CeBIT 2002 Press Conference
Remarks by Steve Ballmer
March 13, 2002
STEVE BALLMER: Thanks. It’s a real pleasure and delight to have an opportunity to be here with you today. There is a lot going on, certainly in the world of technology. We wanted to tell you a little bit about some very, very exciting news on a variety of different fronts from Microsoft. Show you a couple of things which you may have seen, but may not have before, and then certainly most importantly we want a chance to take your questions and hear what’s on your minds.
I will start with — in some senses — a transformation that we made about three years ago as a company in terms of the way we think about what we do and how we’re trying to add value. Our company grew up with a vision that Bill Gates and Paul Allen, who started Microsoft, articulated — a computer on every desk and in every home. And for over twenty years that was a motivating mission for our company. There’s still not a computer on every desk and there’s still not a computer in every home. But three years ago we decided that essentially we thought that there was broader set of ways in which we could add value through software. Bill worked hard at it and decided that our new mission had to be to empower people through software any time, any place and on any device.
And if you think about it, sometimes corporate mission statements mean a lot and sometimes they don’t mean much. But I’ll tell you, the mission statement of a computer on every desk and in every home meant a lot to us and so does this notion of empowering people any time, any place, any device. And we think about the ways in which and the places in which people might want to use information technology. How do you empower a business? How do you empower a consumer? How do you empower people when they are on the go? How do you empower them when they’re at home? How do you empower them when they’re — I don’t know — out jogging? How do we continually provide tools to extend the way people use information?
And sometimes I challenge our people. The real charge is just to think about how we can help people with our software. More hours a day and how do we provide more value per hour. If you think about it from the individual’s perspective in some senses, it’s about how do we help people from the time they wake up in the morning to the time they go to bed at night. My son, did he finish his homework? Well, I don’t have time to take a phone call from my wife, I don’t have time to go to the computer. I’d like my wife to just beam it in to my wristwatch across the Internet and let me know.
We’re sitting in a room like this and as I look out I see a lot of people with paper and pencils. Why aren’t we helping you with information technology devices? Someday in the next few years you’ll come with a little tablet device. It’s your PC — you’ll write on it, my voice will be recorded and it will be automatically fed as a piece of voice input over the wireless network in this room onto your tablet PCs. That’s the way a meeting like this should work. But whether it’s meetings, whether it’s being interrupted in different places. Watching television. I really want television watching to be assisted by information technology. I always joke I want to be able to yell at the TV and have it do voice recognition. And figure out what I really meant during the basketball game when I was upset. And these are just some of the consumer areas that we see being transformed.
In businesses there are still a lot of processes, particularly in smaller- and medium-sized companies, that are still not fully transformed in the information technology world. So as we sit here today, we talk about a much broader set of devices and a much broader set of software businesses that we as a company are pursuing than we would have talked to you about five years ago. We’re not trying to be in every bit of the software business. The software business is so big, it’s so broad, it’s so expansive. But we’ll talk to you about a lot more than PCs with Windows and Office.
Many journalists ask me: “Will Windows and Office still be your biggest business in the next three years?” And the answer is, “Certainly, yes.” And they’ll be growing, and growing nicely. And the PC will be the anchor device, the most intelligent device that everybody owns. That people will own other devices — devices that sit next to the TV, devices that go into the pocket. Our other new businesses, whether it’s MSN, our Great Plains and business solutions business, the work we doing on Xbox, which we’re launching this week in Europe around the television — those will all be rapidly, rapidly growing businesses. But still, three, four years from now, PC operating systems and Microsoft Office — if we do a good job — will be by far our biggest businesses.
Today I get a chance to talk about a number of things. The first thing I want to talk about relates to our .NET platform. .NET is at the core of what we’re trying to do as a company. Whether we’re talking about Pocket PC devices, Windows, Office, .NET is our platform for helping software developers and users take advantage of the revolution that we see happening around the XML industry standard message set. XML will be essentially a lingua franca of the Internet.
We need to provide tools to people — to developers as well as end users — to take advantage of that phenomenon. The success of a new platform can be measured in no small part by the degree to which independent software vendors and large corporations address it and embrace it. Today we’re announcing in conjunction with SAP their support for our .NET platform in SAP Portal, SAP R3, et cetera. And what SAP is announcing, essentially, is we’re working on a set of tools that when it ships, any developer who learns Visual Studio .NET, who learns the .NET platform, will be able to write and customize their SAP environment using our .NET tool suite. This is equivalent to announcements that they’ve made in a variety of different ways.
You can certainly customize our three using their ABAP programming language. You’ll now be able to use our .NET platform, .NET tools and .NET experiences in close conjunction to customize the SAP environments. This announcement builds on a very strong partnership that we have. Over half of all the new SAP installations go in on top of Windows. The single highest performance benchmark on the SAP-SD benchmark, it’s not on a Sun System, it’s not on an HP system, it’s on a Windows system — 26,000 users. We posted that benchmark just last week.
And I’d say, despite the fact that you can always find levels of competition and overlap between any two companies, the partnership and relationship between Microsoft and SAP is strong. It’s positive. I was talking to Dr. Plattner on the phone just a couple of nights ago. We like to laugh a little bit about the fact that occasionally we bump into each other, we’ve got issues, we’ve got problems. But we still do incredible work together and that’s very, very important to us. So SAP support for .NET, I think, is an important milestone in acceptance of that new platform.
We also think this XML revolution in .NET will be very important in the mobility space. And one of the most critical new investments we’ve made over the last several years has really been this concept of bringing rich intelligent software into devices that go in the pocket. And in some senses the way you’re able to communicate with these intelligent devices through the magic of the XML standards will be even more important. When I want to send something down to my pocket device, I will send a set of XML and then the device can figure out the best way to present it. The device will figure out what to do with the data based upon the capabilities that it has. And these pocket devices will become full members of the Internet community.
I think one of the big impediments to the acceptance of mobile data will be the notion that mobile data can plug into the Internet in an Internet-native way. And whether we think about what I call our two-handed device — the Pocket PC — or I think about the Smartphone software that we’re working on for what you might think of as a device that you operate with one hand, we’re very, very focused on making data and voice work very well across the range of mobile devices that we are involved with. It’s a big focus for us. And it joins another device which needs to be a full citizen in the mobile world and that’s the PC. Later this year with partners we will launch Tablet PCs that you carry with you. They will have GPRS connectivity built in. They will 802.11 capability built-in. They will have voice capabilities that get built-in. So whether you want a big screen, a little screen or the smallest screen. All customers deserve richness, intelligence in these devices across both voice and data types.
Joining me today to talk a little bit about some of the work that we’re doing with the pocket PC 2002 in the mobility space and with the Smartphone 2002 is Brian Boruff. Brian runs the mobility division for Microsoft here in Europe, Middle East and Africa. He’s going to have a chance to show you a couple things, tell you a couple things. And he will be joined by the head of our worldwide mobility division during the Q & A, Mr. Peter Knook.
BRIAN BORUFF: Thank you, Steve.
Thank you. So what I want to do is take about 10 minutes to talk with you a little bit about the strategic importance of the mobility market to Microsoft, and then I want to show you exactly how we see some of these consumer services being delivered to some of the devices that Steve talked about.
In my job at Microsoft in Europe, Africa and the Middle East, I’m responsible for our relationships with our mobile carriers. And it’s so interesting. Three or four weeks ago at GSM World Congress, it was so interesting to see the emergence of what we can consider to be a whole new E-CO system around mobility devices. We’re forming — we, Microsoft — partnerships across the spectrum with mobile operators and carriers. We’re working closely with original device manufacturers on unique designs that integrate both voice and data. We’re working with solution providers — Excenture, Compaq, HP, many people, ISVs — that are delivering mobility solutions into the enterprise. So we’re really noticing as the mobile world becomes more data-enabled we’re noticing a whole new E-CO system developing. And we see software at the center of a lot of the value that we feel will be driven in this whole area. Windows-powered devices, software that runs and synchs with the server on Outlook. access from a mobile device. So there’s just so much that we’re seeing that’s exciting in this industry and for me it’s probably one of the best jobs in Microsoft to be part of this whole E-CO system as it develops.
So I promised I’d talk with you for a minute and then I promised I’d show you some interesting things. Before I do that let me just share with you three things that we’re announcing today that just really kind of reinforce our commitment to this mobile market. The first thing we’re announcing with British Telecom is a Pocket PC 02XDA device. I think we’re going to have Ed come up and actually show this to you. But it’s basically a GSM phone. As Steve described it, it’s a two-handed device that can synchronize with exchange and do a lot of great functionality. So that is available — and launching today, availability in May in four key markets that mm O services in Europe.
Second announcement today is we’re working with Siemens and Fujitsu on the pocket LOOX Pocket PC which is a whole new device category that’s being brought to market today, and we’ll be showing that to you.
The third thing that’s important to keep in mind as part of we feel our role in this E-CO system is to bring software platforms to market that allow us to get devices and mobile solutions to market quicker. So we have announced and we want to reinforce our commitment to our software and silicon vendors, both Texas Instruments and Intel, in these reference design platforms that are available today for people to take and innovate at the device level on the ways to deliver mobile solutions to users — both consumers and also to business.
So without any further ado, Ed, I’d like you to join me on stage and we’d like to actually show you how this whole process appears to the end user and some of the excitement that we see for how these services will be delivered. Ed?
ED: Great. Thanks, Brian.
So let’s go ahead and have a look at some of these devices. The first device we want to look at is the 02XDA which is launching here at CeBIT. Let’s go ahead and look at that software. So we have a phone application that integrates phone functionality and the Pocket PC functionality all in the one device. So you have all the things you’d expect from a mobile phone. You’ve got a call log, you’ve got speed dial, you’ve got 10 numbers to dial.
But it’s really in the software integration where we add the most value, where the Pocket PC reaches very nicely into the phone and the phone reaches right back. So if I go into contacts and if I tap and hold on Steve’s contact card here — let’s go ahead and open it up — you’ll see that all the numbers are hot-linked. So if I were to tap any one of these — for instance, I’ll just go ahead and tap the mobile number — we’re actually able to place the call completely outside of the phone application. If we have some audio you can actually hear that ring. So if we actually want to go ahead and hide that we can look at some other data or we can go into the phone application and make a note.
So one of the really important things on a phone-enabled device is being able to input data while in an active voice call. You can see the voice call still up, and I can actually say “Call Bill” and that’ll actually just go ahead and recognize. And I can stop that and I can end the call. So how does the phone reach back into the PDA? Well, if I go into the call log, I open up that note. You can see that that note lives right there and it synchs right up to Outlook the next time you’re back at your desktop.
So, that’s just a look at the Pocket PC phone edition. Now this software will be shipping initially on the 02XDA. It will also be brought to market with the HP Jornada 928. And also here at the show we’re also introducing some of the conventional Pocket PCs. The Pocket LOOX, as Brian mentioned, and also a new NEC progear device.
So that’s the Pocket PC. I also wanted to show you our Smartphone software. So I go ahead and zoom in here. So this piece of hardware is actually one of the devices that’s using the reference design that we’ve developed in conjunction with Texas Instruments.
So, as Steve noted, the Smartphone is designed for one-handed operation. So if I go into contacts — let me zoom out so you guys can see a little bit of this — if I decide to go ahead and dial his phone number, I can just type in b-a-l-l and we’ll sort to Steve’s contact card. By tap and open you can see that we have all the rich Outlook information that you expect on your desktop available now here on the mobile phone.
So if I go back into the home area, now one of the things that people are talking about a lot today on mobile phones is messaging. Now, multi-medial messaging is something that gains a lot of hype and we think that while it’s great to be able to send text and pictures, we think true multimedia messaging involves a lot more. So I’ll actually go into the Inbox and we can see there are a number of e-mails in here. If I open this e-mail from John Kelly, you’ll see that there’s an attachment for a Windows Media video file. So if I actually go ahead and open that, we’ll launch Windows Media and you’ll see we have a full-motion stereo audio and video file that’s playing on our Smartphone. So taking that rich experience that people are accustomed to in the fix-network world and bring it to the wireless is something that we’re super excited about.
So that’s video on a Smartphone. Of course, we also support rich audio and video on the Pocket PC. Now what’s interesting is that these devices are PDAs and you’re going to do a number of things. Maybe you’re going to read some e-mail, maybe you’re going to surf the Web, maybe you’re going to watch a video or maybe you’re going to listen to some music. So how do we handle it? If you’re listening to music and a phone call comes in? So we’ve got some music playing here. With a little bit of luck, the phone will ring. So here we have the phones ringing. Custom ring tone — kind of a classic there. I go ahead and I answer the call. You’ll notice that we’ve actually lowered the volume. We’ve paused the music. We can have our conversation. We can view other data. But as soon as we’re done with the phone call, we can actually just go ahead and hit end and the music picks up right where it left off.
So a lot of great devices, Smartphones from folks like HTC, Sendo, the reference design with TI, a lot of amazing devices. So with that, I thank you. I’m actually going to hand it back over to Steve. And while I do that, I’m actually going to go ahead and present him with one of the first mm O pocket PC full-edition products.
STEVE BALLMER: Lot of fun. Lot of good stuff going on. And we’re excited to be in the marketplace with the first wireless Pocket PC with mm O . Let me turn now for a minute from the world of mobility to the world of the digital home, if you will. There’s an area where we have a lot of enthusiasm not only for the PC but for devices that attach to the television set and devices that you can deploy as almost kind of screens everywhere in the house. I love to tell my wife that five years from now we won’t be digging through the computer or old shoe boxes for pictures. We’ll be beaming them to intelligent screens everywhere in our home. And we’ll be taking notes and driving.
Now an intelligent screen is a lot different — as you’ll hear — than a Tablet PC. A Tablet PC has a hard disk, it’s got intelligence, it’s expensive. Because it is a PC, it’s has a PC cost. But there are parts and places in our home where we just want a screen. You know right there, and we want it attached to a PC so we can drive it. But on our refrigerator we want pictures of the kids, except when it’s time to make notes, and we want all that stuff kind of nicely tied into the PC where we really keep all of our family photo albums. We’ve been working on a product concept around this that we call Mira. And Todd Warren’s the general manager of the division that builds Mira is here with us today. And I’m going to let him talk about it and show it to you and announce a couple of new partnerships that are important. Todd.
TODD WARREN: Thank you. It’s great to be here at the European introduction of Mira. So just to give you an idea of what Mira is, the benefit that Mira brings to the PC user is the capability to access PC data and information anywhere in the home within a sixty-meter radius of their PC. So you can use that device to connect remotely to all your data, all your PC applications, remotely in the home.
We take advantage of the new zero-configuration wireless capability that’s part of Windows XP Pro. We also take advantage of the remote desktop capability that allows you to connect from Windows XP back to your Windows PC. The kinds of scenarios that this enables are exactly as Steve said. From your refrigerator you could have one of these devices connected back to your PC for Web browsing, for listening to music, for looking at digital pictures or for quick access to your PC applications and data that are stored in your desktop PC.
We think this enables a whole new set of uses for the PC. We know today that people browse the Web up to 12 hours a day. This gives people the capability to do it in more places in the home than ever before. And access that PC experience from outside the location where the desktop is. Much in the same way the cordless phone allowed people to access their phone around the house from places other than the phone jack, the wireless, smart display device allows people to access that PC experience form anywhere in the home.
So with that let’s take a look at it. I’ll go over here and switch the monitor. So what we have here actually is a desktop configuration. We’re using a full standard monitor-type configuration for the smart display. So I could use this as a primary monitor to my PC. The difference is: with this Viewsonic device, I can just pick it up — and if I unplug my power cord it will go out — but I can use it anywhere in my house to access all that information that’s on my PC.
Another configuration you might want is a secondary monitor configuration where I have a device that, for instance, I put on my refrigerator or that I leave accessible in the kitchen so that I can very quickly from another room in the house access all the data and information that’s on my PC. Everything you’re seeing is running on a standard Windows XP PC.
So I’ll take the stylus out here. And I’ve been running a set of applications, so one of the things I can do, as Steve mentions, I can look at photos, so I can see my family, pull up a picture of my family and view that on the screen. I can switch over and I can see Bill Gates, who introduced the Mira technology and concept at CeBIT, or at CES, and see that information here on my PC. I can browse the Web.
So here if I click on Internet Explorer you can see the German site for Mira — that’s live today — where you can get all the information about the Mira set of technologies and partners. As you can see, it’s my standard start menu that I have when I’m using the PC on my desktop available now anywhere in the home. I can roam anywhere I want and have access to this information. I can open an Office application, if I wanted to quickly browse and look at a file quickly. Anything that I have created on my PC, all my files, all my PC data, this is now accessible anywhere in the home. I can also access Windows Media. So if I open up my Media library here, I can listen to music right here on the device away from my PC. Most of the devices have a headphone jack so I can plug headphones and listen to my library of music that I have stored on my PC anywhere in the home.
What we’d like to do now is show you a video to give you an idea of some of the scenarios for using a Mira device anywhere in your home to access the PC data. So what I’d like to do now is play the video that gives you an example of those scenarios for using the device anywhere in your home.
So clearly, accessing the information from anywhere in the home. So there you have it. That’s the Mira concept. What we’d like to do now is talk a little bit about the partnerships that we have today. As you know, we announced the Mira concept at CES. We had support from some big US monitor manufacturers, like Viewsonic, as well as some enabling partners, like National Semiconductor, we built on the partner momentum and three weeks ago we announced in Japan another set of partners including NEC and their PC division, Panasonic and their monitor division, and today we’re announcing a new set of partners to serve the European market, including Philips, and what I’d like to do is show you some of the Philips’ devices that we have here — brand new Philips devices — one of Europe’s leading consumer electronics vendors.
We have a 15″ primary display monitor configuration that’s really quite interesting. It includes a wireless keyboard that connects back to the device. It’s magnetic so it can connect to the screen so that when you pick it up to take it around the house, you take the wireless keyboard with you anywhere you go. We also have a secondary monitor configuration in a 10″ model from Philips that’s being shown in the Philips booth today.
We also have support from Tatung. Tatung is a Taiwanese original device manufacturer that serves a worldwide market and they’ve built a ruggedized water-resistant one. So if you spill coffee on it in the kitchen, it will still be fine. If your child knocks it off the coffee-table, it will still be fine. We also have support from LG Electronics in Korea, one of the largest LCD panel manufacturers in the world. So that we’ll truly have a wide variety of devices that can serve the market, including the ODM Trigem, which we’re also announcing today. So, thank you very much.
STEVE BALLMER: We had a chance to hit on a number of interesting themes. Mobility. Mobility in the home. Certainly a big theme for us in .NET. I’d now like to bring up on the stage with me a new partner for Microsoft in a significant way. We’ve got a lot of shared interests on a variety of fronts. Please join me in welcoming Ron Sommer from Deutsche Telekom.
Today we are announcing with Deutsche Telekom an alliance. We’ve concluded some agreements. We’ve got more under way. Everybody’s been working very hard. But I think it really builds on the joint strengths of the two companies. We certainly have incredible respect for the focus and discipline that Deutsche Telekom has put into driving broadband connectivity throughout its network of offerings here in Germany and around the world. And a lot of respect for the quality and focus on customer support and service that Deutsche Telekom has and I think we have very much shared visions of some of the things that are possible in that arena.
RON SOMMER: And those things we would like to get moving — jointly. Steve, I’ll try to stay in English. Not surprise you with a German explanation of what we try to do. So I’ll stick to my script if you may despite what I saw yesterday. Your speech in English was wonderful. It was a great speech. I could not do in German what you have done in English yesterday.
Ladies and gentlemen, the two companies, Microsoft and Deutsche Telekom, have been working closely for a long time. I’m very pleased that this cooperation will now be given a new dimension — a new dimension in the future as a strategic partnership. And I’m positive that we’ll be even more successful than we have already been in the past.
Our partnership will focus on two major arenas, both of which have an enormous potential — mobile data communication and network-braced software applications. In both areas we’re pursuing the same joint objective. We want to create a consistent platform which allows our customers to use applications and services having a totally new quality regardless of customer’s end devices or the customer’s locations. This consistent platform will provide the basis for complete compatibility when different technologies, different services and end devices are used.
This means, together with Microsoft, we want to be one of the first to offer our customers a real one-stop shopping service that creates direct added value. This will make Microsoft and Deutsche Telekom the engine of progress and innovation also in the convergence market.
In mobile data communication we are presenting here at CeBIT the first results of this pioneering partnership. On the basis of a joint service integration platform, Microsoft and T-Mobile have developed portal solutions for business customers which open up totally new dimensions for mobile working while on the road. With the mobile access portal and any GPRS end device, a GPRS-capable end device such as a mobile phone, PDA or notebook, employees can access their company network quickly, easily, securely and use additional mobile applications.
With this mobile service portal, T-Mobile also offers companies hosted office applications. We will launch these new services on the market in the summer of 2002. T-Mobile and Microsoft will also work together when developing next-generation mobiles with which it is possible to access Microsoft Exchange applications such as Outlook.
In another innovation, in the new T-Mobile T zones that we demonstrated to many of you just two days ago, T-Mobile customers will not only be able to use T-Online’s messaging and e-mail services but also the respective Microsoft network services. And this means that our content for mobile data applications will become even more attractive at the international level.
After all, when it comes to mobile communications, we are thinking far beyond Germany and Europe to our 67 million mobile-communication customers around the globe. Our partnership with Microsoft is a very important step in gradually leading our customers towards sophisticated but easy-to-use data applications on the basis of today’s standards and thus preparing them for the next standard UMTS. This will give us an important head start when marketing UMTS.
Let me now talk about the second area of cooperation — the development and marketing of Web services. This means the use of applications and services via the Internet. And that is why we are signing a memorandum of understanding today. With our joint Web services we want to offer companies of any size totally new opportunities to customize software in service packages and adjust them to changing company needs. Costly software maintenance and administration will be a thing of the past. The latest software packages will be offered via the Internet independent of end devices, again, and independent of location. And this means significantly lower cost for our customers. Our division T-Systems and Microsoft are building joint platforms for these services that will be called — what surprise — T .NET.
Not only will we market our own products via this platform. It will also be open to other providers. Our aim is to produce a convincing full-service offering for Internet-based services for the international market with attractive terms, state-of-the-art quality, maximum security and, obviously, best performance. This market for Web services is so far only at the rudimentary stage of development. A world-market volume of US$50 billion is already being forecast, however, for the year 2006.
And as you said, Steve, yesterday, we’ll surprise the world with what we can do between now and 2006. One fourth, by the way, of this market potential will be accounted for by the West European market. We aim to be the market leaders in Germany and in Europe. The typical strengths of the two companies will be combined in the partnership between Microsoft and Deutsche Telekom in highly interesting growth areas. As one of the world’s largest telecommunication groups, Deutsche Telekom will contribute its skills as a network operator, as a mobile communication provider and as an Internet service provider. Microsoft, the world’s leading software company, has the know-how needed to develop and implement the necessary software products. The cooperation now agreed on will be a classical win-win situation for both companies — for Microsoft and Deutsche Telekom.
If we would talk about sports I’ll use the word “dream team” that we are trying here to establish a dream team that will help decisively shape the rapidly developing convergence markets. This time let me also use this opportunity to express my thanks to the teams that worked so hard to get done what we wanted to get done, and this is just the beginning of what we really want to get done. And a special thanks to my American colleague and their management board of Deutsche Telekom, Jeffery Hedburg, up there in the corner, who wrapped up the agreement with Microsoft from our side. And now I’d like to give it back to you, Steve, with many thanks for this great start, the continuation of the partnership and the many things that we will get done together.