Steve Ballmer: Microsoft Partners and the Cloud

Remarks by Steve Ballmer, CEO of Microsoft
Microsoft Partners and the Cloud
New Delhi, India
May 27, 2010

STEVE BALLMER: Well, thanks. It’s a real honor for me to have a chance to be here with you today. I arrived last night for a couple of days in India. It’s been not so long since I was here, but the market is so dynamic, things are moving so quickly, it’s good to have a chance to be here. It’s especially good for me to have an opportunity to be here with some of our important partners.

I find that the discussion with our partners is usually the most interesting I’ll have in any city that I visit. Our employees, they give feedback, but they’re completely in. Our customers, they give feedback, but they’re a little more distant. Our partners, you’ve made an investment in working with us, I think you’re genuinely in our corner, but you’re also independent businesses, and you’re going to push and we’re going to push on you. And that makes for, I think, one of the most healthy and important and constructive dialogues that we at Microsoft get a chance to have. So, it’s a pleasure to have the opportunity this afternoon.

With that said, I want to start by saying thank you. We have built our business as a company on this notion of partnership. I don’t know how Bill Gates and Paul Allen decided this when they were young people just starting Microsoft, but Paul Allen wanted to build computers, he wanted to sell them, he wanted to do everything. Bill Gates said, no, no, no, we’re software guys Paul, let’s specialize.

And because of that mindset of specialization, we formed partners with people who build hardware, people who sell hardware, software, systems integration services. And so all of our revenue is based on our collective partnership, and it is very important, and we’re very appreciative of the work that we do together.

It’s tough. Market’s moving fast. This is a market where you have to be really on your toes, and to do that and move forward together is very, very important to us. I see a lot of opportunity for all of us working together in India.

I had a chance to make some remarks earlier in the week that I gather got maybe a little picked up here in India. Software piracy has improved somewhat here. And it’s not good, we’ll come back to that I think later on. There’s still a very high piracy rate here, it’s just better than China at this stage. So, I say thank you for that too, although — don’t go crazy — we still aspire that this place be a lot more legitimate and that also will be, I think, an important part of your and our success is to see the increasing legitimization of the market.

One of the things that I think is important for me to do in a visit like this is to remind you how much more work we have to do in the sense that the work we’ll do as a company and we will do together to change our customers’ lives, to improve their business performance, to change how they work and live, we have so much more opportunity to innovate and make a positive impact. Exactly what we all do, the skills we have, those will continue to change in this dynamic market. But the opportunity to really go forward, to innovate and to make money together, that’s very strong. And I want to show you just a little bit of a video, just two minutes, just to show you some of the kinds of things that we aspire to go do as we evolve Windows and Office, as we move to the cloud, as we move forward with Exchange and SharePoint, Windows Server, SQL Server, Bing, Xbox, Windows Phones. We have a vision in mind of the kinds of new scenarios that we want to enable and I want you to take a little bit of a look at those. So, let’s roll the video, please.

(Break for video presentation.)

STEVE BALLMER: A lot of hardware to invent in there. A lot of software to write to enable that hardware. A lot of new scenarios. The little boy and the little girl communicating across the world in a real-time video conference, simultaneous translation. The lady who goes to the store and gets her shopping list — electronic shopping list automatically arranged for her by the grocery store to fit their traffic pattern. The simulation of the physical world and the virtual world, allowing the mechanic or the product designer to really do 3D interactive design. The tools that allow you to navigate and go through large amounts of data to make good decisions about how to run your business. A lot of different scenarios.

We all know in this room that whether it’s the consumer market, the small business, which today is still largely not automated here in India and actually in many other parts of the world, on up to the biggest enterprises in the world, there’s so much opportunity to make a difference with new technologies and old technologies delivered in new ways.

And that’s why this notion of the so-called cloud is so important. The cloud really is a buzzword more than anything, it’s not a thing. The cloud is not the Internet, the cloud is not some one Microsoft product or competitive product. The cloud is a new model for computing. It’s a new model for computing that brings together the best of rich clients with the best of the Internet. It brings together the best of the enterprise data centers with the best of the Internet. It is a phenomenon that all products will need to take advantage of. Windows and IE will fuse together and embrace the cloud. Office, we’re embracing the cloud. Windows Server through Windows Azure, embraces the cloud and so on and so forth.

Now, at the end of the day, the benefits of the cloud to the different customers we serve will appear in different ways. The consumer will see the benefits in one dimension, the small business who simply can’t afford to automate will now have a service that they can just think of subscribing to or using as they need from the Internet at large, which will be phenomenal.

The large business will have an agility and a speed of action which is amazing. So, this move to the cloud is important and as we like to say today at Microsoft, when it comes to the cloud, we’re all in. It doesn’t mean that your business and our business is going to change tomorrow morning and there’s going to be no more hardware sold, there’s going to be no more software sold, there’s going to be no more systems to integrate, no. It won’t change overnight. And yet, we have to recognize it kind of as our north star that gives guidance to all of our actions.

We talk about five key dimensions of the cloud. First is to remember the cloud gives us all new opportunities. There will be things we do today that go away. I had an employee who’s involved doing the Exchange deployments ask me whether he had a job in the world of the cloud. And I said, “Well, you might have a different job in the world of the cloud.” It’s important because the kinds of things we all do evolve.

The cloud will bring new responsibilities. Every day, we read about privacy, security, reliability challenges that we need to embrace. The cloud really is a different kind of computing platform because all of a sudden, data and information that helps the individual learn and helps the programs that we use, the applications that we use, learn about the world.

As I’ve grown up at Microsoft, the platform is the processor, the operating system and the algorithms that you write. Now there’s a platform of data about the world. Where’s the traffic jams today in Delhi? That’s a first-class part of the way you can write an application. Or where’s the cheapest place in the world to find a given component? Instead of searching around, looking, looking, you can build it into the supply chain application. That’s why we say the cloud learns about the world and about you and your interests.

The cloud is a place that not only hooks people to data and programs to data, it’s a place in which we assume people hook to people much more seamlessly. We talked today about social networking, but social and professional interaction will change.

Small business wants to go online and interact with its customers. You’ll be able to see right there within the CRM screen, is my customer available? Can I contact them? Are they on their mobile phone or are they someplace else in the world that I need to contact them?

The cloud actually wants smarter devices. What does that mean? Some people think the cloud is a place where PCs and smart phones go away and everything becomes sort of centralized again out there in the Internet someplace. The cloud that we envision actually says the devices should be smarter, easier to manage, but smarter. And in fact, we need to fuse the best of smart devices and the best of the Internet. And I think that’s important since many of you are in the business of selling computers and smart phones or even building computers and smart phones.

And last but not least, the cloud drives advances in server technologies, server operating systems as well as server hardware, and that in turn will also help redefine the cloud. Today, when people say “the cloud” it’s something that Microsoft or one of the guys we compete with runs and you have to pay for. You can’t own your own piece of the cloud. And yet, I believe this notion of what we call the private cloud is important.

You won’t buy servers the way we think about it today. You will buy containers that include compute resources, storage resources, networking resources. Our operating systems will have to help you write programs that are easy to manage in that environment and you’ll want a consistent environment whether you choose, whether your customer chooses, or whether you want us to operate the cloud infrastructure for your customers.

So we’re all in. We believe that this is the direction for us to go. It doesn’t mean that we’re not going to continue to do other kinds of new capabilities. Doesn’t mean that we won’t have near features that work in traditional ways as well. But this is our north star for the improvement of a lot of our different products.

We’re in a year in which we’re shipping a lot of exciting new products. Windows 7 really hit the market well. We’re hard at work in Internet Explorer 9 and on the next version of Windows. We’re launching Office 2010, and the number of new things that we can enable in our customers, whether it’s a consumer or small business, on up to a mid-sized and large business with Office 2010, SharePoint, Exchange is really quite remarkable.

We have our Windows Phone 7 Series coming to market the end of this year. We just released a new version of Windows Server 2008 R2 which really has improved management and virtualization and a number of other things. SQL Server, where we’ve really put investments into business intelligence, complementing some of the things that we did in Excel and we’ve done in SharePoint.

Our company invests about US$9.5 billion in R&D because we believe in the opportunity to actually innovate and do exciting new products. Through our product line this year for the business customers that many of you serve, client management, security, business intelligence, search, portal, voicemail, Web and audio conferencing, all of these capabilities are coming to the fore in the product line that we are putting in the market this year.

And we keep on going. We have a lot in the pipeline. We just shipped a lot. And that gives us all the tools we hope we need together to go out and build bigger and more profitable business together.

We’re revamping our partner program. Many of you are resellers, many of you are systems integrators, many of you are OEMs, many of you are some combination of the above. We want to make sure that we give you the tools to get you trained, and we want to make sure that we give you the marketing and technical support that allows you to really succeed with our joint customers.

The more professionalism, the more legitimacy, the better we all represent ourselves to our joint customers, the faster the market develops. So, we seek to invest with you and we use kind of a set of programs, we call them the Microsoft partner network, to really support and move that forward.

I see a very bright future ahead. We’ve got a lot of work to do, we’ve got a lot of things to go build and innovate and design. You have a lot of things to do to keep up to speed with the latest and greatest in technology and really figure out how to bring that alive, to sell it, and bring it alive for the customers that we jointly serve.

I think India will be one of the most quick-growing markets for information technology over the course of the next five years. I think that’s going to be exciting for all of us. I am reminded every time I visit that we sometimes have to get a little out of the box, that the Indian market isn’t exactly the same as the markets that we see in every other country, but you can count on us to be smart and try to invest in ways and build products in ways that can make sense and let us exploit the full breadth and opportunity here in India as well as around the world.

Thanks again for your time, and I’ll look forward for the opportunity to take your questions, your thoughts, and your comments. My pleasure. (Applause.)