CeBIT Conference

Remarks by Jean-Philippe Courtois, President, Microsoft International

March 1, 2011 – Hannover, Germany

Good morning. I am so glad to be here today at the CeBIT Global Conferences! In line with the theme of the day – ICT Solutions for a Better World – I am going to talk to you for the next 30 minutes about the cloud and some of the applications of the cloud that are making a difference for individuals, businesses and governments here in Europe and around the world. I will also talk about three characteristics of the cloud which will enable it to drive improvements to our world – real-time access, scale and elasticity.

The cloud is the biggest phenomenon the ICT industry has seen since the Internet went main stream. Today people are redesigning the way computers work with phones, TVs and all kinds of smart devices, connecting everything through the cloud.

So what is the cloud?

At Microsoft, we think about it in two parts – the consumer cloud and the commercial cloud.We’ve been in the consumer cloud business for 15 years, delivering consumer services like Hotmail, Xbox Live, Bing and others for millions of consumers around the world. It has taught us a great deal about what it takes to operate cloud services reliably and at scale. As a quick sidenote, I’m very happy to report that TODAY we’re launching Bing officially in France as our second European market, and we hope to launch beyond beta here in Germany very soon.

The consumer cloud effectively began the trend toward consumerization of IT in the enterprise, as people first began to expect “always-on access” to email from wherever they were. And for the past five years at Microsoft, we’ve been retooling our full portfolio of enterprise technology, including our most popular desktop products like Windows and Office as well as Windows Server, Exchange, SharePoint and more, to enable our commercial customers to take full advantage of the cloud. Just yesterday, we announced that Windows Intune, our new cloud service for PC management, will be generally available on March 23 in more than 35 countries.

So how do we define the commercial cloud?

In its most stripped down form, it is about sharing computing power stored in large, remote data centers, rather than relying on the power of a local PC or server. To make an analogy, the commercial cloud enables computing power to be consumed on-demand like electricity, where an organization pays only for what they use and don’t ever need to think about the infrastructure required to enable them to flip that switch.

Microsoft provides our commercial customers with a CHOICE to deploy pieces of their IT –applications, platform, and/or infrastructure – either on their own premises, or as a private cloud with a local service provider, or in the public cloud in a data center operated by Microsoft and a few others. This is the big picture of what IT as a Service looks like, and Microsoft is uniquely positioned to enable choice across this full spectrum.

The modeling that we’ve done indicates that a datacenter with 100,000 servers has an 80% lower total cost of ownership than a datacenter with 1,000 servers. Obviously there are few companies who have the resources to build datacenters on this scale, but Microsoft is one of them, and we are deeply committed to helping connect everyone into this opportunity the cloud represents.

In fact, Microsoft’s big goal for the next decade and beyond is to provide continuous cloud services for every business and every individual on the planet. This will be no small effort, considering that simple connectivity is still a problem in large parts of the world, but we believe it can be done. To achieve that however, we are working harder than ever to partner with governments, ISVs, solution providers, and an ever-wider ecosystem of players, to help ensure that everyone can benefit.

The cloud represents a huge market opportunity and a responsibility for the ICT industry. Gartner estimates the worldwide market for cloud services was worth $58.6 billion in 2009 and that by 2014, the market will be worth $148.8 billion. So there’s the financial opportunity, but the cloud actually represents a broad opportunity for new software investments that create new business models and new businesses because of commercial software infrastructure that's never existed before. It also creates responsibility, for all of us as technology providers, to build technology that will protect the anonymity, the privacy, the security of what I say, who I say it to, where I go, and what's important to me.

On a grander scale, we believe that the cloud represents an opportunity to drive national competitiveness. The World Economic Forum tracks 110 indicators on the topic, falling into three main categories. They are: Basic Requirements; Efficiency Enhancers; and Innovation and Sophistication Factors. You can see some of these on the slide, and when tied in with a country’s national priorities, the impact the cloud can make is remarkable. The Centre of Economics and Business Research released a report that said cloud computing will add €763 billion in productivity to the top economies over the next five years.

In Ireland, Microsoft recently commissioned a study that found if Irelandinvested aggressively in the cloud, it could eliminate half a billion euros in cost each year from its economy, generate €9.5B in sales annually for Irish based companies by 2014, create 8,600 new cloud-related jobs and 2,200 new non-IT SMEs leading to 11,000 more new jobs. It also found that the cloud could lower the cost of delivery and improve the quality of public services in Ireland.

Similarly, the Microsoft Germany team launched an initiative earlier today with Chancellor Merkel called “Chancenrepublik Deutschland” which aims to leverage cloud computing and other technologies in Germany to drive key societal changes in areas such as education, work, eHealth, eGovernment and the environment.

This is not technology for technology’s sake. The implications of the cloud are broad – socially, technically, and innovatively. What we believe fundamentally is that the cloud represents an unprecedented opportunity for enabling people to DO more with and GET more from their technology.I have a couple of examples I want to share with you today to help illustrate these points. They span three realms: public sector/government, business and research.

When it comes to you and me as consumers and truly feeling the impact of the commercial cloud in our everyday lives, some of the most interesting applications have begun to appear in the public sector and government space. The consumer cloud has changed people’s expectations about what government should be able to do for them. Today’s citizens, especially the younger generation who is just starting to vote and who have never known a world without the Internet, have an expectation for online ease of use and transparency. They also expect to have a way to make their voices heard.

For those of us in IT, it’s easy to forget that there are still 200 million Europeans offline, so I’d like to take a brief moment to commend one of your keynote speakers later today, Vice President NeelieKroes, for her role in Get Online Week, an annual event driven by Telecentre-Europe and the European Commission, in which Microsoft is a partner, focused on helping many more people get connected.

I have a new customer to tell you about today which is called Tecnigral. This is a 50 person Spanish company which has created a cloud-based application being used by the Madrid City Council to better manage the city’s trees. Madrid spends €14M annually maintaining its 245,000 urban trees. The “greening” of cities is an increasingly important topic, as the benefits of trees including fighting air pollution and stopping erosion are now widely understood. Also studies have proven that for every dollar spent on maintaining trees, the public receives three dollars’ worth of benefit.

To help address this, Tecnigral’s application enables Madrid citizens to learn about the trees and to send requests to their City Council regarding trees in their neighborhood. Managing trees in an urban environment is much more complex than managing them in a park, and Tecnigral knew that technology could help.

I’d like to show you a quick video of the app.

Tecnigral is also currently working on a mobile version of this app to allow consumers to access this solution via their smartphone, further demonstrating the power of the cloud to provide seamless access to services and information across devices. With the solution’s success in Madrid, it has been adopted by four other City Councils and one university in Spain which will deploy for citizens this Spring, and negotiations are underway with at least one other city outside of Spain.

This helps illustrate the first of the three important qualities of the cloud which will enable it to drive improvements to our world -- REAL-TIME ACCESS. The cloud puts the power of technology in the hands of the masses, across devices, enabling citizens to make their voices heard to their government. Because this application is built for the cloud, there’s no reason it couldn’t immediately scale out to citizens in 10 or 100 or even 1000 new cities in Europe and beyond, as all Tecnigral needs to deal with is managing the application. The rest is up to the cloud.

While Tecnigral is privately held, governments themselves are also harnessing the power of the cloud. One example is Railnet Denmark which is owned by Denmark’s Ministry of Transportation and is charged with the country’s railroad infrastructure. Railnet Denmark created a cloud-based system which enables commuters to stay informed of rail conditions.

Why is the cloud important here? These kinds of systems see tremendous spikes during periods of extreme weather or other more menacing situations like a terrorist attack. By building its system for the cloud, Railnet Denmark no longer needs to worry about its system being brought down by an overload of consumers trying to access it at once. The cloud will add and remove servers dynamically to ensure that the system is provisioned to meet demand so that all commuters can stay informed. By the way, Railnet Denmark has achieved 60% cost savings on hardware and software since moving to the cloud.

I’d like to share a third story in this space, from the Czech Republic, about a group of 3 students who created aapplication called GINA (Geographical Information Assistant). It began as their submission for the Imagine Cup, an annual software competition Microsoft hosts between high school and university-age students who want to develop technology to help solve some of the world’s toughest challenges. It began in 2002, and last year’s competition included 325,000 students from around the globe.

The original GINA team was three students who developed a mobile solution to assist aid agencies, humanitarian organizations and emergency services in disaster zones. When the team was developing this, disaster struck in Haiti with a devastating earthquake. These three students knew that their technology could help, so they called up aid groups and convinced one, Hand for Help, to bring them in.

I’d like to show you a second short video about it.

These three students are now a business of thirteen, although they’re still students working on their PhDs and on GINA full time. If there’s anything that points to the need to continue to invest in teaching ICT skills to students today, it’s this story. Just look at what they can do when they have those skills.

Also it’s worth noting that recent studies here in Europe have shown that as many as 90% of new jobs created here in the next 5 years will require some ICT skills. NINETY percent. One of the reasons for this is the cloud.

It is making technology available to an entirely new group of people which we call the “deskless worker.” This is all those aid workers, people in retail and on the factory floor. Getting something as simple as an email inbox for them to receive messages used to be impossible, because where would they check it? Now with the cloud and the broad array of smart devices or even kiosks, we can reach all these people with technology, and providing them with the skills to take advantage of this has never been more critical.

With that, I’d like to transition to the business realm. One of the things I like best about the cloud is that people are using it to do NEW things and create NEW businesses – creating value where there was none before. And in today’s world, no one can underestimate the value of a healthy economy.

We’re finding that small and medium businesses are quick to adopt the cloud because they don’t have legacy infrastructure to deal with and theyunderstand the value in not having to maintain their own IT. Because they don’t have to make capital investment on infrastructure, the cloud provides theability to ACHIEVE SCALE.This is the second of the three qualities of the cloud which will make a true difference. SMBs represent the core of Europe's economic engine, and for them, the cloud essentially removes the technology barriers that have previously held them back.

We have a great example of a small company named VassiliouTrofinko which specializes in production and distribution of frozen food in Greece and abroad. Email is a critical business tool for communication with customers, suppliers, and partners, and the legacy email system they had was limiting their efficiency. This 120 person company deployed our Business Productivity Online Suite for 60 mailboxes for its employees within one week, providing best-in-class collaboration and communications tools through the cloud that will help boost productivity and improve interaction with their extended supply chain.

This is not a technology company, but technology is critical to its efficiency. With the cloud, they can have access to the same kind of technology infrastructure backing them up as any of their largest competitors. And with our Office 365 cloud service now in beta, we’re expecting millions of small and medium businesses who’ve never had the means before to now take advantage of enterprise-class productivity tools in our Office suite, at low cost, through the cloud.

But it’s not just the small guys who are benefiting. Large enterprises are also deploying cloud solutions to help reinvent their business models and improve their bottom line.

Xerox is a leading global enterprise for business process and document management, which I imagine you’re familiar with. In 2010, it launched Xerox Mobile Print, allowing people to print from their smartphones while on their corporate campus. They set this up through a private cloud service on the customer’s campus, but the next logical step was to find a way to enable this from ANY public printer. The storage, security and provisioning requirements for delivering this type of service were steep, so Xerox determined that the best way to accomplish this with scalability was to turn to the public cloud. Following a short four month development on Windows Azure, a first version of Xerox Cloud Print was created as an innovative new cloud servicefor its customers.

The last realm I’d like to cover is research, an areawhere we see huge opportunities for the cloud to help accelerate scientific discovery.

In November, we announced the release of NCBI BLAST on Windows Azure. NCBI Blast is an algorithm created by the National Center for Biotechnology Information (NCBI) which is used by scientists to compare biological sequence information. For example, following the discovery of a previously unknown gene in mice, a scientist will typically perform a BLAST search of the human genome to see if humans carry a similar gene.

By making this algorithm available for free via the cloud, we are enabling scientists to tap into the power of the cloud to greatly accelerate their work. Researchers at Seattle Children’s Hospital in Washington recently used it for a project to better understand protein interactions. With 10 million known proteins, they estimated that it would take six years for a single computer to find the information they needed, but by tapping into the power of the cloud, they were able to split millions of protein sequences into groups and distribute them to multiple data centers on two continents for analysis, which meant that they got the information they needed in only one week.

This is a great example of the massive computational power to which the cloud can provide access, and points to the third of our three qualities of the cloudwhich will drive change in how technology can impact the world: ELASTICITY. With the public cloud, renting 1 machine for 1,000 hours will be equivalent to renting 1,000 machines for 1 hour, enabling us to rapidly accomplish complex tasks that were previously impossible because of cost or time constraints. It will mean that small teams of researchers can now tap into the same kind of computing power which was historically only available to the largest of research labs.