Who: Tami Reller, CFO, Windows and Windows Live
When: Tuesday, November 27, 2012
Where: Credit Suisse Annual Technology Conference 2012
PHIL WINSLOW: Well, good afternoon, everyone. I hope everyone enjoyed the lunch. I'm very excited to have Microsoft join us at the Annual Technology Conference. If you don't know me, my name is Phil Winslow. I'm the software analyst here.
The way that we're going to do this keynote is, we're very happy to have, obviously, Tami Reller, who is the CFO and Chief Marketing Officer of the Windows and Windows Live Division. And Tami is going to run through slides for about 20-25 minutes, and I'm going to join her up on stage for Q&A.
So, with that, I'll turn it over to Tami.
TAMI RELLER: Thank you.
PHIL WINSLOW: Thanks for coming.
TAMI RELLER: Yes.
Great. Thank you, Phil. Thank you, Credit Suisse, for having us. And thanks all of you for being here. It's good timing to be able to talk to you about Windows. Before I do that, this is so important that I read this, so I need you all to focus, and stay tuned. So, Safe Harbor, here we go.
So, this presentation contains forward-looking statements, which are any predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks, and perhaps some uncertainties. Actual results could materially differ because of factors discussed in our earnings press releases, and the comments made during this presentation, and in the risk factors section of our Form 10-K, Form 10-Qs, and other reports and filings with the SEC. We do not undertake any duty to update any forward-looking statements.
Awesome. Here we go. It really is my pleasure to be here today to speak to you about Windows. And by now I'm hoping you have seen and heard quite a bit about Windows 8, and I'm actually also hoping that you spent some time hands on with the product. And if you haven't, I would love if you get a chance to do that.
So, for the next 20 minutes or so as Phil described, I'm going to talk to you about our new release, and really the tremendous buzz and interest we've seen in the marketplace since October 26th when we officially launched. But I do think to better understand Window s 8, and what it represents, not only for our customers, our partners, but really the whole industry, I wanted to take a minute and really talk about the context with which it was designed. And this is something that we've been fairly consistent in talking about since we first started talking about Windows 8 back in January 2011.
So, a couple perspectives, I mean, if we look at the time we're now in, we're now really connected all the time. Our PCs, well they used to be about managing files, and today we know that people and communications really are the center of activity. This idea of work and play, they're intertwined, and hopefully intertwined seamlessly as you move between them, not just during the day, but throughout your life and throughout your week.
This stuff that we have, that we create, the stuff that we consume, it's not just on our PCs, it's also in the cloud, and we expect it to be in the cloud and accessible. And that desktop PC of old has been replaced by one or more, more sleek, more powerful, more mobile PCs with vastly more storage and computing at a fraction of the price.
So, in order to deliver experiences relevant to this world that I just described, this world that we now live, and to anticipate that ways that we'll want to use technology in the future, we did need to reimagine the Windows experience from the chipset to a whole new array of form factors, to touch, to the developer platform, the store, and apps, and to the user experience. We've often described this as reimagining Windows from the chipset to the user experience, but there's a lot more to it that we've really asked our ecosystem to join us on this journey.
So, Windows 8 is a new generation of Windows. We've often described it as fast and fluid, and immersive. It is designed to be highly personal and I'll talk a bit more about what we're seeing with customers and how they are making it personal.
Windows 8 represents really a generational shift of hardware, a generational shift of the operating system and apps, all together, all at once. The other thing that I think is important to mention is it was built for the future, not just any one single selling season. Windows 8 also happens to be one of the most tested releases of Windows in history. Over the course of our previews, and we really did build Windows 8 in the public eye and had a number of previews, we had over 1.2 billion hours of testing and that testing took place across people from 190 countries, so very broad, very extensive, across the course of several releases.
And in building Windows 8 we took the foundation of Windows 7 and we made it better. People may experience benefits on their existing Windows 7 PCs, like battery life extended up to 13 percent, boot time improved by up to 36 percent, and on new PCs a cold start time of under 10 seconds. So, Windows 8 was built to work beautifully on existing Windows 7 machines. And, in fact, Windows 8 upgrade momentum is outpacing that of Windows 7.
So, why do we have so much upgrade momentum? So, for as little as $39.99 you get Windows 7 made even better, you get powerful built-in services, including free streaming of music, through our Xbox service, great new apps, and then an app store to find even more apps going forward. So, that's a little bit about upgrading. Windows 8 is also about the best PCs ever. Windows has always stood for breadth and choice, and that's certainly the case with Windows 8. It's about breadth of innovation and breadth of choice. PCs have become increasingly mobile and much more powerful, and with Windows 8 and the new form factors we're introducing it's all about moving effortlessly between what you want to do, call that create and consume, and about what you need to do, all in one device, whatever device you happen to be on. We talk about this as no compromise, and that's whether you're on a device with a mouse and keyboard or whether you're on a device with touch.
At launch you may recall that we talked about 1,000 PCs and tablets that had been certified for Windows 8, which is a big number. Well, I'm pleased to tell you today that we now have 1,500 PCs and devices broadly that have been certified for Windows 8 and these will continue to come to market in the weeks and months to come. So, the innovation, it continues and we're confident there's a lot more opportunity to innovate.
I did want to just take a minute and show you just a few devices. There's always risk in this, because I'm going to show you a few devices and there's plenty that I won't have the opportunity to show you from our partners, but I do think it will show you a sense for the range of devices that are in the marketplace. There's some touch devices in retail today, and we're working to continue to get more touch devices out there, as well. But, broadly speaking there's a lot of great devices that have come to market, some that have sold out, some that are now being replenished and coming to market and more models to come.
So, I just wanted to spend a minute and show you a couple of things, and just give you a sense for what's out there. I'm going to start with a few touch laptops. This is a laptop from ASUS, and what's great about this is it's thin, it's light, it's 11.6 inches, for those who love that size form factor, but it's a touch laptop with a Core i3 and it's $499. And this one has just come into retail in the last couple of weeks. So, imagine getting a touch laptop, works brilliantly, for $499.
I also then wanted to highlight another touch laptop. This one is from Sony. It's been quite popular. It is also a touch laptop. This has a Core i5 and is selling for $899. So, it's called the T13. So another touch laptop, this one is 13-inches. So a little bit more of a standard sized laptop, but this one has been quite popular.
This one you may have seen this. We talked about this at launch. It's been talked about elsewhere. It's gotten some nice reviews. This is from Acer. It's the Aspire S7. This one, also a touch laptop, just incredibly thin, ultrabook class ultrabook. It comes in either ‑‑ touch laptop, ultrabook class touch laptop, comes in 11-inch as well as 13-inch, and this is another example of one that came to market, was at launch, sold out and is now being replenished, and can be had.
So, those are three touch laptops. I also then wanted to highlight, this is a Lenovo coming to market in the coming weeks, Lenovo tablet. It has a pen, so that's a unique characteristic of this tablet. It's incredibly thin and light. And this one is sporting an Atom chip. So, you may know this as Clovertrail from Intel. But there are more and more of these tablets that are going to be coming to market in the weeks and months ahead. But in particular this Lenovo is a terrific option.
Also on the RT side, another Asus device in the U.S., you can find this one at Best Buy, AT&T also has a broadband built-in version of this, and this is a tablet. What's unique about this is it has a great keyboard, and the keyboard actually has a battery in it as well. So, you get extra long battery life for both the tablet and the actual keyboard itself.
So, a couple of good examples. I also wanted to highlight a couple of others that are either in market and starting to fill in at retail, or coming to market. The full class of all-in-ones, touch all-in-ones, a really compelling class of device, this one in particular, the Dell XPS 27, great device that you'll see, and then another Clovertrail or Atom device from HP, the Envy X2. So, just another example of a couple more devices that are coming to market very soon.
That's devices. Windows 8 is also about the cloud, and being connected wherever you are. You can sign-in to any device, any Windows 8 device, and bring your personalized settings, apps, and stuff right to you. It is a fairly magical moment when you're going from one device to another device, typing in your Microsoft account, and all of your personalization and stuff comes right to you. And your apps, they really start to light up with those connections to friends and family. And content from the services that you connect to, whether that's Facebook, whether that's Twitter, LinkedIn, and your e-mail accounts, that comes right into the apps within Windows 8, the mail apps, the messaging app, and the People app, so, full integration. So, all your Facebook contacts come right into the People app, for example.
And since most people use multiple PCs and a phone, Windows makes it easy to connect across these devices to SkyDrive, Facebook, Flickr, or other services that you're using just to get all of your photos and your files instantly. With Windows 8, hopefully you can see from this app the apps are meant to be clean, and beautiful, and intuitive. What I think is particularly unique about Windows 8 apps is their ability to connect to each other. So that as your system becomes richer and you get more apps, and these apps are sharing and connecting, the system becomes richer and richer as more apps come in.
One of the other things you've probably noticed with Windows 8 is the tiles. They're really alive with information, and they're updating, whether that's breaking news, whether that's weather or social media updates, you have a start screen that's alive with information, and information that's relevant to you because you've personalized it, and it has your content and you picked the apps that you want.
So, the launch of the Windows Store, which we described at launch as the grand opening, it was the biggest grand opening of any app store. So, we were pleased with the progress we were able to make up until day of launch. But more work to do.
Since launch the number of apps in the app store has doubled, and several apps have crossed the $25k revenue mark. And what's significant about that is once an app reaches that level of success, then a developer is paid, or gets to keep, 80 percent of the download revenue for the life of the app, not just for the year, but for the life of the app. And so we believe that presents the best economics for developers on any platform.
So, here just a few examples, there's a lot, because it's, again, doubled. But, here are just a few examples of the apps that have been added since launch. There's the weather channel, Fox News, ESPN, very popular Angry Birds Star Wars, and on from there, Bank of America, British Airways. So, across categories you can see that apps are really starting to fill in. We also announced right after BUILD that Dropbox and Twitter had committed to build Windows 8 apps. And so those will be coming soon, as well.
So, this is one of the many reasons that Windows 8, we believe, represents the best developer opportunity ever. We talk about the best economics, with the ability to earn up to 80 percent, but also developers are really benefiting from this modern developer platform that lets them write in whatever language they're comfortable in, including tools to do that. The reach of the Windows platform, and then perhaps as important as anything, flexibility in supporting the developers business models, so whether they're free apps, whether they're ad supported, whether they want to use their own monetization engine to capture customer monetization, all of those models are accommodated within Windows 8, just giving them full flexibility in how they want to take their apps forward. And we think that's a big plus for developers.
So, I've talked about the industry, I've talked a bit about partners, talked about developers. I did want to take a moment and talk to you about customers. With the design of Windows 8 we really aimed to put the user experience and take a different approach and really put our customer and their device at the center of the experience. We designed the start screen, I think you've heard us say this before, but we designed the start screen to be home base. It's alive, and it's dynamic, and it's designed to be that way, with all the people and the things that you care about most, and so highly personal.