Envisioning Tomorrow – 2019 AT&T Business Summit

[ROCK MUSIC PLAYING] Well, good morning, everyone. With that introduction,
Satya, I’m thinking maybe we turn this
into a personal coaching moment. [LAUGHS] You’ve had a lot of
success at Microsoft and certainly as the CEO
over the last five years. The change that you
have driven there’s been nothing short
of spectacular. And we’ve titled
this segment today, in front of this
illustrious audience, which I’d be remiss if I didn’t
say is a collection of our joint customers– I’m sure many of your
pride and joy customers are out in the audience,
as well as ours– that this segment is called
“Envisioning Tomorrow.” And taking a moment to look at
where technology is taking us, and as the leader of one of
the world’s largest technology companies, could you share
some thoughts about where you see technology
taking us and how these leaders in the
audience should frame up this for their own enterprises? First of all, Jeff, thank you
so much for having me here. It’s great to be here at this
conference with all of you. And as you said, a lot of
the folks in the audience are our mutual partners. And we’re very grounded in, how
does technology and technology innovation ultimately serve
the needs of transformation? And when I think broadly,
though, of the shifts– and I was backstage, both of
us, listening to Tom Friedman. It is always awesome
to sort of listen to how he summarizes
what’s happening. I broadly think there are three
fairly major technical shifts that are happening,
that ultimately the leaders in
the room will have to harness to power their
sort of ultimate business transformation. But the first one is computing. I’ve never seen anything
like this in my 28 years or so in the industry, where
the power of computing– even though Moore’s law in some
sense is really challenged– we are able to overcome that
by just the sheer ability to disaggregate and
then aggregate back in different ways
in a ubiquitous way. So that is the cloud. That is the edge. And this is something
that we will come back to. But the notion that
there is elastic compute, distributed computing
wherever– in every place, in every thing– computing is getting
embedded in the world. Then the next question
or the next big trend is, if you have
all this compute, there isn’t an application, an
experience, a business process activity you will do that’s not
going to be infused with AI. I mean, AI is
simply, think of it as a compute job that reasons
over large amounts of data. And that’s what’s going to power
pretty much every experience. And so AI and its
implications are going to be pretty profound. The last big technical shift
I see is, we all have devices. In fact, we all have
multiple devices. I think in 4 years,
5 years, 10 years, we’re going to really not
think about just one device. We’re going to think
about multiple senses and multiple devices. You’re going to be able to
transition from one device to the other. So in other words, we’re
going to finally put back people at the center versus
the device at the center. And we will have a true
multi-sense, multi-device experience. And you can see all
the beginnings of it. We’re going to launch
Minecraft Earth soon in the United States. It will in fact launch
today in the UK. It’s so awesome to see that
game and how it’s played. Right, there is the real world. There is the virtual world. They blend together. And that augmented reality
vision across devices is sort of the thing
that I see going forward. So these three trends compound. Computing is everywhere. Every experience
is powered by AI. And you live in a multi-sense,
multi-device world. And the question is, what
does it mean for retail? What does it mean
for hospitality? What does it mean
for health care? What does it mean for
broad consumer gaming? All of those are going to be
the transformative trends. Yeah, I think everybody here
probably agrees with that– certainly, if you’ve
got young children. And I don’t mean that to be
the employees of the businesses that you support. But actually, family
members who are consuming just an
ever-increasing number of gigabits on the network. I think there’s
probably two norms that I’ve come to appreciate
in my tenure at AT&T. And that is the demand
for high quality content is ever-increasing. And the need to
deliver that content in the most efficient
manner, in the right way, is also increasing. And for us at AT&T, we kind
of tackle that every day when we wake up in the morning. I think the last
stat that I read, Satya, was, we manage roughly
400 million edge points in our broad scale network. Range is anything or anywhere
from a massive connection to an enterprise customer
to enable their business all the way down to
a wireless device. And we always get
this question about how the network is transforming
and how this compute is moving its way from what has
historically been big data centers with the
web scale players, but where they users are now
actually out in the field. Out, closer to the edge is
where the demand needs to be. And this is some of the work
that your team and my team has been hard at work
trying to expand and explore over the last several
months since we announced our partnership back in July. Before we get there though,
maybe take a moment. You transformed
Microsoft from within. And I think your story
is fairly well-known. But for the audience, maybe
spend a moment and talk about how you actually created
that change inside of Microsoft that has resulted in such great
success for you as a company. I’m a consummate insider. I’ve grown up at Microsoft
all my professional life. So the way I came at it is, in
fact, I was taking over from– Steve was not a
founder, but he had founder status in the company. Paul and Bill started Microsoft. And Bill and Steve
built Microsoft. And as a mere
mortal CEO, I felt I needed to much more ground the
company in a sense of purpose to start with. And that’s what, in
fact, led me all the way back even, to the very origin of
the company, which is Microsoft got started as building
the BASIC interpreter for the Altair in 1975. So if you’ve got a tools
company, a platform company, that sense of purpose
around creating technology so that others can
create more technology– I mean, in 2019, everyone
here is a software company. You are going to build
your own software IP. And so in some sense, if we
stick to what we were really meant to do, which is create
technology so that you can create technology, we’ll be OK. And so that’s what I
went back to, saying, OK, let’s have that. Let’s be proud of
that sense of purpose. Let’s be grounded in
that sense of purpose. And in order to do that,
though, to your point, we needed to have a culture
that enabled us to pursue our sense of purpose– not do things out of
envy, not because others are doing something
and having success. What is it that the
world wants Microsoft to do in a unique way? And that culture– I was inspired by a book
I’d read perhaps five years before I became CEO, by
Carol Dweck at Stanford called Mindset. And I read it because my
wife had introduced me to it more in the context
of my children’s education. And that book really
changed our lives. Because it has this concept,
if you go to school, you go into any
classroom, and you have two girls or two boys– one of them has more
innate capability, but is a know-it-all,
the other person has got less innate capability,
but is a learn-it-all. What happens in life is the
learn-it-all does better than the know-it-all. And that applies to CEOs. That applies to companies. And so we said, let’s
take that growth mindset– more importantly, the ability
to confront your fixed mindset, right. I mean, at Microsoft sometimes
people come to me and say, Satya, we found
the 10 people who don’t have a growth mindset. And I say, that’s not the point. The point is not to go
looking for those 10 people. It’s more important
for each of us to be comfortable confronting
our fixed mindset, moving from these
know-it-alls to learn-it-alls. And that, in the ultimate
analysis, I would say, is the necessary
condition, right. You need a culture that allows
you to create something new, to question status quo, give
you the everyday courage to move forward. And so those are the two things
I’ve come to realize much more than– what, it was close
to six years in the job– that as a CEO, as
a leader, you have to focus on that renewal of that
sense of purpose and culture every day. Because that’s what
will then allow you to even pick the
right strategy, the tech trends, and everything else. But without these
two pillars, you’re not set up to get a lot
of other things right. Yeah. I tell you, that took a lot of
courage inside of Microsoft, I might imagine. And your leadership is evident. I must admit how proud I
am of AT&T and the work we’re doing with your company. It spans beyond just the tech
stack and the work we do, trying to bring a new
way to bring products to the marketplace. But it extends into
things like community, where, as I think Thomas had
mentioned in his prior segment, corporations in
America are being held to a very high standard. And it’s around employees,
around customers, and at the ultimate–
around society itself. And I’m really proud of
the work that you’ve done and that we’re
trying to do together to bring products and technology
to parts of society that are in need. I for one can tell
you that we’ve used tool sets from Microsoft
to help train our organization and teach them new skills, as
well as the partnership that we have trying to address
the homelessness, even here in Dallas, in OurCalling
app, which is a technology platform working
with Microsoft that enables homeless people that
are unfortunate to get access to care and services that
they otherwise might not know about through
the use of technology. And so really, you walk the
talk, is what I wanted to say. And I’m very proud to
partner with Microsoft. As you think about the
way the cloud has evolved and the things
that you have done to expand the importance of
cloud in today’s day and age, what kind of advice would
you share, or watch-outs, or opportunities
for the audience? One of the things I
think a lot about is, if we use this term that every
company is a digital company, every company is a software
company, what does it mean? Like, how does one create
that digital strategy inside of any enterprise, in
any [INAUDIBLE] or industry? And the formula, at
least I think about, is what I describe
as “tech intensity.” And the inspiration
for this came from, there’s an economist
at Dartmouth by the name of
Diego Comin, who did one of the best longitudinal
studies of technology diffusion. It was mostly studying what
happened during the Industrial Revolution– how did
technology get created, and how did comparative
advantage come about? And essentially, his conclusion
was that two key things need to happen. One is, in this context what he
talked about around countries, I think applies to companies. Each of you will need to get on
the efficient frontier of what is new technology, right. So that means you should
be, in fact, first and foremost, the best
adopters of new tech. It’s kind of like back
to your learning– always continuous learning. Correct. And the last thing
you want to be is out of position,
both in terms of cost structure and other. And you lose time if
you’re not basically taking what is available. The cloud is a great example. At this point, if you take
cloud, its efficiencies, its innovation– that can be a massive
accelerant to you. So therefore, how do you adopt? And it’s got to be
evergreen, right. This is not a one-time,
I adopted something, and then it instantly
becomes legacy. That’s, in fact, a big mistake. So you’ve got to really
have a way for you to adopt technology fast. And that means you need to
even have a lot of trust. And we’ll unpack that later. But you have to have
really the ability to get the latest technology. But here is the key thing. You need to build
your own digital IP. In some sense, you’ve got to
build your own proprietary IP on top of what you brought
into your organization. Right, like one of
the things that you don’t want to be caught up is
spending your scarce resource on essentially building
something that can be available or that is available
as a commodity. So you want to bring
in the commodity and build your proprietary IP. Interesting, one
data point here is– in fact, I found this
data in LinkedIn– today, the number of software
engineers being hired outside of what is considered the
tech industry is greater than the number of
software engineers being hired in
the tech industry. Right, in fact, the
crossover happened in 2017. And so that means you’re
already doing IP creation. The question is, is
it most leveraged? And that, I think, is the key. And of course, you’ve got
to not only adopt and build capability, but you also have to
do this with trust all around, right. There are lots of nuances
here– trust in who are your suppliers. You can’t have a bunch of
suppliers who turn around and compete with you. Yeah. So you have to have
a real understanding of even the game theoretic
way or how digital network effects play out. Trust in technology–
that is, you’ve got to produce technology
that your customers are going to trust you. So that, to me, I
think, is what I describe as “tech intensity”– is that the simple formula– tech at option times
tech capability to the power of trust– is what I feel every
company needs to do to become a software company. Yeah, let’s take that a little
bit further and maybe kind of weave in some of the work that
our teams are doing together in the edge, our Network Edge
Compute strategy, and 5G. Because I think, speaking
on behalf of AT&T, we are a storied company. We’re rather large. We operate an amazing network. And at times, we like to
invent things on our own. If it wasn’t invented here, it
typically is not good enough, was the old mantra. And so part of our change
formula within AT&T is to recognize trusted
partners like Microsoft that have nailed the cloud scale
with Azure and the right tools that we need to improve our
performance delivering service to this great group of
customers and many others around the world. But at the same
time, how do we bring the best of what
Microsoft has and the best of what AT&T’s deep network
technology has to offer? And everybody always
asks me the question– I don’t know if they ask you– tell me about 5G. What’s 5G really going to do? How is it going to transform
the economy and the world and the product set? And maybe spend a moment. Let’s talk a little bit about
how your company and AT&T were coming together to bring
some real neat products and services to the market. Yeah. Well, first of all, Jeff,
we are very, very excited about this partnership. And it, in fact, speaks
to that tech intensity, right, which is, what is it
that we can bring to the table? What is it that you
can bring to the table? And then everyone
in the audience. So in some sense,
this is not about any one of us being
the platform company or the software company
or the digital company. It’s all of us
collectively doing things that make
it possible for us to run our businesses as a
cohesive set of components that come together. So one of the things
that’s been exciting to me is to see even the early promise
of what you’re building out as your platform with 5G
and the Mobile Edge Compute and the Network Edge Compute. It’s just transformative. Once you start saying that is
low latency access to compute, I think it changes everything. In fact, one of the
first demos we did was essentially for
drones in cities– how do you do the moral
equivalent of an FAA to be able to coordinate
their flight activity, right? That requires absolute
low latency coordination at the edge. And so that is one
of the developers we enabled with your network
and our edge computing APIs, and that’s how they built that. In fact, recently we
brought one of the services that we built for
Xbox, called PlayFab. Essentially, it’s an
ability for a game developer to monitor what’s
happening in the game. I mean, every game, by the
way, is like an economy. When a game developer ships
a game, it’s not like, oh, here is the game. They literally are monitoring
the game in a real-time basis and then changing the game. It’s called “live ops.” And we now have, again,
that live ops service at the edge on the AT&T
network for developers to write new types
of applications for any game they launch, right. So these are the
types of things. But now let’s put it
together, let’s say, in a commercial context. Take retail. When you’re walking on a retail
aisle with shelves, to me that’s a compute device. And so the question is,
where is the compute? Where is the AI
reasoning happening? And so this is where, I think,
when the AT&T and Microsoft are going together to any
of our retail partners and enabling their
stores to become, really, the edge compute
of the combined network is probably where
we’re going to go. Same thing with hospitals. Same thing with
manufacturing plants. So it’s a pretty
exciting future. It’s about developers. It’s about business
decision makers and how they envision
some of these scenarios. Yeah. I mean, it gets
us pretty excited when you think about
the history of, everything is
headed to wireless. We all know that the concerns
around security and privacy is becoming more and more
of our daily discussions and what keeps us up
at night to ensure that we’ve got secure
connections with this very valuable data. I can remember a time when we
first launched our wireless industry and the
through-puts on that network were measured in kilobits. And we were celebrating if
we got double-digit kilobits. And you fast forward to
today, and it’s 200 megabits. Maybe latency is in the
20-millisecond range. Here next year, the industry
will launch nationwide coverage of 5G. And you’ll see that
millisecond performance improve to something that is virtually
faster than the brain can process, which opens up a
real canvas for engineers and product developers to do
some really interesting things. And what I’m most
excited about is the way we’ve approached this
partnership with Microsoft– our core network
teams and building of the 5G standard and
the new architecture. We’re not thinking about this as
a finished product or a service that is so mission-specific
that we kind of paint ourselves in the corner. Yup. But rather, how do we
open up the network, along with our Azure
compute components with you, to your developers? Right. And kick this to the
app developer community, so we can find ways
to really reveal the value of what this very
high-speed, low-latent network can do in areas like
retail and others. And what we think about
in our back rooms, as we put these plans
together, is less about what my company can
do for Microsoft and what Microsoft
can do for AT&T. But we’re thinking, how can
we make our joint customer more competitive against your
competitors in this space, as you mentioned? There are big-scale
players, platform players, who are eating around the edges
of many of our businesses. How do we enable them to be
faster, stronger, and healthier to compete against that? Maybe spend a moment, and
share your thoughts on that. Yeah, it’s an interesting thing. In a world where
everyone’s building out these digital platforms– right, every retailer
is, every hospital is, every industrial company is– one of the keys for us is what’s
sort of a way for the economics here to work? In fact, I think one of
the fundamental things one has to recognize is there
are two different business models at play right now. There is platform
economics, and that is what I’ll call
“aggregator economics.” They’re very different. Platform economics–
in fact, I sort of consider ourselves building
platforms and technology platforms. They’re only stable
if people building on top of your platform
are successful. In other words, you can’t
have platform economics if people are not able to
derive value from the platform and be successful
in whatever they do. So even in our partnership,
how are you benefiting? In fact, when the two
of us produce something, how is the retailer benefiting? That’s right. That’s the only way the
platform can be stable. Aggregator economics
are slightly different, because aggregator
economics are where you are really both on the
demand and on the supply. You can even play pretty
game theoretic constructs of, subsidize one side for a while
in order to capture share, and then increase prices,
and so on and so forth. So aggregator power has just
got many different dynamics. In some sense, I
look at it and say, Microsoft will be
successful if our customers will be successful. And that’s sort of what
governs, in fact, how we even think about both the business
model and the product innovation. And in the aggregator case,
it depends on who at what time needs to be successful. And that’s, I think,
something that needs to be well-understood. And so to me, what is
important for us and AT&T– and that’s one of the reasons
why even our partnership– we are well aligned around it. Because both of us need
everyone in this room fundamentally to be successful
with their digital capability building, their
business transformation. And what we need
to be able to do is give you the tools to
build your own platforms. And that, to me, is I think
one of the things that will play out in the
next 5 to 10 years, is a better understanding
of digital network effects, the distinction between
platforms and aggregation effects. Because today, I think people
conflate the two as just one. But they’re very distinct. Well, Satya, I
really do appreciate you taking time to come
participate in our summit. And I wish you all the best of
success on your next journey. And I’m looking forward to
co-piloting the future here with you. And I hope that we’ll be
able to announce some really marquee products and services
available in the marketplace in a not-too-distant future. Oh, thank you so much, Jeff. It was a real
pleasure to be here. So please, give a round
of applause to Satya. Thank you. [APPLAUSE] [ROCK MUSIC PLAYING]

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