Bill Gates

Speaking to more than 100 CEOs gathered at Microsoft's Redmond, Washington State headquarters, for the 10th annual Microsoft CEO Summit, Microsoft Corp. Chairman and Chief Software Architect Bill Gates on Wednesday said trends in the “new world of work” create a need for companies to rethink how employees find, analyze and act on vital corporate information. Gates described how current and future Microsoft offerings address the key issues of information overload and information “underload” – the difficulty employees face trying to act on information once they have found it.

Microsoft asserts that although finding information and people through powerful search tools is critical to enabling information workers to more effectively do their job, the intelligent enterprise requires secure, customizable solutions that help their employees collaborate and act on information to drive business success. The company believes that enterprise search is just one facet of effective Enterprise information management in a people-ready business, and Microsoft is addressing this by providing new solutions that enable employees to find relevant people and information quickly through their desktop, within the corporate network or on the Internet.

“Everyone inside an organization – from the CEO to the newly hired information worker – has to be able to find the information they need and then use it to drive smart decisions and take action,” said Kevin Johnson, co-president of the Platforms and Services Division at Microsoft. “Search is just one piece of the solution. Organizations that enable employees to create, access, use and share information efficiently will be more successful at building customer relationships and better at getting great results from their people.”

Enabling Information Management With Enhanced Search Solutions

Microsoft today shared its vision of how enterprise search fits in the broader context of software technologies and services that maximize employee productivity and effectiveness. Enterprise search is just a component of information management, which is far more than browser toolbars and appliances or a keyword search of a set of documents on a network. An optimal enterprise search solution improves productivity by quickly, seamlessly and securely connecting people with the right information so they can effectively apply it to their organization’s needs. It also allows organizations to deal with very large amounts of content, addressing information overload and underload by giving information workers the right tools to make better decisions, find and instantly share the knowledge within the enterprise and beyond, and prevent duplication of content and effort.

Finding, Using and Sharing Information Through a Single Point of Entry: Windows Live Search

Microsoft’s goal is to create and deliver groundbreaking search solutions that present information workers with a simple, unified way to get at the information they need, no matter where it resides.

New Microsoft Office SharePoint Server 2007 Search Solutions

Microsoft Office SharePoint^® Server 2007 provides integrated information management capabilities such as portal and collaboration, enterprise content management, business process and forms, business intelligence, and enhanced search. Enterprise search is also a core investment area with enhancements in increased relevancy, security and scalability. In addition, Microsoft Office SharePoint Server will provide new capabilities through its Business Data Catalog to search against structured data sources in line-of-business applications including those from Siebel and SAP.

Office SharePoint Server also furthers Microsoft’s investment in people and expertise location through a breakthrough innovation called Knowledge Network for Microsoft Office SharePoint Server 2007. By automating the discovery of undocumented knowledge and relationships, Knowledge Network can provide customers with the shortest path to key contacts, enabling them to make better decisions more quickly. Knowledge Network will do the following:

As a response to customer feedback from the Microsoft Office 2007 system beta, Microsoft is also announcing a new product called Microsoft Office SharePoint Server for Search 2007. A subset of the complete SharePoint Server offering, SharePoint Server for Search will provide midmarket and departmental enterprise customers with core search capabilities, crawling content in common data repositories including file shares, Web sites, SharePoint sites, Exchange Server and Lotus Notes. It can also be extended to search other repositories using third-party or custom-built connectors, and is upgradeable to the full SharePoint Server offering.

Remarks by Bill Gates, Chairman and Chief Software Architect, Microsoft Corporation
Microsoft CEO Summit 2006
"The Next 10 Years"
Redmond, Washington
May 17, 2006

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BILL GATES: Well, it's pretty amazing that it was 10 years ago that we started this event. I had a chance to go back and look at the various slide decks I've done over the 10-year period, and for better or for worse I have to say I'm very consistent, software it turns out is a pretty important thing all 10 years, and the power of computing is really changing the way business is done, and so we've seen an evolution of what that means in a very concrete sense.

We've actually used this CEO Summit to try out lots of new things. Some of those, like some of the real-time meeting so that got shown here first, has gone to be very, very popular, some like the Tablet are on its way to becoming popular, but clearly a phenomena that is not as mainstream yet as we expect it will be, some evolution still to go there.

Top row: Steve Wood (left), Bob Wallace, Jim Lane. Middle row: Bob O'Rear, Bob Greenberg, Marc McDonald, Gordon Letwin. Bottom row: Bill Gates, Andrea Lewis, Marla Wood, Paul Allen. December 7, 1978.

One of the most interesting slides I had from that very first speech was speaking to the idea of exponential improvement. In chips we talk about this as Moore's Law, the doubling every two years, optic fiber gets better faster than that, the disk storage industry has actually done even better than that.

And so it really leads to a different way of thinking about capacity, a different way of thinking about what you can do. You know, today in a company the idea that you digitally record every meeting, that you have all your training information online, and that it's easy for people to access that anywhere is commonsense, the actual cost of doing that storage is almost a rounding error, you wouldn't even know it was there, whereas 10 years ago it would have been completely impractical, just way too expensive in terms of not only storage costs but network bandwidth, network access costs, and so it's just a mindset change that as you move up that exponential curve more and more things become possible to do in a digital approach.

And we don't see this going down. The breakthroughs that are required to keep on that curve are coming very rapidly. The actual clock speed of the computer won't go up as much, but instead we'll have more computers, so parallel processing and techniques that allow us to run software across many machines are becoming increasingly important.

In fact, there was a whole field called supercomputing that was doing things that way that is now actually becoming part of the mainstream of computing, it's no longer a niche, but those techniques are being used in systems.

The very high-end systems, the most expensive systems used to be different in terms of how they addressed memory. In fact, all those techniques are now in the standard sort of Windows Server, Windows PC, and the computer industry is as unified as ever along this high-volume, low-cost model.

The Quest for Business Performance

Well, the imperative to use information well and work quickly, be able to draw on talented staff anywhere in the world and getting them to work with others, whether they're inside your company or outside your company, that's probably stronger today than ever before. And there will be a lot of sessions talking about these changes in the marketplaces, the different areas of the world, the different regulatory things, the economic situation we're in, but all of that I think leads to the same view, which is that one of the few things that differentiate companies is how they can take their people, the skills of their people and get them to really add up in this effective way. And so we start with that people-centric view, but then say that the software is the piece that can really facilitate and allow that to happen.

When you look at business transactions, there are the ones that really happen with no complexity at all, just no overhead, no exception, and then there is the case where something unusual happens, and those are the ones you can learn the most from, those are the ones that take people's time, and those are the ones that many of these software systems have been too rigid to really understand and deal with. And creating more flexibility, understanding the needs of the people, that's a big theme, in fact that's the main thing I want to touch on today is this realization that even as things have become very software driven, there are approaches of doing that that actually are very rigid and don't draw out people's capabilities, don't spot the patterns, don't use their time well, and so there are some guidelines now on how to do software so that we don't run into those problems.

The Last Mile of Productivity

The term I'm using that I literally came up with just a few days ago is the last mile of productivity. The analogy I'm drawing there is that getting information into systems feels like that's the whole thing, you just get it to be digital and the magic will happen. Well, in fact, making it so that people can act on it, and so they get notified of what's important to them without being overwhelmed by these notifications, that last piece of taking the user's ability to see what's going on, the user's ability to work easily and solving that, that's where all the value is. So you can feel like you've made the investment to get things to be digital, but unless the very user interface, the standard way that people navigate the information, is very obvious to them and very well accepted into their work practice, you don't get the benefit. So that last mile, not digging the ditch for that last mile can really block that entire dream.

In fact, it's very interesting that if you compare various businesses in terms of what they're doing with IT nowadays, the differences are not as dramatic as you would have found in the past. Virtually everyone has for their workers an up-to-date Windows personal computer, they've got Internet connections to all their different offices.

Digital Workstyle

Different businesses may have slightly different timing of how they're moving away from the more expensive systems that were prevalent in the past, moving applications off the mainframe, moving from the proprietary hardware that ran the high-end UNIX systems into these more high volume, mainstream systems, and that makes sense that everybody would have their own path to go down there.

But that isn't the key differentiating thing; the key differentiating thing is how the information is presented. In fact, ironically, some of the people who have moved off of the older hardware faster and moved to the lower cost hardware and shifted the investment into more of the software side, they've been able to get these user interface type advances.

Today, in some sectors like banking, companies like, say, Shinsei, which is big Japanese bank, that have gone all the way and built all their systems around personal computer type technology, that's the exception rather than the rule. But the big win to look at there is not what they saved on some maintenance contract, but rather it's by building the systems that way, how did the workers' involvement in the information and awareness of, OK, we lost a customer, what does that mean, how is that a trend, or which loans went bad, what should we learn from that, it's that that really is more distinguishing than some pure price difference in the infrastructure costs that they have.

Now, when we look at this, we realize there's been a key missing piece that we need to step forward, with, and that is the standard way for people to collaborate. Essentially the Office software that runs on the Windows PC standardized document creation, and so when people talk about sharing a presentation or sharing a business plan, they put that in an e-mail attachment, send that around, there's not much confusion that the person you send that to will have the software and the familiarity to open it up and navigate that information. And that's not just true within a department or a company, it's true essentially worldwide. You can hire a temporary worker and have them come in and expect that they'll have the skills of working with that software immediately without any investment being made.

When you move up to the level of collaboration though, things have been incredibly fragmented. The only things that have been at all universal are having Web sites that are out there with different formatting, but those are very hard to develop and different, or to use e-mail and to stick file attachments into e-mail and send those around. And for collaboration that can work and, in fact, it's what people have had, particularly when you want to work across company boundaries, but it means that you're constantly sending new updates to people, you're not sure what people should see this change, and you don't really have the structure for them to navigate through things.

If you want to have a project, for example, that everybody is tracking the activities on, you'd like to have a site with some calendars, some documents, some people things, different access rights for different parts of it, and make it so people can choose when they get notified about those changes, and you'd like that template to be something that without any programming, any IT involvement you just pick it and up you go, there it is, and people who you send that link to are used to it because they've seen that for other projects. And likewise for a new design, a new innovation, all the different kind of activities you'd like to have a similar collaborative user interface.

Well, it hasn't worked that way because the collaboration things have been broken down into buckets where document management has been different than search, which has been different than business intelligence, and the user interfaces have been different, and the costs have largely been fairly high per seat so it's very rare that you want to take that cost or the training capability and spread that out. And so it is very analogous to what document creation was like before the Office as a package, as an integrated package came along. And we've been trying to address this, and we reach a big milestone with the version of what we call SharePoint that's coming out in the next year.

The real business point here is that people, these information workers that are a huge part of the investment that you make, and a huge part of determining the quality of decisions about products and pricing and marketing, that software empowerment for them really can make the difference in how well things get done.

And so instead of having an initiative that just says, OK, let's do business intelligence well or let's just do search well or just do a financial portal well, the idea of taking one basic drive train, one basic approach that all these things can fit into is what we're believing has the most impact. And so then you get this cycle of decisions, actions, finding insight, you get those things feeding on each other, and people in a bottom's up way, not a top's down way can get involved in these processes.

This tension of what do you do top's down in a company and force there to be a very much imposed structure versus what do you allow to happen bottom's up has always been there. In fact, even in this style of computing when the personal computer first came along it was sort of a troublemaking problem that really facilitated bottom's up information activity and was almost a threat to the top's down capability. Now, we've come to an accommodation there where things like the e-mail directory and standards get set top's down, but the actual use of those tools is very empowering bottom's up; portable computing that lets you go out onto the customer site, work from home, it was a challenge for IT to think how they could manage it the way they wanted, but software tools have allowed that to happen. But as we move into this question of these collaborative environments, there's a question of how do you get the mix of what should be done top's down versus what should be done bottom's up.

Microsoft's CRM Experience

A great example of this where we made many mistakes along the way is what happened inside our company when we were putting together a customer relationship management system, CRM the acronym, I'll bet almost all the companies here have had initiatives around this.

Our early experience was quite poor in that we said, OK, let's take our eight different systems and make them all the same. And so a couple years went by while we were doing that, and we created this thing that was the superset of everything involved. You know, it's a long time, a lot of money. Then we found people weren't using the system because the forms were pretty big because it had been all these different things, all the different attributes had been pulled together, and so we really imposed on people top down, we said if you don't fill out these records you won't get paid. And so sure enough, people came in and filled out those records, but they were doing that instead of being out and spending time with the customers, and they still weren't seeing it as giving them the benefits that they wanted, and, in fact, it had brought too many things together. And when they wanted to collaborate about a particular customer problem, it had this very rigid structure where they couldn't go off and create their own site that might have a blog or a calendar, they just didn't have that kind of flexibility and the ability to navigate around those things.

And so we actually backed off dramatically from this approach, and we said, OK, we're not going to put it all into one system, we're going to have one customer ID, but if you do business with us in different ways, the different back-end systems have different levels of complexity, that's OK, so we're not going from eight to one, we're going to expose the data much more in your electronic mail package, for us that's Outlook, and so it's just part of your normal activities once you finish a meeting to go and just fill in a little bit of status, and that is appropriate for the customer type, it's not that big unified dictionary we came up with. And then for any set of customers where you want to create one of these collaboration sites, SharePoint sites, we just make that super easy to do from within your e-mail package.

So we took what was a two-day training course, got rid of it, put in what even if you go through the whole thing is only a couple hours of video that's out on the Web that you can watch whenever you want and answer various questions, and so it's a blend of the bottom's up way that these people wanted to work and recognizing that one customer taxonomy doesn't cover everything, but still because of the unified customer ID and a few common fields across the system, there is an element of top's down that allows this to all work for us in the right way. And, of course, the SharePoint sites that these people create, we have the appropriate rights management and we back those up and so that works well.

Enterprise Information Management

So it took us several iterations to get this right, but I think it's emblematic of the whole collaboration space of if it's too structured it doesn't work for these people who count so much, if it's too unstructured it doesn't work for the business, and how now with this idea of a collaboration template can we go in and get the best of both worlds.

So it's about not just finding the information, are we using it, getting insights into it, sharing it with other people, being able to go back and forth in a very, very rich way, and it's not just text documents, it's all the rich information, including things like employees and their background, their expertise, do they want to contribute as you're brainstorming about something new; that's structured information, and yet today in most companies it would be easy not to be able to find those things, so a lot of information that has to be used in a rich way.

Well, to give you a good example of how this has evolved, and it's evolving very rapidly and it's very exciting, I'd like to ask Dane Glasgow to come on out and show us how we're thinking about enterprise search and even a little bit of the software coming out in the next year. Welcome, Dane.

DANE GLASGOW: Thanks, Bill, appreciate it.

So today we wanted to show you a few applications that really speak to information management and helping users find, use and share that information across the enterprise. So let's start with one of the most common examples of information management, we'll start some e-mail.

So I don't know about you guys, but I have a ton of e-mail and it's often hard to find just the e-mail I'm looking for, hard to manage my e-mail, there's lots of it. And one of the things that we heard really clearly from our customers was how do I actually do that inside my application in the context of what I'm doing. And so with Outlook 2007, what we provide is search across the folders that you're actually using so that you can real time search across that directory, and you'll see that as I do I get results back immediately within that folder. I don't have to go to another window, I don't have to wait for an hourglass; right inline, very quick, very easy to manage. And from here I can take action on those e-mails, so I can move across them, right?

So very simple, very easy to use, and that's one of the key things that we've heard back from our customers. And it just scrapes the surface of a bunch of functionality that's in Outlook 2007, but I wanted to show you the richness of the search and how fast you can do those things across Outlook 2007.

So e-mail is one, let's take a second example. One is, OK, search across your PC, I want to find documents. And one of the things that makes Outlook 2007 search possible is that with our new Windows desktop search technology we have a consistent search platform for people to build applications on top of. Outlook is an example of that. But built directly into the operating system I can search across my machine. And again it's very easy to use, simple, real time feedback. And as I type, you'll notice that I get back results that pull back from across my machine, across my e-mail right inline, very easy for the user to manage.

I continue to refine, I can find the exact document I'm looking for, categorize these as files or communications. So let's pull up a Word document. So I can take immediate action on these results. This is across the new Office 2007 suite.

But once I've found a document, what if I want to share it with people, how do I do that and how is that easy? So built directly into Word is the ability to save this up to a SharePoint. As Bill was mentioning, SharePoint is our authoring for document management and search across the intranet. And here I can select a share that I have on my SharePoint up in the cloud, and I can save this document right to that SharePoint from within my application; so again connecting the dots between not only finding the document but using it and sharing it with others across the enterprise.

So let's go take a look at that SharePoint site. So right here you see I have a list of the shared documents across my enterprise, and I can take action on those. So here's a document I just uploaded right now, and I can do things like workflows. So if I want to enable approval processes on these documents, I can do so easily inline across the application. If I want to have document management, we can check documents out, users can control how they interact with this data and share it across the enterprise.

Additionally, I can immediately interact with people. So who published this document, maybe I want to talk to them, maybe I want to schedule a meeting. So Communicator, our instant-messaging product for the enterprise, is built into our SharePoint offering and makes it super simple for people to communicate across the enterprise and take action on the documents that are there.

So, great, there's a place to put all these documents, but what about finding them? Well, let's take a look at search. You can see that we have a very clean, simple UI, the new SharePoint 2007 Server product has done a tremendous amount of work around relevance and ranking so that the exact documents that you're looking for are available within the enterprise. And so if I do a quick search, I can pull back documents across my entire enterprise. I can pull back documents on shares, on SharePoint, in a variety of third party line of business data.

So one example of a specific application of this is customers. So customer management is a challenge, how do I keep track of all the data that my organization has access to, whether it's in SAP or in Siebel systems, and how do I sort of view that in one way.

So we have customer search. So in this case I search for an example, fitness bike accessories, and I'll pull their page up. And this is an example of SAP data coming back over here, hosted in a real time control so that you can see and graph this data and take action on it in meaningful ways, Siebel data coming back in real time from our line of business applications. It's not only just information presentation, but I can take action on it, so I can edit this customer right from this page. I can integrate deep Web Services. So, for example, so you can see exactly where this company is located by interacting with our Windows Live Local product, and immediately get a bird's eye view. A little bit later, there will be another demo to show you some of the great technologies that can be built on top of this platform.

Additionally, you'll see that there's customer contacts. This brings us to the next big phase for what the SharePoint product will offer through our Knowledge Network technology. Relationships are a big part of business. And managing those relationships and finding out who is the person within my company that actually has the knowledge that I need is a challenge today. So, somebody showed that 80 percent of the knowledge about customers are actually in the brains of your employees, not on PCs. And so how do you actually mine that information, and how do you connect people within your organization?

So take, for example, here, this is a customer contact, Kevin Kennedy, and I actually want to interact with him. So, if I click Kevin Kennedy, I immediately see a list of colleagues across my organization who happen to have a deep relationship or knowledge of Kevin Kennedy with this customer. And you'll see here that you can see a rating of the data, the ranking for that person. Let's take a look at Brian Burke who happens to be one of the colleagues within my organization.

On this page, you can actually get data that comes back from a variety of sources. So, it can come back from your organizational data and hierarchy. You can see, for example, that I might have things in common with Brian. For example, who is the manager who ties us together? Who are colleagues that we both know. And what are some of our common interests, how can I start up a conversation with Brian so that I can get an introduction to Kevin. And so, this data is all dynamically done throughout the enterprise so that immediately you have the social network infrastructure that allows you to mine that data and take advantage of it to help drive people knowledge into the enterprise.

So, I've talked about search and e-mail, I've talked about search across your desktop, all in the context of those environments. I've talked about search across the Internet. I've talked about taking action on those data, using that data, and sharing that data across your enterprise.

You all know that we also have a ton of investments going on in our Web search products. So, how do all those things tie together. One of the things that we've heard from our customers is, hey, it's great to have search in the context of the environment I'm in, whether I'm in Outlook and e-mail, or on the desktop. But I really want a client that allows me to access information across all of those sources. And how do I bring all that data back together?

For those of you who were here last year, I think you saw a demo of our basic desktop search products, but let me pull up an example. This is our new Windows Live search client. And this brings together data from multiple sources. So, it confederates search results from a variety of places, multiple PCs across the enterprise, Internet, Web results all into one place.

I just did a first search just to pull back information from my computer, but I can broaden that to say, hey, I'd like to look everywhere. And immediately I get back data that shows information from my computer, from my Internet, and not only do I see the document come back in the list, but I can get a rich preview of that. I can see highlighting on the inside of it, so you can see actually that the terms that I searched on are highlighted within that document, or I can get data back right from the Web. So, if I click on this link, this will actually connect to the Internet and pull down the information related to this search term.

One of the things that we've heard back from customers is that, hey, I would like to group this stuff. Don't just show me a big long list of everything. I would actually like to see it in different groups. We've also enabled that technology, so that you can actually see exactly where this information is coming from, so you can see as data comes up from your computer, you can see data coming back from the Internet, or you can see data coming back from the Web sites and Web search. Additionally, let me show you a quick example, if I do the search cross the Internet, I can get back that exact page that I had before that I was showing you, it was a customer deep data page, and I can actually get that data in line within the application.

So, I've walked you through a few examples of search across e-mail, search across the desktop, and now just search, but helping users connect with the information, and connect with that information in ways that they can share it across the enterprise, whether it's people that they're trying to connect with, or data.

So, thank you very much, and I'll turn it back over to Bill. (Applause.)

Digital Lifestyle: High-Definition Experiences

BILL GATES: Well, as we talk both about Digital Workstyle, and Digital Lifestyle, and of course the increase in both of these is very complementary. If somebody is a heavy user at home doing family scheduling, they're going to go to work and expect those same rules and promote the idea that that is an efficient way to do things, and vice versa. And, for many of you dealing with consumers, this whole Digital Lifestyle concept of how they're finding products, being marketed to, the big changes there are happening faster than ever before.

In this whole Digital Lifestyle area, we've got incredible devices. This is a little music device that iriver is coming out with that's a $199 device. You can see how small and nice these things have gotten storing thousands of songs and photos, things like that, in a pretty innovative way that you just click around to navigate. Obviously the phones are getting a lot richer, too. This is one we're very excited about. Actually it's a partnership between ourselves and Motorola to do this device called the Q that will be coming out in the near future, and it's got the rich software, not just for typically telephony, but browsing information, getting your mail, your calendar, in a very simple way, even being able to browse and preview Office-type documents that come in through the e-mail, so a much richer phone experience.

And so, as people move from device to device, from their PC at work, to their phone, even to their car, watching TV, the PCs at home, they want their information to just show up. They want it to be what we call user-centric where the model of what they care about, what they've been working on just appears automatically. Today, this is very complex. If you go out and take a few photos with your camera, making sure it gets catalogued up with everything else, and making that easy to share, there's a lot of manual effort involved in that. Synchronizing devices, making sure when you leave with your portable, you've got all the things down on it that you want to get down on it. But this is a good example of something where software advances, because of low cost storage, and Internet connectivity, that is something that will be very easy to solve, very standard.

Also, we have the move approach towards the high-definition generation, and this has just started in the last years, you've seen the price of the high-definition displays come down quite a bit. Eventually, you'll just think of that as a standard experience that people have. We've helped to drive that a bit with our next generation video game product called Xbox 360. In fact, almost half of those users have a high definition TV that they are connecting up to, and so between that and the movies, and the PC experience being projected onto that screen, we think that these volumes are going to go up very rapidly. Over 90 percent of those users are connected up to broadband, and so, of course, those numbers globally continue to grow in a pretty amazing way.

Revolutionizing Media

We are starting to see the dream we've had about delivering TV over the Internet becoming a reality, and this is true worldwide. Partners like British Telecom in Europe, Deutsche Telecom in Europe, AT&T here in the United States, and many others around the world are building very high bandwidth Internet networks that are not just to deliver video the way you would have thought of it in the past, but deliver it in a personalized way, so that the ads that you see are based on what would be interesting to you. The pieces of the news show that you see are based on the interests that you've declared on any of the devices you happen to work on. And so all the video, not just those that fit into these channels, gets made available. If you care about the local high school sports games, that's going to show up. If you care about some lecture on a topic that's a hobby of yours, that's going to show up in your guide. And so the acceptability and flexibility about when you watch, and when you can see more information, all of that is very different than today's TV.

This is a big year for this Internet TV activity because all those companies I mentioned over this next year will be rolling those services out, and starting to get people to understand, this is not just broadcast TV done in a different way, it's a whole new type of video platform.

And so, people are more and more connected, photos are changing to be digital, music is changing to be digital. Movies are only slightly behind in terms of the Internet being the way that you're going to, whether it's a rental type use, or putting it in your library and having access to it, that you're going to be bringing that down. A lot of issues there in terms of the competition, and making sure that the rights management is done well, but nothing that's going to slow that down.

I thought I would share a few examples where we've been able to use these capabilities to reach out to our customers. One that has probably the most amazing press we call Channel 9. This got named by the thing where you can listen to the pilots talking to each other on an airplane flight, and our person who thought that was a neat feature thought, well, what if we could have that same relationship with developers who use our tools, where they could hear our people talking about the tradeoffs, and they could even get into that conversation and say, why don't you do it this way, or change this, and really bring them into a community. And so we've put out onto the Web, first it was fairly text-based, but now it's a lot of video as well as text information, a very informal channel, where somebody with a fairly inexpensive camera just goes and interviews the people, really building these products, and gets them to talk about what they're enthused about, what the challenges are, and that's become our primary way of staying in touch with these customers. In the last month we had over three million unique people come in and view those videos. And because this was aimed at very serious developers, that's a worldwide audience that's only about 12 to 15 million, and so we're capturing a lot of those people who are coming in every month to learn about the things we're doing. If you compare that to, say, buying a broadcast ad, or a print ad, or anything like that, it's just not in the same league in terms of the depth of relationship and feedback that comes out of that.

Likewise, on the Xbox itself, we have the ability to connect up to those users who have broadband and download demo trailers so they can see what a new game is going to be like, think about whether they want to buy it. They can buy lightweight games that actually come over the Internet instead of being so big you have to go out and buy a disk so people can try those out, and that's letting game studios go and do little concept games, see if those are popular, and only if that works, then they go and do one of these full-blown games that are very much like a move nowadays. A budget for a great video game can get into many tens of millions of dollars, and some will even, eventually, we think, cap the 100 million mark for a really epic type game. And so making sure that you have that early data, and that the smaller studios can get in, this type of live environment makes that happen.

When you get people online, there's all these community phenomena that take place, where people want to find other people, they want to know their reputation, so if they're playing with them they know if they crap talk, or if they're at their same level, or if they're recommending something in a more commerce type environment, you can understand how reputable their sites might be in doing that. And so, creating an environment where you have contests, and spectators, and lots of discussion, both text and audio type discussion, those environments will be very important for companies to build, for your customers coming in to have a dialogue with you, and internally as well. Some of the new capabilities, the idea of making it easy to blog, or making it easy to create a site that anybody can contribute to called the wiki, those are things that our software should make easy to do inside the company, and on these Web sites as well. And so people who draw lots of people in, make it fun, have ways of enticing them to come back, we think that's very worthwhile.

This last week on our Xbox service, we had over 5 million downloads of these game trailers. That's pretty phenomenal, it was a special week, the big entertainment show called E3 was held in Los Angeles, and so a lot of new games got announced. So, we won't have that on a typical week, but it's quite incredible when you compare just running a little ad about a game versus being able to have somebody take a six-minute sequence that came down over the broadband and show that to their friends, and look at that, it's a much tighter connection, and sort of speaks to the idea of how we're going to stay in touch with you, and what are the general techniques there.

Video on the Internet is exploding, and the whole idea of what the business model looks like will have to be figured out there, but there's a rapid shift for video viewing to go and get new clips online. The Olympics were a good example of this for me, if you compare the typical TV experience, you're going to sit down, whatever is on at that time, you're going to watch it. I was very busy during the Olympics, so I randomly caught a few things, but not much. The ability to go to the site that we did together with NBC, the NBC Olympic site, you could pick by sport, and pick the highlights. That was a much more compelling experience. In fact, you could even just pick the video of people taking big falls, if you have an interest in that, it was all right there packed in five minutes. You could see every one of them, and if your friends brought up the next day, they'd think you must have been watching TV for 24 hours to have seen every single one of those, and just have the latest data. So, navigating the information about when are these events, what medals have been won, what's the back story on all those things, the interactive format for something rich like that is clearly a lot better. Broadcast does not work for something like an election or the Olympics, and so the real experimentation is happening here in this Internet environment.

Online Advertising

Advertising, of course, is a key component as well, and we are seeing a shift to online advertising. But it's important to remember that as big as that is now, it's $17 billion, it's a fairly small percentage of the pie, about 3 percent, and that's actually less if you take hours that people are spending browsing the Internet versus watching TV and other things. It's actually underrepresented by hours. And even as this doubles up into 2008, it will stay behind the percentage of minutes there. And yet, this is the environment where the ability to target the person, to know that they're interested in a car, or insurance, or a mortgage, or something like that, you have that capability. It's been fascinating as we have these keyword marketplaces to see the types of things that get bid on. It somehow gives you a sense of what the profitable products are, and where finding the customer is a worth a lot. I don't know what type of comment it is on our society, but it is mostly legal lawyers that are bidding the highest. If you type in personal injury, or asbestos, or anything that might lead to a lawsuit, that click is worth the most money of all on an Internet search environment. So, a lot of experimentation, our company along with people like Google and Yahoo, are investing massively to make these online ad systems work better, be more personal, and even bring video type formats into the environment. And so I would say that's something that is worth everybody looking out for, because it's a gamble change how you reach out to customers, and it's an opportunity to think creatively, do things in a new way.

Services: A Look Ahead

Another big trend I wanted to touch on is the idea of software running not always inside your company, but sometimes the software running outside your company, and you connect up to it over the Internet. The term for this is a service. Now, it's an ambiguous term because service often means a consulting service, or something done on an hourly basis. Here I'm talking about a software service, and this is going to explode where in the past 100 percent of the software you relied on was running on your company premises, in your data centers, and you had the management. In the future, it will be more of a mix. It won't be an overnight change, and we'll have to do a great job of supporting the mix, where some things are inside, and some are outside. But, there are benefits to this approach in terms of getting up and running very quickly, in terms of some databases, like one you'll see having to do with mapping that you shouldn't have to duplicate, it would be very inefficient to do that. Branch offices, this can sometimes work well. Small and medium business may be some of the first to really latch on to this. And so it is happening that software can run anywhere.

The right approach here is to make it so you're indifferent, that it's the same software, you can get it either running inside or outside, just depending on how much control and integration you want to do, you pick what's appropriate. And that's what we call symmetry. If we design our mail approach, you can switch back and forth, have part of your company do it one way, part another way, without any effect.

I mentioned the user-centric idea that these services have got to work for not just one PC, but your multiple PCs as you move around, and also the phone, and increasingly more even the TV, the 10-foot viewing environment, and other things as well. There is a chance here, if we really do this right, to simplify IT, to have software looking at resources instead of manually having to monitor things, to have things be expressed in a much higher level form. And so, this really has great promise in terms of freeing up resources that have been put into dealing with existing applications, and letting you focus on doing things in a new way that are more business goal driven.

One of the terms is match-up, this is taking your information and other people's information, or your software and other people's software, and without having to recreate what the other guy does, get that combination to work well. And it comes up here because you can just see what they have available through a Web service, that's the kind of call you make out to the software, and then pull that in and put your information on top of it. I think to understand that, our Virtual Earth environment, which is this mapping, photo world that we're building up at a very rapid rate, is probably the best running example of that. So, let me ask Stephen Lawler to come out and give you a glimpse of when you get Web services, some of the cool things you can do with it.

Welcome, Steve.

STEPHEN LAWLER: Thanks, Bill.

Web services are changing the way that enterprises interact and access information, software technology, and real-time data feeds. Virtual Earth is a Web service that provides you with a 2D and 3D digital representation of the real world that can visualize all of your business data. So, here what we have is a U.S. Government Intelligence Agency application, and what this is doing is it's incorporating their airport data that they have behind their firewall, and using the power of Microsoft's Virtual Earth system. Here we can look at historical types of information, like a timeline controller, and we can look at significant delays experienced through all the airports, and individual airports, over the last three years. This is a great way to visualize regional patterns and seasonal delays.

Now, I know that all of you are not necessarily exposed to all these commercial type delays. We're going to take a look at some specific details at an airport. All this is streaming from a cluster of a thousand servers in Microsoft's Virtual Earth System. We're hosting over 100-plus terabytes of data so that you don't have to. You can just incorporate your business intelligence along with this powerful Web service.

Here what we're looking at is detailed information on LaGuardia. So, I can click on LaGuardia, and bring up specifics of the airport. Web services easily integrate with real-time information feeds, like this live video feed, and, in fact, behind their firewall, they have all this private data about emplanements per security personnel, all in this Digital Dashboard that they can make executive decisions about.

Now, I know a lot of you have probably seen flat maps and satellite maps in the past. Virtual Earth has introduced a powerful new imagery, called Bird's Eye Imagery, which really captures what it's like in an area. This new technology is amazingly powerful. In fact, we've actually captured a familiar CEO here in the New York area, possibly firing somebody after an Apprentice episode. So using the Virtual Earth Technology is an easy way to integrate in with your current IT investments and assets.

In fact, this application is using SharePoint Portal, which they already have up and running, SQL Server databases, and lots of layers of their business intelligence. The Bird's Eye Imagery that we're showing you is extremely powerful, and we're expanding our coverage internationally for a global reach. Where this kind of technology was only available in a small region before, we're going to do 80 percent of the United States population covered, 80 percent of Europe, as well as expand into the Far East. Here you can see that the government people, they quickly remind us that as nice as private travel is, there's always a faster way and a finer ride.

Moving on to the next application, what I want to show you is how Virtual Earth and Web experiences, Web services, can really help you make a great customer experience. So the John L. Scott Company is using Virtual Earth technology in a customer-reaching application. As many of you know, real estate has been a very hot market, and 25 percent of all home buyers now see their house, prospective house, and their purchase for the first time on the Internet.

Here we have integration with all the multiple listing service data. I can quickly zoom in and find information about properties nearby. This integrates with another service, the multiple listing service, as well as John L. Scott's information about their offices. Here I can see business property details about this, and again, through the powerful bird's eye imagery I'm able to quickly recognize and take a look at its surroundings and the property. This saves countless wasted hours of both the agent and prospective homebuyers that used to have to screen these properties in advance just to suit their needs.

Here, I can also see on Lakefront, if you really want to avoid those delays at the airports, it's easy just to park your airplane in your backyard.

Lastly what I want to show you is how Web services are being relied on for mission-critical applications. This is for British Petroleum, a hurricane management system, and they're using Virtual Earth, as well as Web services, to integrate in their private business data like this. So here what we have is expensive, offshore rigs that they're monitoring constantly. And they're constantly on the lookout for hurricanes or potential disasters. I can integrate in seamlessly about the facility, as I walk through. I can get information about its production capacity, all coming from within their firewall in British Petroleum's business, and I can see real-time information that there are five people currently on board this offshore rig.

In addition to this type of information, I can overlay important data that an operator, who might be monitoring this situation, and seeing a hurricane threat might put helicopter pads down. So in the needed case of an evacuation, I can quickly get information and make necessary decision support and analysis. In addition to that, I can see what kind of assets I have exposed with British Petroleum, in addition to the offshore rigs. Here I see the fuel terminals all through the Southeast could also be affected by a hurricane path. I can learn from previous disasters, something like Katrina, and see what kind of impact and path a storm like that took, and how it affected my business.

Then all of this, because it's Web services, are simply integrated with not only your business data, but real-time information feeds, like this is the current weather system right now in the Gulf area, and these are detailed currents about the ocean Gulf water path that are operating currently. So British Petroleum, when I talked to the executives, after they were using this application for quite some time, they really summed it up when they said, Steven, 90 percent of our time used to be resources and time used to be spent on just gathering this type of information during an incident. Now, 90 percent of my resources and time are spent on making decisions and analyzing this data. So the Virtual Earth system hopefully can help all of you, and that's an example of the power of Web services. (Applause.)

Looking Ahead

BILL GATES: In thinking about those maps, you can think about having your mobile phone and finding things that are nearby, or the whole way that in many cases when you're in a location that map is the easiest way to think about the restaurants, or the store, or the next place you want to go. So you're going to see that interface more and more, and it won't just be 2D, as you saw those bird's eye views, flying around, those will even get extended where you can kind of fly into the store and see what's there, as store people are putting up virtual equivalents of the merchandise they're offering in the store. So this idea of the 3D Web that's been talked about, a lot of work to be done, but that will become more and more of the Web experience, so a very natural way to see what's going on in the world and to navigate around.

We've got a lot of things still to solve, in terms of having software empower people in the ultimate way. Search today is still kind of a hunt, where you get all these links, and as we teach software to understand the documents, really read them in the sense a human does, you'll get answers more directly. You won't just get links, and your ability to have actions exposed will be a lot better.

I mentioned user-centric services, that means when you buy a new device you simply say who you are, and all your preferences will come down on it. It will take several years before we have all of that, but that's partly why we've been involved in software architectures on the different devices, because we know you've got to have this commonality to make it easy for people to move between devices and get the latest devices, and yet thinking about what they care about.

Tablet I mentioned, we're very committed to drive that to critical mass. The new release of Windows that comes out later this year is a big advance there, in terms of the quality of the hardware and software. One of the big things we do with the recognition is we look at all the documents you have to understand the names of people, and products, and things that you typically use. So that's just one thing where we've been able to take the recognizer and move it to a new level.

Speech recognition, we now have the ability with the power of these phones, to build that in, and understanding exactly where do you want to use this keyboard to enter text, and where is it appropriate to be creating the SMS message by talking. We're doing some experimentation with that, but more and more, whether it's controlling the TV set, or the map finder in the car, or the media selection in the car, speech will be one of the modalities, because the quality is very strong. In fact, the next version of Exchange has the ability where you can call into it, and listen to your calendar and stuff, even change appointments as part of the standard, high-end capabilities.

The relationship of the phone to the PC, these live real-time meetings you can set up where you're sharing slides, where you have multiple people in the room, you can see them easily, that's a dream that I think the industry has had under the term video conferencing for a long time. That's not yet a realized dream, and in the next year we'll introduce some hardware and software products where we think we can make that a reality. That you really think of moving from pure voice communications, to easily bringing the screen into that for document sharing, and actually more and more of the communication activity happens there.

We're connecting up to the traditional PBXes and people are, just like mainframes, replacing those with pure software-driven voice solutions that we and others provide. And that's allowing you to have a more flexible system, because it's all software driven. For example, when somebody changes offices it should just be a little command in the software, nothing expensive as somebody coming out and taking a lot of time for that to be done. Most importantly, though, is getting people the information they want when they want it, so you don't have multiple phone numbers, you simply have software that, when it's important, locates you and understands the context that you're in.

Finally, actually simplifying the business applications, so as you change your business rules it's not a matter of waiting for tens of thousands of lines of code to be written, but rather more of an English-type, declarative, high level expression of that business process. Moving software up to a higher level, so you don't have to write nearly as much software.

So plenty of things that let us focus our $6 billion of R&D on, on moving software to the next frontier, and a pace of change that I can say confidently will be as fast as it's been in any of these last 10 years.

Thank you. (Applause.)