Steven Ballmer: “An Opportunity You Can Not Miss”

Remarks by Steve Ballmer, CEO of Microsoft
Bogota, Colombia
April 26, 2010

STEVE BALLMER: Well, thanks. I’ll make a deal with everybody. If whoever turned those lights up turns them up just a little brighter – I’ll see if I have any say here. Can we just make the lights a little brighter? Ah!

Welcome. Very nice to actually see you now here today, and it’s a pleasure for me to have this opportunity. I’m honored that you would take the time first thing in the morning. I don’t know the protocol very well here in Bogota, but in most capital cities starting at 8 a.m. is quite early. So, double thank you for being here today.

My last trip in Colombia was unfortunately longer than it should have been. I was here 13 years ago, January of 1997. I remember it very well. I hit one of the customers in the head with a baseball, because I’m not a very good aim. There are no baseballs for this day here, and I think we’re all fortunate. The customer recovered, got a few free copies of Office. There was a happy ending to the story.

Certainly the country was also quite different. I arrived late last night, but even in the few short hours that I’ve been here, the change in the environment from a safety and security perspective, let alone all I’ve been able to read about the economy, the business, the progression of industry, the advances we’ve seen in our own business here in Colombia.

I’m excited to have a chance to be here to kick off with this event, and really get a chance to meet a number of the interesting entrepreneurs doing exciting things with technology here in Colombia.

In our business – in our business the world looks very bright, very exciting. The opportunities are boundless, which in a way is really quite an amazing thing to say.

I think if you were to study the history of commerce, you would rarely find an industry that has been able to continue a pattern of innovation for as long as the information technology industry has currently been going. First computers were invented 60 years ago, roughly 60, 65 years ago, and yet we look out the next five years, the next 10 years, the next 15 years, and there is no shortage of innovation. Even the automobile industry in its wave of innovation at the early part of the 1900s didn’t have a run of 70 or 80 years of intense and exciting and creative innovation.

But we look out and we see nothing but incredible interesting opportunities, and the kind of opportunities that people see, they think about and they say, yes, I know how I would use that myself, I know how I would use that in my business.

And I thought maybe what we’d do today is show you just a short video clip to try to get you to sit with us and envision some of the things that are going to be possible in the next five years or so. So, if we could roll the video, please, and probably we should turn the lights down for the video.

(Video segment.)

STEVE BALLMER: There’s sure a lot in that video, and the goal isn’t to try to sort of teach every technology or get you imbued with every advance, but the kinds of things that we showed, the kinds of flexibility in the hardware, the kinds of enhanced realties that you can get using essentially computer overlays on top of real life pictures of the world, the ways in which you can interact with people, real time translation, real video conferencing that spans the world, all of these technologies are within the realm of the possible over the course of the next five and 10 years. Some of them will come faster, some of them will take more time. Probably we’ll look back five years from now and say, yes, we’re leading a life that’s much closer to the one depicted in the video.

I remember probably six or seven years ago, it was early during the run of this TV show on FOX that I’m pretty sure has a global footprint called 24. And we were watching, my wife and I, this show, and she says, the computers, the technology, the smartphones, she said, boy, that’s really crazy, you guys will never give us this stuff.

I think now they’re struggling, the people who write the TV show, to make the technology – make their contrived technology stay ahead of our real technology, which is really, if you will, quite incredible.

And this is a future that we are very excited about. We’re driving very hard. We’re investing in very broadly. And whether it’s Microsoft or other companies, it doesn’t come all at once. It comes with a series of product launches this year, next year, the year after. And in each and every one of the new products that comes to market you’re going to see really interesting and exciting advances that take us to this future.

In our own case this is the year in which we launched our Windows 7 product, the foundation on which we will build this next generation of technology. Nobody was sitting there waiting for things to boot up or take time or blah, blah, blah. There was a great assumption everywhere in that video of security that just works. Some of it, at least in the video, was biometric with thumbprints and the like, but a strong foundation on which to innovate.

This year, we’re launching a new product we call Office 2010. It’s the next-generation product from us to help people communicate, collaborate, be productive, at work and at home.

What you can do with that product for videoconferencing, for voice and Web conferencing is incredibly stunning.

The way you can bring people together from around your company, from around the country, from around the continent, the globe, is incredibly stunning when people take a look and see the new capabilities.

The increases in productivity that people feel, another big step forward.

My favorite thing that we’re pushing the envelope in, in Office 2010, is really giving people the ability to process information. A lot of your businesses, people want to take in large amounts of data, and then let the software do some analysis, find out where we’re seeing problems in the production run on this product. Let’s take a look at all of the transaction data from all of our stores, and really see if we can’t spot who our best customers are, and what are the right offers to get them. That whole business intelligence phenomena is one that we’ve really pushed forward in this most recent introduction of our Office product.

Bing. Bing is our search engine. And we are a small player to big Google, but we see so much opportunity to revolutionize the way people actually get things done in their digital lives.

Today, if you type in “flowers” to a search engine, 90 percent of the time you’re actually trying to buy some flowers. Do we actually help you buy flowers? No. We need to guess what did you mean, what did you want to do, and help you take action, not just help you find 10 links that you can go search through yourselves to find out which one might actually send some flowers for sending to your husband or to your wife for your anniversary or other celebration.

The notion of really understanding what the user means and helping the user take action, that is a Holy Grail. Because if our world remains the world of file, open, take explicit action, we’re never going to get the full way that we need to get in achieving this vision.

Perhaps for me the most exciting product we’ll bring to market this year, and it really fits in this context, actually comes out of our videogaming group. You might say, why would I talk to a group of CEOs about videogames? Because the technology actually is very general purpose, and we’ll see come into the rest of our lives pretty soon. It’s a technology that we call Natal. It’s a little camera and microphone that sits on top of your TV set. And if you want to control the TV, you don’t go get some remote control or big fat gaming thing. If you want to look through TV channels, you just gesture, and the computer recognizes your voice, it recognizes your gestures. You want to see the next sports program, you go like this, it will cycle you through. You want to play a game and you need to jump, you jump. I’m not going to jump too hard; a little bit too high altitude here in Bogota for that, at least for me. But it recognizes you, it knows your voice, who you are, your gestures, what you’re doing.

And if you think about that in a lot of settings, why am I carrying this thing? I’ve already forgotten three times where I set it down. I should just be able to go like this, and the camera should recognize that gesture and control the slides for me, and let these kinds of things freely happen.

This is one year of innovation from one company in the information technology industry looking to move the boundary forward in some pretty exciting ways. But for all of us and for all of the industry participants that means a lot of innovation that I think will have significant impact in your own personal lives, as well as in your companies and your professional lives.

A lot more coming, but I want to give you a little perspective on it, specifically from the standpoint of people in business.

As I speak to all of you today, I know you have two hats on. One hat is I am a CEO, CIO of a major company in Colombia. My job is to drive productivity, innovation, business agility, drive down costs, all of those things. And I want to talk to you about that persona, because in some senses a lot of what was in the video, a lot of what we talk about in the individual products appeals to your personal persona, because you’re all users of these products.

Everybody has their favorite set of products and things they like to do and advances that you’d like to see. And in the world we live in today, there’s no firm line between those things. There’s not an enterprise IT set of technologies and a consumer set of IT technologies. People span back and forth between their lives. If I asked you to pull out your cell phones and show them, I’m going to guess that you use them both for personal business and for your professional life.

And so as a company we focus on building technologies that will span your entire life. Whether it’s phones or PCs or camera, and voice-based input, we need to span both.

But when we talk to you about the needs of your business, I think there are a few focal points that people talk to us about the most. How do I get, whether it’s in dealing with my employees, my suppliers and vendors or my customers, how do we drive agility? How do we actually let the business move forward more quickly? How does IT help us innovate in our business? How does IT facilitate the introduction of new products and new services? Or how does IT at least not hinder it?

So much of what people do these days, whether it’s exploration for natural resources, whether it’s intelligent farming, whether it’s the kinds of things people do in terms of new financial services products, good or bad financial services products but new financial services products, information technology is key, not just of reporting the numbers but in driving business agility, in driving the relationship with the customer, and in changing that in significant ways.

The second thing people talk to me about is costs: How can IT help me drive down my costs? How can we reengineer our supply chain to save money?

Third, empowerment. I think the general view is now quite high that people really are most companies’ No. 1 asset. So, how do you give people the information so that they can make literally thousands of discrete decisions every year that improve the profitability of your business? How do you give the teller in any bank branch the information to sell one new product to somebody who’s sitting there right in the branch, just give them a little more information and let them make a good decision? How do you give people the right decisions, whether it’s for pricing or cost?

And last but certainly not least, a lot of the dialogue in business from an IT perspective is how do we make IT itself more efficient.

For most CEOs IT is a bit foreign. They didn’t grow up running IT. And yet IT is a significant percentage of the capital expense budgets and the operating expense budgets of many companies.

Even in our own case we have a lot of people who understand IT, but the numbers are large. We will spend a billion dollars, over a billion dollars this year on IT, out of a total expense base of about 25 billion. So, it is not insignificant. It’s not insignificant in any of our businesses.

And there are so many advances coming in the next few years that literally will drive up the productivity of IT. You’re going to have decisions to make of whether you choose to save money or reinvest in new IT or other projects, but the technologies and promise, particularly that comes out of something that is being much talked about now called cloud computing, the prospect is to both reduce costs and improve the agility of IT operations.

Today, we are very committed as a company to this major transformation to the cloud. It’s a very amorphous word. When people talk about cloud computing, it has something to do – I’m going to define it for you briefly – but it has something to do with the Internet and using the Internet as a fundamental part of the infrastructure for computing, not just what you do in your own datacenters but what goes on outside of your datacenters being applied inside your company. It has application both to consumers and to enterprises.

It creates a lot of new opportunities and responsibilities for the technology community. If we’re going to be running some of your IT, we have to run it responsibly with the right security, with the right privacy.

But it also creates new opportunity. You will let the computers operated by companies like ours do things for you that you have to pay your own staff to do today, and there will be a cost savings implicit in that.

The Internet will be a place in which learning, the systems learning about people and people learning from the systems, continue to improve. Of course, that’s kind of obvious in the search case or the business intelligence case.

I spent last night for dinner in Sarasota with the former CEO of Proctor & Gamble, A.G. Lafley, and he just retired as CEO maybe four or five months ago, and he was just amazed. He’s sitting there telling me stories. He says, now that I’m retired, I have to do my own research on the Internet. I said, oh, that’s good, I like that. And he said, you know, it’s amazing how quickly you can learn about any given topic by going to the Internet, and yet it is still an inefficient process.

I did this myself recently. I wanted to find out, since there’s a big debate around the world about health care costs, how much money per person is spent in various countries, how much of it is spent in the last year of somebody’s life, and just kind of understand how much is spent on older people and younger people. I could get the answer on the Internet. That answer took me about six hours to really feel good about.

Of course we can do better in using technologies that learn, that learn about the world and that help you learn. That’s important.

The way people interact with each other socially and professionally continues to change. You know, every year or two or three, there’s a new way to communicate. And it turns out none of the old ones go away; there’s just a new one. We had voice calls. Then there were faxes, and then we got e-mail. And after e-mail we got text messages and social networking and videoconferences and desktop-based videoconferences and on and on and on. And nothing goes away.

Cumulatively though we rebalance our time, and there will be new modalities of how we want to interact. We won’t travel as much. We will feel like we are virtually together, as you saw in that video, because of the intelligence that lives in the so-called cloud.

The devices, the computers, the phones that we actually use, they’re going to get smarter. Did you see that little fold-up cell phone that the lady was using in the video? Pretty smart device right here.

Some IT people will tell you everything is going to get dumber, and everything will be controlled from the center, from the Internet. There’s going to be a lot of intelligence in the devices.

My favorite was the picture that they were taking and then you were seeing. You know, I point a camera at you and the camera tells me your names and who you are by going out, checking a database, bringing that information back. You could say, OK, that’s a violation of my privacy, don’t do it, fine, we’ll solve that problem before the technology gets introduced, but this is the direction in which things will head, smarter devices.

And the last but not least, the hardware and software that underpins the way things get built are improving in order to support the kinds of large scale applications and storage of information that’s implied by this world, and there’s a lot of technology advance at that level.

At Microsoft we say we’re all in when it comes to the cloud. It makes a very nice pun if you stop and think about it. I don’t think you’re supposed to have your head in the cloud in general, but on this one it’s the most important technology advance, both for the consumer and for all of you as businesses.

Some of you will embrace it right away. Some of you will say it will take us a year, three years, five years. Some of you will move quickly with some of what you do with your IT infrastructure and move more slowly with other parts of your infrastructure.

But when your IT person comes to talk to you and says, I’ve got an idea and it will require us moving to the cloud, probably they’re being very forward-looking. There’s a bunch of questions you have to ask to make sure they’re being thoughtful.

If they’re not coming to you to mention something about the cloud, you should probably give them a little nudge and ask them when are we going to hear about the cloud here inside of our own company.

Today, we’re launching here – or just last week we launched here in Latin America our first cloud services for enterprise customers, something that we call the Microsoft Online Services, which allow corporations to securely get calendaring and e-mail and collaboration and other capabilities to workers here in Latin America and around the world. This is a part of the Microsoft Office family of products.

Many of our customers say we don’t need to run our own e-mail systems anymore or other collaboration systems; you run them, Microsoft, you deploy them, you put in the capital expense. If something bad happens in my datacenter, I don’t worry about it, because this is somehow covered in multiple Microsoft datacenters.

Earthquake in Chile, we had one of our customers that had been around for over 100 years, a sugar-refining company. Their datacenter went out. And because they were in the process of migrating to these services, we were able to bring that infrastructure back up very, very quickly, and that was a very important example of why the move to cloud services.

Here in Colombia we’ve been working with (inaudible), if I pronounced that closely enough that you could at least understand who I meant, who is moving with us in this direction.

Coca-Cola, the Coca-Cola bottling company, Coca-Cola Enterprises, is moving this direction.

You’re not a pioneer if you move to the cloud today. We have 3,000 customer trials moving in this direction in Latin America, and 500 alone here in Colombia, as we speak today. This is a direction that I think you should be very open to as it comes from your information technology folks.

If I was going to summarize from our own perspective as we look at this incredible opportunity, and we think about the relationships we have with your companies, I think they’re anchored in five things.

No. 1, we’ve got to be delivering great new products and services to you. There’s no substitute for product. We can get up, we can talk, we can have consultants, but we need to continue to push the pace of innovation that will allow you to practically and economically realize the vision that we talked about.

We’ve made the big technological transformation in our own product set. We’ve bet – and this is important in our industry – you have to bet on a future bet. Our bet is the cloud.

We’re innovating in the broadest set of areas: phone software, PC software, TVs, servers, infrastructure for building up the applications that run your business, productivity and communications software, search and information management software, and entertainment. There’s nobody investing more broadly. And whether you are trying to change your own IT operations or whether you are trying to change the relationship you have with your customers using information technology, all the way including the consumer watching the football match in front of the TV set, no company is better equipped to partner with you and help you make these important investments.

We’ve got great people, including a great staff here in Colombia where we’ve been doing business for over 15 years. We also have a partner network of hundreds of independent companies trained and educated in our technologies who are doing business here in the Colombian market.

And last but not least, we’re making – it says balanced returns. I should have said balanced investment. We’re investing in the future in a way nobody else is. Our company will invest this year alone over $9.5 billion in research and development, which is larger than the R&D budget of any other company, not just in the information technology industry, but any other company in the world.

So, our goal is to help you realize the opportunities to improve your own lives, to improve the agility, the empowerment and the cost structure of your businesses, and to do that with the kinds of technologies and scenarios that were really highlighted in the opening video.

I see Colombia as a place in which innovation is happening. Certainly there is leading edge adoption of information technology in the country, but we also see important investments and opportunities to collaborate on innovation in biodiversity, in the creative industries, in the alternative energy areas.

Biodiversity and alternative energy here in Colombia I particularly want to highlight. I think this country will lead in some of those areas. And yet the speed of scientific advance in those areas will be driven by the quality of the information technology infrastructure that supports it.

The best way to speed up scientific advance today is to speed up the rate of experimentation. The best way to do that is with simulated models in the virtual or computer world.

And so as this country pushes forward on a number of its leading industries in innovation, we look to partner with our research and our development teams and our local country organization to help be part of the innovation processes which are driving industries here in Colombia and around the world.

With that, I’m going to wrap. I want to say thanks again so much for your time this morning. We have our Q&A session coming up. But I particularly also want to have a chance to say thank you for your business. Everybody in the room is a fantastic Microsoft customer, and certainly I for one am very, very appreciative of that. So, thanks, and I’ll look forward to the questions and discussions. (Applause.)