Microsoft CEO Summit 2007
May 16, 2007
BILL GATES: Well, good morning. I have the honor of getting to talk about where technology is going, and not just the breakthroughs in technology, but also the changes in how it's being used. If you look at things like how people think about the Internet and video, over the last couple of years it's dramatically different. It's really become the mainstream of how people think about creating, distributing, and getting video, and that has some implications that are pretty profound.
Now, part of the reason that that things keep changing is that the pace of innovation is very, very rapid. We see that at the chip level where we still have the ability to double the number of transistors on these chips every two years or so, and it looks like there's another decade where that will continue; so no limitation in terms of the kind of power that's coming out of these devices.
So, you'll hear people talk about, for example, 64-bit memory. Well, what that means is that we've really gotten rid of the limitations that would have prevented us from doing business intelligence, and really analyzing things and seeing patterns. Historically, those were either things that were not easy to do or they required unbelievable expense, only a few companies could do them. Today, analyzing customer behavior is something that should be standard even for small companies that have very modest IT budgets. It's all within reach because of the extra power that is in these chips.
Now, the size of the hardware also makes a very big difference. We continue to reduce the number of components, reduce the size, and so we're getting even some new form factors. You can think about, where do PCs stop if you take smaller and smaller PCs, and how far up do phones go, and is there a gap there in the middle? Media devices like the iPod or navigation devices or dedicated reading devices, will there be specialized things in between or will these two more horizontal platforms that run many applications come down and even overlap each other? I tend to believe that the phone will move up and the PC will move down and there won't be any special device categories, because the power of being able to run any application, whether it's media, reading, navigation, is very strong.
These are actually some full-blown Windows PC devices that can even run the latest Windows, Windows Vista. So, you see this is one you take in your hand and it's just a touch screen device, or this is more traditional in terms of the input where you have a nice keyboard but the screen can be this way or you can flip it around and use it just with a touch, say to watch video or to play with pictures.
And so as we get down into these form factors and you think about some phones that are coming out with bigger screens and motion video, you can see that they really are meeting and then just taking on the applications like still photography, motion video, incredible maps where you can see data about commercial establishments or traffic or even your friends that are nearby showing up on that map.
So the broadband connectivity, the speed with which these wireless networks work, and the small devices are really changing the patterns of use. Broadband penetration continues to go up. In a lot of developed countries it's well over 50 percent, and the growth per year has actually been accelerating there. The United States actually is about 15 in the rankings on this penetration, so this is not a U.S.-centric phenomenon. In fact, if we look at things like use of mobile devices, the U.S. would rank even lower than it does on broadband penetration.
So, the adoption of technology is pretty much a worldwide phenomenon. It's no longer the case you can just at one market and say, OK, if I catch the trends there, that's what's happening in other places two or three years hence; it's happening largely at the same time. And that's why we can talk about the world being a smaller place, because all the empowerment is there at the same time.
People often have an assumption that the power of the average personal computer would be different in say the United States than in China, but that's actually not the case. The average machine is the same between those two countries, and so the same kind of software, same type of applications.
Of course, as this technology is getting out there, the usage of it goes out. We call this probably the digitization of the economy. It means getting rid of forms, it means catalogs being online, it means applications like education where the idea of finding the world's best lectures would have been virtually impossible in the past; now on the Internet it's more and more there, it's more and more organized in a way that's going to make that just common sense. Of course you can go out and get the world's best lectures, and of course you can go out and test your knowledge and see if you're confident, even go to a Web site whose reputation is that if you pass their test you're accredited with that skill set, so even something like education, the value-added pieces of teaching and accrediting being that somewhat unbundled because of what the technology can do.
Now, when we think about this, the way people work is changing because of it. Historically, a few things like a copying machine, PBX phones, they came in and changed the workplace a little bit, but it's only in the last 15 years where the idea of how do you organize schedules, what does an administrative assistant do, those have changed dramatically. The access to information, knowing what's going on inside your business or the competitor's business, being able to collaborate with partners literally during the course of the day, working with people in five different countries and changing plans, that's all possible because of the interconnection.
And so in this new world of work you can work at home, you can work on the road, and if you have a company with many locations, the overhead, the problems that that creates, the need for trips and things is reduced by using the technology in the right way.
I've taken this idea of the Digital Work Style and I've got three slides here to talk about typical things that people do. And I'm not going to dive into every one of them, but I've split it so I have the Digital Work Style Basic. These are the things that basically everybody is doing now. Then I have digital work style empowered, which is the next level of benefit and ambition. And then I have advanced, which are things that only say 10 or 20 percent of companies are doing today, but I'd be so bold as to say that those things will all move on to the other tier where they become kind of commonsense, and then a new set of things will emerge that will become the advanced activities.
The basics, a worker with a fairly up-to-date PC, connected to the Internet, standard Office suite, electronic mail, ability to send mail to groups, to do attachments, to correspond with people inside and outside the company, you know, all pretty straightforward stuff in terms of basic.
In terms of empowered, then you see a separation of companies, some of whom have jumped in and done these faster than others. For example, at Microsoft, training used to mean signing up for a course, going off to some nice place -- I always wondered why they picked such nice places -- being gone four or five days. And there are still a few types of things, like our leadership courses or thinking about our business model, where that type of format works. But if you take something like learning a new skill set or the diversity training that we do for everyone, that's moved completely online. You go up, you watch the video, you can do it at work, at home, you can split it into segments, and after you watch those segments, you are tested on whether you understood what you watched, and we track that to make sure that for the ones that are required, people are actually going through those things, and your manager will know when you have or have not completed those things, but very, very flexible. And so this idea of putting the video online, and putting the knowledge-testing there, that's over 80 percent what used to be face-to-face training is done that way.
There's also a class of training that we just wouldn't have done at all, it wouldn't have been worth the trouble in the old format that is now possible to do, and those are optional courses, but it's pretty amazing how much people take advantage of that. Typically people are doing three or four courses during the year to add to their knowledge.
If you look at human resource activities, we've been able to get rid of paperwork altogether on this. If you change your address, you do it once, and even somebody like our 401(k) provider gets notified and it's all just a straightforward thing there.
This also comes up when you're doing reviews: Can you get lots of input, can you understand the history of the person there? A digital system can not only raise the efficiency but also the quality of those activities. And so it's quite different than it would have been in the past, the employee understanding their options, understanding what the status of the things are.
We also look at what can people initiate themselves. Let's say there's a metric you want a group to be tracking. How easy is it for somebody without IT involvement to create a site that has that metric, kind of graphs it, shows the progress, has people commenting on it? Can a project schedule or a quality drive, can you create a site that draws everybody in, gives them complete up-to-date information without any overhead, without getting a developer or approval or any of that process? And so making these things end user creatable makes a huge difference.
Take something like a survey. I think it's very helpful to go out and poll employees anonymously or attributed about how they feel about the project they're on and their management. We actually create a leadership index where we get the answer from everybody who works for someone, and that's a very interesting diagnostic that as we see it change over time, as we compare between the different groups it helps us know where we're doing the right things.
Because of the ability to create these surveys digitally and send them out and then over a period of a week somebody has that in their e-mail, and they can find the right time to answer it, we can get very, very high returns. In fact, if we insist on returns, we get up to 100 percent. And it's very easy to do. And so we find whether it's top management having some key metrics or individual groups just creating these things, sending them around, that that just becomes a standard thing because it's so easy to do.
Creating workflows for approval that will vary by group, making that so again there's no code involved in it, this type of collaboration helps facilitate the things that need to go on in workgroups. Seeing sales information so it's live, I know over the years we've talked about this ability to dive into data and see the detail and share that with other people, and not just be surprised by the numbers but actually seek the best practice or the problem that that reveals, and not just have it be the executives who are using a certain way of interacting with the data, but having that be pervasive so everybody is on the same page, same conversation, that's become a lot more straightforward.
We talk about reducing trips, and some of this is the new things in communications, connecting up the screen to edit documents together. If you have a meeting that you can't get your employees all in one place, not only can they see the video but they can interact, they can send questions in. The tools that let you set this up and do it over the Internet mean that the cost now is less than a tenth of what it would have been in the past.
One new thing is taking the phone that you carry around and putting some of the business information there. Electronic-mail has become pretty standard, the calendar sharing, but also documents about customers that you might be going to visit or metrics that you might need to be updated on because there might be something urgent to be done about that; having the software platform expand the information empowerment out even to that small screen device is becoming far more typical and the environments are making that far easier to do.
Now, that does bring us to something I have over in advanced, which is when you have all this information out there you have to worry about where is it going, is it leaking out. If somebody leaves their portable machine behind, if they leave their phone behind, is it easy for somebody to go in and get salary data or things that are confidential about your business plan?
And so more and more the idea of rights management, that when you initiate an e-mail that's about the close of the quarter or related to a lawsuit, you can mark and say who can get at this document, and even figure out what sort of time period that document should be accessible, that's called rights management.
It's been tricky to implement because if you want to do that across company boundaries, say with your law firm or a company you work with, setting this up has been too difficult and it's just changing. That's why it's in this advanced category.
With communications, we're going to see a demo of some of that, but the extreme form is where you actually no longer have a PBX at all, and it's all completely software-driven. That means that as people move offices, they want things forwarded, it's all easy to do, and the interface of these things is far simpler than the buttons on those classic desktop phones.
Group meetings: We've got a thing called Roundtable that gives you a 360-degree view of a meeting room that we actually showed here in years past. That's actually in a broad beta today and ships later this year. And there are a lot of people taking advanced camera technology and allowing a meeting either to be participated in remotely or easily recorded somebody can go back and then take, say the transcript and find the part that they're interested in.
Things where you improve meetings, the efficiency, reduce the number of people who need to go, things like that have a surprisingly big impact on digital work style productivity.
Forecasting using models, that's kind of a new thing. The tablet computer that you've all got a chance to play around with, those are emerging things. In areas like medical insurance we're starting to see it really catch on, but over time we see that as mainstream.
The last thing here I wanted to mention is that with video arriving on the Internet, it's possible for a company to create essentially their own TV channel. And it's actually better than a TV channel in that people can come in and watch at any time video on demand.
A great example of this for Microsoft is that there's a special customer group which are software developers, and having them excited about our work and getting their feedback is critical to our success. And historically while we would do face-to-face events, our ongoing communication with them was through the trade press. And of course we still do that, but what we have now is just a couple of employees who walk around with handheld cameras and interview individual developers, ask them what they're working on that's fun or hard, and they put hours of that video, new video up every week, and then we have over 4 million unique developers coming in and watch those videos on our Web site. That's not buying advertising, it's just buying that little handheld camera and having the right interviewer create a sense of dialogue, and then we use that channel for people to say did you like what you heard, do you think we should give that more priority, do you see something we're not doing, and so it's really changed the nature of our relationship with those developers. And so it's actually a TV channel that if you compared it, it would actually have more viewership than most of the cable TV channels, and yet it's a very targeted activity we're engaged in there.
We're also starting that up for our broader set of users, people who use Microsoft Office, learning about some of these best practices, and we're just at the beginning of that. And so I think we'll see lots of examples of where that can be done, whether it's simply staying in touch with employees around the world or particular groups of customers.
Now, communications, when we say it's changing, you might ask, well, why? What's so unique about this timeframe? Well, historically the networks limited what could be done. The quality of the voice was quite limited. You were working the phone numbers. You had no idea who was where. And so that hardware piece limited the creativity of what you could do.
As that's changed to just be the very high-bandwidth Internet with great optic fiber cables and great competition and making those costs constantly going down even for a global network, now it's much more a case of the software. How do you make it easy to set up a conference call or forward? When you come back to your office, shouldn't you be able to see who called in? Or if certain people are calling in when you're busy, shouldn't they have options to do things at that time? Shouldn't you be able to see before you try and call somebody their presence information, and if you have a close relationship with them see in some detail not only what they're doing now but the part of their schedule that they want to come and share with you?
And so the split where the phone world and this Windows PC world have been two separate worlds. that's changing utterly. In fact, on the desktop it would be our view you won't have that desktop phone. You'll have the PC with a phone peripheral, and then you'll have your mobile phone. And the mobile phone and that PC will be working together in a rich way. So your call log will be unified between those things, your calendar, so a big change from what we have today.