Jim Ewel
Marketing Vice President
Microsoft presentation
Salomon Smith Barney Technology Conference
New York, New York
September 7, 2000
MR. GARDNER: Good morning, thank you. My name is Richard Gardner, I cover PCs, wholesales IT distributors, and a couple of other sectors for Solomon Smith Barney on the technology side. Our next speaker this morning is from Microsoft. And I'm not going to spend a great deal of time on an introduction, but we are very privileged this morning to have with us Jim Ewel. Jim, as many of you probably know, is responsible for product management of Windows 2000 Server, and Windows Terminal Services. He's also responsible for Microsoft's initiatives in the ISP and the ASP side.
Jim has been with Microsoft since about 1989, started out as an enterprise sales manager in Chicago, and from '94 to '95 was responsible for Windows NT Server, and Microsoft BackOffice, and was responsible for the launch of Windows NT Server 3.5 and 3.51. Without further ado I'm going to turn it over to Jim Ewel.
Jim.
MR. EWEL: Thank you.
I guess I don't have a lot of leeway with the mike, so I'm going to just stay over here. It's going to be a little tough for me, because I tend to wander around a bit. So if I wander too far from this mike and you can't hear me in the back, just wave at me and give me a hint that I've moved too far.
So I told Richard that I would talk about three things today, about how Windows 2000 is doing, and what we see in terms of the acceptance in the marketplace, a little bit about our competitors, and how we see ourselves positioned against people like Sun and Oracle, and also about the future, a little bit about what the future holds for our Windows business, both on the client and the server.
The first thing I would say is that one of the things we look at whenever we introduce a new version of Windows is what is the customer acceptance in terms of some of the indicators of the infrastructure. Things like what are independent software vendors doing, if they're writing applications to your platform, you know that they are seeing demand from their customers. And we are seeing very good acceptance from the ISV. This time with Windows 2000 we did something that we've never done before, which is we put a very high bar for certified applications.
We have two kinds, sort of compatible applications, of which there are about 10,000 applications, we add about 500 each month, and certified applications which really take deep advantage of Windows 2000, they take advantage of the Active Directory, they take advantage of the installer technology, they take advantage of technologies like Intellimirror. And we are starting to see a number of these applications that are taking very deep demand of the operating system. We're shipping right now about 140 of those, with about 300 in the cue at the testing lab.
The other thing that we see is very many people getting trained to deploy Windows 2000. When we started out we had a goal of having about 100,000 people trained by the launch. And we're already seeing upwards of 250,000 people trained. That, again, is a good indicator for us that customers are actually demanding trained people on Windows 2000. And of course, we did release the service pack about  I think it was about six to eight weeks ago now. So we now have SP 1. That was a critical thing in terms of mindset. Many customers sort of took the attitude that they were going to wait for Service Pack 1. And we have seen record downloads of that service pack. In fact, in the first week we saw over a million downloads of that service pack, and we have had very good feedback from the customers about the stability of that release.
We are also starting to see adoption among major organizations. One of the things that I find kind of ironic right now is that I hear a lot of stuff in the news about some of our partners, HP, and Compaq, and Dell, whatever, talking about Linux. And certainly Linux has become a good way to generate some good PR. But, if you look at what they're really using in their businesses without exception, HP is deploying Windows 2000 to their desktops, IBM is, Dell is, Compaq is, Intel is. All of them, rather than use Linux, are using Windows 2000, and are among our earliest adopters, and our most fervent supporters about the quality of Windows 2000 on their desktops.
We are also seeing some switcher customers, and in some particular areas. Credit Suisse was one that we talked about at the launch, and they're deploying Windows 2000, both for their financial workstations, and to their servers, and in many cases they are doing that and replacing some Sun servers, or working in conjunction with Sun servers. And as they add new machines adding Windows 2000 servers instead of Sun.
The other trend that we are seeing is in the workstation arena, where traditionally you had a lot of customers that used UNIX at the workstation to run sort of high end, CAB, CAM and engineering programs, and then they would have a separate machine, a separate PC on their desktop, which was their Windows desktop to run productivity applications. Now with Windows 2000 they can actually use the same machine for both those high-end graphics CAD, CAM machines, and also their productivity desktop. So they're replacing a UNIX workstation and a Windows PC with a single Windows 2000 desktop. And that's what they did at United Defense, and are starting to do at Motorola, and we see that as an ongoing trend.
On the server, a lot has been talked about in terms of Active Directory, and we are now starting to see some of the large deployments of Active Directory. Now, any organization will tell you that you do need to do some planning, and it does take some time to roll out Active Directory. But, a lot of it is just getting people over the mind set that it's that hard and showing them examples of other customers that are rolling out large deployments of Active Directory. And we are starting to see these. Telus for example, rolled out over 14,000 users; Vosh (sp) out of Germany has rolled out over 35,000 users in their organization.
We also are seeing some competitive switchers, particularly among some of the dot-coms. So, for example, Web MD was a switcher from Solaris Netscape, and the main thing that drove them to switch was moving to our development technology based on COM-plus, and moving away from CORBA on Solaris Netscape. We also have seen switchers from Linux. GoInvest.com, for example, switched from Linux because they said they were rebooting their Linux servers everyday. And with Windows 2000 they have had those machines up constantly, and have not had any unexpected downtime with those machines.
Some other web sites have also migrated to Windows 2000, and we are starting to see some of the largest web sites migrate to Windows 2000. This is just a brain dead, easy thing for customers to do. And what we're hearing from the dot-com customers is that when they implement Windows 2000, and the new version of Internet Information Server that is part of Windows 2000, they're seeing two major benefits.
MSNBC, for example, saw a tremendous performance benefit. They are able to handle now with just four servers the volume of traffic that they previously required eight servers with NT 4. So they're seeing roughly a doubling of performance. And any time that you can go to a customer and say, for a simple software upgrade I can deliver essentially twice the hardware that's a very good value proposition. That's a very easy sale for us.
The second thing that they're seeing is tremendous reliability. We did a lot of work in Internet Information Server 5 to make it a more reliable system, particularly for the large dot-coms, and for the hosters. One of the things that's very different about the product is its ability to host multiple companies on the same server. And so we are starting to see adoption by various hosters. Dell's hosting service, for example, offers both Linux and Windows 2000, and they have been steadily creeping up in terms of the percentage of Windows 2000, to the point that now it is the preferred choice for their customers.
One other interesting note is that we are now seeing some more accurate numbers about who actually runs the Internet. I'm sure if you follow the PR recently, you always hear numbers quoted by Linux about how they and Apache run the Internet, and they quote these numbers from a company called Netcraft. Well, it turns out, about a month ago, that Netcraft started looking closely at the numbers, and one of the things they noticed is that they had a huge number of sites that were what they called parked sites. Parked sites are basically ones where someone has  they've reserved the domain name, a particular name, maybe they'll want to sell it later or something like that, but they aren't actually doing anything with that site. It just says under construction, or it points you to somewhere else, or whatever. But it's not an active site on the Internet.
It turns out that when they eliminated those sites, most of which were hosted on Linux, and which don't really in some ways count towards who's really running the Internet, it turns out that it was a lot closer between Windows and Linux. It was actually 28 percent Windows, and about 29-1/2 percent Linux. Big difference from the 60 percent that they were claiming previous to this.
The other thing that Netcraft's numbers revealed is that when it comes to high value sites, the e-commerce sites, and secure sites running SSL, that Windows was, in fact, the dominant player there - in fact, higher than both Sun and Linux. These numbers are easily found on www.netcraft.com.
The other thing that we've done with Windows 2000 is make a lot of progress in terms of scalability. For years, people have sort of knocked Windows NT and Windows for not being scalable. And one of the things that has happened over the last six months is, if you look at all of the standard industry benchmarks, whether those be benchmarks of sort of CPC type of benchmarks, which are sort of artificial but well audited benchmarks, or the major benchmarks of applications like SAP and Seybold and others out there, you'll see that now Windows 2000 dominates those benchmarks. In fact, we've always had very good price performance, we totally dominate that. We right now own the top 60 numbers on there. So just totally dominant there.
But what we've never had before is, we were never in the top 10 for absolute, you know, price is no object scalability. Just deliver me the best performance; I don't care how much it costs. We now own the top five absolute benchmarks, and we do that at about one-third the cost of Sun and Oracle.
One way to look at that is to compare our 64-way solutions. We use a very different approach to this. Sun uses a scale up approach on a very expensive E-10000. We use a scale out approach using standard Compaq Eight-way machines. One of the reasons why this is very attractive to dot-coms is that they can scale as they need. They can start off small, and they can gradually, in increments, add additional machines, and they can scale at a much more reasonable investment for them.
So, what you see here is that Windows 2000 generates 50 percent better performance for $3.2 million compared to $11.2 million for the Oracle-Sun solution. In fact, just recently Oracle and Sun, which have traditionally owned the top numbers, actually slipped out of the top ten. Their best number is number 11. Sun recently did publish a number that was a better number, they put out a lot of bragging rights about this, but they actually did it with Sybase, which we don't see that many customers adopting that today. So, we think we have a good solution for those high-end customers.
Now, Oracle and Sun will say, yes, but that's not real. That's not a real benchmark. Well, let me tell you Oracle and Sun, real customers are using this today. One of the customers that is using this today is Buy.com. And essentially what they do is, they sell music, they sell electronics they have different parts of their business, and they essentially partition those different parts of their business on different servers on the back-end. You can see the quote from their VP of information services where he says, hell, yes, this stuff does scale.
The other major area that was a focus for Windows 2000 is in terms of reliability. And in reliability you often hear talk of nines, four nines, five nines, all this stuff. What this means, essentially, is availability numbers. So this is things like, if you're looking at how available is your web site, three nines translates into you have basically less than about a day-and-a-half of downtime per year. Four nines translates into you have basically an hour and some minutes of downtime a year. Five nines is about five minutes of downtime a year.
What we're seeing is excellent uptime for Windows 2000 sites, not in just the lab, but in real world customer scenarios. NASDAQ, for example, we do a surveillance system that looks at every single trade that's done at NASDAQ, that does it in real-time. Over the last year, that has achieved approximately five nines of availability during the time the market is open.
The Boeing site is their e-commerce site, their business-to-business e-commerce site. Barnes and Nobel, Vote.com, they are a customer that switched from Sun because they were having reliability issues, and they are seeing up to four nines of reliability on Windows 2000 and couldn't be happier. And, of course, Dell.com, which is the largest Internet site in terms of dollars that are going through that site has experienced just tremendous uptime during the past 12 months, and they, of course, run on Windows 2000.
So let me talk next about the road map and where we are going. We shipped back in February both the professional version of our product and our standard server, which we call Windows 2000 Server, and our advanced server, which is more aimed at enterprise accounts. Back on August 11th, we released to manufacturing the Data Center version of Windows 2000, which sort of completes the product line, and we'll launch that product on September 26th in San Francisco.
We also released to manufacturing this summer Windows Millennium Edition, or Windows ME. That is sort of the last version of the Windows 9X, 95-98 code base, and that is focused at consumer desktops. That launches, I believe, in the next week or so, and that will be focused on those customers, primarily who are buying new machines from the hardware vendors.
We have two more releases on the horizon. The first is called Whistler, that will be the first release with .NET technology, and it will also be the release where we target out 64-bit edition, and I'll talk a little bit about that in terms of the timing. And then also Black Home, which is our second release with the .NET platform, and it's really a release that's projected out in terms of two or three years, and I'll talk a little bit about both of those.
So, let me talk first about the Data Center product, because this is a very important product for us. I talked a little earlier about the importance of scale out, and how we were able to achieve those great benchmark numbers, and customers like Buy.com were using scale out in real world situations. But we also have customers that want to scale on a single machine, and that's called scale up. And there are a lot of reasons to do that. And we want to support scale out and scale up. The Data Center version is targeted at the scale up customer. And it's targeted primarily at large line of business and dot-com customers, specifically the back-end, usually the data base server of the dot-com customer, rather than the front end web servers, or web blades. And it's aimed at server consolidation. For example, at Microsoft we're consolidating all of our Exchange servers, and we have about 50 or 60 of those today, onto just eight servers with our Data Center Edition.
The key features of the product are, first, the scalability. It scales, advanced is limited to eight processors. This takes advantage of up 32 processors, and up to 64 gigabytes of memory. It also supports some storage area technology, storage area network technology in the form of something called Winsock Direct; it provides very fast access to storage area networks.
In terms of reliability and availability, it supports four-node clustering, which is generally what customers implement in order to get failover. I should mention that this is four-node failover clustering. We actually support up to 32-way clustering on the front end for things like IP clusters. We also provide in this release something called the process control tool. This essentially allows customers to manage these different applications, and to limit the amount of memory, the amount of CPU time that any application is getting. That's important because as customers consolidate, they don't want one application slowing down another or taking over the machine. And the process control tool is something that allows them to partition those resources effectively.
Now, just as important as the Data Center product is the program that we've built around it. One of the things that we see about the Data Center product is that it can't be a product that is supported just in our normal channels. It can't be supported through our reseller channel, or through something that isn't high touch. This absolutely requires high touch capability to support this. So, we've added some new capabilities into this program. Before Data Center, we have for years provided 24 by 7 support for our software. What we didn't provide, and which is provided by the Data Center product is a joint queue between the hardware vendor and Microsoft where the customer can call a single number, 24 hours a day, seven days a week, and get to someone who is going to solve the problem, regardless of whether it's a hardware problem or it's a software problem. We have both OEM or hardware employees in that queue, and we have Microsoft employees. And they jointly take responsibility for the problem, and fix the customers' problems regardless of what it is.
We also provide as part of this, guaranteed onsite response. So we require that the OEMs, and we assist them in this, that if a customer has a problem, we will be onsite within four hours if that's what it takes to get them back up and running.
We also provide a number of high touch facilities prior to the customer actually installing the product. One of the things that we find is that in order to get excellent reliability, we have to help the customers put the processes in place in order to ensure that reliability. And those processes include things like availability assessments. When we go onsite and we inspect what they're doing in terms of their procedures, and we make suggestions about ways that they can improve those procedures. We also provide them with what we call known good configurations. One of the major issues that you see in customers that do not get good reliability is that they don't manage the change control process. They add a new driver here, they put in new bios in there, they put a new piece of hardware in there, and pretty soon they've got a problem, and they don't know where the problem came from because they didn't test the entire set of changes that they made. What we do here is that most of the OEMs provide on a quarterly basis, or every six months, a well-known tested configuration down to each and every driver that they have in fact put through what we call long-haul stress testing. So the customer knows that that particular configuration is a good configuration. We think that's going to help us succeed in that market.
Now, Intel is coming out with a new chip, as many of you know, the Itanium chip, 64-bit chip, and Microsoft is ahead of the game in making sure that we support that chip very well. The main benefits of that product, it does provide a complete 64-bit kernel, all the parts of the product at 64-bit. It does allow 32-bit programs to run in a Windows on Windows compatibility layer. So if you have existing programs, they can run on that machine. Now, they won't get full advantage of the speed and the extra memory that's supplied by the 64-bit chip. To do that, we will have to have a new generation of applications.
The big applications that will see benefit from this 64-bit transition are the large database applications, any application that uses a lot of memory, and any application that needs really rapid I/O, which is the I/O throughput is about four times that of these existing chips. Now, other applications will not see as much performance gain, at least in the initial versions of Itanium. So we see this targeted primarily at certain key markets, the workstation market with the floating point processing  that's the other big benefit that I forgot to mention  the workstation market, and the high-end server market, particularly the database applications.
Whistler is our next version of Windows 2000, and it really is aimed at two things. The first is that Whistler will be the first time that we bring to consumers the Windows NT code base. So we bring and ship a consumer version of Windows that has the reliability of our business operating system, the Windows 2000 operating system. So that's very important, and we will have a version for consumers that is more compatible, but does provide that same degree of reliability.
On the server side, it's primarily focused on making deployment easier for customers, and making it much easier to manage. So just a couple of things that I'd say about that. First is, we will allow customers to have much more flexible directory configurations. This essentially allows them to have different configurations in different departments or divisions of their company, and still be able to manage it as if it was a single directory. The major other impetus is to make it more manageable. And specifically there we are looking at making everything bout the server manageable, not just from the graphical user interface, but also from the command mod. We've heard from our customers, particularly our hosting customers that that's very important. Because as they manage hundreds and thousands of servers, they need to automate that via scripts, and they need to be able to manage everything about the server from the command line.
No speech is complete without sort of a vision of our direction, and our direction is quite clear. Bill Gates stood up and talked about our .NET direction. And since we announced that back at Forum 2000, I've had more calls from dot-coms and from customers and from people that you wouldn't expect to necessarily have been talking to Microsoft. So, we really have seen a resonance in the industry as a result of this initiative. Microsoft .NET is really about viewing something very differently.
Microsoft traditionally thought about operating systems and APIs, and building applications on top of these application programming interfaces or APIs. The thing that's different about .NET is that it assumes the Internet, it assumes that you want to build applications that take deep advantage of the Internet and make the experience for the user much more a two-way experience, not just a push down of the presentation of the graphics.
So there are four key things that make .NET important. The first is, it's no longer just about PCs. Yes, PCs are super important, PCs will continue to be the thing that most knowledge workers use on their desktop as their primary creativity and work device, but in addition to their PC they will be carrying cell phones, PDAs, and other devices, and we want to make sure that we make those devices full class citizens of the computing world, and make sure that they interact very, very well with those PCs.
The second thing is a new user experience. This means a new graphical user interface for Windows, which we're well into designing now, and I've seen early prototypes of this. It also means providing the user with that two-way interaction with the Internet, which is very important to expand the use of the Internet within the user base.
The third thing that's important is a new developer experience. And we revealed this about six weeks after Forum 2000 at our programming and developers conference where we actually were able to deliver to the developers there early versions of VisualStudio.NET, which was real working code that we had been working on for about three years that delivered the ability to them to start designing .NET applications. The result surprised a lot of people, they didn't expect us to have real working code there, and we've gotten nothing but good feedback from the developers because of that.
And the last piece is software as a service. We do see customers who want to implement both their Office and e-mail, and even new kinds of applications as a service, where instead of paying us sort of for shrink-wrapped software, that they are paying us on a monthly basis for maintaining that service, and maintaining certain service levels to them. We do see that as an important transition, and that as we move forward our revenue will be based not only on shrink-wrapped software, but also on this software as a service.
And the last thing about .NET is, it's very much standards based. It's based on a standard called XML, which is the next successor to the HTML on the net, and we are seeing increasing interest from the customers about both XML and what it can do for them. An example of this is the announcement that we made yesterday on new UDDI, this is a universal description language essentially, a yellow pages, if you will, for the Internet for businesses. And what you saw there were some quite unusual partners getting together and saying this is very important technology, and a very important to making sure of the health of the web.
I think that's all I have today. I'm very excited to be here. I'm going to have a Q&A session right across the way afterwards. I encourage all of you to come. I'll be happy to answer your questions. Okay.
Thanks very much. |
