Steve Ballmer Speech Transcript – Enterprise .Net Launch

Remarks by Steve Ballmer
Enterprise .Net Launch
September 26, 2000
San Francisco, CA

MR. BALLMER: Thank you all very much.We’re delighted that you could join us, whether here live in San Francisco or via our satellite audience.We very much appreciate your time and interest.All for the next 90 minutes or so, we’re going to talk

90 minutes, 120 minutes; we’re going to talk to you about Microsoft’s efforts in the enterprise.I do have to note the irony of running this major enterprise event in a theater that featured Pearl Jam, David Bowie, and of course, the infamous Jerry Garcia, but nonetheless, the focus today is very much on the enterprise.And it’s a very big, big day for Microsoft, and I think a very big, big day for the computer industry, as you’ll hear and see from a number of our important partners today.

I was talking to some press folks earlier today, and sometimes I had a hard time convincing them that this was even the big news of the day for Microsoft, let alone the big news of potentially the year, the decade. But certainly, the work we’re going to talk about today — Windows 2000 Data Center version, and the .NET enterprise servers — this is amongst some of the most important product work we’ve talked about, some of the most important services, offerings we’ve had a chance to talk about, and certainly as you’ll hear from our partners, whose equipment is putting out heat here throughout the building, you will also know that it is one of the most important launches from the perspective of our enterprise partners.

I get asked frequently, “Is this the start for Microsoft in the enterprise?”And the answer to that question is, certainly not.Microsoft has been active, and aggressive, and innovating, doing enterprise server platforms now for over 12 years.And I sort of, in my mind, demarcate the hiring of Dave Cutler from Digital at the start of this enterprise era.That’s when we committed ourselves to building serious enterprise operating systems for the client, of course, but also for the server.And if you look at the people we’ve put in place since that time, from the operating system area, Dave Cutler, who is championing our 64-bit work today; Jim Allchin; Brian Valentine, who runs the Windows team today; the folks that we brought in the database and middleware space, people like Jim Gray, one of the leading database experts in the world; Peter Spiro, the architect of RDB; Hal Berenson; Paul Flessner, who runs our efforts in these areas; David Vaskevitch who pioneered our efforts in the middleware space.We certainly have a team that’s committed and able in the enterprise arena.

One of the key assets I think we bring to the table in stark contrast to some of the folks we compete with in this area is a range of development tools that really help improve the productivity with which people can create and deploy enterprise applications.If you look at the team we have in place today, folks like Charles Simonyi, who is one of the original architects way back when of some of our early applications; Yuval Neeman, who has been with us over 15 years; Anders Hejlsberg, who is the architect of our new C-Sharp programming language; David Stutz, and others.

So for 12 years, we’ve been working hard on the product that makes the foundation for an enterprise platform, and we certainly had some success.But also, I would say, for most of those 12 years, at least 10 of them, we’ve also committed ourselves to building the services and partnerships that are required to help our enterprise customers succeed in building and deploying technology.I would say that perhaps for the first several years, we were a bit schizophrenic, how much services should we do, what’s our appropriate role.And I’m going to talk about the evolution of our services approach later.Suffice it to say, though, as we sit here in the year 2000, we have over 7,000 people dedicated to enterprise services, architecture, design, wholesale support, onsite support between our consulting and enterprise support team, and really the deepest ramp in the size of this group has come over the last four or five years, as we’ve heard more and more clearly from our enterprise customers that they don’t just need products from us, but they need a range of service offerings to help us put skin in the game in their solutions.

Now, this business, this enterprise business for Microsoft, has grown to almost $4 billion.And if you characterize our businesses today, I think I can best say perhaps that we have four big businesses, our desktop business, operating systems, file sharing, Office, the stuff for which we are best known.It’s a good strong business, still growing, although its gross percentage, of course, is smaller than it was in its glory years.

Our enterprise business, which is currently entering its phase of most rapid growth — and I’m very excited about the contribution it’s playing — and as we look for the future, we see both the desktop business and the enterprise business contributing in major ways.There’s our consumer business, which is the smallest, but perhaps most rapidly growing, and then our business in new devices, gaming, television, wireless, et cetera, which is still quite nascent.

So, as we look to the next few years, this enterprise business will be of increasing importance inside the context of Microsoft.Now, what’s the element that unifies these four investments that our company is making — the answer is the .NET platform that we introduced back in June of this year.And the .NET platform, really, as we talked about at that time, responds to the next generation, or anticipates the next generation of applications people are going to want to build for the Internet– new user interface, a programming model that facilitates and helps stimulate applications which are easier to integrate, the new operational model which scales in a context in a way that is appropriate for the Internet, and which has itself four basic pieces.The .NET framework for application development, which we have in pre-beta today; the .NET enterprise server support, the first generation of which we’re launching today; the .NET building block services, where we haven’t said much yet that will run out in the Internet cloud itself and integrate with these .NET enterprise servers.And, of course, a range of .NET devices, including the PC, but also small form factor devices, television sets, et cetera, sharing a common programming model, a common approach to user interface, a common approach to storage, and a common approach to management.

And this launch today of Enterprise 2000 also marks the debut with the built-in XML support across the .NET enterprise servers — really marks the debut of the first shipping .NET technology.There’s still a long way to go on .NET, including in the .NET enterprise server line, but it’s good to have the first technology clearly and squarely in the market.

We’re going to try to do a lot today.Today is many things.First of all, it’s a product event.This is the broadest launch we’ve done in Microsoft’s history.We have eight new enterprise servers that we’re launching today, including one totally new product, which I’ll talk about later, the Mobile Internet Information Server.

This product line, as I said, imbues the best of XML across the .NET strategy, and we’ll launch the Windows 2000 Data Center Server, which we announced with Windows 2000 back in February, but it is now being made available with a range of hardware support, and certification from system vendors and infrastructure vendors that is necessary to make sure that we and our partners can commit to the kind of uptime, reliability and availability that customers expect.

The other key thing which I’ll underscore as we talk about the specifics is the accountability.One of the key benefits of the PC model is, it’s very open, very flexible.People can add things and search things, change things, that create great options.But I think to some degree, our partners and we agree, it is limited to the potential for us all to make certain reliability guarantees.And so with the Data Center Server product, there’s fewer configurations, there’s more testing, there’s more certification, and there’s higher accountability.If there’s a problem, we and our system vendor partners will be on site together within four hours if that’s what’s required to get that system back up and running and functioning in the appropriate form.

I said it’s a product launch. Eight products, what are they?The Windows 2000 Data Center Server, which builds upon the advanced server foundation in Windows 2000, adds a set of new technologies for helping manage jobs, et cetera, in a data center environment, and has this extra level of certification or reliability.

The Exchange 2000 Server, which pushes scalability and management to a new level using active directory.Our SQL Server 2000 product, which has a range of new programmability and analysis features, but really is focused in on increased scalability and management.The BizTalk Server, which lets you orchestrate XML work, flows between business processes in an enterprise.The Application Center Server, which facilitates management of Web farms where you’re trying to scale out applications by adding a number of smaller servers instead of consolidating everything onto one larger server.The Host Integration services to tie back to IBM mainframes.The Commerce Server products that facilitate the development of B to C Web sites, and the Internet Security and Acceleration Server, which helps at the edge of the network to provide proxying and caching facilities to applications built to this model.

So, it’s a range of products, a range of different functionality, but a pretty good suite of middleware and building blocks for the kind of applications which are important today.

Today, though, is also a news event from an industry perspective.On the chairs where you’re sitting, you should have received books that have over 100 plus high-end design wins and references from customers who have switched all competitive platforms onto Windows 2000 and SQL Server.Today, HP announced a 32-way Data Center Server product, which is exciting to us.

Today, we announced EMC as the first Data Center infrastructure vendor, as they’ve gone through the same kind of rigorous testing and certification of their storage product with a variety of system vendors, as the system vendors went through for the certification of their original equipment.Compaq is launching a program called Integration 2000, which I’m going to describe at length later.Mark Hoffman, the CEO of Commerce One, will join us to talk about some dramatic moves they’ll make around .NET and the enterprise server line.Dell is announcing a program, which I’ll have a chance to describe later, called Supplier Advantage.I mentioned the Mobile Information Server, which I’ll describe again later on, gives better access to corporate data over wireless infrastructure.And certainly not least, I think we have as exciting and august a group of industry CEOs at this event as any event this year, and we’ll have a chance to have a panel discussion to hear some of their views.

If you take a look and think of this in historical context, I would say from an industry perspective, the years from 1950 to perhaps even as late as the year 2000, 1999, the focus in the enterprise was partly on what you could do, but it was largely on what we call the ability — the ability to make sure everything got done the way it was supposed to. New features, flexibility, were nice, but what you implemented had to work all the time, every day.And so we find focus on reliability and scalability and manageability, and those things are important today, they’ll be important in the future, although we see already a transition and a broadening of interest, as I’ll talk about in a bit, coming from CIOs and CEOs in terms of the demands placed on IT.It’s not enough to just keep these systems up and running, but it is absolutely 100 percent a requirement to nail the abilities — scalability, reliability, manageability.And I want to have a chance to talk about that in some depth today.

If you take a look at the feedback we’ve received in the Windows platform, until version Windows 2000, much of the feedback is actually focused in on scalability.Can Windows systems hit the high water mark, do the big jobs, solve the largest problem in the largest enterprises in the world?Look at these machines. Look at them.What separates these systems from the kinds of systems — mainframe systems, proprietary minicomputer systems — that people have been using to do enterprise jobs?Answer: no difference in their scalability.The difference comes in the fact that they use industry standard components, they leverage an R & D base that’s broader than the companies who build them, and they have incredible upside scale.

Today, if you look at the TPCC database benchmarks, and you ask, who’s got, not the best price performance, which has been certainly dominated by Windows systems over the course of the last several years, but where’s the highest level of absolute scale available today, the top five benchmarks are all on the Windows 2000 platform, running IBM DB2, running SQL Server, and they still have much better affordability and price performance.But you’ve got numbers that run as high as 440,000 TPCC.It’s really quite amazing.The scalability lid is off.We still have all the advantages of scaling out with a number of small, cheaper, inexpensive servers.But if you want one big machine to solve the toughest jobs in the world, you can do that today with a Windows 2000 Data Center Server product.

Well, that’s a thing that’s so amazing is the progress that’s been made on the Windows platform in scalability just over the last two years.Here’s a chart that shows the top database benchmarks on Solaris and on Windows going back to May of ’98.You can see the incredible improvements that we’re seeing as people move to use Windows 2000, its new capabilities, SQL Server.The trajectory of improvement and scalability is nothing short of amazing.And we have all the confidence in the world that based upon the kind of work that our partners are doing, as well as the work that we’re doing, and other competitive database vendors like IBM with DB2 is doing on this platform, that we’ll continue to see this kind of dramatic improvement in scalability.

People ask, “But do you have any real references?What’s really going on?Are there people who have high scale operations using this stuff today?”Ask Jeeves, 4 million questions a day; Free Markets Asset Exchange, $7.6 billion in market volume; Lycos has announced that they’ll convert entirely to the Windows SQL platform; Barnes and Noble, 500,000 sold in 2 days; NASDAQ, 20 million hits per day; Radio Shack, 4,000 concurrent users;; but perhaps the most significant currently in the Ballmer household, had over 200,000 concurrent users the day an NSYNC concert was announced in Los Angeles recently, and as the father of 8-year-old boys, I can tell you it’s a red-hot ticket in our family.

But, these kind of peak scalability demands are what people have wanted to see, and which we can now demonstrate, not just through our own words, but through the actual performance the customers have seen, using real hardware, in real environments.

What I’d like to do now is invite one of our customers to come up and join me on stage.Joe Mohen is CEO of, a very interesting company that has built its solution on Compaq hardware and Windows 2000, and we’re going to have a chance to talk with Joe about what they’ve done.


MR. MOHEN: Thanks, Steve.Good to be here.

MR. BALLMER: Nice to have you here.

MR. MOHEN: Thank you.

MR. BALLMER: I think it probably makes sense just before we get started for you to tell people what is

MR. MOHEN: Well, Steve, is a global Internet election services company.We conduct elections for public and private clients all over the world.In March, we made history by conducting the Arizona Democratic Primary on the Internet, the first legally binding election on the Web in the world.We’re conducting elections now for ICAN, the United Nations Employees, the United Kingdom Labor Party.On Sunday we did an election for the city of Brest in France.And we recently registered over 400,000 Americans to vote through our Web site.And I know you don’t travel much, but if you happen to be traveling on Election Day, you and your 200 million compatriots can get your absentee ballot applications through our Web site.

MR. BALLMER: Really?

MR. MOHEN: Really.

MR. BALLMER: I can vote electronically?

MR. MOHEN: You can get your absentee ballot application through our Web site today, as all other Americans can, as well.

MR. BALLMER: I guess elections is kind of a peak load problem.You don’t vote every day, you vote and you get stomped with that.Is that right?

MR. MOHEN: That sure is right.When we went to the Windows 2000 and Compaq platforms, the key choices in that decision were, first of all, scalability.Elections can be as little as a few hundred voters, to the many, many million.We have to be able to handle online scalability requirements, because voter turnout is unpredictable, and furthermore, voter traffic is very hard to gauge in a peak load like that.The second factor for us was reliability.You cannot say to an electorate, we’re going to push back the elections from November 7th to November 14th, because we have technical problems.Elections have to work; it’s as simple as that.

Another factor, of course, is security.For, this is paramount.Our customers’ key requirement is that we keep the ballots secret and that the election results are secure.With Windows 2000 and the Compaq solution, we feel our security system is bullet proof, and of course, the other reason is that by doing this event, we might be able to get tickets to NSYNC.

MR. BALLMER: Shall we take a look at your site here?

MR. MOHEN: Please.

MR. BALLMER: Please, Garth.

MR. : Hi guys.Thanks.Now, what we wanted to showcase today was a system built on Windows 2000 Data Center, and Compaq servers and storage, that can handle the needs of the most demanding applications on the Internet today, like, what I want to do is take a look at some of this pretty hardware.This is really the star of today’s demo.This is a modern data center architecture that combines the benefits of both scale-up and scale-out computing.What we’re looking at here is a Compaq ML-770. This is a mainframe class server.We’ve got 32 processors on board, 32 gigabytes of memory, this thing is running Windows 2000 Data Center and SQL Server 2000.

Moving over to the left, we’ve got four Compaq ProLiant 8500-Rs.And these are eight-way processors each — we’ve got four of them — and these are what we’re using to actually generate the load against that back end.We actually need some pretty big muscle to stress that backend server.Moving over, we have a rack of Compaq DL360 Web Blades — now this represents the best of high density, scale-out computing.Each of these guys has two processors in them; we can fit 42 of them in a standard rack.Now, these guys handle our incoming Web traffic, and we have an enormous amount of horsepower in a very small footprint.And then finally, we have a Compaq ESA 12000 StorageWorks — this is attached to our back end SQL Server. In this cabinet today, we have over 2.4 terabytes of storage to handle this online election.

So let’s take a look at what we did.Now, last night, we ran a simulation of a United States presidential election using’s software.Now, what we did is we ran a 15-hour, long-haul stress test to simulate polling opening in the East and then closing in the West.And as the votes progressed, you can see each of the counties filing their returns and turning red.

MR. MOHEN: You know, Garth, it’s important to note, too, that this is not just simulation software. This is the real production solution that was used to run an election in the city of Brest, France, on Sunday.And it’s the same solution we’re using to conduct the UP vote, mock presidential election.We expect about 10 million K through 12 students in the United States to vote in that election in October.

MR. : Great.And we didn’t want to sit here and make you guys watch and entire 15 hours of demo, so what we did instead was we had this time lapsed photograph here, showing you the summary results.Now, last night we were able to get over 300 million voters through the system.Now, to put that in context, that’s larger than the population of the United States today, and that’s over 3 times the turnout we had in the ’96 presidential election.

So let’s actually take a look at the software.Now, I’m going to log on here.See, I’m using a password; this is very secure.And we’re not actually voting for any of the actual year 2000 candidates, but I’m going to go with Thomas Jefferson, always one of my favorites.And I’m going to go ahead and confirm my vote.Now, that’s a deceptively simple user experience.

MR. MOHEN: Yes, the UI for an election might be just point, click on the candidate, the party, or the issue you’re voting on, but under the covers, this is one of the more complex transactions you can imagine.There’s cascaded multiple levels of encryption, there’s multiple databases being synchronized, and there’s massive voter authentication, as you can imagine, for 300 million votes.So this is one of the more complex transactions you can envision under the covers, much more complex than e-commerce.

MR. : So let’s take a look at what’s actually going on in the back end.What we’re looking at here is a system that’s showing us a live performance of that back end ML-770.And you can see, we’re only stressing about 8 to 10 of the CPUs right now, and we’re getting about 3,000 votes per second.Now, before we can put this through its paces we need to configure the Web front end.Now, using the scale out approach, one of the benefits we like to talk about is on-demand scalability.When you need additional capacity, you can simply plug a new server into your cluster, and you can get that capacity really quickly.

Now, I’m using a product called Application Center 2000, which makes it very easy for me to manage that cluster through a single application image.Now, I want to add a new machine to my cluster to get some additional capacity.

MR. BALLMER: So you’re bringing another one of the racked application servers online right now?

MR. : Right.So we’ve got one of these here, it’s not actually involved in the system right now.But, what I want to do is incorporate into the load balancing, and have that start serving load right away.

MR. BALLMER: It’s got a scale-out feature you get in the Windows environment that you don’t get in some of the proprietary Unixes?

MR. : Right.And the nice thing about it is, we’re using standard, high-volume hardware to achieve really mainframe class scale.Now, as I step through this, I’m not going to make you watch this for all 42 servers, but what Application Center does is it’s automatically going to copy over all the system settings, it’s going to move, the components and the configuration over, and it’s going to re-calibrate the load balancing, so that machine is immediately going to start doing some load.

So now we can actually start stressing this system out.And what I’m going to do is I’m going to actually start increasing the load.And you’re going to see three things as this happens.First of all, we have additional processors, and they’re going to come on load as the transaction volume increases.Second of all, our overall throughput is going to increase to between 6,000 and 7,000 votes per second, which is more than sufficient to handle a U.S. presidential election.And then finally, and probably most important, is even at peak load you’ll notice we’re only using about 50 percent of the capacity of the system.It’s really important to have headroom to accommodate periods of peak load in the future.

So what we’ve shown you here is using standard, high volume hardware with the Compaq platform, servers and storage, and Windows 2000 Data center.We have the platform to scale the largest applications on the Internet today and in the future.

MR. MOHEN: That’s true.And talking about the future, Garth, the Gartner Group predicts that by 2004, many states in the United States will be offering their citizens online voting.This solution gives us the scalability that we need at to change the world.

MR. BALLMER: Thanks very much, Joe.

MR. MOHEN: Thank you.


MR. BALLMER: Joe was slightly inaccurate in only one thing. I actually do travel a lot, and I may do that kind of online voting for this presidential election.

The second ability on which we’ve received a lot of feedback is manageability.We want to keep these systems up and reliable. It’s important to know what state they are in, to be able to tune them, to be able to do that remotely and automatically.With Windows 2000, we introduced a range of new infrastructure for management support, the WMI Instrumenting approach, the Microsoft Management Console, Terminal Services for Remote Administration, the Directory, the Intellimirror technology, the App Center Server, which Garth just had a chance to show you, along with a set of guidelines on how to build systems that are highly manageable.

We have support from essentially all the major management ISVs, from Mission Critical Net IQ, from BMC, from Hewlett Packard and a variety of others.If you take a look at some of the things customers have done, Digex is literally managing thousands, thousands of servers remotely using the Terminal Services approach.CBS Market Watch has 70 servers in three different locations that they’re managing centrally, using the Windows 2000 management technology in a very important way.

We’ll enhance some of this in our upcoming Whistler release, where essentially everything in the Windows 2000 system will be enabled for headless operation and for remote scripting.But, with Terminal Services, we have a great management solution available today.At Credit Suisse First Boston IT, costs in this transition have been reduced by 15 percent.At Adventist, which is a French drug company, 90,000 employees, about 50,000 PC users, they’ve moved to consolidate using Windows 2000 and Exchange 2000, their enterprise-wide mail system.They’re processing about 18 million electronic mail messages a day.They’ve gone from 1,000 users on a server to 2,000.And they’ve shrunk their IT staff involved in managing these systems to just six people and they’re also, in addition to mail and calendaring, delivering instant messaging services and video conferencing services using this infrastructure.Net costs went down from about $11 to about $5 per mailbox, per month — quite a big improvement based upon the management technologies that we pioneered in Windows 2000 and Active Directory.

Reliability is probably the area, though, where we’ve been pushed the most.There’s been a consistent perception; in large part, I think, based upon Windows 95 and Windows 98, and some of the experiences people have with their own PCs about the reliability of Windows 2000 and our Datacenter product.That should be completely dispelled with the work that we’re talking about today.The Datacenter version of Windows 2000 gives us not only increased scalability, but increased reliability.

We have 10 partners who have been heavily involved.Compaq, with whom we co-developed, essentially, this Datacenter program, offering 32-way systems, eight-way systems, storage that’s well integrated, et cetera.HP, which has the first four-way cluster in the marketplace, we’re doing a lot of good work, and they’ve announced support for this on their new family of processors announced just last week.Dell, bringing its build-to-order capabilities to this kind of high-end machine configuration, IBM, Fujitsu, others.In the case of Status, they’re actually offering a guarantee of 5.9 of uptime reliability on their system, and all of the partners have a range of offerings that they have in the marketplace today on guaranteed uptime.

I want to make sure to highlight Unisys here for people.Unisys really invented, in some senses, the PC mainframe. Their ES-7000 system was the first 32-way processor system in the marketplace, and Unisys and Microsoft has really bet big in becoming partners in this next generation.

In addition though to the hardware is the work that we’ve all done together on reliability.You can’t plug an arbitrary device into these systems, there’s a certification program.Hardware needs to be certified, add-on infrastructure needs to be certified, applications need to be certified, and they need to be certified on clustered, non-clustered systems, et cetera.We and our partners have co-located our people, so we can provide a single point of contact in case of a failure that needs to be diagnosed.And, as I said earlier, we’ll have people onsite from our company, the hardware partner’s company, or both, within four hours.There’s a consistent base level of support services and professional services that all of these Datacenter partners will provide.And, as I mentioned earlier, the uptime guarantee.A lot of emphasis upon reliability, a lot, a lot, a lot.And I think that with this program we get the best of the PC industry merged with the best of a more limited, managed, contained environment in terms of what that brings on the reliability front.

We have some customers who have been using these systems already.FreeMarkets, who I mentioned earlier, B to B marketplace, has already achieved, so far, five nines’ worth of reliability out of their Windows 2000-based system.Some of the people are using Windows 2000 Server and Advanced Server in their numbers, NASDAQ, Data Return,, InfoSpace, all of these people are achieving at least three nines, and in many cases, four nines of reliability.These are systems that are in production, running.We have experience today.There are no more pioneers in this business.The pioneers are here, and the results are in, and we think they certainly are very, very interesting.

I would like now to invite to join me here on stage John Dehlin from Microsoft.John is going to give you a sense of some of the Datacenter reliability issues.He’s going to show us running on the Unisys hardware I described earlier.


MR. DEHLIN: Thanks, Steve.

MR. BALLMER: Welcome.

MR. DEHLIN: Thanks, great to be here.


MR. DEHLIN: In today’s world of electronic commerce, whether you’re a dot-com startup or a large enterprise, there are three key things that you need to guarantee top reliability.You need rock solid hardware, rock solid software and rock solid services.What you see behind me is a Unisys E-Action ES-7000 computer.

Now, the Unisys people have been in the business for four decades delivering mainframe computers to the enterprise.What this represents is their new line of servers completely dedicated and committed on the Windows and Intel platform to delivering mainframe reliability and performance.

So, there are two things I want to mention about this mainframe server.First and foremost, scalability.This server contains 32 processors, 32 gigabytes of RAM, and with the EMC storage box attached, 4.8 terabytes worth of data storage.I think we can call that safely scalable.

The second thing we want to mention is no single point of failure, as we actually turn and open up this server, we can see that they’ve architected this from the ground up, to have no single point of failure.As you see up top, we have redundant ventilation.So if any of the impellers — a fancy word for saying fan, but it’s a different, it’s not a fan, it’s an impeller, very different — if any of those impellers goes down, the system does not overheat, and it stays up and running.

We also have redundant power supply, so if any of the power supplies fail, again, we have redundancy, we can swap them out without taking the system down, and it stays up and running.There are even two processors dedicated to services and maintenance, separate from the 32 processors, to help you manage your server.So this is rock-solid scalability, no single point of failure.We talked about hardware.We talked about rock-solid software.

Running on this server is Microsoft Windows 2000 Datacenter Server, the software that we’re all here to celebrate today, in addition SQL Server 2000, and several applications from now that we’ve done a little bit of introduction, let’s go ahead and set up the demo, take a few minutes to talk about what you’re about to see.There are two companies that we’re going to discuss in this presentation of this demonstration.

The first is an ASP, an application service provider, and what they want to do is provide SAP to their customers as a service over the Internet.Not a small task, but with the right hardware and the right software, they can do it.So, if you wouldn’t mind directing your attention to the screens above you, we have a performance monitor running.We’ve windowed it, Internet Explorer with an ActiveX control to let you know that this is all a live data feed from this server, fully functional, but I’m going to go ahead and maximize it and explain to you what you see up there.

Down below, you see 32 bars going across of various colors.Each of those 32 bars represents one of the 32 processors here in this system, and the utilization rate for each processor.So, it’s a fancy way of letting you know how busy the server is.The bigger the bars grow, the busier the server and the processors are.

Now, above it, we see eight additional bars.One of the key reasons why this application service provider decided to use Windows 2000 Datacenter Server is because, in the past, if they wanted to run lots of large enterprise applications, they had to have lots of large servers.However, with Windows 2000 Datacenter Server, you can consolidate several enterprise class applications onto one server.

MR. BALLMER: That’s a theme I hear a lot from CIOs whom I talk to.

MR. DEHLIN: And that’s exactly what we’re doing here.So, as you can see, these bars across, we have’s R-3 application, which is a business transaction processing application.And you can see that there are ten processors in blue dedicated to that application.We’ve got other applications running in here as well, business warehousing applications using four clusters; even SQL Server 2000 has four processors.

So, now that we’ve talked about this set up, what I’d like to do now is go ahead and kick off the demo.So, I’m going to go ahead and hit “start” right now.What’s going to happen behind stage is, there’s an SAP benchmark tool that’s generating transactions on this server as we speak.And what we’re going to do now is talk about the second company.There’s an online bookstore that’s about to release a highly anticipated teenage fantasy volume, a new volume in a series, they want to make sure that they have anticipated the ability to respond to unprecedented, unpredictable, high volumes of load.

So the load is now generating on this system, and this SAP wanted to make sure that they could handle unforeseen swings in load.So what they’ve done is, they’ve hired some Unisys business service professionals to write some code against the process control tool, a feature of only Datacenter Server 2000.That code is going to dynamically reallocate processors from some of the less utilized applications to SAP’s R-3 if the need arises.

So what I’d now like to direct your attention to the screen above me to my right.It’s 10:00 a.m., the online bookstore now releases this new book.And our teenage star Britney logs onto her computer, she sees that the book is available, she goes ahead and orders the book, and that’s great.But thousands and thousands of others ordered the book as well.

Now, if your site is not properly architected, if you don’t have the right hardware and software, you’re going to have problems.But because we’re running Windows 2000 Datacenter Server, we’re going to be okay.What you’re about to see is a performance monitor that’s monitoring response times.What it’s monitoring, it’s trying to find out if users are having slow, sluggish responses in their Web site.And what you’re going to see is that the threshold is going to push into the red.And with 10 processors, we see that we don’t have enough horsepower to process this unanticipated large spike in volume.

So, now if I can turn your attention back to my left to the performance monitor, what you’re about to see is those 10 processors get maxed out, and there you go dynamically, four new processors automatically, without any user intervention, were brought onto the system.Now, this was significant because there was no user intervention, no chance for human error.The system dynamically responded, and that’s where professional services come in.

So, just to simulate a totally real environment, we’re going to bring up the next load.In just a few seconds it’s going to take this system to 18 processors.But what I’d like to do is just go ahead and wrap up and conclude while you watch that happen.

What you’ve seen today is rock-solid hardware in the Unisys ES-7000.You’ve seen rock-solid software that’s Microsoft Windows 2000 Datacenter Server.But you’ve not only seen reliability from a hardware and a software perspective, you’ve seen business reliability, which means that end users have a happy and a very productive and efficient experience when they’re engaging with your company.They get on the Web site, what they want to happen, happens quickly.And what’s most important, besides customer satisfaction, is that we’ve captured all the revenue possible that’s been brought to our Web site.We’re not losing any business; we’re capturing all the revenue.

There’s one final point that I’m dying to make, Steve, all of this is available today at one-half the cost of a Sun UE-10000.

So, with that, let’s take just a second


MR. DEHLIN: With that, let’s take just a second to see a quick video of a company called Real Tech. They’re a German solution provider that’s actually providing SAP-based ASP services in their market.Thank you very much.

(Video shown.)

MR. BALLMER: Scalability, reliability, and manageability are the big three.The abilities we had to get right in Windows 2000 Datacenter Server, and that you’ve had a chance to hear from some folks about.What I’d like to do now though is show you a short videotape in which we get to hear from Ralph Martino, vice president of Strategy and Marketing from IBM about their enthusiasm and excitement behind Windows 2000 Datacenter Server as a platform that really, so to speak, nails the abilities.

Please show the video.

(Video shown.)

MR. BALLMER: IBM, like Unisys, is a company that’s been at this almost 40-50 years, trying to get the abilities right, and certainly that testimonial to us is really quite significant.One other aspect I want to comment on in a little bit more depth, about the way we approach the enterprise is our own services strategy.We have had incredible partnerships with systems integrators, service companies, independent software vendors.We have, I would say, over the past been, perhaps “shy” is the right word, about putting ourselves out front, and leading engagements with our customers.We’ve gotten feedback from time to time from customers that say, “Microsoft, we love your partners, but we want your skin in the game.We want you committed.You don’t have to be the provider of all the services and people and bodies, but we want to know that you’re with us, that you’re going to help us get this design right, that you’re going to make sure the thing stays up and running with us.”And one of the great evolutions that we’ve made, probably some more progress, but huge evolution, has come in this ability from Microsoft to put skin in the game with our enterprise accounts.

Our consulting force has worked with over 2,000 companies across the globe.We have 50 projects just in the last year that we’ve done that have been over $1 million projects.We have customers where we have people onsite all the time, consultants, technical account managers.We have rapid onsite response capability everywhere in the United States within four hours, and we’ll have the same capability throughout the globe within the course of the next six months.So, we’ve really put an emphasis on hiring, on processes, on training, and making sure we can be there with our customers all the time, not to the exclusion of our partners, but with our partners, side-by-side, both of us with skin in the game.

MR. BALLMER: Skin in the game, real involvement, to talk a little bit about some of the issues in this area I’d like to invite to join me on state Al-Noor Ramji, who is the global CIO of Dresdner, Kleinwort, Benson, a securities and investments firm, to talk a little bit about some of the work that we’ve done together.

Al-Noor, welcome.

MR. RAMJI: How are you?

MR. BALLMER: Good, how are you?

MR. RAMJI: Fine, thanks.

MR. BALLMER: This is a little bit of a set up, because I’ve known Al-Noor for a while, but how did we get involved together?

MR. RAMJI: Well, it’s a long story.But, Dresdner fundamentally seeks to reduce the cost of business for our clients and to reduce the cost of business really means doing a number of things.Now, investment banking and Dresdner’s sustainable advantage really is quality of people, product innovation, and our close relationship with our customers.

Now, when you get to the Web, though, you get masses of customers, you get a huge growth in customer base.Now, on the Web the key skills are productization, customization, and particularly, deployment.That’s not something we’re good at.That’s why we wanted to look for a smart partner, and that’s really where we came across you.So that was our main reason for getting together.

MR. BALLMER: And how do you think we’re working together now?Things are working, what’s good, what’s bad?

MR. RAMJI: Yes, I think things are good.But, let me give you a little bit about the product, and then perhaps I can explain how we got there.The product fundamentally was we wanted mass deployment to all our clients of all their applications.Now, the customer clearly wanted to not only access his new applications that we were giving him, but also all his legacy applications.They wanted to be able to access them in the same way, regardless of where they were, they didn’t want to redevelop any applications, but they wanted to access all of these via the browser.Now, that’s quite a challenge.

But, the project we’re working on together is called Grasp.And what Grasp does is, at zero cost, delivers personalized deployment.That’s in a secure way, so you can access through the browser any application you’ve got — your own delivered by Kleinwort Benson, delivered by anybody else, delivered through the browser, securely, any time, any place, anywhere, and through any device.

Now, to get to the question of how we’re getting on, and why did Microsoft, in a way, win the contract.Initially, the first thing really was sheer persistence, because you had no

though you understood the problem space, you gave us no resource, there was no resource available to focus on it, this being a product company, it had difficulty getting started.We moved off that, though, and you put, as you call it, skin in the game.We got top-level support, in fact, a personal email from you, which did a lot of good.But, also we got some top quality guys from Redmond, and we got these people working on a common problem without actually worrying about a kind of Microsoft mindset or a whatever mindset, to drive to a resolution.And then fourthly, the real reason you got the thing, frankly, was the competition couldn’t manage to do it.So otherwise they might have got it.

MR. BALLMER: It’s good to keep us on our toes consistently.Thanks very much, Al-Noor.

MR. RAMJI: Thanks a lot.


MR. BALLMER: Al-Noor, I will make one more brief comment. Al-Noor might think we’re too persistent sometimes.I found myself on vacation in rural Quebec this summer.And who did I run into in the parking lot of our condo complex but Al-Noor Ramji, also on vacation, and we were really working for the business that summer vacation.

This kind of customer interaction, and we’ve literally had dozens now of R & D people involved with Dresdner on these projects, is what customers are demanding from us from a services perspective, and what we are stepping up to.The other thing, which customers are seeing and needing at the server and enterprise level is the same kind of broad application and middleware support which has made Windows popular on the client forever and a day.

And so it’s important for me perhaps to remind you today that Windows 2000 is in very good shape, not only with our own middleware, but we’ve got middleware from Tibco, from IBM, from BEA available on this platform.The popular databases, from Oracle, from Visual Insights, from IBM, management tools as I talked about earlier, CRM applications from Seybold, from Onyx, from Pivotal, ERP systems from SAP, from Great Plains, et cetera, and the e-commerce middleware that’s becoming so popular, from Ariba, from Commerce One, from I2, from Vignette, from Broad Vision.There’s no shortage of solutions and toolkits to allow people to very quickly put together the kinds of solutions that make enterprise computing a reality.

That talks to what I might call the basics, the abilities, the services and the applications.But, the enterprise is changing.The abilities are assumed, keeping things running is assumed.And when I talk to CEOs and CIOs today, much more the dialogue in this Internet world, if you will, is about agility, how are business models changing, how am I agile about responding, how am I agile about anticipating and responding to new competitors.Mergers and acquisitions, getting IT systems aligned, is one of the first things nowadays that people focus on, to help newly merged companies come together.Re-engineering relationships with trading partners, outsourcing, virtual organizations being the source of work, real time decision making, promotions, customer service.Businesses don’t want this stuff to just run, they want to be able to stay ahead of the game, and CEOs understand this.

We conduct a CEO summit each year in Redmond, where we get about 100 leading CEOs from around the world together.If you go back three years ago, people were largely scratching their head, and didn’t seem very comfortable with many of the IT issues.Now not only are they comfortable about the IT issues, but the CEOs we talk to are talking about business transformation based upon IT, moving quickly based around IT.And so the enterprise technologies and platforms et cetera, of the future, have to do more than serve up the abilities.They have to really focus in on the next generation, on letting companies be agile.

Certainly one of the areas in which companies are demanding the greatest amount of agility is in re-engineering their relationships with their supply chain, in these B-to-B marketplaces and exchanges.And today we’re announcing in conjunction with Commerce One a global alliance to deliver marketplace solutions.Together Microsoft and Commerce One have won over 70-plus large B-to-B exchanges.But, today Commerce One is going to talk about their new marketplace infrastructure, which will be based on .NET.They’ll talk about how their applications are optimized for the .NET servers we’re announcing today, and how Andersen Consulting, Compaq, SAP, and Commerce One are coming together to serve up these solutions.

To chat with you about that, please welcome Mark Hoffman, the CEO of Commerce One.



MR. HOFFMAN: Thank you.First of all, I’d like to just reiterate that we’ve had a great relationship for a long period of time, and we’ve won these 77 exchanges, 45 of which are up and running.They’re already the biggest most demanding exchanges in the world.So you have great companies like it was a coefficient exchange of Ford and GM that are going to process $500 billion worth of spend just through that one exchange and marketplace.Exostar with Boeing and Raytheon, and Lockheed and others, these are Fortune global 200 companies coming together to begin to invest in this area.Their combined spend today is equal to about $2.3 trillion, and that’s what we want to run through these exchanges, running early ones on NT, going to Windows 2000 as quickly as possible.

So it’s huge, very demanding applications.These are the most critical applications that somebody can build in this business.So we have now moved from doing that into a tighter relationship where we’ve already won a lot of those deals. Today we’re extending and tying together in, again, I think a way that’s unique in this industry for software companies to align, and to coordinate our software in this manner.So we’re doing it in three different areas.We’re doing it in sales and marketing, we’re doing it in engineering, and we’re doing it in applications. And let me just talk a little bit about each of those areas.

On the sales side, we’re aligning sales forces in a very strong, go-to-market strategy, where our global sales forces will be aligned and drive marketplaces around the world.We’ll align on sales/marketing PR, to make sure we’ve got our messaging and everything correct there in the market.Secondly, on the engineering side, we’re going to use all those components you showed up there on .NET, and build those into the next generation of product that we’re building for marketplaces.And I think that’s going to be a very powerful solution, certainly able to scale past the wildest dreams of all these exchanges that are getting built around the world.

We’re also going to cooperate on XML, and to make sure that our XML strategies are integrated and aligned.And I think that will have a very solidifying effect in the marketplace, because with our SAP relationship, it’s not Microsoft, SAP, and Commerce One aligning around this XML strategy, and in particular some of our XCB

our XML strategy here.So that’s very powerful.

On the applications side, we’re going to work together to build on-ramps.One of the biggest problems I’ve got today is how do you get on ramps into this marketplace.Millions of suppliers have got to come on this very quickly, how do we get millions into this environment?We’ve got to build easy on-ramps, and standard ways of doing business.And we’re going to work together to do that, which I think will be very powerful in this market.

And then lastly there are applications that have to get built around these exchanges.So literally, there are thousands of applications, and there’s no way that Commerce One can build them, or even Microsoft can build them all.We need partners to do it.And you’re going to tap into your 6 million developers as we develop these standard interfaces to be able to program to these exchanges, and help bring a liquidity to the marketplace, because that’s what the customers want, get these things up, get them transacting, get all the services aligned, in a very powerful solution.

And the last thing is very important.And we’re looking at the logo up here on these charts.But, this is really tying together this into a global trading exchange.We talked about these exchanges being individual exchanges, or marketplaces, but exchanges are able to communicate with other exchanges, or marketplaces to marketplaces.And that means that anybody around the world can do business with anyone, anywhere, any time.And as that global trade begins to run, that’s going to be running on a Windows 2000 platform and your .NET components.And that’s going to be, I think, one of the most demanding, if not the most demanding application that’s being run out there.

And one more thing, which is that we’re tying it together with our partnerships.It’s you, us, Andersen Consulting, Compaq, Intel, are all joined in this in helping to drive these solutions into the marketplace, and that’s a very powerful thing.

MR. BALLMER: Well, we’re super, super excited.Mark and I have known each other — I want to say 14 years, something like that, through a number of different careers.But, the level of agility and quick motion that you guys need to have at Commerce One is amazing, and we certainly appreciate the support.And we’ll work well together.

MR. HOFFMAN: Well, thank you for the partnership, it’s great.

MR. BALLMER: Mark, thanks very much.


MR. BALLMER: The abilities are assumed, it’s just the notion of being agile, and the agility, velocity, flexibility, and empowerment with knowledge that I think are really the hallmarks of what CEOs are asking for today.But, rather than have me kind of just talk about that, we thought we would invite some of our partners who are building these technologies, using these technologies, and are out there every day, come join us on stage for a panel discussion of some of these issues.

Joining me on stage today will be: Steve James, the COO of Andersen consulting; Michael Capellas, the CEO of Compaq; Craig Barrett, the CEO of Intel; Hasso Plattner, the CEO of SAP; and Larry Weinbach, the CEO of Unisys.Our panel moderator today will be Chris Atkinson. Chris is vice president of the .NET enterprise server line at Microsoft, and he’ll engage us in some lively conversation.

Please welcome Steve, Michael, Craig, Hasso, and Larry.


MR. ATKINSON: Good afternoon, everybody.Starting with Steve, how does today’s announcement affect the way that Andersen Consulting will drive relationships with your customers?

MR. JAMES: The whole discussion today has been very exciting for us. The .NET vision, the Enterprise 2000 platform is something that we’re excited about.And the reason we’re excited is because our clients are excited.I also want to say that we’re very excited as a firm, Andersen Consulting, to have the partnership that we have with Microsoft.We consummated this formally back in March.It’s a very large global relationship, and we also, at that time, created a joint venture called Avanade that has been very successful in its early stages.

The reason we know that this alliance is working is because we’re seeing tremendous demand for Microsoft skills with our clients at Andersen Consulting.We’re also seeing hundreds of companies that we’re either doing work with today or who are evaluating very seriously the whole Enterprise 2000 environment in order to be able to make the changes they need to make in order to be successful in the economy.

As an example of enterprise clients today here, the Wall Street Journal is here, Enron is one we’ve worked with very closely, and then startup companies like Portum, which is an auction company, is very active using this type of platform.It’s being very successful, and it’s being very well accepted in the marketplace.And the reason is, is because it reduces the total cost of managing the systems environment, and it has great price performance capability.

MR. ATKINSON: Thanks very much, Steve.

Michael, today, many large enterprise customers implementing best of breed solutions have the challenge of coordinating multiple vendor relationships themselves.How is Compaq going to help customers address that issue?

MR. CAPELLAS: I don’t think there’s any doubt we’re sort of at this inflection point as people are starting to roll out their Internet-based applications.On one hand, you have just this huge new level of new devices, wireless is absolutely exploding the number of devices, we’re having all kind of new access points come in.And so what’s forcing that to happen in the Internet is, more and more of the content is being rendered locally, so it’s going closer to where the end user is.At the same time, we’ve got the applications kicking in, some new wave applications.People are taking their existing structures, they’re Webifying them, they’re adding things to them, which creates even more demand on the back end.So, if you sort of visualize what’s happening in the world, you have the access devices coming in, being served closer to the edge of the Web.So you have to scale out.At the same time, you have to scale up, so it’s creating new transactions.So, what we’re doing with our customers is, we’re really helping with an integrating architecture.We’re continuing to work on application integration; we’re optimizing the applications so they run faster.And then we’re really putting a lot of attention; we talked about reliability, on the support that comes after.So, we’re doing things with our partners like the Joint Q, where we’re coming together to have common call centers that ask the question.We’re putting a lot more service on the Web.And we’re starting to guarantee both reliability and uptime.And so, in the age of the Internet, you know, everybody can’t do it all.So we’re developing these close lasting partnerships where, even though it’s best of breed, even though they’re components, there’s a single point of accountability so that the customer knows that we’re starting to mitigate the risks.

MR. ATKINSON: Craig, we’ve been partners, Intel and Microsoft, for some 20 years now.How has our partnership evolved, and I guess more importantly, where do you see it headed in the future?

MR. BARRETT: Well, I think Intel and Microsoft have been reasonably successful on the desktop.I really believe we’re starting to see the same thing in the datacenter.If you look at four or more companies are going to 100 percent e-business, do all of their activities with vendors, suppliers, employees, partners; datacenters are getting built out.There are perhaps five to six million servers sold a year today, realistically about 90 percent of those are Intel architecture based.They’re being purchased, as Steve mentioned in his presentation, not just on the basis of price, or lowest cost, not just on the basis of performance, or the highest performance, but on the basis that there’s a variety of suppliers for those systems, there’s open interfaces, people can innovate on top, the whole industry can innovate in that arena, whether it’s from a hardware, software, reliability, availability, manageability standpoint, the whole industry is behind this capability.

So, what we’re seeing, I think, is the start of the same activity that we’ve had on the desktop is in full force in the data center from the front of the data center, the Web servers, into the application servers.Some of the bigger servers that we’re demonstrating here today into the big back end databases.So we’re incredibly excited about it, and working with Steve and his team in that space.

MR. ATKINSON: Additional comments, Steve?

MR. BALLMER: Well, I’d just comment– Craig and I actually had a fascinating discussion recently.We were talking about the enterprise and really the big back end database servers being the frontier.And it was a nice conversation we were having a room where we each kind of had our laptops available.But when you take a look at hardware like this, I guess it reminds us both, we’ve got a lot of progress we’re making with our collective partners, really going after the back end transaction systems.

MR. ATKINSON: Hasso is CEO of the world’s leading enterprise software company.We’ve been working with you in the enterprise space in developing our strategy over a period of years.How are the servers we’ve launched today going to impact SAP’s business going forward?

MR. PLATTNER: I think it will have a significant impact.You might not know, but the run rate now is over 60 percent of our implementations take place on Windows NT platforms.We still haven’t reached the high end, but this launch certainly gives us the opportunity.With our new product line, and I have to correct one of your little charts, we have left and lost the ERP market.There is enterprise software, but there is much more software in the future between enterprises.This cooperation, collaboration between enterprises is enormous, and we don’t even see where it goes to.So, we will need much more computing power to bring all these people, all these massive numbers of transactions together.And I’m very grateful to see that this is a huge stride forward, which enabled us to launch our now significantly heavier system with much more transactions, or much higher transaction rates on portable computers.

So, I think it will be very important.And to make a counterpoint to that, I have this little one here, little Compaq device.


a beautiful thing.

MR. PLATTNER: Pen-based computing, and I can access systems through that.So, they combination of services, the combination of large service systems, large application server systems, I think you’ve made a significant move.And that’s not a marketing statement.

MR. ATKINSON: Thanks very much, Hasso.

Larry, you’ve been implementing and building mission critical systems with customers for decades.How does the announcement for Windows 2000 Data Center and your ES-7000 technology, how will that impact the industry?

MR. WEINBACH:I think it’s got enormous impact on the industry.About three years ago when I joined Unisys I didn’t know Steve Ballmer.I called him up one day and said, let’s form a partnership.And if you’ve ever talked to Steve for the first time, and he turned down the volume a little, I got very used to what a negotiation with Steve was all about.But in 30 days, we were able to negotiate and pull together a partnership.The ES-7000 is the culmination.And what we basically said to Steve, and what we delivered today is, we said we can take on a scaling up rather than a scaling out, a scaling up, we can take Windows and move it into the enterprise arena, because we have the capability from a scalability, reliability, availability and manageability that you talked about, Steve, we have that capability because of our heritage.And we’re very pleased with the partnership and being able to deliver the ES-7000, which does all those things, operating with Windows Data Center 2000.

MR. ATKINSON: Back to Steve again, how does the introduction of .NET and the evolution towards a world of Web services, how does that impact the way you deliver consulting to customers, and the way you work with customers?

MR. JAMES: Let me just give a little business context, and it’s going to be simplified and summarized.But what’s happening today from a business standpoint is that some companies are trying to introduce new products or services very, very rapidly through the Web.And others, the Global 1000 are trying to figure out how to integrate effectively, and cost effectively, their legacy systems with the Web’s capability and access to the customers.So, there’s a wide range of business applications that are being considered, and they’re very complex.

Enterprise 2000 helps dramatically with this.And I’ll talk about only one element of Windows 2000 and Enterprise 2000 as it relates to this, and it’s the rapid development capability.How that relates to our firm is that we bring a lot of good strategy, business process, change management, customer relationship management, types of consulting and ideas to our clients to help them change how they do business in the marketplace.With Enterprise 2000, there’s a lot of things now that are very stable.They can be operationalized very quickly, and they allow the company to get to market much faster.And we don’t have to spend as much time on that component of the project in order to get them into the marketplace and make them successful quickly.

MR. ATKINSON: Hasso, how will the .NET platform enable SAP to really differentiate yourselves from key competitors like Oracle?

MR. PLATTNER: That’s a good question.First of all, the scenario is or has changed.It is not possible anymore, and therefore we deviated in our strategy from our old strategy to try to put everything into one system and cover everything with one system, the AS-400 approach.That was clearly our intention in the early ’90s.In the mid-’90s, we saw that our large customers appreciate what we have done so far, but they want to have a more flexible, slightly more complex approach.They want to have a suite of systems, a suite of systems where they can replace individual systems, build different strategies probably in sales than in manufacturing, and now, three years further down the road, we have the situation, as I mentioned before, that we have to integrate on many, many other systems.So, integration across systems is the clear order for us, the marching order for us software guys in the future, to try to catch everything inside one system.That doesn’t mean that you try to build large integrated components, a large CRM system like we do, a large SCM system, and marketplace we do together for Commerce One.

But then these systems have to all work with each other.So we need software as much and as quickly as possible that let’s us bring these systems together across the network in an easy, maintainable, cost affordable session.And, therefore, it’s very important, and we are basically in weekly discussion s here with our friends from Microsoft to help to push this forward.

MR. ATKINSON: Great.Thanks, Hasso.

Larry, we see some

you described them as Intel mainframes.Why is the Intel mainframe the right choice for today’s enterprise customer?

MR. WEINBACH: Well, the main key factor is performance and cost.We, as was indicated during the exhibit before, we have an ability at this point to bring to market a product which has at least 50 percent less cost than what Sun is touting in the marketplace.We think it’s more like 40 percent of the Sun cost rather than 50 percent.And what we, in effect, have done working with partners, and we’re very proud of Michael Capellas and Compaq who are OEM’ing our ES-7000.I think Carly forgot to mention when she said they were coming out with a 32 that they were also OEM’ing our ES-7000.


MR. WEINBACH: But she’s not here, so she can’t defend herself.But I want to assure you that we are creating with our partners, where we have a very close relationship, and with Microsoft, a de facto standard.And this standard is going to allow all of us to go to market and to create an alternative to UNIX environment, and that is really based upon value.

MR. ATKINSON: We’re just getting warmed up.Craig, where is the Itanium processor and Windows 64 going to take us?I mean, we’re just warming the engine here.Where are we going in the future?

MR. BARRETT: I think that’s very exciting. The Itanium processor family will start to roll it out the end of this year, we’ve already got 6,000 development systems out, a bunch of them at Microsoft.Steve always wants more.We’re trying to get them, Steve, but we’ve been partnering with Microsoft from the beginning in terms of getting NT-64 as a production ready OS.We’ve been working with essentially all the computer OEMs here in terms of their hardware development, been working with the major software application houses on the product.

Really, if you look at that data center again, we have a wonderful beachhead, 90 percent of the volume, more than beachhead, but if you look at the Web servers, and the application servers, and you get to the big iron part of the data center, and that’s where Larry and his boss work.When we start to put the Itanium processor, 64-bit, wonderful floating point performance, huge, huge databases, then you have seamless scalability, capability, any app., 32-bit, 64-bit, front to back, and super cost effective.So we think it will blow those other guys away even more than we’ve done so far.

MR. BALLMER: If I might just add on that, I want to make sure everybody understands clear, we’ve got a team that’s been working now for years with Craig’s guys on Itanium, Dave Cutler I talked about earlier has been leading that effort, and we’ll have the products that we talked about today, the enterprise products, on Itanium as it becomes available later on this year.

MR. BARRETT: The Itanium processor family, let’s get the branding right here.

MR. ATKINSON: Final question to Michael, we’ve said since the start, .NET will not succeed without partners.Now, you’re a key partner of Microsoft, how is .NET going to affect Compaq, and also your relationship with your own customers?

MR. CAPELLAS: Well, the interesting thing about .NET is, you know, we talked a lot about the back end, and the heavy engines that support it.I think that’s an important part of it.But the real goal of .NET is to really sort of change the paradigm of how you really deliver Internet applications.So, if you think about its components, the first thing it starts with, it says, we’re going to define a universal interface.What happens in the Internet age is, we have multiple devices, different form factors, and everybody hitting the Internet from different phases.Well, what .NET promises to do is to unify that interface so the application doesn’t care or know what it’s hitting.So the user interface starts to look a little better.

The second thing it does is, it then says, well, I need to start to unify also where the access point is.And so .NET comes in and says, I’ve got one common look and feel.I’ve got one way to access the application.And in front of the application it says, I know who you are; I know how much bandwidth you have.I can personalize it.And so, the whole front end changes.And then the idea, also, is to take, as much of the application development away from what has been traditionally deep encoded in the application, and provide tools.For example, put an authentication server on the front end, .NET will authenticate all that user interface so that the application doesn’t have to do it.Look in and look at some complex things about how you develop applications.Put tools so you can move applications around, you can do components by pointing and clicking to develop the applications.And so, I think there’s a whole richness that says, the Internet is about components.It’s about the front end, it’s about caching on the edge, it’s about the back edge.The unifying part is how do you pull it together so it’s simpler.And so it’s really pretty exciting to think about the different things .NET will do.It’s a different way to think about how you unify the delivery of these tools.I think it really has the opportunity.We’ve all got a lot of work to do to make all those pieces work.But it’s about the spectrum of the delivery.

And the whole idea is, we’ve talked about faster, quicker, more flexible, and those are some pretty powerful concepts.And I know to make it work it’s going to take all the pieces we have, and so we’re pretty excited about it.

MR. ATKINSON: Absolutely.

Any additional comments, Steve?

MR. BALLMER: Well, I want to thank everybody very much for not only coming today.The work that our industry is able to accomplish because of the nature of the industry based upon specialization and cooperation is amazing.And if you just look, you know, over the last

— we have a long-standing partnership with Intel, a little bit more recent with Compaq, but it’s still 20 years old.Within the last 10 years, of course, the relationship with SAP and within the last five just incredible partnership with both Unisys and Andersen Consulting.

There is a reason why the PC model works.There is a reason why enterprise computing will adopt a similar model of specialization and cooperation, and it’s the work of the companies up here, and others that really will make that happen.So, I say, thanks for coming, but mostly it’s a pleasure to have a chance to participate in this kind of an industry with you.

MR. BALLMER: Velocity, agility, flexibility, I was impressed by the velocity with which they were able to remove the chairs from the stage.But, it’s a different kind of velocity that enterprise customers want to see.How do you get to market quickly?How do you get to market with something valuable quickly?How do you get something that’s more than just a simple Web presence?How do you get a cycle going where you can build, learn, improve, change, and re-deploy applications quickly?How do you improve collaborative processes?It’s that kind of speed, time, speed to market that really captures people these days.

We think that the .NET enterprise server platform offers a lot.There’s over 6 million developers today who understand our Visual Studio tool set, and who are available, and have the training and understanding to quickly get in and help people in this environment.We’ve built in core services, the XML support, the application server, the directory, there’s no complicated reconfiguration and assembly process.We have building blocks pre-assembled, like the Commerce Server, and we will introduce out in the Internet itself the so-called .NET building blocks.Are customers able to be fast moving and agile today with our platform?There’s some good references.

Woolwich Financial Services Company in the United Kingdom, over 4 million customers, wanted to move to offer 24 by 7 customer service across a variety of devices, PCs, kiosks, wireless devices.They were able to get that solution up and running in just three months on top of the Windows Server platform.

Finoc is the largest retailer of books and music, et cetera in France. Last fall, they had a Web site, which was wonderful, but didn’t allow at all for transactions.We and they sat down together and committed ourselves to having that thing be operational quickly, and letting them actually sell things across the Internet, 70 days later they had a transactional Web site in place.That Web site today has the highest reach of any e-commerce site in France.

Speed, speed, speed, new delivery channels, new opportunity, the platform has to do more than just work, it’s got to let people get to market quickly, and get to market with a solution that has the fullest possible value.To give us an example of how this works, I’d like to invite Scott Mitchell, who is the chief technology officer of the Home Shopping Network to join me on stage.Scott is going to have a chance to talk to us a little bit about some of their experiences.

Scott, welcome.

MR. MITCHELL: Hi, Steve.Thank you for having me.


MR. BALLMER: Tell me a little bit about

MR. MITCHELL: Well, Home Shopping Network is actually the world’s most widely distributed television shopping network.We broadcast out to 137 million homes across the world, including France, Germany, Japan, and even, its sister e-commerce company is one of the Internet’s fastest growing e-commerce sites.It’s actually kind of a rare dot-com, because it was profitable within the first 90 days of operation, and it

yes, kind of rare.And without any expensive branding campaigns or strategic alliances.

MR. BALLMER: How did you get into market and get profitable that quickly?

MR. MITCHELL: You know, we truly focused on providing a great customer experience, and building a great relationship with our customer, and that all has to do with being agile and being flexible.And the .NET platform has actually increased our agility and flexibility significantly.When we first built our platform we built it on the technologies that our TV business was built on.And that included a plethora of products from a variety of vendors, including Compaq, Intel, Sun, Oracle, and Microsoft.Since then we’ve converted over, migrated over to a completely pure Microsoft-Compaq-Intel platform, and to give you an example of time to market


MR. MITCHELL: Thank you.

MR. BALLMER: Some of our employees.

MR. MITCHELL: Right.To give you an example of time to market, we actually were able to convert all of our databases, redesign our entire site and give it a new navigation look and feel, convert all of our integration processes with our core business, and our key partners and vendors, and basically launch and deploy the entire site within 45 days.



MR. MITCHELL: Thank you.

MR. BALLMER: Where do you see things going for you guys in the future?

MR. MITCHELL: We’re just absolutely thrilled with the .NET platform.We’ve integrated SQL 2000, and we’re going through a process of implementing Exchange 2000 now.We’re looking forward to Commerce 2000 with great optimism.Essentially we’re going to continue to build great relationships with our customers, giving our customers a great shopping experience, and focusing less on the technology and more on the experience and relationship building.We’re looking towards partners like Microsoft, Compaq, and Intel to help us out with the technology, and give us the tools, and the knowledge on how to move forward.

MR. BALLMER: Super.Super.I appreciate it very much.Let’s all say thanks to Scott Mitchell.

MR. MITCHELL: Thank you.


MR. BALLMER: Thanks.

MR. MITCHELL: Thank you.

MR. BALLMER: Let me give you one other example of some work that we and partners are doing to improve velocity, and that’s an announcement that we’re making today in conjunction with Dell of something called the Dell Supplier Advantage.And the Dell Supplier Advantage is a program that Dell has introduced that includes a set of Dell servers pre-loaded with the .NET enterprise software, a set of services that are delivered by Elante Corporation, that guarantee that within 30 days you can take somebody who is a provider of goods, get them up and online, and feeding information about their products into other online marketplaces.So it’s kind of a catalogue-supplier operation if you will.

One of the earliest customers of the Dell Supplier Advantage has been Pitney Bowes.And joining us today, both to talk about that and have a chance to demonstrate some of the work they’ve done is Justin Bonar, the VP of strategic partnerships for Pitney Bowes, and Robert Hylton from Microsoft will assist with the demo today.

Justin, welcome.

MR. BONAR: Glad to be here.

MR. BALLMER: Glad to have you here.

MR. BONAR: Thank you.

MR. BALLMER: Tell us a little bit about Pitney Bowes and why it’s so important to be online?

MR. BONAR: Well, Pitney Bowes is a $4 billion corporation providing mailing, marketing, and messaging solutions to over 2 million businesses worldwide.We have a set of e-commerce objectives, and we believe that the Microsoft .NET enterprise server solutions are going to help us in pursuit of those objectives.

MR. BALLMER: Tell us a little bit about your e-commerce goals, and what you hope to accomplish.

MR. BONAR: Well, we want to move nimbly into new distribution channels, including new marketplaces.We want to broaden our customer base, and strengthen and deepen existing customer relationships.We think the partnership with Dell and Microsoft is going to help us do that.

MR. BALLMER: And why did you pick the Dell Supplier Advantage particularly?

MR. BONAR: You know, over 80 years Pitney Bowes has supplied solutions to millions of customers of all shapes and sizes.As a large, global enterprise we want to sharpen our focus, and increase our effectiveness in key specific targeted markets.One of those, for example, is small business.So we formed our Pitney Works division to provide a set of Internet enabled solutions to small businesses.The Dell Supplier Advantage program is complementary to that small business strategy.It provides Pitney Bowes with a straightforward way to rapidly publish our Pitney Works offerings to multiple e-marketplaces, and thereby reach the widest array of potential new customers.

If you want to see it in action, go to the demo.

MR. BALLMER: I’d love to.

MR. HYLTON: Okay.Thanks, guys.

Just like Justin said, the biggest opportunity for them to reach out and touch those new small businesses through a B-to-B marketplace, presents two basic challenges that they need to overcome.The first challenge is their ability to get their information out to that marketplace, to sell those goods and services.The second challenge is, once they’re out there, once those buyers can find them, how do they get those purchases, those orders, how do they take them in and what do they do with them?

So a simple demonstration here, I’ll start with the Commerce Server 2000 business set.I’m going to go into the catalogue publisher here.Now, Pitney Bowes has several catalogues of goods and services that they sell.What I’m going to do is open up what Steve kind of called the new delivery mechanism, or new sales channel.And I’m just going to answer a couple of quick questions about that channel.

First of all, what do I want exposed to that channel?In this case it’s the Pitney Works mailing and shipping solutions.And where do I want that to go to?In this case, my target is the Dell marketplace.And then the last piece of where it’s going is what platform that runs on.And this could be any number of them from some of our great partners like Ariba, Claris, Commerce One, VerticalNet, and others.In this case, the Dell marketplace runs on Ariba, so I’ll choose that.And then next I need to offer one more thing, and this is the ability for the catalogue itself to be accessed remotely from the marketplace, so that buyers out there can actually take advantage of the rich solution that might live on Pitney Bowes site directly.

So once I’m done with that, it’s really a matter of saving that out, and publishing it out to the marketplace.

MR. BALLMER: So you’re saying, using the new .NET services model the catalogue never has to get copied and copied, you just register your presence with the marketplace, and then automatically talk to the Pitney Bowes site?

MR. HYLTON: Actually, it’s up to you.You can do both.


MR. HYLTON: So we’ll start, and I’ll just publish that out.It’s going to look pretty easy, there’s a lot of things going on here.So what I’m going to do is switch over to another little piece here that shows what kind of complexities we helped take care of for you with this solution.

So we started with the Commerce Server 2000 catalogue.And basically put that out in a nice, rich, XML format.And then, based on the choice that I selected of what marketplace to send it to, it knew to take that Commerce Server XML format and map that over to the target XML format, in this case Ariba’s CXML.And then once that’s done it packages that up in a BizTalk envelope and BizTalk server takes care of that deliver to the marketplace.And there you go, you’ve got challenge one solved.Basically, you’ve published that out to the marketplace.

So now I’m going to switch hats for a second and show you what the buyer would see.So now I’m just a buyer on the Dell marketplace.In this case I’m going to log in, and I’ll be on my way.What I want to do, I happen to want a postage meter today.So I’m going to search on postage meters.And up comes a couple of postage meters that I happen to find.Now, it could have found across multiple suppliers in this case, because I’m at the Dell marketplace.And in this case it shows one of those new Pitney Bowes personal post postage meters that I published just recently.And it looks like what I want, so I’m going to go get some more details here.And this is where I’ve actually reached out and touched the live site that’s running on Commerce Server 2000 across the Internet.So I can take advantage of a richer service than just looking at pieces of the catalogue.

So since it knows, because I’ve shopped here before, it knows a little bit about me, and I was able to pass that information via BizTalk server, I don’t really have to do anything here but place my order, because everything looks pretty good.So I have this order in here, I could choose some other products from some other companies, but in this case I’m finished.So I’m just going to give this a name, and place my order.

Now, I’ve done that that kind of really solves challenge number one.So let’s look at challenge number two, how am I able to accept those orders, and what can I do with them?So I’m going to switch hats again, I’m going to go back to being the supplier, Pitney Bowes in this case, and look at my system and what I’ve done over here.In this case I’m going to look at orders, look at order status, and as I click on this it actually is going out and querying the many marketplaces that I may be connected to, and looking for orders.I’ll just search on all orders here.And I happen to have a new order from the Dell marketplace, and now it’s really up to me.I can either act on this order myself, or I can let my back end systems through the other integration technologies take care of that, and act on that all the way though my supply chain.

So basically we’ve shown how to overcome those two challenges to take over this opportunity of getting to these new customers through a B-to-B marketplace.Getting that information our there so people can find it, and getting it sold so we can process those orders.

MR. BALLMER: Super.Thanks, Robert.

MR. HYLTON: Thanks.

MR. BALLMER: Thanks very much, Justin, appreciate it.

MR. BONAR: Thank you.


MR. BALLMER: You take a look at that, you have a real sense of what speed and velocity means, how to get to market absolutely in the fastest way, the best way, and for Pitney Bowes in this case, to have their product very broadly distributed through a range of marketplaces.

The second of these agilities, I would say, is flexibility.Today, since I’ve been at Microsoft 20 years one of the great concerns of the enterprise CIO has been integration, how do I get systems to talk together?We saw a little bit of that in some of the work that the BizTalk server was doing, communicating across these marketplaces in the last demonstration.But, the demand particularly for integration, as a source of flexibility in business operations will increase.

The demand to have flexibility in the operations model, you don’t know when you’re whether you’re going to start out with just a few small elections, or really be able to do the U.S. presidential election.So you need systems that provide incremental scale out.We need systems and tools like the BizTalk server that provide for standards, XML based transformation and orchestration of business processes.We need standards like UDDI, which Microsoft, Ariba, IBM and host of other companies came together to put in place, so that Web sites can communicate about what they’re able to handle and process on behalf of other Web sites.And we need this concept of these flexible solutions that the .NET framework and .NET servers allow you to build.Flexibility, integration, incremental scaling are key aspects of what enterprises are demanding beyond the ability.

To talk a little bit, some about flexibility, and to talk more generally about some of the experiences they’ve had, I’d like to invite Gary Bird.Gary is the vice president of @ssets.MAX, Honeywell.He’s going to talk a little bit about some of their experiences.

MR. BIRD: Thank you, Steve.



obvious, Asset Max, please tell folks?

MR. BIRD: Well, let me first introduce Honeywell.If you don’t know, Honeywell is a Fortune 50 company, we’re $25 billion in revenues, and we serve global markets.We’ve been around for a long time, a hundred years, and recently the merger will Allied Signal has created an even more powerful company.The customers that we serve today, we offer solutions to people in industrial manufacturing, to the aerospace industry, the airlines of the world, and also to people who own and operate large buildings.

Now, what do all these customers have in common?They all have a lot of capital tied up in these physical assets, the buildings, the airplanes, the manufacturing plants like refineries and petrochemicals.Now, all these are made up of mission critical pieces of equipment, not things like this, but mainly real iron, so pumps and valves and air conditioners, and jet engines.

And when this mission critical equipment fails, it causes enormous disruption to these businesses.And the cost of these failures are extremely painful.That’s why these industries spend on the average of $240 billion per year to just maintain and repair these particular pieces of equipment.Now, even though they’re spending that $240 billion, they still have failures.And when these things fail, they’re losing on an approximate scale of 3 to 15 percent of their installed capacity due to these failures.So something is not working properly.And what Asset Max and Honeywell want to do for our customers is really find a better way to solve these unexpected equipment failures to really address this problem in a different way.And we want to use the Internet to do that.

So we want to create new value for our existing customers, and use the Internet to orchestrate a better way to deliver parts, services, expertise to the person who has a broken pump, a broken jet engine, or a broken air conditioner.

MR. BALLMER: I guess speed and flexibility are kind of important?Why don’t you comment on that?It sounds like it to me.

MR. BIRD: Speed and flexibility are very demanding customers, and they want these solutions today because these problems are real and they’re very painful right now.But this is not an industry that hasn’t been trying to address these problems.There’s an existing maintenance and supply value chain in place.And what we want to do is redefine how that works.We want to digitally transform that using the Internet to make it work much more effectively than it is today.

Now, what does that mean in terms of flexibility?It means that there’s already existing systems.There are already existing business processes and work flows that we need to interconnect with, and then redefine to make it more collaborative and more productive.So, the flexibility to interconnect with that value chain is fundamentally a requirement for what we do.

Now, as we look forward, there is a uniqueness to this business that we’re attacking.And that, most of these users don’t sit behind desktops.These are the guys who get their hands dirty.So they get next to a piece of equipment, they get next to the jet engine, and they need the information, the specifications, the technical information, the advice of the expert on a diagnosis.And then where is that part that they need right there at the right time to install it back on that piece of equipment.So the whole strategy that Microsoft is bringing to market to get the information to the user through mobile devices is fundamentally a priority for our solution set.

MR. BALLMER: That’s a key reason you would have chosen Microsoft as a solution?

MR. BIRD: The whole .NET strategy is really addressing our needs, but our customers are very demanding and they expect a lot from us, and we expect a lot from our partners.And when I look at Microsoft, I want somebody that is not only a world-class technology provider, but somebody that is the same kind of partner that our customers expect from us.Somebody that’s committed, that’s focused, that has the resources, the services, that’s there for the long haul, because we want to have a relationship similar to the one you have with the other members of your panel and partner board.So that’s the real reason, along with the technology that we work with Microsoft.

MR. BALLMER: Super.I want to thank Gary very much, and wish you well.We’ll be there for you.Thanks very kindly.


MR. BALLMER: One last announcement that I want to make in terms of both flexibility and velocity is a new program that Microsoft is participating in with Compaq.Compaq is forming a new consulting practice with over 1,000 consultants to provide enterprise integration services, integrating business applications inside enterprises, and across the firewall.The entire operation will be based on the new BizTalk Server, which we’re launching today.And, as I said, Compaq is committing over 1,000 consultants to that program, very, very exciting for us.

The last agility I want to talk about is empowerment.And Gary kind of talked about it in his comments.You need to be in touch with people when they need it to make the right decision to run the business, understand customers, to collect and analyze feedback, to share and collaborate.That’s where we grew up, but marrying our enterprise infrastructure with our desktop infrastructure we think is a real advantage we have.Our digital dashboard technology for presenting mission critical information to Office users, and the way Office includes support for XML.The business intelligence features in SQL Server 2000, the collaboration in Web store capability in Exchange 2000, some of the new XML support in smart tags in our new Office 10.The new pocket PC, which Hasso Plattner had a chance to show you, running the Mobile Internet Explorer, and the .NET Compaq framework for smaller devices are all very important.

We have a lot of customers that we’ve worked with in this way, people like B of A, who have a new document management and collaboration system with over 4,000 documents, and over 576 gigabytes of information, Partners Healthcare serving the Harvard

University community.In just under six months, they’ve put together systems that help provide real-time medical information, streaming media, collaboration systems to reach out and really touch the doctors and other healthcare professionals that they contact and do business with.

With Compaq, we did a project about two-and-a-half years ago that we called the Tera Server, the largest SQL Server database in the world.It’s got geographical information taken from U.S. satellites, Russian satellites, pictures of the entire globe.And for a while, it was kind of sitting there as a novelty, and an interesting test on SQL Server.We recently reengineered it to be a Web service, to be explorable, if you will, via XML, and via the new SOAP protocols that we’ve introduced, and are going through the standardization process on.That data is now available and the U.S. Department of Agriculture has built it into an application that they make available to people in the agriculture industry, farmers around the United States, so that literally from an iPAQ style device, you can get access to applications that will show you specific topographical and aerial photos of any farm, any part of the United States by marrying together this notion of enterprise applications with important empowerment of workers with tools to access that information.We think it’s an excellent example of really where the future is going.

And one of the critical reasons that we’re introducing a new product today, which will ship the first half of next year, that we call the Mobile Information Server I guess 2001, and this is a server that’s designed to help corporations and wireless operators unleash or unlock corporate information for wireless access, from pocket PCs, from cell phones, et cetera.There’s a built in out of the box solution that makes it very easy to get wireless access to Exchange information, email, contacts, calendaring, and there’s tools and infrastructure that lets you hook up this same approach to other applications SQL databases, et cetera.It supports the important mobility standards, multiple air links; carriers can implement it, developers, enterprises.It includes some of the most interesting new work we have going on in Microsoft research, controls that let you automatically adapt a Web site so it can present itself on a small screen device, an advanced agent for notification and filtering of information changes that happen in corporate enterprise servers, so that I’m only notified of the changes that I’m interested in when I’m interested in those changes.It’s a very kind of interesting and rich product for that environment.

It’s also my pleasure to let you know today that we’re announcing that Juha Christensen, who comes to us from Symbian, where he was involved in a variety of wireless activities will join us as the new head of marketing and sales for the wireless initiative, and will be focused very much on unlocking this next generation of knowledge and flexibility to the wireless workers taking advantage of pocket PCs, Mobile Information Server, et cetera.As everybody knows, wireless is one of the most exciting areas, but allowing people to get access to .NET enterprise data through these wireless devices is something, I think, super important to give enterprises the agility that they’ll expect tomorrow.

I hope from the context of this speech you know a lot about the .NET enterprise servers, and what they try to do, and the technology tries to do to help with the ability and the agility.

The first part of next year, we’ll be launching the VisualStudio.NET and the .NET frameworks that have a set of tools that make it easier and easier to build this next generation of enterprise applications and give greater flexibility in terms of integration.The other pieces you’ll see rolled out with new releases of Windows, on new devices, on additional Microsoft devices, but it’s all in the frame from an enterprise perspective of improving the abilities and the agility, speed to market, flexibility, and the knowledge and empowerment that we can put in front of people far and wide.

The question I might ask is, who is the competition?It’s clear, the competition is Sun and Oracle.And somebody who I was talking to earlier today about this event said they’d been talking to people at Sun, the people in Sun were talking about, well, isn’t Microsoft just catching up with us on the abilities.It may be true to say that we are breaking through in terms of what we can do on the abilities.But on the agility, my retort was, where’s Sun?Missing in action.Where are the tools, where are the integration services, where’s the end user interface?Where’s the complete package that lets people tap into this data.Where’s the flexibility?Where’s the scale out strategy?Where’s the development tools that actually make things easy, not force people into a brand new programming language?

The truth is, there is some momentum today that you see in companies like Sun and Oracle, but the absolute size of the market for proprietary minicomputers with proprietary processors is flat.Sun may be gaining market share, but in the business of providing servers for enterprise and Internet applications, the industry standard Intel platform is gaining share.And we at Microsoft are gaining share with it.And we think today’s announcement in some senses highlights the issue.We’re prepared to compete on the ability.We certainly have skin in the game from a services perspective.We certainly have cost advantages, which are dramatic.As Larry Weinbach emphasized.But we also have a tool set, and a set of middleware, and a set of partners, which will let businesses, move faster, quicker, and take better advantage of the full range of industry innovations than our erstwhile competitors.

I like to tease that it somehow feels like recruiting a couple of sumo wrestlers for your track team.Sun and Oracle are steady and big and sort of expensive to feed, if you will, but they’re not exactly the most nimble guys on their feet, not exactly the guys who will give you the flexibility on the track that you really want to have.In this Olympic year, I guess you could say, I think the gold prize will go to the platform that really offers both of those, and offers both of those at the right kind of price.

Particularly with the Star III introduction tomorrow, in a sense, it’s sort of a classic case where I want to say, hey come on, come on.That is way behind where the Intel processor family is today, and the Intel processor family is moving incredibly, incredibly quickly.

And while we have many customers in the audience who use Sun, and use Oracle, there’s a future direction here that I think is quite clear.We’ll inter-operate with those guys, we’ll participate with those guys.But, the solutions you’re building for tomorrow, I claim there’s no reason not to get on with the inevitable and build those on the kind of platform that we had a chance to talk with you about here today.

I’m very excited


MR. BALLMER: Today is a big day, and I’m very excited about it.Twelve years we’ve been kind of banging our head on this, and I think Microsoft is, if not known for anything else, known for patience, persistence, stick to it-ness.And I think in some senses we should think about this as the enterprise strategy version three, and really building on the abilities, the services, the .NET platform, I think we’ve got a strategy and a set of building blocks, and approaches that can really let our enterprise customers move off in bold directions, with the kind of speed and capability they want to, but with the security to go to bed at night and know things will stay up and running.

Thanks everybody very much for your time and participation today.