STEVE GUGGENHEIMER: First off, thank you for taking some time this afternoon to spend with us. The objective today is just to talk a little bit about innovation in our industry, some of the phenomenal work our partners do in conjunction with us, and then some of the directions we’re all going in. So, hopefully it’s fun, we’ll make it interactive, we’ll do some demos and a sort of update session from where we were last year.

I want to congratulate GITEX on getting to 30 years. I want to thank His Highness for continuing to provide vision for the ICT industry here in Dubai and throughout the region, and actually globally. This is really a center for the ICT community and so being here is always a privilege and a pleasure. I also want to thank Helal Almarri and the folks from the Dubai Trade Center for their support of GITEX and the work that they’ve been doing. Thirty years for any show, I can guarantee you, is a milestone. I’ve watched many shows in my 17 years come and go, so 30 is about as good as you get.

At Microsoft, you know, we have a vision for creating seamless experiences that combine the magic of software with the power of the Internet and the breadth of devices to create truly great experiences. I think one of the things that we’re all fortunate in this time is to work in an industry that moves so quickly. Right? I’ve been at Microsoft for 17 years, and in the technology industry for about 25. I don’t know of any other industry that changes so rapidly and new things come along so fast, that has impact so broadly. So, whether it’s us as individuals at home, whether it’s with schools, government, family, friends, businesses — the technology that we work on and we work with truly has an impact. So, just keeping track of what’s going on, looking at some of the innovations and where things are going is sort of half the fun and half the opportunity.

One of the things that’s been going on for a while and continues to become more evident, and hopefully the display we go through today brings it to life, is that convergence isn’t really about moving to a single thing. What we have in our industry is a convergence of technologies that allow more and more possibilities over time. Right? So what’s happened is the chips that we use in the computers have expanded into phones, into TVs, and to all types of devices and servers. Right? The radio stacks, the memory — so we have a great proliferation of technology that allows more capability for more and more devices.

We are also, of course, having all the media going digital; these are not new trends, but photos and music — books now, we’re seeing about 25 percent of books in some countries being uploaded digitally as opposed to manually. We’re starting to see more and more movies. There are about 24 hours of content loaded on YouTube every day. Right? Sorry, it’s more than that. Twenty-four hours every minute on YouTube every day, so there’s a ton of content coming out there.

Then we have all the networks. We have tons of Wi-Fi and WiMAX and we have the cellular networks and the wireline networks all providing bandwidth. What that leads to, to some degree, is the potential for a lot of noise because we have lots of capability, or if we do a good job, right, in orchestrating across the content providers — whether it’s music or photos or books or anything else — the network operators who deliver that content to the devices for the device manufacturers. If we can create software that helps bridge all of those areas, whether it’s for home use or whether it’s for business, we can create more opportunity.

Now, it is a bit of a challenge because we’re not just talking about a single company or a single industry; we’re talking about technology cutting across multiple industries — and these aren’t small, local industries. These are global industries. Right? Content providers, right, cable networks, telco networks, device manufacturers; it’s a very interesting time to figure out how do we bring all of that together to deliver on experiences for the end users that are actually meaningful, right?

One of the opportunities with convergence of technology and all these changes is to help people get more done, is to help people be more entertained, is to help businesses be more productive. But there’s also the opportunity for more noise, for more, I’ll say, confusion or more things going on that are hard to manage. So, the trick in all of this is to take advantage of all of the changes and all of the opportunity to drive innovation forward on behalf of our collective customers and not get too bogged down or too mired in what could become overload. And so that’s sort of the trick or the challenge, and that’s sort of where I want to spend some time today.

Now, one of the starting points with all of this is where do you go, right? When you have all of this change going on so rapidly, you need a North Star, you need some direction. There’s no single product from any company, and there’s no single point in time where it all suddenly comes together. So, the trick is to have a vision for where you want to go, and then make sure each step along the way takes us there. So, whether it’s a new software release from Microsoft or a new piece of hardware, something new that the content providers are doing or the network operators, is it helping drive towards a common vision?

And none of us have exactly the same vision, but one of the things we do is we try and have a vision, right, to give at least all of our developers at Microsoft and all of our partners that sort of points to what could be possible.

So with that, I want to show you a little video to give you a sense for the type of thinking we do, I’ll say outside of the box, just to give us a North Start to point it. With that, let’s roll the video.

(Break for video segment.)

STEVE GUGGENHEIMER: So you can’t say whether all of those things will occur exactly like it is. It does take a deep partnership, though, between hardware and software, all right, between the solution providers, the businesses, everyone involved. So, having some thinking about where we want to go is part of it, right? We all have to collectively work on that.

At Microsoft, then, we make specific investments. If you look at our research portfolio, we work on platforms that drive devices. From the phone, which we’ll cover in a little while, to PCs, to servers, so we build a variety of platform products. We also build solutions: Some desktop productivity, search, entertainment, and a variety of other businesses. And the real trick across all of the investments is to try and do as good a job as we can on making each device run as well as it possibly can. So, build great platforms. So, phones are great phones, computers are great computers, TVs are great TVs, servers are great servers, et cetera.

But then ultimately over time, help build experiences that bridge. So, whether it’s an entertainment experience or a communication experience or a productivity experience, we want to take advantage, all of us, of the diversity of devices that are coming based on the convergence of technologies, but not have it be so different each time that we have to start over. We want certain things to work across.

So what I want to do for the next 20 minutes or so is talk a little bit about platforms and do a little bit of a tour, then we’ll come back and do a little bit of an update on Windows and phone and show some of the experiences that cut across, and then transition over to the business side and talk a little bit about what happens on the server side with cloud computing and the same sort of paradigm shift over time.

So with that, I’m actually going to spend some time doing a hardware update, because one of the fun things to talk about in our industry is the tremendous momentum we’ve had since last year collectively, and some of the great innovation that’s going on. So, what that, I’m going to move out of slides. I’m going to have the camera guy follow me around, and we’ll do a little show-and-tell because I think one of the best ways to highlight what’s going on is just sort of to go through it.

I’m going to start with phones, and so if you look up here, there are probably six or seven phones. One of them has gone to sleep. Windows 7 Phone was just announced yesterday here in Dubai and last Monday in New York. It’ll be coming into the region — I think the first ones will probably hit the shelf the first week in November or so. And I apologize in advance, there’s a lot of demand for the phone right now, so it will take a little while to get them all to trickle out.

You’ll see a variety of form factors. I will do a demo a little later on of the software, but one of the things we do is work with hardware manufacturers to provide lots of different choices.

So you see a couple devices here from LG, there’s one up top and there’s one down below. This one has a horizontal keyboard. Both of these, for example, take advantage of something called DLNA, which means they can drive your television, they can drive your computer, they can work across different devices as a remote. A unique differentiation that LG has.

This Samsung phone up here, there are two of these. I have one that I use myself, and there’s one up top here. These take advantage of a very high-quality screen or sort of viewing surface, and this one is the one that’s going to be available in Europe as well as here, and there’s another U.S. version that’s very thin and light; it’s probably the smallest one out there.

There are several devices here from HTC. This is the largest with a larger screen, about 4.3 inches. It’s got a little kickstand on the back. If I want to set this up for watching movies or if I want to listen to music, I can do that. They have a version that’s got surround sound Dolby on it, and there are a couple more along the bottom here from HTC.

So if you start with phones, we’ll see a lot of innovation with Windows Phone 7. I’m only missing one. Dell makes one as well with a vertical keyboard slider. So, there are about nine different phones coming into the market, and those will proliferate over time with more and more devices.

Now, one of the things we do with our operating systems both with Windows 7 and with the phones is we make embedded versions, right? These are basically componentized versions of the software that you can turn around and reuse. So, we’ve got a couple of devices here. This is a personal navigation device from Medion. This is sort of a test screen that can be used for a personal video player, personal navigation device.

What this is is essentially a kit that allows me to build anything I want. Since it’s based on the phone operating system, it takes advantage of the ARM chip set or a variety of chip sets that you can use, and you can build it — you can use it for building whatever type of device that you want. And so one of the nice things with a modular system is you can build devices. This is, again, personal navigation. This is a set-top box for doing media, for doing television. This is sort of an experimental device people have built as a slate from more of a specialized form factor.

Now, as we start working our way from the devices into PCs, there’s a category that’s emerging — or has been around for a long time — tablets or slates. Some people think of this as a new category. I brought along a couple of ruggedized versions, which most people don’t see. These are essentially PCs. They’re meant for heavy-duty use. So, you can see it’s very ruggedized. Let me get the power cord out of there. Right, you have to be careful with them, you’ll notice it’s running a video — oh, I dropped it, sorry. But you’ll notice it keeps running. And so whether it’s this device or the military one here, there are a number of these types of devices that are out there today. We also have versions that are used in supermarkets, et cetera.

Now with the consumerization of some of these devices, people are starting to look for, I’ll say, cooler or sleeker form factors. So, there’s a variety of development going on on, I’ll say, different types of touch-screen innovation for small form factors. These are a couple that are in development now. Also, there are people working on applications. This is sort of a research application that people have built to have all of my social networks hooked together.

If I go back up to the home screen here, I can go look at my messages, I can go look at other things that are going on. And so what you see is moving from traditional form factors, and I’ll show you a couple convertibles, into media-consumption-type device that still make the most of the PC ecosystem, everything you see here, but in new types of form factors.

If we sort of start working our way over to the PC category, we’ll see a couple interesting ones. Now, these are traditional convertible tablets. These have been around for a long time; you can flip them around, turn them over; it’s pretty traditional. What we’re starting to see is some innovation in this form factor, taking the thinking from what’s been going on with slates and then blending that with some of the innovation in hardware. I’ve got two of them here.

This is the Libretto. I’ll move this little card out of the way. It’s from Toshiba, and it looks like a normal PC, but if I click on the keyboard here, what you’ll see, it’s actually a dual-screen device, so it’s got a nice soft keyboard you can work with, and if you want to run it in sort of, I’ll call it a standard PC mode, you can, but if you want a dual screen, you can go that direction. So, that’s sort of one level.

This device here is quite innovative. This is a Dell Inspiron Duo. And we sort of think of it as a dual-personality device. It’s a standard laptop, right? I can work on it all day long, but if I want to go into more of a consumption mode, I can flip the screen over, turn this down, and now I have a form factor that’s meant for just either sitting and reading or watching TV or movies. And if I wanted to, you know, I can come along with a dock here, ultimately, sort of have some nice accessories.

So this is the type of innovation that brings together the best of the whole ecosystem of hardware, right, and software together, running in multiple modes, and pulls into sort of the scenario of the best of consumption. I just want to relax and watch something or read something, with the best of productivity, hey, I want to flip it over and use it both ways. And one of the things you’ll see with the industry is the continued innovation across all of these devices as we go forward.

Let’s keep going. This one, when you think about convertibles, right, that tablet is one mode. Now, this Onkyo here is kind of interesting. It’s sort of a standard form factor, but I have a lot of friends who use sort of big spreadsheets and they’re trying to do a lot at the same time. So, they’ve done a little innovation there where if I need a little bigger keyboard, right, I can go along and work in that way. (Applause.) I’ll take that on behalf of Onkyo.

I think one of the things that’s important is to highlight sort of the innovation the industry does. And there are different types of innovation. So, the hardware is one. You’ll notice the skinning on this device from HP is another, and that’s some of the work that they’ve been doing, and others as well. Here, you’re just looking at a range of sort of netbooks overall from Coby, Asus, Fujitsu. This is a larger Sony, and so this is where you’re starting to bridge between I’ll say netbooks and small notebooks into more full-functioning notebooks.

One of the things I brought along here is just a range of notebooks. You know, if we think about, it’s been a year since Windows 7 launched. You know, we get these cool form factors like this Sony Vaio, this one is a little dusty from the work. These come in like orange and pink. So, my 12-year-old daughter really likes the orange one, she thinks that’s quite cool, it fits in a purse or a backpack. She doesn’t have one yet because they’re not there for her yet, but I’m going to get one for her.

If you look across here, you know, a couple of HP machines, this is The Beats. So, it takes advantage of really high-quality audio, you get a set of headphones with it, and HP has done a really nice job here of addressing that market. There are several Dells along here, Acer, Samsung, Toshiba, Fujitsu. And so if you say, hey, I’m looking for a laptop for whatever the occasion — I get this question all the time running OEM — what should I buy? There really is a wide range where each of the manufacturers is driving their own innovation, right? They’re doing work where there’s consistency across certain aspects, and at the same time, unique innovation. And that’s part of how our industry works and one of the nice features there.

One more I was going to show you. Dell has, again, been doing some nice innovation. You notice this one is super thin, right? And if I take this, slide my finger across, it opens up. Right? This is the type of hardware/software innovation that you only get when you enable the full industry to work together.

Now, one of the things that really tests hardware is gaming. All of the machines up top here and this little Alienware down here, these are now gaming rigs. So, if you want to watch movies, there’s a lot more media available out there today, if you want to play games. These types of bigger screens, better sound, you’re seeing a lot more Dolby and surround sound coming out of the PCs.

One of the topics that you’ll see out on the floor and is becoming a hotter topic is 3-D, so you see more and more laptops and the all-in-ones when we get there, and TVs heading towards 3-D. Now, that’s always a chicken-and-egg situation. You need the content to make it interesting to have the 3-D machines, and you need the 3-D machines in order to play the content. It’s a little like high-definition television. So, we’re getting there. That engine of innovation has started.

One of the key areas that’s always a great test, and I’ve got great support from our chip partners here, AMD did this, is gaming. Gaming allows us to use the best of graphics processing as well as the CPU or the central processing unit. So, if I hit start here, right, you’ll notice with six monitors, these games really sort of show off the innovation in hardware. I’m going to run this for a couple seconds, then I’ll pause. But this type of setup is really starting to expand what the PC can do.

In fact, if you take this a little step further, a lot of the animated movies that you’re seeing today are actually built out of PCs. So, when you look at sort of the 3-D movies or the animated kids’ movies that are coming out, and even some of the movies for all of us that have those — not animations, but sort of the still life built in, it’s being done on hardware like this.

There are a number of vendors, both sort of the traditional vendors, so HP and Dell and Samsung and Sony, but also there are a variety of smaller vendors out there. So, local partners, and local innovation goes on pretty heavily in this space.

Now, I brought this along. This isn’t really sort of an overly interactive demo; what this shows is how rich the capabilities are coming. What I’m going to do is I’m going to turn on a wire frame for you. This is a standard wire frame, it sort of shows you how this is built.

With the X-11, we added something called tessellation, which adds a much richer level of graphics. So, basically, a lot more polygons per image. So, I can turn that on and I can turn it off. What will happen is if I go in and we turn the graphics off, as this comes in, what I’ll do is I’ll turn it on and off, and you’ll see the richness. You’ll watch sort of the 3-D aspect of some of these images as it comes in.

So right now, it’s on. See how flat the roof tiles are? If I turn it on again, they become 3-D — off and on. So, that level of capability, right, when it comes down, again, to building games or building movies, it’s built in. The combination of extremely rich graphics, ultimately a physics engine underneath, right, plus the overall capabilities of the computer allow us to build very, very rich games or very, very rich movies, very, very rich entertainment all up. And so that’s an area where sort of there’s a lot of innovation that tests or expands the horizon.

Now, one category we talked about a little bit last year that’s been coming up is the all-in-ones. Take a standard desktop machine, integrate it with a very good monitor and touch, and all of a sudden you have a system that allows you to do the best of sort of graphics as well as entertainment as well as traditional productivity.

So here’s something called the WorldWide Telescope, right? What’s happened is all the telescopes around the world are feeding data into a very, very large database. And from that, you can go explore. And so if I wanted to go out to Saturn, this thing will take a nice trip around the solar system. It will come to Saturn. I can wheel around this way. It actually allows you as an individual to upload images from your own telescope, and it’s building a richer and richer database. So, there’s one sort of system with mapping, which is what Bing uses and some of the other search companies use, that looks at the earth, and there’s another system like this one, the WorldWide Telescope, that looks out into space.

So it’s a really nice marriage of sort of hardware and software, again, in the same way gaming was, this bringing together things that you might want to do on a screen of this style, the all-in-one, with the applications that would drive it. And this is a category that’s been growing very quickly.

Now, I’m going to switch gears to entertainment. So, one of the things that’s coming out for holiday — again, you’re talking about the marriage of hardware and software — is something called Kinect. So, we take a gaming system like the Xbox here, and I sort of — I’m going to come over here and wave at it, it’s going to wake up, and I can then drive this with my hands.

So I’m going to go into the avatar. Right? It’s going to bring it up. So, what this is doing is it’s reading my body movements and it’s using that to actually drive the system. And so this will take just a second. This is the avatar. I’m going to wave at it again. There we go. So, I’m going to change my style. Let’s see, yeah, let’s change my style. So, I need some headwear. I’ll add a hat here. Let’s see. No. So, I’ve added a hat. Let’s go into accessories. I want some glasses.

So I just move my hand. I hover over the thing that I want to do, and let’s go over here. We’ll add some professional shades, and I’m done, so I can come back to the front here. So, one of the nice things here, again, as you marry hardware and software together is that ability over time to add full-body motion into the mix. So, again, it’s that constant innovation in our industry. And when you think about sort of doctors and surgery and you think about kids playing games, there are lots of different places you can use this technology.

Now, we talked about all-in-one capability. These were all-in-ones really based on a PC framework. This TV is actually also an all-in-one; however, it’s built on a TV framework. So, if I go into the input for the TV, you’ll notice it has lots of inputs — TV, satellite, HDMI — we didn’t have time to hook the cable up, but I’ll go into Media Center, and this is an application that went to sleep, I think. Yeah, I think my computer — there we go, wake it back up.

So this is an application that allows me to basically have the data from a computer, because there’s a computer on the back end of this, but with a UI that’s meant for remote control or sort of a wireless setup. If I go into the picture gallery, I could go into sample pictures, I could go look at these if I wanted to and click around. So, if I have pictures stored on this computer or anywhere on the home network, I can go ahead and look at those.

If I go back to the home, I can go in and go down and look at music. I can look at what’s playing now, and so we’ve got some TV shows that are recorded. So, I can sit and play those. And if you think about television towards the future where you have the best of whatever is on broadcast television plus all the Internet television going on with YouTubes and all the other types of video that’s out there, plus your home photos and videos, that ability to integrate them all and have a way to get access to them on, in this case, a TV device is a good way to think about it.

At the back end of this, if I go home here, right, the back end of this, it really is a PC driving that engine. So, now we’ve mixed the best of TV and a PC, so I have access to my game console, I have access over the air, I have access to all of the Internet content. So, again, really driving forward.

Last, but not least, I’m going to come down –I think all my computers went to sleep in this case, so I’ll wake them up real quick. One of the areas that we’ve been doing investment in is server technology as well. As you store more and more of your personal photos, movies, music, et cetera, having a home server to back it up, both locally and then ultimately in the cloud, is going to become more important. I can tell you from personal experience, I’ve been doing digital photography a long time. Somewhere along the line, I lost my daughter’s third birthday. I don’t remember what I did to corrupt that particular machine, but my wife wasn’t very happy with me. So, having that backup capability has become much more important.

The second area is the notion of systems for schools, right? One of the things we’ve done here is we’ve taken a server, a single server down here, right, and added the capability to run multiple monitors at the same time. When you think about the education environment, right, it’s not easy to buy a laptop or a computer for every student always, and it’s even harder for the teacher to manage all of them.

With solutions like this, we have the ability for a teacher to manage all of the desks from one computer, right? We’re doing updates that allow the teacher to be able to look at her screen and see what each student is doing, to be able to push a lesson out or a test to everybody, and it’s something that the teacher can easily manage, right? This is called MultiPoint Server. This is a server that’s been out there for a little while; I’m very happy that LG last week announced their partnership with Microsoft. So, LG ships about 20 million monitors a year. You take the strength of their monitor business plus the capabilities from their PC business and you look at the education industry; phenomenal way to help in an industry that’s growing and needs more computing capability, but doesn’t necessarily need the overhead of trying to manage all the computers individually through IT. So, in some cases, that works great; in some cases, this is going to be a really good solution.

So I think that’s a pretty good sort of run relative to innovation in the hardware space. I’m going to go find my remote and go back to my slides. Actually, I can’t remember where I put the clicker; there it is. So, hopefully that gives you a sense of sort of innovation driving forward on the platform side. Right? There’s been a lot of work done in the last year to bring more and more capability to bear.

Now, let’s talk about some of the places where that innovation is going on very directly. So, we’ll start with the PC space. We saw a lot of PCs, and it’s been about a year. We actually launched here last year. There’s been more than 175 million licenses sold, so about 17 percent of the total operating systems out there globally are now Windows 7, and it’s been the fastest-selling OS in history.

Now, part of the reason for that has been the tremendous uptake from businesses, and some of the things that we’re hearing from the customers, right, more IT pros are recommending Windows 7 than XP, so we’ve sort of crossed over that barrier. Eighty-eight percent have already started their formal migration, and at the end of the day, it’s because companies save money. Windows 7 has put enough capability into the desktop, as have our hardware partners together, to save about $140 per PC per year, right? And when you’re an organization of 500 or 5,000 or 50,000, that makes a big difference. We’re hearing the average is an ROI of about 130 percent over a 12-month period, so it really does return.

Now, I can tell you that all day. What I suggest over time is to find case studies. Ask other customers what they’ve done, and there is a sort of database full of case studies today, some from local companies, some from global companies. There’s a list of them up here. What I was going to do is run a quick video just to show you one case study in action, in this case from the City of Miami, and so I’ll go ahead and run that video and we’ll take a look.

(Video segment, City of Miami.)

STEVE GUGGENHEIMER: So from making employees more productive to saving energy to saving time to saving costs, there’s a lot that can be done when we sort of put the technology to use in the right ways. And we’ve been, again, very fortunate with our hardware partners and with Windows 7 to really be able to drive the PC side of this industry forward.

Now, that’s sort of the corporate side. There’s also a lot of innovation that happened on the consumer side, and we saw a little bit of it up here, but I want to pick two new areas to focus on. As Windows 7 has been advancing, we’re updating two components in the last couple months. One is Internet Explorer, which has our version 9 come out in beta, and the second is Windows Live Wave 4, which was just released.

As we start to transition from the platforms and the hardware, IE9 does a really good job of marrying hardware and software together, and then Windows Live and then ultimately Office and some of the other assets start to take advantage of the cloud to bridge your experiences. So, I have experiences and content and sort of scenarios that will follow me from machine to machine, and ultimately across devices. And so sort of that’s the bridge I want to head towards.

If I start with IE9, that really is sort of the link of hardware and software. We worked really hard on performance to take advantage of the GPU capability in almost all the computers today, so discrete graphics, to make Web pages respond more quickly. So, really take advantage of the hardware acceleration you see in the demos we do here with DirectX 9, 10, and ultimately 11 to actually drive websites to make them faster. So, we’ll show you a little bit about that.

We worked on making it cleaner, easier to use. Security; about 60 percent of what consumers spend time on a PC on today is the Web. So, making sure there’s security there, because there’s no sort of area that’s more highly challenged for security than the Web, was another key area of focus, and then of course interoperability, taking advantage, in this case, particularly HTML5 to really help drive the industry forward and work on sort of standards-based capability.

That’s led to some very good results. I’ll show you a quick video that highlights some of the performance. Taking standard machines like any of the ones you see here, right, and using those with Internet Explorer 9, you can sort of see some of the differentiated performance capabilities. Let’s go ahead and run that video.

(Break for IE9 video segment.)

STEVE GUGGENHEIMER: So I’ll highlight, there are no plug-ins here, there’s sort of no special coding; these are basic websites using HTML5 and, again, that marriage of hardware and software, when we bring those together, we can see some tremendous results. We’ll do a couple demos in a minute here. The press has been pretty pleased with it.

The other side of the conversation is Windows Live Wave 4. What Windows Live does is it starts to bring in the notion of your personal cloud or that capability to take advantage of the cloud with the PC together. And so things like instant messaging, e-mail, calendar, photos, video, storage, et cetera, it allows you to take advantage of those capabilities in the cloud and do a really nice job of marrying them with the PC.

So part of what we’ve done is we’ve built rich clients. So, when you’re on a PC and you have the clients available, you can have a richer experience, you can work offline. And when you don’t have the client available, you can still get access to all of your content, all of your information from any Web browser. So, that’s that nice marriage back and forth, and we’ll talk a little bit more about that as we go forward because one of the things that’s happening sort of as the Internet gets richer or people think about the cloud is having that cloud capability give me access to my information and my content wherever I am on whatever device, but then when I’m on a device that might have a richer client, I can do even more, I can work offline, I can get that sort of best of both worlds.

So this is a good place to sort of move into demos. I’m going to ask Ash (ph.) to come up and join me, and he’s going to take advantage of some of the demos. He’s going to show you a little bit about IE9 as a baseline, and then really move into Windows Live Wave 4 and Office to start to talk about how the experiences start to bridge devices. You’ll notice, he brought along a couple customized PCs, so again, not only is the customization on the hardware, but you’ll notice some of the images on the back of these PCs and actually the way they’re set up is very specific to Dubai, and I’ll let Ash talk you through a little bit more and show off.

ASH: Thank you, Steve.

STEVE GUGGENHEIMER: Thanks, Ash. (Applause.)

ASH: Hi, good afternoon everybody. Steve showed us some great hardware that our partners have been developing, as well as some great software by Microsoft. Let me show you how we bring those together with the cloud. All right?

I’m going to start with Internet Explorer. I just want to point out a fact first. Internet Explorer is the most popular browser in the world, there. And we are making it even better. So, have you ever thought that when you want to surf the Web and you click to start the browser to sort of start surfing the Web and everything, you’re not really looking at the browser, you are looking at the website? And this is what we want, this is the first thing you start to notice with Internet Explorer 9 is the clean user interface. So, we got rid of the top toolbars, we got rid of the bottom status bars. We got rid of a whole lot of icons that we don’t need. We gave you just the basic things that you need to start browsing the Web: back button, forward button, favorites, and settings. Everything else is still there, it’s tightly integrated within IE9, it’s just then when you need it, you can customize your IE9 as you wish. So, we have also done some really nice work to integrate IE9 with Windows 7. Let’s have a look.

So I have here Amazon.com, we all know it. Notice what happens when I click on the tab right here and I drag it down to the task bar. There you go, I have an application just like a normal pinning operation of Windows 7. It behaves like an application and then I can quickly close it and launch it straight from there. Not only that, the really cool part — notice the back and forth button, they change color according to the theme colors of that website itself. And that, by the way, requires zero Web development. It’s automatically done by IE9.

I have a couple other examples. So, I have here an application for eBay, the back and forth buttons are blue. I have a pinned application for Twitter, if you tweet, and I don’t know is that pink or light blue for Twitter.

So like I said, this is automatically done by Internet Explorer, no Web development required. However, just a little bit of Web development you can enrich your websites even further with a right click on the button and the task bar, you get your JumpList, just like Windows 7, so I can quickly access Amazon’s bestsellers, new releases, the store, et cetera, et cetera. This is very easy to do and doesn’t require any time at all.

So moving on, we’ve also done some great work on performance. As Steve showed you in the video a minute ago, there were some benchmarks against other Web browsers, popular Web browsers; how about we do one right here, right now, all right?

So I have this website open, and let me go ahead and start the benchmark while I’ll explain what’s really happening here. So, this is an HTML5-based website; it’s very rich in multimedia. We have a lot of images, a lot of layers of graphics. We’re going to see towards the process of the test, we’re going to see some video kicking in, some really rich animations and so on.

So what happens, this benchmark starts utilizing and putting stress and strain on the CPU as well as the GPU. All right? So this shows us what kind of performance we can expect from the browser. Although with use this as a test, this is a real website. This is the real deal, it’s there, it’s live on the Internet, you can go ahead, check this website out, it’s a huge library of music, albums, it has videos as well, you can sort by genre, by date, by artist and so on and so forth.

So I went ahead and ran this test also on another browser, which I’m going to show you in a minute, but I’m just really talking now to fill in the gaps until we see the results of that test, which should be ready about now.

So in the meantime, I’m going to show you, I ran this test already on Firefox. This is the latest beta from Firefox, Firefox 4.0, you can download it from the Internet and the comparison I’m doing here is Firefox beta, latest version versus IE9 beta latest version, both downloadable from the Internet.

What we’re really interested to see here is the frames per second, what we’re getting from Firefox is 0.79 frames per second. IE9 should be done by now. So, we’re getting 26.52 frames per second. According to this test (applause) IE9 is 25 times faster than Firefox in this test.

Go ahead and try this when you go home or at work. There are about 40 other tests you can try compared with whatever browser you prefer and do this for yourself. All right? What happens is the PC uses the — we access that power. So, speaking of power, did you know that only 10 percent of the PC’s power is used by today’s websites and browser, only 10 percent? We work hard with our partners to access that extra 90 percent from the GPU and not only accelerate the browser, we turbocharge it.

So moving on. What else do we do with browsers? We search. Let’s go ahead, I’m talking about Bing. This is our Bing website. Everybody must have seen it or use it. So, I’m going to go ahead and type — let’s say Dubai. I’m going to search for Dubai. And this is what you get. So, in terms of relevance, in today’s market and today’s technologies, there’s not really that much of a difference in terms of relevance. It’s going to be a very small margin of what kind of results you get with search. So, the area we try to compete in is the actual user interface.

Go ahead and try this search on a different browser, you’re probably going to get maybe a couple of pictures and a lot of blue links to go through. But I’ll tell you what you don’t get. You don’t get demographics, you don’t get weather, you don’t get attractions. You can’t really explore the city from within the stage, you don’t get neighborhoods, you don’t get a slide show. So, speaking of slide show, this is not just random images pulled down from the Web, these are licensed for us to use. These are licensed images taken by professional photographers to give you a better and richer experience when you want to basically look at pictures regarding your search.

So not only that, let’s go ahead and go back to the page. So, like I said, with other Web browsers, you probably get a lot of blue links that you have to stroll through. We also provide you with small applications within the browser. So, it’s like having a mini app from within your search page to give you a preview of that page just to avoid clicking that back button all the time.

Go ahead, when you’re home, go to Bing and search for travel and check out the travel application that you get. So, now that I have Bing and IE9, I’m ready to move on to my personal cloud. So, let’s go check out my Hotmail.

So here’s Hotmail. I received that e-mail from my friend Harry. We were out with the boys yesterday and we took some real nice pictures. Speaking of pictures, do you know that the number one tool for sharing pictures with friends is still e-mail? Yeah. So, we make that even look better, but that’s not my point.

So I can have a closer look and open a slide show to have a closer picture — to have a closer look at the pictures, but apparently it looks fine. Let’s go ahead and download them. So, I went ahead and downloaded them earlier to my PC and I’ll just fire up with Windows Live, we have Windows Live Photo Gallery, I have a clear view of my photos.

So these are the photos that Harry sent me. So, they look good and this doesn’t really look good, this doesn’t look good either, everybody is distracted. This looks good, I just wish my friend, the fourth friend, was there in the picture. With Windows Live Photo Gallery, we can do something about that. So, let’s go and check it out.

So what I’m going to do is I’m going to select these pictures and I’ll create the perfect picture from all these photos. So, we’re doing a quick fuse of the photos right now, and this is the picture I’ve selected. It looks good. I’m going to quickly draw a rectangle around the area I want to fix. So, I want to include my missing friend right in here. And I select him from the missing picture. So, this looks good, boom, magic. (Applause.)

Let’s go ahead and save this and we can make it look better. I know he’s missing his feet, but that’s easy to fix. So, here we go. Apply it, and there you go. Beautiful picture. (Applause.)

I like it. Let’s go upload it to my Facebook. Okay? So with just one click from within Photo Gallery, I can quickly upload to the most popular social networking sites. I can upload it to SkyDrive, which is, by the way, part of the Windows Live family as well, I upload it to Facebook, YouTube, Flickr, and so on.

So let’s go ahead and upload it to my SkyDrive. So, I just click on SkyDrive. It should pop up now asking me my credentials and so on. So, in these situations, some we’re I think — okay, we’re running. Internet might be a little slow. So, you can either upload it to an album that you already have, or just create an album anyway. So, I’ll call it Friends2, just any name, and I’ll publish. That’s it. Two clicks and publishing to my favorite social networking site.

So coincidentally, I have my Windows Live account connected to Facebook. So, once I upload it to SkyDrive, it takes a couple of minutes to connect to Facebook so my friends will see it on my page; they can interact with it, comment with it, and everything. Let’s go ahead and check out Facebook.

So here’s my Facebook. Let’s refresh that. So, there you go; we have the picture over here already. And in the meantime, I want to show you a couple of other things. So, recently, we announced a partnership with Facebook that allows you to interact even with Office documents from within your Facebook page. So, as you can see here, I got some documents, I got an Excel sheet, and this all worked in Office Web Apps.

If I click it, it will quickly launch; you will see in a moment over here Excel Web App; so this is our new Web apps that we launched with Office 2010. And you will be able to see Excel in front of you. This is just HTML, so it uses just any browser. It’s free, more importantly, and it’s the interface that we all know about. Of course it’s a scaled-down version of Excel. I can do the normal editing that I can do.

So let’s go ahead and edit this document, and I have it already open over here, so I’m going to do a quick change and change this value to let’s say 20. This is offline; let’s try this one more time, edit in browser, and here we go. I’ll change that and notice the Sparklines; they will automatically change, as well as the graph that I have down there changed as well automatically.

So let’s go ahead and save this. So, File, you just save it like the normal Office application you’re used to. Okay. And what I’m going to do now is I’m going to take it from the cloud, pull it down to my local machine where I have the full Office installed and do some advanced editing on it. So, let’s go ahead and open Excel and I have it here — File, and here is the document, which I just saved. Now, as you can see, it will say contacting — it’s actually contacting SkyDrive.

Speaking of SkyDrive, you have 25 gigabytes of free space, for free. So, you can store all your photos; it’s a good place to back up your documents and photos and everything. Now, it’s contacting there — using my Windows Live username and password and pulling this document down here to the local PC so I can do a little bit more advanced editing.

It’s taking a bit more time, so I’m just going to open it here. I have it here, I can do some advanced editing. What I’m going to do now in this case, I’m going to copy that chart and I’m going to paste it in a ready-made PowerPoint presentation. So, let’s go and paste over here. We can make this look better and we’ll just put it down here. What do you do with PowerPoint presentations? We share it and have meetings and have presentations and everything.

So I’m going to go ahead and show you one of the most beautiful features I’ve ever seen in PowerPoint. It’s our new broadcast feature. So, if I want to share this with people, I click broadcast, and it’s very simple, just hit the Start Broadcast; what happens is it uploads it again to the cloud, to my SkyDrive service, and sends a link out to all the people that I want to share it with, and they just simply click on the link and it will open on their browser using our Web Apps as well. And then you’re the one in charge of that show. You’re the one who clicks to move the slides, you’re the one who ends the show and everything, instead of just sending it by e-mail and you’re trying to — no, no, not this slide, the slide before — and so on.

So let’s go ahead, I’ll copy this link and send it to myself. Let’s go ahead and select a new e-mail, send it to myself really quickly over here. Link to PowerPoint, paste the link, and send. The beautiful thing about this is that this can work on any browser, and I mean any browser. So, imagine yourself stuck in traffic or stuck in the airport and there’s a meeting going on and you can dial into the meeting and listen to the call, but you’re not really interacting with the meeting because you can’t see slides. I can share this with basically everyone. So, you have a phone, it has a browser, you can connect and watch that presentation as well.

So I have a phone right here. Let’s switch to phone, please. Over here, so checking my e-mail, I’ve received a link already, and let’s open that. Over here I’ll start the broadcast. now it’s connecting. My PowerPoint presentation. (Applause.) I’m fully interactive with the meeting, I’m listening to the call, I’m the one who changes slides.

Thank you very much. That’s my cue; Steve will show you some more features with Windows Phone, and thank you very much for coming. Back to you, Steve. (Applause.)

STEVE GUGGENHEIMER: Good job, Ash, well done. One of the core things that we’re working on there, then, is starting to show the experiences. As Ash went through the demo, one of the things he didn’t talk about with Windows Live Wave 4 is something called Sync.

What Sync does is it takes all of that information, your photos, any documents you want, your contacts, your calendar, and allows you to sync them across any of the PCs. So, what happens now automatically in the background whether you’re on the go or you’re at home, your computers can share the same information; that way you don’t have to sit around and copy photos from one machine to another. If you upload, for example, to SkyDrive and maybe you’ve given your mom an account for those certain photos, she can get them automatically; it makes it much easier to keep all of your computers in sync, and over time, all of your devices in sync. So, that notion of having the experiences bridge devices starting with the computers is something that we’ve been working pretty heavily on.

Now, part of that, over time, is to extend beyond the PC to include the phone. And Ash started the first part of that with a little bit of the demo on the phone of Office, right? Office having access to that same capability or that same information.

So let me extend a little bit more and we’ll spend just a couple seconds here on phone, and then we’ll look a little bit more at the phone.

One of the things we really focused on with the phone was trying to find a design that makes it easier to get sort of in and out of the phone, because we see more and more of our time is spent looking at the phone, so how do we make things easier to do and do more quickly? How do we make certain things done automatically in the background and then how do we build sort of richer hubs or richer experiences for those things we do the most? Whether it’s e-mail or photos or music or people, how do we make those things much, much deeper and much, much richer?

And when you’re designing a phone, there are sort of two ends you can go on. You can actually do a vertical stack from end to end, everything from hardware to software and do it all in one level. You can also build a phone that’s completely open, which is give somebody an operating system and let them go build everything they want. Neither of those work perfectly. If you do it completely open, you get all kinds of devices, but for end users, nothing is consistent and for developers nothing is consistent.

If you do it all vertically, it’s great, but then there’s no ecosystem. So, you need a balance between something that users know what they’re getting and developers know what they’re writing to and have some consistency and open enough that partners — both hardware and software partners and operators can build on top of that.

So let me pop over to the phone real quick and pick up where Ash left off just to show you a little bit more. What we’ve done is we’ve tethered this phone to the PC, but you’ll notice — let’s go ahead and bring the phone up — number two. When I put my finger here, you’ll see it move around, and so as I slide up and down — so I’m actually driving the phone, but we’re able to output on the screen.

If I turn it off real quick and I’ll turn it back on, what you’ll notice is it gives me the information up front. If I had any new e-mail or instant messages, it would tell me along the bottom. It tells me what my next meeting is and what time it is and you can see I have a picture of one of my dogs on the screen. I turned it off again.

I’m going to go ahead and unlock it. And when I go in, you’ll notice I can sort of scroll up and down. There are all kinds of what we call hubs, right? And these are sort of the icons that we’ve had that we’ve sort of organized the way we want. So, for example, if I wanted to take this gadget, move it up, I can simply move it over there and re-pin it, right? So I can sort of build the phone and set it up the way I want to and sort of organize my phone so it’s set up the way I want.

And then of course the basics of phone call and instant messaging, those are all these. You know, Ash took a look at e-mail. If I pop into e-mail, of course it does that really well. We can scroll back and forth. We won’t go look at all of Ash’s mail right now. Who knows what’s in there. But then we take some of the experiences that are sort of more consumer-oriented; I’m going to take people. And with people, I can quickly sort of look at my list of people, I can do a search, you know, try and find somebody. But if I scroll to the right, what it’s doing is it’s actually updating from online. And so you’ll notice in what’s new, we see that seven minutes ago, Ash uploaded his photo on Facebook. And so where he did it on the computer, because of those seamless experiences — actually, it’s going to try to get me onto Facebook, which we don’t want to do — but because of those experiences, what it does is I’m automatically getting that update.

Conversely, if I took a picture with this phone and I said, “update” it will actually send that photo up to Facebook, SkyDrive, wherever I want. So, that notion of having consistency across devices is getting richer and richer. He showed you the Office version, this here is the people version, right? And so now we’re getting that capability to sort of go back and forth.

Let’s take another example. I’m going to go down to music and video. In the music area, right, it’s using the Zune player. So, it takes the same Zune player that we’ve had for a while, the software that runs both on the PC and on this device, and allows me to have those in sync, and I can sync those wirelessly. So, again, those rich, end-to-end experiences are both immersive on the device, but consistent. I don’t have to redo it each time I add a song or I add a new video or a new pictures.

If I go into Xbox, I haven’t loaded up all the Xbox pieces on this, so my Gamertag didn’t update, but you’ll notice it’s got all the games in here. Ultimately, it will have my persona from the game up on top. So, it would have my same character that I sort of built for myself, my same avatar points. I can actually play online back and forth between myself and someone else. Now it will be more of the games checkers, chess, et cetera, it’s not going to be “Halo” across the Web on as phone yet, but over time as that network and bandwidth increases, we’ll see more and more of that capability.

A couple of other in the sort of rich area. Pictures is a very rich area. If I go into pictures, there are sort of three places I get pictures from. I can take pictures with the camera. As you can see, you know, Ash took some pictures along the way; blow those up. These are the guys working on the system getting ready to go.

If I go back the second set of pictures, I synchronize with my file. So, here’s a set of pictures that came off of my computer that I just downloaded onto this phone before I came for purposes of the demo and I can scroll through — this was a trip to China not too long ago. And if I go back again, the third area is pictures off of the Internet like that Facebook picture. So, if we go down here to profile pictures from mobile updates, I don’t know if it’s updated yet, it hasn’t gotten in there yet, but we saw it on the Facebook side. Ultimately, if I have a set of live folders or Facebook folders, they’ll update here as well as we saw in that Facebook section.

So this connectivity of experiences — Office, pictures, music, people — that synergy across devices is getting richer and richer. Ultimately, you know, this screen will add into the mix. So, as a user, I really want a great phone, I really want a great TV, I really want a great PC, but I want certain things to bridge across, right? I want photos, if I want them, music, calendar, people, schedules — I don’t want to have to re-enter my contacts all the time, and making that seamless and easy, that’s part of the innovation drive we’re all working on.

And of course the last bridge across that is going to be business-to-consumer, so as a user, I can separate both my work and personal life, and where I want, I can sort of help bring them together as well. So, I’m not trying to manage two different things.

Let’s switch back to slides. I want to use sort of the server section as the bridge between sort of what we’ve been discussing and some more on the cloud side of the equation. There are a set of products that are sort of built for the home, right, for education with MultiPoint Server, for small businesses with Small Business Server. All of these are getting enabled by the cloud, so ultimately the home server will not only back your content up in the house, but it will also back it up in the cloud. So, you have two levels of redundant backup to make sure you have all of your information safe and secure.

Small Business Server will ultimately pull in capabilities from our online Office offering. So, again, you’ll have capabilities both locally and in the cloud. If we take a look at the cloud from an enterprise or a business side, in particular on the infrastructure, you know, we’ve been doing this for a long time. We’ve actually been building very large data centers since 2005 and services for longer. So, we’re actually on our fourth generation of data center and we’ve gone from sort of single building, rack-based servers to very, very modular data centers that you can put together very quickly, bring up, bring down, and run at very, very large scale. When you take Hotmail and you take Bing and you take Messenger, you know, 370 million users for Hotmail, 300-something million for Messenger, we run collectively I think the number one or number two largest set of websites in the world. And so being able to run at scale teachers us a lot about how you build infrastructure.

In terms of the infrastructure, then, if you look traditionally at IT, there’s everything in a business environment from the applications to the data to the runtime, middleware, OS, et cetera. And as a business, you manage all of it, right? You have a set of servers, you might even have your own data center, you run your applications — sometimes you run all your applications on individual servers, sometimes you mix them.

With virtualization, people start to think about infrastructure as a service. So, they start to say, hey, I’m going to take some of the applications and I’m going to run them on the same machine through virtualization, or maybe I’m going to go to a hoster and have a hoster allow me to run my applications on their systems. That’s sort of one level.

The next level is platform as a service where I actually want to not just sort of run my apps as they are, but I want to have a platform for running applications as a service in the sky. And then ultimately, there’s software as a solution, I want to run everything on the cloud, the application, the data, the infrastructure, the platform, all of the pieces.

And so as we look at our offerings, one of the things we’ve been doing is taking that marriage of the cloud and the infrastructure and the software and bringing them together. So, as software as a service, Office is a very good example. I have Office today that I can run on the machine, right? We saw a little bit of that earlier, but we also have our online services. So, I can take the Web Apps version and just use those.

I can ultimately take SharePoint and I can use SharePoint from both a Web-based application as well as online. And so one of the things we’re doing is taking our assets and making them available both through the cloud and locally.

So, there’s something called our Business Productivity Online Services. You can buy the same quite of server and client capability that we offer today for e-mail, for voice with Unified Communications, for SharePoint for sharing, and you can do it yourself just as you would today, or you can get all of that as a service, either run by Microsoft or run by our partners. So, we’re starting to build that bridge back and forth.

At the infrastructure level, if I go another level with platform and application, with some of our offerings, Azure; so one of the things we’ve learned from building four generations of datacenters is how to run datacenters really efficiently, because at the end of the day you’re basically running compute and storage at scale. And unless you’re really good at it, and you really run at scale, you’re not going to be cheaper than the next person. There’s only a few companies globally ultimately that are going to run datacenters at the scale necessary to make that a service where you can run it cost-effectively enough to offer it to organizations so it’s cheaper for them to run it on your back end versus themselves or someone else.

So, we take that infrastructure as a service, we then marry SQL Azure or some of the database capabilities and ultimately a fabric controller that will allow you to run applications on-premise or in the cloud and go back and forth seamlessly.

Now, that’s where we want to get to; we’re not there yet. We can definitely do the platform as a service, we can definitely do sort of infrastructure and data as a service. Those are easy. You can go build your apps and run them on Azure all day long. We have lots of partners we work with. Ultimately, if we do this really well, you’ll be able to take your applications, run them in your datacenter, right, in your business cloud or the cloud that you have at work or datacenter, whichever you’d like to call it, or up in the sky and go back and forth. If we do a really good job, then management, development tools, right, scale, that will allow you to go back and forth.

And this becomes important. There’s lots of businesses that have applications that peak and go down, right, based on seasonality, based on usage. There’s lots of times where you want a lot of scale in the beginning, or you want very little scale in the beginning and the ability to scale up. That ability to outsource some of that as a developer and as an IT department are very valuable.

So, having the breadth from I’ll say software as a service, taking our assets, taking our consumer applications with Windows Live, taking our business applications with Office, and then taking our infrastructure and platform capabilities, Windows Server and SQL, and making those all available between both the cloud and on-premise is the direction we’re going in.

So, part of that hardware-software innovation is something that we carry forward — and I’m going to for time skip that — is something that we carry forward relative to the offerings and the innovation that we’re all driving.

Now, a colleague of mine, Oliver Sharp, is going to spend a whole session on cloud computing tomorrow, and so if you’re interested in sort of cloud computing from the enterprise and business side, Oliver is an expert. I’ve worked with him for many years. He was on the same flight with me. And he’ll go very deep, and you can ask him lots of questions relative to the work we’re doing with Azure, with SQL, with all of the platform elements we’re building, basically platform as a service offerings for you as a partner if you want to use them, or as an end user.

So, I want to thank you for your time today. Part of what we tried to do was talk about platforms and experiences, the work we’re doing to make sure all of these devices and many, many more from all of our great partners run really well and they do a great job, and that as end users we’ll have experiences that bridge those, both consumer services and business services; that the cloud, whether it’s my personal cloud or a business cloud, is becoming a part of what all of us work with and something we’ve been working on for a long time.

And I spent a little less time on the business side of it today, but Oliver is going to cover that tomorrow. There’s lots of new business models that go with all this change, and that’s an area that we all think about.

Microsoft has invested in all of this technology. We spend $9.5 billion a year on R&D. One of our goals is to help make sure this industry, ICT, continues to move forward, and there’s opportunities for all of us as businesses and consumers.

We focus on consumer and commercial alike, and we really work hard on building bridges. Software is the glue that helps sort of from hardware to network to content to user, how does that all come together, and the same thing on the business side.

So, we really try and build bridges, and hopefully through all of these sort of investments and innovation that we do there’s opportunities for all of you, either to run your business better, as an end user to get more sort of use out of the tools and the technology or more fun out of them, or as a partner to make sure that we help you drive your business better.

So, I want to thank you for your time today. We have not all of it but almost all this technology in the booth, which is in Hall 7, and then D71. Love for you to stop by, ask more questions. We have experts from our partners there, as well as our team.

And with that, I thank you for your time, have a great show, and I hope this was useful for you. Thank you. (Applause.)

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