Tami Reller: Worldwide Partner Conference 2011

Remarks by Tami Reller, Corporate Vice President and CFO, Windows & Windows Live
Los Angeles, Calif.
July 11, 2011

TAMI RELLER: Thank you.

Well, thank you, Steve, and good morning, everyone. I’m so thrilled to be here. I always deeply value the opportunity to come here and talk to our partners about my favorite subject, Windows.

So, given our limited time together this morning, I want to focus on two things. First, I’ll share with you the sizeable opportunity we have with Windows 7 in the coming year. I also do want to provide a brief recap on the “Windows 8” news that we have shared to date.

So, let me start with the momentum and the opportunity right now with Windows 7. So, last year I shared with you that, at a rate of seven copies per second, 150 million Windows licenses had been sold in the first seven months. That’s the fastest, strongest start in the history of any OS. So, let me put the 400 million copies of Windows 7 that Steve mentioned earlier into context. That is three times the pace of Windows XP. Today, 27 percent of the Internet runs Windows 7.

And, at the center of all of this success, all of this momentum is you, our partners, partners across the hardware ecosystem, our retail partners who delight consumers every day, ISVs and developers, solution partners, distributors, and resellers. Thank you. We are so grateful for the strong partnership that we have forged, first through the successful launch of Windows 7, and now as we continue on the path of helping our customers deploy Windows 7 across their enterprises.

That partnership will be the key to continuing to deliver the value of the Windows 7 PC experience to even more customers and even more desktops in this coming year. So, let me share some of the impact you’ve had on customers with your efforts on helping them deploy. Through your work, nearly 90 percent of customers are committed to Windows 7. Already a quarter, a full quarter of all desktops are fully deployed on Windows 7. And there are companies like General Motors who are just inches away from 100 percent deployment across all of their users. That’s almost 80,000 desktops.

For CIOs and IT professionals, upgrading to Windows 7 means several things. First, and perhaps foremost, it means lowering costs. Customers have consistently reported to us and to you that upgrading to Windows 7 has resulted in material cost savings, especially in the areas of PC management and application deployment. Security has been another important benefit and something that companies worry a lot about, especially as workers become more mobile, and as workers become more mobile, more devices are lost. Windows 7 reduces this risk.

Another Windows 7 capability that our customers often talk about — and I know they talk about this with you, and they prioritize it — is virtualization. When I talked to the team at Ford Motors recently, Eric Carson there, who is the senior management working on the deployment at Ford, made sure to emphasize the importance of virtualization in the actual migration process at Ford. And, for Ford, virtualization was the deciding factor for moving to Windows 7. That’s for IT professionals and CIOs.

At the same time, Windows 7 end users are the happiest because they are no longer forced to use a decade-old operating system, old, uninspired hardware, and a dated browser to get their work done. The experience that they know, the experience that they love at home, is now what they have at work.

Recently, I had an opportunity to meet with the team at the Dow Chemical Company. And that was their observation. They shared with me that their end users were particularly excited to get brand new PCs as part of the global migration to Windows 7. They were even more excited when they really started to experience the productivity improvement with their new Windows 7 PCs. And this was something that Dow specifically measured and cared a lot about.

And it’s really the core Windows 7 features, like the ability to pin your favorite apps, and your sites, using taskbar preview to move between windows and tasks easier and faster, jumplists for a quick view and navigation of all the activities that you’re working on, Snap for multitasking, BitLocker for security, and Remote Desktop for that mobile work, all of this making the everyday computing experience simple, modern and secure.

One thing that’s interesting is, we know we have very detailed information, and from our usage data, we know that Windows 7 is making a difference in how businesses and how consumers are working, how they’re communicating, and really using the software to innovate.

Some examples, 86 percent of Windows 7 users are using taskbar preview to easily preview files, which often includes websites and videos; 71 percent of customers, users, pin their apps and files to the taskbar so they can easily access them when they need them; 62 percent of users use Snap to organize their desktop environment around how they work, how they communicate or how they consume entertainment.

Customers on Windows 7 like the Ford Motor Company, Royal Caribbean, Feeding America, the Italian Ministry of Defense and so many others, including many in education and nonprofit, are using a Windows 7 infrastructure to do both the ordinary and the extraordinary to grow their businesses, to innovate and to educate the next generation.

So, together we’re now 20 months into this Windows 7 journey, and the adoption is the highest of any OS in history. I’d like to share with you a few more examples of what this means to some of our customers and how you’re making this come to life. Here’s one, when the economy turned down in 2008, the City of Miami had to come up with ways to trim expenses so that they could keep providing essential services to the residents of the city.

They decided that one of the ways they could do this was to drive efficiency in their desktop experience for the city’s almost 4,000 employees. The whole idea and the goal was to help employees do their jobs with less effort and in less time, which would reduce operating expenses, including energy consumption. What they found in 2009 when they began migrating their client-based computing infrastructure to Windows 7 is that they save in power alone $90 per PC per year for each of their 2,500 PCs, money they could then put right back into helping the citizens.

Another great example is San Diego Unified School District, who just this year brought online 33,000 Windows 7 netbooks for students and nearly 2,000 tablet PCs for teachers. Over the next several years, the school district plans to deploy Windows 7 Enterprise across the entire school district. That will be 140,000 PCs. The district so far is confident that Windows 7 will directly tie to better learning for its students and better experiences for the teachers. We are very pleased that Windows 7 is supporting the important mission of preparing the next generation of leaders and innovators.

So, these types of success stories and so many others would not have been possible without your engagement. In fact, what we’re finding is half of our business customers are working with partners as they deploy Windows 7.

One example, in the case of the San Diego Unified School District, which I just talked about, it was Microsoft Certified Partner Arey Jones, who created a gold image, with Windows 7, Office 2010 and critical education applications for this customer. Arey Jones has been a leader in providing educational technologies for over 40 years, really focused on the education space across the U.S. And one thing that I found terrific is that since the launch of Windows 7 Arey Jones has already migrated 90 percent of their customers to Windows 7. So, thank you.

There are so many great examples of the work you’re doing to embrace Windows 7 for your customers, yet we really are only getting started. Today, as we look across the business community, two thirds of business PCs, two thirds are still on Windows XP. Moving these users to Windows 7, it’s important and it’s urgent work for us to get after together. And as we talk to our customers and talk to you, we see there are four key underlying motivators for businesses to make the move now.

First — and it should be first — it’s the value. The ROI that Windows 7 brings to IT pros, to end users and to the business holistically is proven. Whether it’s driving down costs, having a more secure mobile work experience, or increasing the efficiency and productivity for the end user. The Windows ROI has been tangible and it’s been immediate in most cases for customers.

Second, XP end of life is not that far off — a thousand days to be exact. What end of life means is that ongoing standard support and software maintenance will not be a part of the Windows XP experience. And that can introduce material risk to a business. Together we must help our customers migrate more than 300 million desktops to a modern experience. You most certainly will play a critical role. And in fact, numerically, we believe that well over 40 billion of services will be purchased by customers over the next several years as part of this move.

Third is the cloud. Windows 7 is the best foundation for the cloud and for consuming cloud services. For so many of you and your customers that are betting on this strategy for competitiveness into the future, a modern desktop is an important step.

Earlier this year, we released a new cloud service for PC management and more, and that’s Windows Intune. Today we are announcing the beta for the next release of Windows Intune. The beta includes new features that you and customers have been asking for, including software distribution and remote management of critical tasks. As of today, the public beta of our next release of Windows Intune is available out on TechNet. Please check it out. (Applause.)

And finally, Windows 7 is the path to the future. This leads me to the second topic that I wanted to take some time on today. How are we thinking about Windows 8 and what does this mean for you and what does this mean for your customers? We are, of course, still in the midst of the development process for Windows 8. The two updates we have provided on Windows 8 so far have been focused. They’ve been focused on readying our hardware ecosystem to deliver Windows 8 devices. And with our most recent update in early June that Steve referenced, we also provided partners and customers a first glance at the new Windows 8 UI.

The next update we will do on Windows 8 will come at our Build event this September in Anaheim. So, at the heart of Windows, at the heart of our ability to deliver Windows 8 is the flexibility that Windows has consistently shown. For 20 years now, Windows has defined the computing landscape for well over a billion customers around the world. It has continuously adapted to an always-changing technology landscape, and it’s this ability to adapt over time is what ensures Windows will continue to be highly relevant in the future.

So, the technology landscape of today would include immersive Internet computing, touch screens for sure, and ultra-portable devices more and more. The rapid evolution of technology in these last several years has really brought so much incredible change to so many aspects of our lives, and the Web is driving much of this. The Web is driving changes in the way we work, certainly the way we play and the way we connect with others.

You can connect to the cloud to share data instantaneously and securely with virtually anyone in the world. Use natural user interface to interact with information in new and intuitive ways, develop rich applications that deliver these immersive end-user experiences. And of course, the kinds of devices that people are using today to connect to the Web are different, too. They’re lighter. They’re thinner. They resume from sleep immediately. Some of them have batteries that can last for weeks at a time.

Developers and partners want to be able to build apps that take advantage of the changes in the way that people interact with the applications and run on these devices.

All of these trends, all of these trends that I’ve just talked about help inform the development of Windows 8.

So, earlier this year we provided a technical preview of Windows 8. It was for our hardware ecosystem, and it was the first time that we talked publicly about the next version of Windows. There we announced that Windows 8 supports a new kind of hardware, system-on-a-chip or SOC architectures that will power the next generation of devices.

We specifically demonstrated Windows running on systems from NVIDIA, from Qualcomm and Texas Instruments, and they were all based on our marketecture. And we also demonstrated Windows 8 on low-power SOC Intel and AMD systems, also showing the great innovation coming on X-86 in the device space. This is a technical preview. We’re still fairly early in the cycle. You saw motherboards and development systems, yet much progress has been made.

The demonstration that we did itself highlighted the work we had done on the architecture to enable the richness of Windows to run natively on the ARM platform. There we showed support across a full range of scenarios, like hardware-accelerated Web browsing on IE, device support and other features customers have come to expect, including Office apps.

Then building on this technical preview on June 1st in California, we unveiled the Windows UI for the first time. And on June 2nd, in Taipei, we held another partner preview, where we again demonstrated the UI and then provided our hardware ecosystem the latest updates on Windows 8 systems across ARM, Intel and AMD. As Steve noted, Windows 8 is a true re-imagining of Windows, from the chip to the interface. And our demonstrations in June showed just some of the ways that we’ve re-imagined the user interface for a new generation of touch-centric hardware. We designed Windows 8 from the ground up to be excellent for touch-only tablets and to work well with the keyboard and mouse.

So, over the last month, many of you have reached out to us to express your interest in knowing more about what we announced and how it might impact you. Let me take a moment now to give a quick visual tour through what we previewed in June. What you’ll be seeing on the screen is a video that we made available on the Web for everyone to get a sense for the Windows 8 experience. The video is posted after Julie Larson-Green’s demo at the AllThingsD Conference on June.

The first thing you’re going to see is the start screen. The start screen is a personal mosaic of tiles and every app on your system is represented as a tile. Tiles are better than icons because each of the apps has a little more space to show a bit of its personality. The tiles are live. For example, the weather app can show you the current weather without you opening the app itself. You can arrange, you can group and name them however you like. It puts you at the center and makes the experience personal.

Apps are certainly an important part of the Windows 8 plan. And when Windows 8 ships, developers will already know how to build great apps. The Windows 8 UI is chromeless, and it’s clean, and apps can take up the entire screen. Every single pixel on the screen is there to represent your information. As an app comes to life, Windows quickly fades to the background. The apps are beautiful; they’re designed for touch and work well with a mouse and keyboard, too.

One of the great things about a PC is that you can multitask and work on two things at once. Snap allows you to easily view two apps at once. So, with one simple gesture you can snap one app next to another. You can choose to change which app is big and which one is small. And because we designed Windows 8 to be fast, to be fluid, you can easily get to apps and then move between the apps. The edge UI you’re seeing allows you to just take your finger and swipe from the side to move through your running list of apps.

Controls are also easy to get to, and then they quickly get out of your way. What you’re seeing now, one of the most important apps is the browser, IE10 and Windows 8 will deliver fully touch-optimized browsing with all the power of hardware acceleration. And although this new user interface is designed and optimized for touch, it works equally well with a mouse and keyboard. What you’re seeing now, we’ve even designed a new ergonomic keyboard that puts all of the keys right under your thumb.

Windows 8 also runs the existing Windows apps that you use and love. They are just as easy to switch to, and you can use them alongside your new Windows 8 apps. Here’s Microsoft Office in a Windows 8 environment as we demonstrated in both January and June.

Because it is a PC, it has a file system. The file system has your documents and photos, your videos and music. You can get to your photos from your existing Windows programs, as well as your new Windows 8 apps. And Windows apps can share information with one another, adding new capabilities to other apps. For example, your pictures will be available on your existing file system, as well as a photo service. No copying, no pasting or trying to save things. Just select the pictures, or unselect them. The apps will just talk with each other. And so, as you have more apps, the system just keeps getting more powerful.

Windows 8, it’s an upgrade for an entire ecosystem of PCs. It’s for the hundreds of millions of modern PCs that exist today and for the devices of tomorrow. Our hardware partners have a great opportunity to create the next generation of devices that together with Windows 8 will meet the needs of the modern consumer and the modern workforce. The breadth of hardware choice is unique to Windows and is central to how we see Windows evolving. In both of our Windows 8 previews, we talked about continuing on with the important trend that we started with Windows 7, keeping system requirements either flat or reducing them over time. Windows 8 will be able to run on a wide range of machines because it will have the same requirements or lower. And, we’ve also built intelligence into Windows 8 so that it can adapt to the user experience based on the hardware of the user. So, whether you’re upgrading an existing PC, or buying a new one, Windows will adapt to make the most of that hardware.

For our business customers, your customers, this is an important element because the ability of Windows 8 to run on Windows 7 devices ensures that the hardware investments that these customers are making today will be able to take advantage of Windows 8 in the future. And there’s beautiful hardware in the market today. And, in fact, in tomorrow’s device keynote, you’ll be able to see and get a sense for both what’s out there today and the pipeline to come.

We see a future with a heterogeneous environment of Windows 8 devices and apps running alongside Windows 7 PCs and applications. So, customers can move forward with their Windows 7 rollouts more confidently and with more motivation than ever. And not only will Windows 7 hardware be compatible with Windows 8, so will software investment. There is no doubt that the best way to get to the future is to embrace the present.

Earlier, I briefly mentioned Build. Build is a new event that will show modern hardware and software developers how to take advantage of the future of Windows. It is the first place to dive deep into the future of Windows. Hardware partners and developers who attend Build will be able to work hands-on with Windows 8 touch-centric user interface and learn how to create apps that leverage the power and the flexibility of Windows.

We also welcome corporate developers to Build to really begin to learn, to plan for how they will build Web-connected and Web-powered apps for their enterprise.

So, let me leave you with one key takeaway, which I think really defines the opportunity I talked about earlier. And that is that the path to Windows 8 starts with Windows 7. It’s the perfect time for customers to update their environment, modern hardware, a modern OS, modern applications and a modern browser. Together, we can add measureable value to customers by helping them get to Windows 7, Office 2010, IE9, all on the latest server infrastructure. The time is right now to lay the foundation for the future.

Thank you so much. (Applause.)