Steve Ballmer: Nueva Economica Forum

Remarks by Steve Ballmer, Chief Executive Office
Madrid, Spain
October 8, 2010

STEVE BALLMER: Let me start by thanking the minister so kindly for his very, very warm remarks. I want to thank the Economic Forum for having me here today, and I want to thank all of you for taking time early in the morning to start and have this session.

I’m going to quickly transition from the fact that I think we all understand that many of the world’s economies, including the one in my home country and the one in Spain, we’d all like to see stronger than they are today. And the key to development, the key to progress, the key to growth everybody understands somehow is going to come from productivity and innovation. Innovation somehow is productivity at work speed.

And I feel very fortunate to come to you today as a representative of an industry that I think produces technologies that enable productivity and innovation enhancements in essentially all of the world’s industries and for all of the world’s people. Since information is perhaps the most important commodity on the planet, information technology winds up being one of the most universal improvements that we can make in the world’s capacity to innovate, and to improve its productivity.

Our industry continues to find and create and imagine new things, new opportunities, new ideas that move things forward.

A few years back, there was an article in the Harvard Business Review. I think it said, “Is IT Dead,” something similarly negative like that. And one of the things I did at the — I didn’t believe it, but one of the things I did was go back and look through industrial history, scientific history. And it is hard to find any phase of scientific revolution or industrial revolution that has literally sustained its creativity and momentum as long as the information revolution.

The first computers were in the late ’40s, early ’50s. We’re sitting here 60 years later, and there’s no end in sight for the possibilities to create new things.

The buzzword in our industry today is “cloud computing.” I gave a speech about cloud computing to a group of about 100 CEOs at our headquarters in Seattle late May. I thought I’d done a brilliant job, one of my better explanations for people who are not technical people. You get in front of a room of technical people, you can say cloud computing, and they all go like this right away, but I have to get up in front of these CEOs, and I spent about half an hour. And I finished, and a lady in the front row puts her hand up and she said, “That was very interesting, Steve, thank you so very much. I still don’t get it; what is a cloud, and how do I buy one if I want to?” (Laughter.)

Well, I’m not even going to pretend that I’m going to do justice to the full topic, but I do want to process some thoughts about some of the areas under this umbrella of cloud computing where our industry is trying to innovate and what maybe some of the impacts will be.

In a simple way of thinking about it from my perspective, in a world of the cloud, where the cloud is kind of corporate datacenters and Internet and all of this stuff, we can think about having access to the world’s data, and we can think about having software that mobilizes the world’s data in ways we never could imagine before.

And I’ll just give you one example. In scientific exploration one of the biggest — the two biggest problems are, No. 1, can scientists actually get at and share each other’s data, because datasets now are very large, and there are some politics of will scientists share their data, but even if they want to, the ability to do that because of technology has been low.

The second thing that’s been tough to do is to then on these large datasets have the ability to run very rapid experiments on new scientific theories, but run those in the virtual world instead of in the physical world, because the speed with which you can run a virtual experiment, even if you wind up having to prove it in the physical world, the speed with which you can run it in the cyber world is so fast.

Well, in a world of cloud computing, the ability to take advantage of the world’s data and accelerate it to improve scientific exploration I think is phenomenal. Businesses may have some of their own private scientific data that they want to keep private but then mix it and match it with public data. These are the kinds of things we can envision in the cloud.

For me personally I’ll give you now a more personal CEO kind of view of the world. I was sitting in my office around Christmas almost two years ago. This was really when the financial meltdown was feeling, at least to me, most severe. And I was nervous: What should we do with Microsoft expenses, should we cut, should we cut a lot; oh, what should we do?

And I’m not an economist like the minister, but I did have some notions in my head that public debt and private debt were part of the problem. So, I was interested in just a little historic data, what was total debt as a percentage of GDP in various countries, various years, and what happened to GDP growth afterward, because I’d seen one chart, and I just wanted to get a sense of how bad was now compared to times in history.

Well, I could say what I wanted about that quick, but it was Christmas, so of course I didn’t call in some analyst from vacation, I said, I’ll go do this myself. And isn’t the Internet beautiful? I could query and I could get back all these websites, and I could copy down the information, and try to make sure that it was on the same basis and the same year.

I spent about a day and a half, then I called the analyst back in from vacation. And yet I could express what I wanted for information like that. In the world of the cloud I should be able to get that data just as a scientist who wants to do experiments can get that data.

Access to the world’s people changes. The minister was talking about social networking. Everybody is on social networking. And if you want to find who’s a fan of Britney Spears, social networking is the answer to all of your problems. But in terms of really changing not just even more fully the way we interact with people on various things, we haven’t even scratched the surface.

Yes, we have to obey people’s privacy and respect that on the Internet, but if you have a family member who’s got a disease and you want to find the community of people who have dealt with that disease and talked to the doctors in a given community, that’s not an easy thing to do on the Internet today.

If you want to put together a little private place in the cloud for bankers and lawyers and landlords to come together and talk about a lease, that’s not an easy thing to do yet today in the Internet.

I love being here. It’s my great privilege to have a chance to be here. But I dream of the day when we would actually think it would be better to do this meeting electronically, not because I don’t love being here, but as the leader of a technology company, we have to ask ourselves how do we make virtual meetings where you have technology to help you as good or better perhaps as physical meetings.

So, I think in the world of the cloud we can think of all of the world’s people and in all of their different personalities as individuals, as employees, as citizens, we want to be able to write new innovations to provide new solutions.

The way the whole technology industry builds programs is changing. We talked back where the word “cloud” was born. Should companies like yours write applications the way they do today, build datacenters, buy computers, or is there a better way to write programs that uses resource more efficiently, that saves you money, that lets you be more agile in solving your business problems, that takes less construction dollars, less manpower, less electric power, which the minister and I talked a lot about? The answer is there really is, but it takes new software, new hardware, new innovation.

New devices, there’s new devices coming. We’re always in big competition with other guys out there, blah, blah, blah, blah, blah. It’s really a tough world out there.

But we all know there’s a need for new devices. This meeting proves it. There’s a lady here with pencil and paper. I’ll prove I have one, too. I’m not giving her a hard time. (Laughter.) If I lose this paper, my whole week of action items is gone. That would be bad. There must be a digital form that’s better. But no matter what device you pull out today, if you sit there and start typing, it’s not very sociable, it’s not very pleasant, in some cases it’s not even very efficient compared to jotting a quick note.

We have lots of room to continue to invent what does the future of the television look like, what is the future of the PC, the phone, the note-taking device, the reading device.

There’s a lot of work going on here in Spain to embrace this new cloud computing phenomenon. We’ve had projects big and small with Uzcaltel (ph) down in the Basque region. We’ve worked on building cloud services together for consumers here in Spain.

With small companies like Competitiveness in Catalonia, they’ve actually moved their back-end of their communication and collaboration systems to the company to the cloud.

In Valencia with Torrevieja Hospital they’ve moved really to be paperless in the electronic medical record field, which is quite an achievement for hospitals anywhere in the world.

I think my favorite example of cloud computing though is a project we are involved with, with Telecinco around the World Cup. They wanted to stream all the football matches over the Internet.

Now, the truth of the matter is everybody in this room understands that that’s a huge demand for a very short period of time, and having them build out the capacity to go do that, and then have to shut it down in a month is not a good idea. They chose to use our Azure cloud service to build that application, to use it, and then they shut it down, and we were perfectly happy, because we repurposed all of that capacity back into applications for other people. It’s part of the efficiency of the cloud; great for Telecinco, great for Microsoft, and really a good example in a way that I think a lot of people can relate to of where the cloud makes a difference.

So, I have a lot of enthusiasm about the fundamental advances, I have a lot of enthusiasm about the way we’re going to interact with our computers, speaking to them, touching them, having them recognize us when we walk into a room: “Hi, Steve, you look happy today; what would you like to do?”

We actually have a new gaming and entertainment product coming out this Christmas that will even recognize my motions. So, if I want to play a little Ping-Pong game with friends around the world, literally I just start swinging, and the computer recognizes me and my motions and what I’m doing, and it can see and project what the ball flight would be off the paddle. It’s really quite stunning. And yet we’ve only as a company and an industry scratched the surface.

So, I’m proud to have a chance to be here. I look forward to helping participate and our industry helping participate in the innovation in a lot of industries represented, and helping to improve the productivity in all of the world’s industries.

My pleasure to be here. I’ll look forward to a chance to have some questions and discussions, and thank you again very, very much for your time. (Applause.)