Live: Bill Gates keynote launching new Microsoft communication platform

October 16, 2007, 4:20 PM UTC
Photo: Jon Fortt

In San Francisco, Microsoft (MSFT) has launched Office Communications Server 2007 and a fleet of other products that the company says will revolutionize the way businesses communicate. The basic idea: the company wants to bring software to phone calls in a way that will make tasks like conference call setup and call forwarding as simple as routing e-mail. Microsoft also hopes to help companies to build such advanced communication capabilities into all sorts of software. This is a new front in Microsoft’s competition and collaboration with Cisco Systems (CSCO) and others.

The presentation will include partnership announcements with SAP (SAP) and Dell (DELL).

A guy with a guitar is walking through the crowd, playing lead really loud. This is definitely one of the more dramatic beginnings to a Bill Gates keynote I can recall.

Bill Gates has taken the stage.

He says it’s exciting to be here for Microsoft’s unified communications launch. He says this is about taking the magic of software and applying it to phone calls.

This is a complete transformation of the business of the PBX, he says. The traditional PBX is like the mainframe was years ago. By moving phone calls onto the Internet using the powerful industry standard servers, businesses can get lower costs and higher productivity.

Mega-trends driving this including Moore’s law, improving network performance, and computers that can process audio and video better.

Now is the time when communications will be revolutionized, starting with the phone call and moving on to screen sharing and other types of collaboration.

Now he’s got up a slide showing how PCs have changed since 1977. He shows the Altair — “that’s the computer that got me to drop out of school,” he says — and he’s talking about all the changes by decade, including advanced operating systems, the Web, and now communications.

That includes the mobile phone. The key players in the mobile phone business are likely to be the people who are great at doing software, Gates says, an argument you’ve see on Big Tech before.

Gates says Microsoft surveyed people about how they use a desk phone, and found that just one in three have successfully transferred a phone call, and even fewer have set up a conference call. It just doesn’t work, he says. “This has been its own world, not touched by the magic of software.”

This is also a change in the business structure, so the opportunity for people to come in and do new things is much larger. New players will have the opportunity to come in and add valuable new applications to the phone, in the way they do with e-mail now. (One of the difficulties Microsoft will run into here is reliability; people have a really strong expectation that their phones will work perfectly every time. Software crashing your phone? That won’t go over too well.)

We’ve seen this transformation before, Gates says. Microsoft and Intel changed the computer industry, making it a more open business with opportunities for newcomers to build businesses.

Gates is talking about all the opportunities that its vision will open: More innovative phones and devices, interoperable applications, because of an open communication software platform sitting on top of industry standard infrastructure.

He says that in the beginning, this will work alongside the PBX. But over time, this will be a solution that just involves software running on top of industry standard servers, moving data over the Internet.

Ten years from now when people think about telephony, we’ll look at movies and see the old desktop phone and people will say, “Oh yeah, we used to have those — that was really intimidating,” Gates says. (That’s a bold statement; companies change out things like office phones very slowly. I’d be surprised if today’s phones become an old memory so soon. Another factor that he’s leaving out here is the network effect. This software is most valuable when everyone within an organization is using it — and it will take quite a while for this advanced communication software to get such a large installed base.)

Now he’s talking about how this type of software will save companies money. People won’t need to wait on hold as often, because IM-like presence capabilities will show folks whether people they want to reach are available. Travel costs should also drop, he says, when people can communicate clearly without having to be face-to-face.

Gates says Forrester did a study for Microsoft that found a business would get a 500 percent return on the investment of going to this platform over three years. The reason why it’s so high, Gates says, is because businesses would be leveraging investments they’ve already made in servers and data pipes, among other things.

Now Gates is showing off RoundTable, a five-way camera that you can sit in the middle of a conference room to present a meeting to someone who’s remote. Because of software, the camera knows which speaker to focus on during the meeting, as if a person were controlling the camera.

He’s showing a video with Virgin Megastores, which is using RoundTable. Four people are sitting at a table, and someone remote can see both a screen on someone’s PC and the people in the room. The argument is that it helps them to make decisions more quickly.

Gates says this isn’t software telephony — it’s “much, much more than that.”

This is a big bet that Microsoft has made over several years, “one that we feel great about.” He’s bringing Jeff Raikes, president of Microsoft’s business division, to the stage to talk more about this.

Raikes says that last year Microsoft was talking about the roadmap, and today they’re here to launch the product, making this “an important milestone.”

“Collectively, these underlying technology form the backbone of software-powered communications … it’s a big R&D bet for Microsoft,” Raikes says.

He says these will deliver revolutionary economics in voice communication. The era of phone tag, voicemail jail, and other hassles is ending, he says. This will change communication as fundamentally as e-mail did in the 1990s.

A big part of this will be making people, rather than objects, the center of communication. In other words, rather than thinking of dialing phone numbers, people will find people by their names. (A call might ring on three different phone numbers, or a voicemail might show up in an e-mail inbox to make it more accessible, for instance.)

The average office worker wastes 37 minutes per week in voice mail jail or playing phone tag, Raikes says, citing research. That adds up to 30 hours per year, he says — all lost productivity.

Now, a demonstration. Eric Swift, a senior director in the unified communications group, is going to do it. He’s demonstrating how a sales rep would use the software.

The sales rep puts on a headset, while in the car, to check all of his messages. He can call in and check e-mail, voicemail, etc., via voice commands. He enters a pin to enter. It tells him he has a voicemail. It then tries to hang up on him, saying it heard him say “goodbye” (which he didn’t say). He then tries to check voicemail, but realizes he has to go back to the main menu by saying “main menu” before checking voicemail. He then tries to go back and clear his calendar by saying “clear my calendar,” but it doesn’t work; it says he has to say “more options” before doing that. (These glitches are a little embarrassing, prompting snickers from the crowd; they would be pretty frustrating in a real-life environment. Nice concept, but Microsoft clearly has some work to do on the voice interface.)

Now he’s showing a “presence” demonstration, an IM-like interface that shows who’s available and how they want to be contacted.

From within e-mail, he can send an instant message and see who’s available. The IM also picks up subject lines from an e-mail, so that the person on the other end can see what the communication is about.

Now he’s demonstrating how to set up a conference call by dragging and dropping a contact into a communication window. He can also set up a video chat with a click. (This is simple for someone who’s computer-savvy, but it could be a bit of a challenge for some others. There are a lot of different windows up here. And it’s important to note that if just one key person in a conference call doesn’t know how to use the software, there’s the risk that it could screw up the whole call.)

Now he’s demonstrating a group meeting using video.

Now, he’s showing that you can contact someone from within a document, when the document has that person’s name in it. Click the name, and it shows ways that person can be contacted.

Raikes is back on stage, stressing that the capabilities demonstrated are available today. “This is not something that costs $300,000 to get started,” Raikes says.

(Important note: The piece of this presentation that involved working within software on a PC went a lot more smoothly than the part that involved voice recognition on a phone. Microsoft will probably want to work with companies that specialize in phone service to improve the phone experience, and the company already has some of those relationships lined up.)

Raikes predicts that in three years more than 100 million people will be able to “click to communicate” using this kind of software, using Microsoft software or software built on Microsoft’s platform — and VoIP will cost only half as much as it does now. He says Gibson Guitars is seeing a 25 percent cost reduction so far. Intel is using communications server now, he says.

Etienne de Verdelhan, CEO of L’Occitane, is on stage. He explains that the company has more than 900 stores, and it exports more than 85 percent of its product outside France. He talks about unified communications, saying it’s helping make IT more popular in the organization because it’s helping people communicate more effectively. He says they’re planning to roll it out across the whole organization, which will be more than 500 people. (I wonder how many people are using it now?) Eventually, he says they want to remove the PBX systems. Important to note that he says they would start by taking out PBX systems in smaller sites, and then perhaps in larger ones. This system will be very gradual, it seems.)

Raikes says three global telephony companies are introducing roadmaps based on the unified communications idea: Nortel Networks, Ericsson, and Mitel.

SAP is working to build presence and click-to-communicate into Duet, its software that it develops with Microsoft. (Note that there’s little chance that SAP’s best-known rival, Oracle, will make a similar move. Oracle CEO Larry Ellison has no love for Bill Gates or Microsoft. It’s worth pondering whether some application developers will be reluctant to build Microsoft technology into their programs, unless they know for certain that their customers are demanding the capabilities, and that it will help them to sell more software.)

Gates is coming back to the stage to wrap things up. He says the unified communications shift will be really significant — like the shift to the graphical user interface. People will expect information like presence to be widely available. He says that eventually, white boards and table surfaces will be tied into a system like this, making communication a lot more fluid.

The presentation has ended.

For more on Microsoft’s strategy, click below to hear Jon Fortt’s interview with Gurdeep Pall, corporate vice president for Microsoft’s Unified Communications group.