Seamless ComputingOpportunities & Challenges for China Kai-Fu Lee Corporate Vice President Microsoft Corporation

Talk OutlineIT & Growth Seamless Computing Opportunities for China

Software : Engine of growthPower of software today:US$200 Billion industry 10 million well-paid professionals wellIncreased efficiency everywhere 5 times faster growth than GDP

Will the growth continue?Microsoft: YES! Microsoft R&D: 1998 : $3 billion 2004 : $7.9 billion What fuels this growth?Moore’s law Waves of innovation.

Waves of InnovationResearch & DevelopmentEngineering Intellectual PropertyXML/SOAP HTTP/HTML SMTP

Speech/Writing Devices everywhere Wi-Fi/Broadband WiWeb Services Trusted Computing Hardware Rights Management

Internet Web Browser Email Clients

Mouse GUI LANs

Desktop publishing Enterprise applications

PC Architecture Operating Systems

Spreadsheets Word Processors

Market AdoptionIntellectual Property Economic Value Seamless Computing2005

PC1980

Applications1990

Internet1995

Seamless Computing: The Next WavePerson-toPerson-to-Person Interaction

ConnectedContent Addressability Person-toPerson-to-Machine Interaction Machine-toMachine-to-Machine Interaction

SelfSelforganization Replication

Information Driven

Amazing visualization

Speech & Intelligent UI

Experiences

Ink & Handwriting

User Interface EvolutionNatural User InterfacePersonal Assistant Multimodal (speech, ink…) Graphical Natural Language User Interface Search Engines Hyperlinks Multiple Windows Digital Decade Menus XML Command line Web Services1985 PC 1990 GUI 1995 Internet Smart devices

Natural User InterfaceDo what I meanNUI InteractionNatural & task-based taskExpressive & efficient Scalable & adaptive

“To me, speech recognition will be a transforming capability … when you can speak to your computer and it will understand what you're saying in context.” – Gordon Moore “Speech and natural language understanding are the key technologies that will have the most impact in the next 15 years.” – Bill Gates

A Roadmap Towards NUI VisionTTS SRSpeech

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A Roadmap Towards NUI VisionBuy 100 shares of MicrosoftTTS SRSpeech

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A Roadmap Towards NUI VisionBuy Microsoft stockTTS SRSpeech

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What is the best University in California?

A Roadmap Towards NUI VisionTTS SRSpeech

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Send flowers to my wife on her birthday

A Roadmap Towards NUI VisionTTS SRSpeech

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I want to plan a vacation to Europe

Speech Accelerated by… …Super-Moore’s Law SuperEnable human-level speech recognition (SR): humanLeveraging Moore’s Law + more data + research Predictable 10% error reduction or more per year HumanHuman-level performance possible in 10-20 years 10Tasks Free style transcription Alphabet letters Read newspaper transcription SR error rate 30% 30% 5% 3% Human error rate 4% 1% 0.9% SR-Human SRGap 19 years 15 years 11 years

Also enable natural language, Bayesian learning….

IT & Software : Opportunities for ChinaChinaChina's IT Spending (US$B)

China = #1 factor in Asia’s growth Huge market#2 PC market in the world #1 phone market in the world

50 45 40 35 30 25 20 15 10 5 0 2000 2001 2002 2003 2004 2005

Huge growth25% CAGR in IT 50% in software & services

Opportunities Leverage strong traditional industries Large talent pool Outsourcing becoming global trend

Challenges Lacks software eco-system Lacks IT leadership talent India is far ahead in outsourcing

India : World Leader in Outsourcing“Ideal” population for outsourcingEnglishEnglish-speaking country with good education EntryEntry-level call center jobs with growth path 700 million people under 35 Highly adaptable culture

Process leadershipCost optimization “Go to India for cost; stay for quality”

Valuable companies with ambition beyond outsourcingTop 4 companies worth US$50B showing astounding growth Good environment for start-up companies start-

Opportunities Insatiable demand for outsourcing Aspiration to build software company

Challenges Lacks infrastructure/modern cities Lacks domestic market

Recommendations for ChinaToday: Today:Learn by building an outsourcing industry (like India):Learn from Indian companies, build 2-3 large companies. 2Stimulate software companies with high-

demand US customers highBe willing to take on “simple” work (testing, localization) Educate talent with English, int’l sales, large proj. mgmt. skills

Develop a Chinese IT software industry (like US):Leverage China’s huge domestic market & traditional industries Build on areas where software value is understood (enterprise) Educate talent with market research, customer-focus experience customer-

Lead by finding leapfrog opportunities that favor China:Web services : Disruptive change + advantage for local players Mobility & phone : Unique market that is advanced & large

Educate leadership talent by improving higher education“Hard skills” : international business, management, process “Soft skills”: teamwork, communication, “EQ”

Future: Future: Software export to international market