Microsoft Corporation Presents at Morgan Stanley Technology, Media & Telecom Conference, Feb-26-2013 08:45 AM - NasdaqGS:MSFT

NasdaqGS:MSFT

** Summary of Executive Statements**

Kurt DelBene (Executives)

1. Overview of Office 2013 Release:

   • This is the most exciting version of Office in over 15 years.
   • Key differences include simultaneous shipping of desktop applications, servers, and services.
   • Enterprise customers can start deploying products from December of the previous year.
   • Consumer launch on January 29th with strong features like social connectivity, cloud integration, and a subscription service.
   • Office 365 Home Premium allows up to 5 PCs or Macs to use Office.
   • Strong release for Office 365 services, including specific offers for small and medium-sized businesses.
   • Office 365 has gained significant traction, with 1 in 5 enterprises using it and a 150% increase in small and medium business customers.

2. Subscription Model:

   • Customers can choose between perpetual licenses (Office 2013) and subscriptions (Office 365 Home Premium and Pro Plus).
   • Benefits of subscription include easy downloading, real-time updates, and ongoing relationships with customers.
   • Strong value proposition with multiple device support, additional cloud storage, and Skype minutes.
   • Initial uptake supports the current price point, and no immediate plans to adjust prices.

3. Touch-Enabled Devices:

   • Windows 8 integrates touch as a core feature.
   • Office is well-tuned for touch, with a focus on the new Metro design aesthetic.
   • Touch is becoming the standard for interacting with PCs, and Microsoft is heavily invested in natural user experiences.
   • Future developments include voice interaction and advanced input methods.

4. Product Evolution and Future Directions:

   • Workplace dynamics are rapidly changing, leading to investments in social collaboration tools like Skype and Yammer.
   • Expanding the Office business through note-taking applications like OneNote, which is growing in importance.
   • Investing in large meeting experiences with touch displays and enhancing software to work well with touch.
   • Future documents will be more dynamic and real-time, integrating web content and other data sources.

5. Acquisitions and Integrations:

   • Skype and Yammer acquisitions are going well, with a focus on maintaining their unique strengths.
   • Skype is being integrated into the Unified Communications Group to enhance enterprise and consumer connections.
   • Yammer is being priced to ensure broad deployment and is becoming a key part of the Office 365 service.
   • Customer reactions have been positive, with a viral adoption model and integration into enterprise agreements.

6. OneNote:

   • OneNote has evolved into a daily operating app, with cloud synchronization and integration with other Office applications.
   • Features include real-time note-taking, handwriting recognition, and cross-device support.
   • OneNote is positioned as a comprehensive tool for capturing and sharing content, with ongoing innovation planned.

7. Enterprise Adoption:

   • The 2010 release was strong, and the 2013 release is expected to build on that success.
   • Side-by-side deployment of 2010 and 2013 is possible, allowing for gradual transitions.
   • Key features like business intelligence, unified communications, and e-discovery are driving enterprise demand.
   • Relationships with customers are becoming more strategic, with opportunities for upselling and expanding workloads.

8. Cloud and Subscription Models:

   • Aspirations to move towards a 100% subscription model, but currently strong in hybrid environments.
   • Quarterly release cadence for Office 365, with plans for a major-minor cycle for structural changes.
   • Addressing data sovereignty and content discovery issues to make customers comfortable with cloud migration.
   • Subscription model offers a lever to combat piracy and increase customer value.

9. Consumer Value Proposition:

   • Multi-device support increases the average customer value.
   • Always-up-to-date service and cross-device functionality are key benefits.
   • Subscription model allows for easier delivery of new features and differentiated client experiences.

10. Cross-Device Experience:

    • Significant work on iOS devices, including a new version of Outlook Web Access and enhanced web applications.

    • Focus on delivering a great user experience on all devices, not just replicating PC software.

    • Web apps are available via SkyDrive and Office 365, with plans to expand cloud storage and connectivity.