in our industries, move jobs, move companies, we all recognize these kinds of organizations. The basic IT shop, IT is a cost center, and a lot of what IT is about is putting out Fourth fires, manual processes, minimal central control, disparate systems, new standards. Companies gradually, as they try to professionalize and get more dynamic and agile, start to standardize. More automation, still a reactive characteristic, certainly to the businesses, but definite improvement in a rationalized environment. And there are tools that we can give you today to help you progress through these stages. Policy is pretty proactive, users start to get empowered.

The problem in many IT shops is the user is empowered and there’s no central control, efficiency, organization, or information protection. On the far extreme, you get powerful user empowerment along with very effective and low-cost IT control. And you start to see that in a rationalized IT environment. Zero-touch deployment, proactive security, user is empowered. And yet, of course, the ultimate goal is to get to this state that we call dynamic IT.

Technology Trends in the Datacenter

If you think about this in terms of the technology trends, the other perspective, you see one set of requirements and sort of say to the world on the customer side, what do we see on the technology side? We see four big industry trends, a number of which are either in evidence or highly influenced, the things we’ll talk about in terms of these new products. But four big industry trends that will really impact and enable firms in this room, people in this room, to be heroes and to drive IT to be a strategic asset.

The world is in the still very early stages from a business perspective of moving to software plus services. The notion of service or Internet-based infrastructure for applications, for you to deploy, build and deploy your own bespoke applications, we’re early stage. Hosted services, cloud-based work, from an enterprise perspective, it’s yet to prove itself from a security and reliability and trust perspective. And we’ll talk about how we enhance and deliver those things in an on-premise enterprise world.

But the ultimate technology trend is to remove a lot of the work that happens inside enterprises today in deployment and operations and allow that to be done centrally, if you will, for many businesses, in the cloud.

The second is virtualization. Virtualization — many people want to talk about where we are in the virtualization technology adoption cycle. Today is certainly less than 10 percent and probably if you add it all up, less than 5 percent of the world’s servers are virtualized. We’re very early in the virtualization technology cycle. And virtualization is a technology that, in some senses, promises more than anything else to be about eliminating, or at least reducing, the cost of deploying and operating new solutions.

Number three is the morphing that is happening today in the way software is developed, a more open kind of a world. I don’t just mean open-source software, I mean development for interoperability so that applications can be composed and work together. I mean opening up the development process so that operations and development are linked from the get-go. I mean opening up the development process so that the designers of rich user experiences and the coders and software developers themselves are linked from the beginning.

And so there’s many forms of kind of opening up a software development that is happening, which is a trend across the industry in many, many ways. You can see it today in the products that we’re launching; you’ll see it from our competitors whether it’s in the commercial world or the open source world. And last, but certainly not least, is the industry trend back again to richer and richer user experiences, like a pendulum that swings back and forth in our industry. People love rich user experience. Something comes along like a browser, and then everybody swings back because it’s tough to both get some of the new benefits and at the same time get the kind of rich user experience that people love. And we’re starting to see that pendulum swing back.

The users in our industry and the technology trends all say we ought to be able to get the benefits of a rich user experience, the benefits of the openness of the Internet, and the benefits of low-cost, simple deployment in one experience. It’s not thin clients or thick clients, it’s not browser-based computing or other computing. The industry is working hard to bring together those benefits.

So these powerful technology trends also give us new opportunities to really drive a dynamic IT strategy. And as we look at the industry trends, some of which we’ll talk about more today, and as we take a look at the customer environment, the new products that we’re announcing today fit squarely in the sweet spot of taking advantage of technology trends and helping to solve what we think are some of the important customer opportunities that you’ve talked to us about.

In the last 12 months, we have shipped a lot of products that fit into this Dynamic IT strategy. I’m not going to tell you they’re all about the dynamic IT strategy — Windows Vista, Office System 2007 — those are products for consumers at home, students, school, in addition to being for people at work and in business. But, certainly, the range of products that we’ve made available from Vista and Office to Systems Center and Forefront in the management and security area, from the client, the server, the edge, the management of physical systems and virtual systems now through Systems Center, our Biz Talk technologies for facilitating application integration, the backbone of our service-oriented architecture strategies. Silverlight and important work we’re doing there to facilitate rich user experience integrated in the browser. We’re doing pioneering work with groups like the Beijing Olympics and Major League Baseball, all moving ahead nicely.

We have recently released the Service Pack 1 for Windows Vista, much awaited by many of our IT professional clients as you think about deployments of Windows Vista into the enterprise, I think Vista SP-1 will do exactly what folks want it to do. We’ve had a chance to collect feedback; we’ve had a chance to respond to the issues statistically that customers are most having. The range of device drivers and applications that are compatible with Vista has really shot up. We’ve improved a number of areas of performance:boot up, file compression. We’ve improved battery life. The bit-locker technology, we’ve moved forward in ways that people thought were important for multiple drives. We’ve done work on deployment and terminal services capability. So in many, many ways, Windows Vista with Service Pack 1 I think is now fully ready for the kind of broad enterprise deployment that I know many of our IT customers have looked forward to.

So it’s been a busy last 12 months, and yet we’re still sitting here today with some of the most exciting new products in our history to introduce. So let me have a chance to do that now.

As everybody is much aware, the Internet is an amazing thing. We used to have launch events where we told you something new, now you come to a launch event to learn more about things that are maybe old friends of yours. Today we get a chance to launch three of the most significant products in Microsoft’s history: Visual Studio 2008, which has already shipped; SQL Server 2008, which will ship later this year; and of course the product which is now available, Windows Server 2008, which I think is the most significant Windows Server release we have made since the first version of Windows Server.

There are four key areas of our dynamic IT strategy that are really reflected in these products, and they kind of map to some of these technology trends, and they certainly map to some of the key requirements that you’ve expressed to us. A secure and trusted foundation, which is key to managing complexity, and is key to protect the information. In some senses, the major themes which we’ll have a chance to talk about over the course of the rest of this year will actually be how we bring security and trust to platforms and IT applications that run in the Internet cloud.

Today we launch our virtualization strategy in earnest. We’ve had a set of products in the market, but I want to really bring those together and make sure you understand them. All three of these products do a lot to enhance Web and developer productivity, and making it very much easier to develop rich Internet and rich application experiences faster and with more scalability.

And last in the area — in a sense of rich user experience, we want to talk about business intelligence. How do we really let the people who work in the organizations represented in the room today, how do they get to data that actually lets them get the key insights to make the key decisions and drive business value? If dynamic IT is about IT as a strategic asset, the most important thing at the end of the day that most business people will do to evaluate is they’ll say, “Can I get the information I need to make the decisions I need? Can my people get the information they need to make the decisions that they have to make every day in their jobs?” And until we can fulfill that mission — of which business intelligence is an important part — I think we still have opportunity for greater and greater heroism, if you will.

Secure and Trusted Foundation

So let me now spend a few minutes and kind of characterize how these three big products fulfill improvements in these four areas for you. And I want to start with the notion of secure and trusted foundation. And I’ll kind of try to talk about all of the products in a sense in each of these categorizations.

We’ve done a lot of work, particularly in Windows Server, we have done a lot of work to harden the platform, to simply do more to make it hard for the bad guys out there to violate the security and access control and information protection that you want to ensure. We have a new technology in Windows Server 2008 that we call the server core. We allow you to build custom versions or custom images of Windows Server, tailored for specific workloads which are very much hardened and present less surface area for people to attack. And we’ve done this kind of componentization by default.

In the server core role, we allow you to run headless servers with no user interface. We’ve done work to componentize IIS and shut down ports to the Internet by default. We’ve done work in the domain controller technology so you can deploy active directory databases out to branch environments, but do that in a way that is secure in which local operation cannot affect the master active directory. So we have hardened the platform.

We’ve done a lot of work on reliability and availability, improvements in the clustering technology in Windows Server 2008. So you can get fail over without the need to be on the same IP sub-net. We’ve built on the strong data mirroring technologies in SQL Server to now provide transparent fail-over capabilities. We’ve built a new technology into SQL Server that we call the resource governor so that you can get very predictable performance as you do database queries and transactions consistently. So a bunch of things that fit in this category of availability driving security and trust.

And last but not least is the area of compliance and governance. With our network access protection technologies which are built into Windows Server 2008, you really can inspect a new participant in your network before you open up and give access to the network to that new machine, that new server, that new laptop, whatever it may be. And it really ensures that every citizen on your network has the appropriate patches, firewalls, security policy, et cetera.

We’ve done work to make sure NAP also works for the Linux machines that you put on the network, enhancing and moving forward with greater heterogeneity and interoperability in our work. We’ve improved our bit locker technology for hardware layer security on the client and on the server. Since many servers are in remote branch environments, we don’t want people taking information off of the server either in an improper way.

Federated rights management: you really can connect with one of your trading partners, customers and suppliers and have the authorization of rights of [email protected], and Tom Brokaw, If our two companies want to trust each other, we can trust and validate our mutual right to access information in either environment.

And last, SQL transparent encryption. You can now encrypt information in SQL Server without having to change application code, which means it’s easier and simpler for developers to take advantage of encryption in their database applications.

What we’ve seen with some of the early work that our early adopters, our heroes, have done, is a 60 percent reduction in patching through the use of this server core deployment. If you have a smaller footprint deployed, you don’t have to deploy all patches, they simply don’t make sense in some of the roles to which we are deploying, about 60 percent less than Windows 2000.

Power savings opportunities in the data centers: about 40 percent of data center costs are in power, and there’s up to 10 percent savings with Windows Server 2008 on standard transaction benchmarks versus Windows Server 2003. And we already have over 1,000 ISVs and hardware vendors who have done the work to test the compatibility of their servers, their hardware, their backup devices and their applications with Windows Server 2008. So a trusted and secure foundation, Windows Server.

SQL Server 2008

In SQL Server, a couple key things that I’ll highlight: first is this area of security. I know the advertising says that our erstwhile number-one competitor is unbreakable, and yet if you look at the data on common vulnerabilities and exposures over the course of the last five years, yellow is Microsoft, red is Oracle. Small is good. I’ll let you decide how we did. But we’re very proud of the work that we’ve done on our so-called secure development life cycle and the positive impact that’s had on vulnerabilities in security in the database area, and I think it really makes us shine versus competition.

The other area I’ll highlight is performance. With the launch of SQL Server 2008, we will own the performance record for data warehousing benchmarks, the CPCE benchmark, and at least for four processors — process for socket and below industry-standard servers, we’re on the transaction benchmark in the SAP sales and distribution benchmark, which is phenomenal work.

What you’ll see in SQL Server 2008, particularly in the business intelligence areas, is a lot of work on performance in the scale and speed of data warehousing and business intelligence work load.

Lastly, if we take a look at Visual Studio 2008, again, from the perspective of security and trust. Trust and skills starts with adoption. Today, 72 percent of enterprises have .NET skills, outdistancing by quite a large margin Java or any other skill set that people are building. And with the launch of Visual Studio 2008, you’ll see performance again ramp up dramatically as we improve compiler speeds and developer productivity really quite dramatically. Start times, load times, compile times are all quite dramatically improved with this launch of Visual Studio 2008.

Microsoft’s Approach to Virtualization

Turning next to virtualization. People ask me: “What’s your virtualization strategy?” And I say it is broad. The number and range of things that people want to virtualize in this world in order to improve deployment and operations efficiency is large. Today, we’re going to talk mostly about server virtualization and what our Hyper-V virtual machine technology, along with our System Center management tools, and Windows Server 2008 bring to market.

We have virtualization technology for not only the server, though, but also for the client operating system in our Windows Vista Enterprise Edition and our Virtual PC technology.

Through an acquisition we made almost two years ago now, we picked up important technology that allows you to virtualize not just the hardware and the operating systems, but the applications. Our soft grid application virtualization technology has literally shot through the roof as people find what they really want to do is to bring multiple versions of an operating system, of an application down and run them on a PC without all of the complexity of virtualizing the PC operating system and hardware itself. This has been an incredibly popular and well-received addition to our product line.

And, of course, there’s presentation virtualization — where you do all the computation centrally and you just send down essentially screen shots. That’s what we’ve done through our terminal services technology, which continues to advance and progress in popularity and which is updated fairly dramatically, again, in Windows Server 2008.

The thing that is quite unique about our approach to virtualization is that we take virtualization as just a piece and in the context of an entire management strategy. You don’t manage virtualization, you manage a data center and applications, you manage hardware resources, software resources, virtual machines, operations, configuration data, and our System Center product line lets you manage all of these forms of virtualization and everything you need to do for deployment and operations in one integrated, unified way.

So we have a broad virtualization strategy, but today it really gets a pop with the launch of Windows Server 2008 and the Hyper-V Virtual Machine, which is in beta, which is scheduled for release coming up here within the next several months.

With our Hyper-V Virtual Machine, we’ve had a few key important design points. I think it’s well known, we’re not the market leader in server virtualization. And you told us virtualization despite the fact that everybody is benefiting nicely from some of our work to work of the market leader, et cetera, you told us it’s too hard, it’s too tough, it’s too expensive.

And so as we brought Windows Server 2008 and Hyper-V to market, we took a simple goal in mind: we want to democratize virtualization. Virtualization should be, properly, if desired, run on 90 percent or 100 percent of servers, not the current five percent, six percent, seven percent. Now, people said: this can’t be a big compromise, Steve. You’re going to still have to give us the kind of high scalability, high memory, good performance that the market leader does. You’re going to need to really work hard to make sure that you continue to maintain minimal footprint, because some of the advantage of virtualization is to have fewer moving parts in the market.

They said if you’re going to do virtualization, do it right from the get go. Your virtual machine better run Linux instances, and your management tools better work well, not only with your own virtual machines but with VMware’s, with XenSource’s, etcetera. But get that all integrated with us, and don’t give us a different set of management tools for virtualization and virtual machines than you give us for everything else.

We focused in on this. You will find that we have from a technology and simplicity perspective, driven this hard. One set of management tools. You don’t have to go learn all new concepts on management, democratizing virtualization. The virtual machine itself is broadly available in the right way and kind of the right price. The tools that help you manage virtualization are priced not only at a fraction of the cost of the market leader, but at the same time they do far more than just manage the virtual machine.

And we think with these three elements in place, we can really help propel virtualization to be a mainstream technology on all servers as opposed to, in some senses, something which is only simple — which is too complicated for most machines, and too expensive for most machines. So I think a lot of good work in Hyper-V, Windows Server 2008, and I’m sure if you talk to some of the heroes, some of our leading-edge adopters, you’ll really get something of a sense of that in a strong way.

I’ve talked a long time. It makes some sense to show you some of the things that we talked about here today. So to really help frame what we’re doing in security and trusted foundation and in virtualization, we created a fictitious company that we call the Fourth Coffee Company, and we’re going to see a set of scenarios around everything that we talk about played out in videos and demos, talking through this fictitious company, as well as video commentary by some of our early adopters.

So to show us the first video and to give us the first demonstration, let me have a chance to welcome Justin Graham, who will do the demonstration and we’ll roll the video to give you a little bit of perspective. Please enjoy.

(Video segment.)

Demonstration: Virtualization and the Next-Generation Web

JUSTIN GRAHAM: Okay, I’m still here. I think that new MS research beam machine still works. That was the quickest trip in history. Whew! Well, as you see, we’ve got a lot to do and we’ve got a short amount of time to do it. So I’m going to show you three things: first, we need to ensure that we’re running on an agile, virtualized platform. Second, we need to set up high availability. And last, but not least, we need to turn our attention to our Web and database infrastructure to ensure it’s agile enough to respond to the demands of this next generation Web promotion.

So I think that’s enough to do. So why don’t we go ahead and get started with how we’re going to do it. So, luckily, Fourth Coffee has decided to run in the new Hyper-V virtualization platform. This gives us great benefits in the ability to scale up as well as scale out. Now, because of this acquisition and Web promotion, I need to add a new file server to my existing infrastructure.

Now in the past, this might have taken a stack of CDs, six or seven boxes of pizza and a lot of caffeine and some junior administrators to do. But now that I’m running in Hyper-V, it’s just a matter of a few clicks. So I’ve started a new virtual machine and added a new file server to my existing environment just that quickly.

Now that I’ve done that, I need to make sure to add it as a node to our existing fail-over clustering solution. To do this, I’m going to use the new fail-over cluster manager inside of Windows Server 2008. This gives me all of the information that I need to get that done very quickly.

Now, in the past, adding a node might have taken me a couple of days, maybe even a master’s degree in fail-over clustering to do so. But with Windows Server 2008 and the fail-over cluster manager, adding a new node is very quick.

Now, for the purposes of this demonstration, I’m going to skip the validation test because it takes a couple of minutes to run. But in the real world, you would want to run through this validation to make sure you’re following those best practices. So we’re ready to go ahead and add the node. Now, while we’re doing that, I want to show you the validation report that gets generated when you run the validation test.

When we did research on past versions of Windows, we noticed that over 55 percent of calls to Microsoft Product Support in relation to clustering were due to misconfiguration. So we’ve done all of the research for you and incorporated all of that knowledge into the product, and we’re checking to make sure you are putting your fail-over cluster in the most highly available and highly reliable state.

So you can see as I’m scrolling here the literally hundreds of different settings and best practices that we check to make sure that you’re running in the best configuration, and I’m running out of desk here because there’s so much that we actually check.

All right. It seems as we’re done adding the node — oh, well, wait a minute. We’re not quite done. So, normally this is the point when I see yellow and I start to dust off the resume and make take a look at something different because I don’t want to hear what’s going to happen. But with Windows Server 2008, this is actually a good thing. It is telling me that I have the ability to remove the quorum disk because I now have an odd number of cluster nodes.

Because the quorum disk can be removed, I don’t need to really worry about it and manage it. So very quickly, I’m going to use the new Microsoft Management Console and I’m going to open up our quorum configuration. Because of all that inherent knowledge that I talked to you about before, Windows Server 2008 has made a recommendation for me to go with a node majority configuration, basically keeping the number of votes for the quorum at an odd number and removing the quorum disk so I don’t have to worry about managing it anymore.

So just that quickly, I have added a new node to our existing fail-over cluster and put it in its most highly available and highly reliable state. Now, what you’ve just seen here is a first in the industry, an out-of-the-box fail-over clustering solution with zero single points of failure. (Applause.)

And not only that, it also allows us to cluster our virtualized resources to even make those highly reliable and highly available. All right. Well, we got through that part and this is normally where we’re all kind of sitting around the conference room and we’re saying, “Oh, great job, guys. Woo! High Five. Let’s go home — oh, wait — ” And then somebody raises their hands and says, “But how are we going to manage this?” Heads start scratching, people start looking around, pointing to the other guy. But then, luckily, Fourth Coffee is running System Center tools, specifically, the virtual machine manager tools.

Now what we’re seeing here is the first time we’re showing System Center Virtual Machine Manager managing the new Hyper-V virtualization platform. And there are a number of things that we can do with this tool. If you’re in a mode of server consolidation, we can convert physical servers into virtual server configurations using this tool. We can also manage the library of building blocks we have for virtual machines such as strip, templates, and virtual hard disk. This makes my job extremely easy to do when it comes to management of our new platform.

All right, we’ve now decided how we’re going to manage this solution, and that makes me feel quite a bit better. So now I can turn my attention to the new Web and database platform so I can make sure that it’s agile enough to respond to this next-generation Web promotion.

Now, we decided to run our Web servers on the new Hyper-V virtualization platform for a number of reasons: First, we also — we have some interoperability with Novell that allows us to run some work loads on the backend, such as SUSE Linux 10. Second, though, we are able to address up to four processors and up to 64 gigabytes of memory within a virtual machine. Now, this is great for our Web platform because it allows us to scale up and out extremely quickly.

Now, I remember the last time we had to do this, lost a weekend, missed a very important birthday party, which I’m kind of still in the doghouse for, and some of my friends had some Lakers tickets that I missed. But now with the new IAF (Infrastructure Assessment Framework), I have all of my settings right in front of me here. So no longer do I have to go around right-clicking and tab hunting to find the settings that I want.

Now, this is a brand new Web server, and I haven’t configured it yet. Now, in the past this would have taken me a ton of time to do, I would have had to replicate a bunch of data, make sure that all of the manual configurations are done properly so you can see the default page. In the new IAF7, I have a feature called shared configuration. With shared configuration, I can leverage a configuration of the first server I brought online and I can save that configuration and leverage it amongst all of the other Web servers that I had, very quickly configuring them.

So I’m going to go ahead and apply this shared configuration to my new Web server that I’ve brought online. So, now we had the default page before, and now just that quickly I have leveraged the shared configuration, and this now matches all of the other Web servers that I have in my farm, and you can see the page that we have built for our Web farm, our new server is now ready to go. This is extremely great. (Applause.)

All right. Now we know that no good Web site is any good without a good database back-end on writing the data. Fourth Coffee has decided to run SQL Server 2008 as its database platform. Now, you can see here that we’ve got some resources running here, specifically a pool for our executives and a pool for our marketing department.

Now, I need to make some changes, but before I do, I need to ensure that I know that the current performance state of the machine is. To do this I’m going to use the new Windows Reliability and Performance Monitor. This gives me a one-stop shop for all my performance and logging needs.

I’ve gone ahead and pre-populated the performance monitor with two counters watching the CPU utilization of both the executive pool and the marketing pool. You can see that they’re both taking up approximately the same amount of resources, but because of this new promotion on the Web, I need to prioritize my marketing resources. To do that, I’m going to use the Resource Governor in SQL Server 2008, which is a brand new feature. This allows me to very quickly prioritize certain database workloads over others.

Now to do this, I’m going to silently — and hopefully stealthily — borrow some resources from the executives, hopefully they won’t notice, and give them back to my marketing department. Now, just that quickly, I’ve made the change, and you can see I’m already divergent in the utilization of both of those pools. Our marketing pool now has the available CPU resources it needs to agilely respond our Web promotion, and the executive pool has been a little bit restricted.

Now that we’ve done that prioritization, I need to turn my attention to best practices with my database platform. In the past, we really didn’t have a way to do this, and I had to sort of manually make sure that all of my databases were configured with our best practices, and make sure that we were compliant. In SQL Server 2008, those are the days of the past, because we have policy management. Fourth Coffee has decided to place all of its best practices for compliance inside of a policy. So I need to make sure that my new marketing database is following that best practices policy. So I’m just going to run it against my database. It looks like we have a little bit of an issue here, so I’m going to drill down and see that most of our conditions passed except I forgot to enable database encryption. Well, normally at this time I would start to kind of sweat, and figure out that I have to walk down the hall to talk to the development department about rewriting their applications, but now I can use a brand new feature in SQL Server that allows me to encrypt an entire database on the fly. So I’m just going to manage encryption on our database, and we support some of the best security encryption technology here. I’m going to use AES 256 bit encryption, and I’m going to use a certificate that was generated by Windows Server 2008, and I’m going to turn on database encryption. So just that quickly I have transparently encrypted an entire database without having to rewrite any of my applications to leverage it, and all of my users can face no interruption while I did this. (Applause.) Now that I’ve done that, I need to retest our policy to make sure that the database is now in compliance. And as you can see, just that quickly we are now in compliance and everything is A OK.

I’ve shown quite a bit here in a short amount of time. We’ve added a new file server, we’ve made it highly reliable, highly available. We’ve decided how we’re going to manage this solution, and we’ve configured our Web and database infrastructure to agilely respond to our Web promotions while following best practices and compliance. But, hey, don’t take my word for it — there are already heroes out there that are using Windows Server 2008 and SQL Server 2008 to build great solutions. Let me introduce you to one right now: Hunter Ely, Senior Security Analyst from Louisiana State University.

(Video segment.)

STEVE BALLMER: I think it’s fantastic to have a chance to hear from Hunter about some of the great work he’s doing, and the institution that he’s involved with, and we’re delighted that there was value to him in using some of the technologies that we’re talking about, and putting in the market today.

Web and Developer Productivity

The third theme I want to talk about is Web and developer productivity. We live in a world in which the need for speed, the need to push out new solutions, new applications, has never been higher, developers want to allow these applications to be massively customized. That’s kind of a Web notion. We’re driving for richer and richer user experiences, which means more need to involve graphics artists and designers.

The need to be able to really understand and model business processes is higher, and of course, as applications are now being designed to run at various scales, and in various different ways, the desire to build applications from the get go that are designed for operations is very high. And with the launch of the three new products today, particularly the new .NET, and IIS, and Visual Studio 2008, we’re really delivering a rich set of technology to help with Web and developer productivity.

We’re building new rich Web applications, incredible new tools for allowing you to very rapidly build AJAX applications through the use of our Intellisense technology against the JavaScript programming environment. For richer and richer presentation applications, our new XAML technology and the .NET Framework, and Silverlight, with the new expression development toolset, enhances developer and designer productivity. With the new .NET Framework 08, with Visual Studio, and particularly with our LINQ, or LINQ, the ability and speed with which somebody can write an application that does database access has never been higher.

In addition on the operations side, with the kinds of enhancements we’ve made, we really think we now have the best platform bar none for hosting Web applications, either in a shared or unshared environment. We’ve done a lot of work in IIS 7 to help people get better performance, to share configurations, to deploy sites much faster than ever before. Rackspace, one of our hoster partners has found that hardware requirements are off 16 to 25 percent per cluster with the introduction of IIS 7.

We’ve done a lot of work in SQL Server and in IIS 7 on PHP support. Today, Windows is becoming the most popular platform on the planet for running PHP applications, which has a certain irony to it, but we’re going to make sure that Windows is great not only at running applications built in .NET, but also in the PHP environment.

I want to return now to the Fourth Coffee Company scenario that we’ve been talking about. Again, we’ll frame up some of the opportunities in the video. We’ll have a chance for Jacqueline Russell of our team to do a bit of a demonstration for you. Then we’ll have a chance to hear from one of our heroes. So let’s take a look at somebody making things possible with Visual Studio, with LINQ, and with the Expression toolset. Thanks.

(Video segment.)

Demonstration: Developing Rich Web Applications with Visual Studio 2008

JACQUELINE RUSSELL: Good morning everyone. My name is Jacqueline, and I’m a developer at Fourth Coffee. Like most of the devs around here, I usually start off my day with a double latte and Visual Studio 2008. There are four main reasons why Fourth Coffee relies on Visual Studio 2008 as our primary development tool. First is the application lifecycle management support. Second is the increased editing and debugging enhancements, making my life a whole lot easier. Third is the seamless data integration, and fourth is the support for developer-designer collaboration.

As you heard, Fourth Coffee is planning a new online campaign to help generate excitement, and to drive traffic to some of our new store locations. Here’s a mockup some of our designers have pulled together, of what this new Web site would look like. Pretty snazzy, huh? Now, I’ve asked the developers to take this vision and turn it into reality.

Visual Studio Team System 2008 is an integrated application lifecycle management solution that gives development teams greater visibility, using the entire software development lifecycle, and as a result helps them work more effectively together. I currently have my Fourth Coffee solution opened up here in Visual Studio. In my Team Explorer Window I can carry the Team System Server, to get a look at my work items for today.

There are four active paths I need to complete. I need to make a couple of last minute changes to the Web site. I need to integrate some backend data, and I also need to make a small change to my Silverlight design. So let’s get to work.

The first thing I need to do is insert a hyperlink onto one of my Web pages. So I’m just going to copy the link directly from this work item here. And then I’ll open up my default.aspx pane. The new split view editing feature really improves Web development experiences, by allowing you to see both the source code, as well as the design view simultaneously.

Notice also that when I click on an area here in the design view Visual Studio automatically moves my cursor to the appropriate location in the source code view. If any of you out there like me get lost editing complex pages like this, this feature is a real lifesaver. Okay. I’m going to go ahead and paste that link in here. Notice that when I made a change to the source code, Visual Studio will prompt me to synchronize my design view, as well. Okay. There’s our Cup On Us link.

Another cool new feature in Visual Studio 2008 is all the .CSS and styling support that’s built right into the product. So take a look at this Your Account hyperlink, for example. It’s got this weird gray background color to it. Let’s fix that. Now, to do this task I would play a game that I like to call, where is that dang style coming form, which usually lasts me about an hour or so. I wind up with me needing a coffee break. The new style Windows in Visual Studio 2008 are one of my favorite features.

This CSS properties Window will allow you to see what values are being applied to any element on the page. So in the case of this Your Account link here, we see that there’s actually two anchor tag style rules being applied to it. An inline style with this gray background color, that’s overriding our style sheet rule. So let’s go ahead and remove that inline style. There, that looks much better. It’s so easy it feels like cheating.

Okay. Let’s move on to my next task, which is to integrate some backend data into our Web site. Now, the code for this get event method was originally written by a developer who has since left the company, and now we need to make a slight change. So rather than going through and modifying this existing ADO code, we’re going to make this update using a new data access technology called Language Integrated Query, or LINQ. LINQ is a set of extensions to the .NET framework that encompass query, set, and transform operations, which are integrated into the programming language itself.

Specifically, in this instance we’ll be using a technology called LINQ to entities, which enables developers to work at a much more conceptual level, making accessing and manipulating data a whole lot easier, because you don’t have to worry about all the plumbing code.

I’m just going to comment out all this existing ADO code here, for comparison purposes, and then I’m going to drag and drop a LINQ code snippet that we have available to us right here. Notice the difference. First of all, this LINQ code is much shorter, and if you look at the syntax it’s actually much more readable, it’s more like .NET programming. Plus, check this out, you even get Intellisense support, how great is that. No need to worry any more about remembering your SQL query syntax, and then kind of massage the return data into something workable. This really is a huge improvement.

Okay. So like all good developers, before moving on, we should probably debug our application. Now, our Fourth Coffee Web site contains quite a few JavaScript functions. I have some not so fond memories of peppering my JavaScript code with alert boxes to try to figure out what was going on. No more. Visual Studio 2008 now includes JavaScript debugging.

So we’ve set a break point here in one of our JavaScript functions that looks up a store name. And you can see the deep debugging support we get, both in our visualizers, as well as in our debugging Windows. Not only that, but Visual Studio 2008 also includes JavaScript Intellisense. It’s a wide array of JavaScript language references, making AJAX applications significantly faster, and easier to build.

Okay. Before we wrap up, let’s take a quick look at the way developers and designers can work together more effectively, using Visual Studio 2008, and Microsoft Expression Blend. Expression Blend is part of the Microsoft Expression Studio, and it lets interactive designers seamlessly share project files with their developer counterparts. So both Expression and Visual Studio speak the same language, ensuring the design vision carries over into the development world.

So it’s about 10:00 a.m., about the time our Fourth Coffee designers start rolling into work. Good morning. As a designer I work exclusively in Expression Studio. My developer counterpart has let me know that I need to make a couple of changes to the animations on our Web site. So I have the Fourth Coffee solutions loaded up here Expression Blend 2, and I’ve got the scene.xaml file opened up in the editor. Let’s take a quick look at the way these animations currently play out on this site.

Okay. You can see those floating boxes flying in from the left here. I’m going to quickly change the direction of one of these boxes, and I’ll do that by setting this event canvas property. Let’s set this value to 910, that feels about right. Okay. Then I’m just going to save that change. That’s about enough work for one morning. I think it’s about time for my yoga break.

Okay. So while our designer is contemplating her next out of the box design concept, back here in the developer world you see that Visual Studio has notified us, the designer has indeed updated her files. This is a great integration point. It ensures that everyone is in sync, and working from the most current version.

Okay. So with that taken care of, we’re ready to publish our changes up to the staging server, where they can be reviewed, and then eventually posted to the Web. I can do that through a painless one-click publishing process. That’s easy enough. Now for my favorite part of the day. Let’s go back to my task list where I can check off work items by changing their state from Active to Closed. When I resolve work items and check code back in, (Visual Studio) Team Services will automatically notify our team if there are new changes to be made. Okay. So we’re pretty much done with our work for today. Do you guys want to see the finished product?

Okay. This is a Fourth Coffee online promotional Web site we built, using Visual Studio 2008, and Microsoft Expression Blend 2. It’s using a technology called Silverlight, which is a cross-browser, cross-platform plug-in for delivering the next generation of rich media experiences. So I’m just going to type in my zip code here and see what happens. Those cool animations thereon the left we get a view of our neighborhood store, some store information, and the promotional offer for that store. There’s also an interactive map with the four closest store locations to me. And I can drag and drop these event categories, like music, or reading, to get a list of upcoming events at each store location. What do you guys think? Pretty cool, huh?

Next generation Web applications like this, built by developers like you, offer better performance, better usability, and a better overall experience for customers. Now, let’s go to Singapore, where a visionary CIO is transforming her country’s transportation system using a next generation Web platform.

(Video segment.)

STEVE BALLMER: Again, I think a pretty exciting example of how some of the next generation Web and developer tools that we talked about and had a chance to see are being applied in Singapore in real life.

Business Intelligence

The last theme I want to hit on for the three products we’re launching today is business intelligence which, as I said earlier, is really a way of letting the users engage. It’s not about the presentation, it’s about the insight and understanding. And today we’ll talk about new features in SQL Server 2008, but I want to put this in the context of the overall business intelligence strategy at Microsoft. The most popular business intelligence tool in the world today is Microsoft Excel, and we continue, as we did in Office 2007, to enhance the capability it gives for front end presentation and analysis.

Number two is the work we’re doing in analysis and teamwork through SharePoint, through Excel as a shared analysis and computation engine with Excel Services, through our Performance Point product line, which we launched in the last year, which brings KPIs, business score carding, and other organizational performance technologies to market.

And certainly last but not least, is the work that we do in SQL Server itself to support business intelligence. With SQL Server 2008, we’ve done a heck of a lot of work on the performance and scalability of data warehousing.

I’ll tell you a small story — it’s kind of interesting — on how some of the fervor around this came about. About three years ago, two-and-a-half years ago, we brought in as our Chief Operating Officer a fellow named Kevin Turner. Kevin had been the former CIO at Wal-Mart, and Wal-Mart is a big user of Teradata for data warehousing applications. And underneath Kevin at Microsoft we had put our CIO. And it was time to build a new big time, high-performance data warehouse application at Microsoft, and the CIO came in and was talking to Kevin, and complaining about some things in SQL Server, and Kevin said, “Well, why don’t you look at Teradata?” And our developers were horrified. You’re not going to use SQL Server? You’re going to look at Teradata? And Kevin said, “I’ll tell you what, I was the best Teradata customer in the whole world when I was at Wal-Mart. I’ll give you to SQL Server 2008, if you can get over the goal line, we’ll take and build all of the Microsoft data warehousing stuff on SQL Server 2008 and beyond.”

And we’ve really done, I think, an amazing job. High performance data warehousing, partitioning, 64-bit support, all built in. We’ve done a lot of work to optimize for data integration, reporting, and analysis, including new data types for unstructured data. We include spatial information as a first class data type in SQL Server 2008, documents, and images are first class data types with SQL 2008. The reporting engine, and reporting services in SQL 2008 can render directly into both Word and, of course, into Excel. So you’re not just rendering reports, you’re actually rendering output into Word, and into Excel, which I think is very, very powerful.

We thought we’d give you a sense of how the campaign, the Web campaign at Fourth Coffee is doing, and through that we’ll give you a look at some of the new SQL Server business intelligence features. To do that will be  that demo will be done by Kristina Kerr of our database team, after which we’ll have a chance to hear one more time from one of our heroes about some of the ways in which they’re using business intelligence.

Let’s roll the video one last time.

(Video segment.)

Demonstration: Business Intelligence & SQL Server 2008

KRISTINA KERR: Well, until my new single, “Stinky Cat” goes multi-platinum, I’d better not quit my day job as a BI products manager. So today what I’m going to walk you through is how we can monitor and analyze our campaign performance using Microsoft Business Intelligence. What I’m going to show you is how using the new data types in SQL Server 2008, the new Report Designer, and the data mining add-in for Excel, how we can empower information workers all across the enterprise to make better decisions. So let’s get started.

What we see in front of us is a desktop of a marketing manager. We can see its Outlook, but there are a few key things I want to point out. We can see over here there’s a folder called Microsoft Dynamics CRM. This is where we have tight integration with Dynamics CRM to show us information about our account, our campaigns, and our contacts. So right from within Outlook, I can open up information about this new Web campaign we’re running. Now, right here, I can see my dashboard and I can monitor my results, or I can open up the Office SharePoint site to get more information about how we’re doing.

So this is my BI Dashboard. My BI Dashboard is made up of a few key components. On the top left, we can see my Performance Point scorecard pulling KPIs from SQL Server Analysis Services. Down below, we can see our reporting services report libraries, and on the right we’ve got a map with business intelligence data surfaced right within it. So let’s start with our scorecard. We can see the conversion rate is trending down. That measures the number of people who come into a store and actually make a purchase. The fact that that’s a big red arrow going down is a little bit concerning. So let’s take a look at our math and see if we can find out what might be causing that decrease in conversion rates.

Now, due to the new data types in SQL Server 2008, we can now store non-relational data types such as advanced geospatial data, by coming that geospatial data with business intelligence data, we can now get location intelligence. So as we see here, each coffee cup represents a store, and gives us the overall status of that store. We have context to the information that we’re looking at. And because we’re using Virtual Earth as our visualization platform, we can interact with the math in the usual ways, drilling down, drilling in, moving it around.

Now if we look at how each of these stores are performing, we can see that the conversion rate issue isn’t necessarily a widespread problem. When we hover over one of our green coffee mugs, we can see that the conversion rate is fairly high, but if we look at one of our red coffee mugs, we can see that it’s relatively low. Now I’ve got an idea about what might be causing that, so I’m going to open up my SQL Server Reporting Services Report and see if I can find some more information. Looking at this report, there are a few key components. We’ve got our pie chart in the top left showing sales by category. And we also have another chart showing sales by conversion rates. As we scroll down, we can see the conversion rates for all of the stores that Fourth Coffee has in that area. If I look here, the store that has the low conversion rate is exactly the same store that we saw in the map.

I might want to add a little bit more information to my report to see if I can figure out what’s causing that problem. What we see here is SQL Server 2008 Reporting Services Report Designer. The reason we built that is because we heard from our customers that they’d like to give their people and their organizations a robust design environment for creating complex ad hoc reports without the intervention of IT. So you know when you get those phone calls and somebody says, hey, can you change that column header from lilac to eggplant, yes, now you can empower those people to do it themselves using the new Report Designer.

We’ve also included a new visualization engine where you can change the chart types. So instead of having the standard pie chart, you can use some of these new visualizations to better understand the data that you’re looking at. Now if we scroll over a bit, and go down to our grid, within here we might want to insert a column that will show us inventory levels for those particular stores. Now just like they do in those cooking shows, I’m not going to go through all the formatting with you, I’m going to pull up something that’s already fully baked with inventory levels already added and nicely formatted. So when we preview this information in our report, we can see that that information has been added, and that same store with the really low conversion rates also has low inventory levels. So perhaps people are coming into the store not getting a mug and, therefore, not making a purchase. This is great insight for us to have, and I want to share that out with the rest of my team by publishing this fact to SharePoint Server so other people can view this information.

Now, ever since the beginning of this campaign, we’ve been tracking what people have been buying when they come into our stores. So I’m going to use that information that we’ve been collecting here in Excel to do some analysis. We can see here in the table that we’ve got information about what people are buying, and up here at the top we have a tab called Analyze. This is a new SQL Server 2008 data mining add-in for Excel. This is letting us do powerful data mining using the engine of SQL Server Analysis Services to bring the results back to us in Excel.

I’m going to run some shopping basket analysis here, and see what kinds of products people are purchasing together. This kind of information will help the marketing manager make merchandising decisions in the future. So what kind of products they can bundle together and sell as an offer. I’m going to zoom in a bit so it’s easier to see. We can see that when people go into a store, they typically will buy filters, and coffee beans together, or an Americano and a bagel.

In our second tab, what we can see is, when somebody purchases a product, what is the recommended product to sell along with that. If we scroll over, we can see the overall value of that bundle of goods. So when I want to do my marketing campaigns in the future, or perhaps revive this, I’ve got some great suggestions from SQL Server delivered to me in Excel to make those merchandizing decisions for me.

What I’ve just shown you is how we can use the power of SQL Server 2008, the new data types giving us location intelligence, the new report designer letting us create and modify ad hoc reports, and the new data mining add-in for Excel to empower decision making for everybody across the organization.

To show you business intelligence in action, I would like to show you a video of how the San Diego Zoo is using Microsoft technology to help protect endangered species. Thank you.

(Video segment.)

STEVE BALLMER: The range of customer applications that you saw today from Louisiana State to Singapore, transportation to Robert Erhardt and the San Diego Zoo, I think, is amazing, and the kind of incredible work that people are doing are amazing. Today we had just a chance to hear from, see and witness just some of the innovations embedded in Windows Server 2008, Visual Studio, and SQL Server. I have up here, if you will, the top ten list, the hottest hits for each of the products, and I don’t have the time, nor do you have the inclination for me to sit down and make sure we’ve run through every one of them.

But some of the most interesting, powerful things in these products we haven’t even had a chance to get to today because they’re just so rich. The PowerShell Scripting Technology in Windows Server, we spent no time on at all today. Some of the amazing things that you can do to write applications built in Microsoft Office using Visual Studio. The Synchronization Framework in SQL Server that allows you to take data online and offline and build the next generation of applications. These are feature rich products, these are products that I think really leverage next generation technology and that really focus in on the key things that our customers have articulated for us. The work of our early adopters, the heroes that are here today that have already used these products, some of whom we’ve had a chance to hear from, give us confidence that we’ve really taken an important move in the right direction as people have gotten out and used these technologies in new and interesting ways.

So I would like to just have a chance to shine the light, have them stand up, some of our early adopters, they all have VIP badges, special, red. Feel free to grab them and chat with them, but how about a round of applause for some of the early adopters of these technologies. (Applause.) I don’t know if I’m causing trouble for our heroes, but if you see one of those orange badge holders, ask them a question, find out their experiences, and learn a little bit from some of the folks who are really on the front edge of taking advantage of this deep and rich technology.

Some of the products we talked about today are in market, Visual Studio, Windows Server, SQL Server, and HyperV rollout over the course of the next few months. But we’ll have a version later this year of Windows Server for High Performance Compute Application, the Windows HPC Server. We’ll have a version of Windows Server that’s really tailored for mid-market companies that can’t deal with the full complexity of all of these workloads, where we’ve managed to really think through what’s it like if your IT staff is maybe five to ten people, and you might have a total of five servers, we call that the Windows Essential Business Server. And for the smallest companies that may only want to instance a single server, we have our Windows Small Business Server product coming to market later this year, with updates to not just Windows Server, but Exchange, and OCS, and all of the technologies that are built in. And last, but not least, we’ll have Version 2 of the Microsoft Silverlight Runtime, which is really the target platform for the Expression Design Suite that we showed you. We’ll talk more about Silverlight and where it’s going at our MIX Developers Conference in Las Vegas, in the next few weeks. So an exciting last 12 months, an exciting set of products launched today and of course a very rich and deep roadmap coming for the course of the next 12 months.

I’ve had a great time having a chance to share a little bit with you today about the phenomenal new products in the market. I am excited and honored to have a chance to be here today. If I think back 20 years ago, Microsoft was just embarking on this mission to really be an enterprise computing player. We were learning about the needs of IT, and here we sit 20 years later, I think we’re at the forefront for many of you with what you’re doing. We’re talking about making dynamic IT key to a strategic asset. We’re trying very hard to make sure we have technology that allow all of us, developers, and IT professionals to be heroes, and hopefully with the launch of these three new products all of you will agree that with this as a foundation, you are heroes. Heroes happen here.

Thank you all very much. Enjoy the rest of the day. (Applause.)