The Power of Innovation Balancing Investments During Periods of Economic Uncertainty

1. The Power of InnovationBalancing Investments During Periods of Economic Uncertainty John Frederiksen General Manager Response Point Microsoft

2. Introduction

3. Business Climate:What We Hear From Our Customers: SAVE METIME INCREASE OURPRODUCTIVITY SAVE ME MONEY HELP US GROWOUR BUSINESS

4. Importance of Communications “In the next decade, sweeping technology innovations driven by the power of softwarewill transform communications.” Bill Gates, October 16, 2007 Microsoft Office Communications Server 2007 Launch

5. Microsoft Research Priorities • Communication and collaboration Areas of Research that Touch Telephony Communication hardware Human-computer interaction Mobility Natural language processing Speech technologies

6. The Innovation “Playbook”Connect, Integrate, and Help Imagine New Possibilities H/W Solutions New Markets S/W Solutions New Customers Partner Opportunities New Channels

7. Experience Innovation: Bank of the Future

8. Experience Innovation: Bank of the Future

9. Communications In Today’s WorkplaceEnvironment: Chaotic, Cost-conscious, Fragmented, and Demanding Communication Overload How can I prioritize and react to the sheer volume of communications and be more productive? Global/Distributed Customers, Partners and Teams How can I get a global organization to act in concert across boundaries? High Cost of Communications £ € How can I leverage existing enterprise infrastructure and the Internet to lower communications costs? $ ¥ Disparate, Complex Networks How can I integrate my communications and PC networking infrastructures?

10. The Software Turning Point Choice Innovation Productivity Lower Cost Unified Communications Platform

11. Experience Innovation : NASCAR Today

12. Experience Innovation : NASCAR Today

13. Microsoft and Small Business Segment • Long-term infrastructure Investments • Telephony is an extension to their Microsoft infrastructure • Response Point leverages Microsoft’s SMB expertise “With all the included features, Response Point is a cost-effective phone system-an equivalent phone system would have cost us about four times as much.” Matt Spencer,President, Dixie Medical

14. Response Point Learning's Act Fast Ponder Less Learn Listen to your Channel… ~6 month Release Cycles… Flexibility with New Partners…

15. Thank You Contact Information: johnfre@microsoft.com 425.706.6104

16. Appendix

17. Microsoft’s Investment in Innovation R&D Expenditures For CY2007 $7.1B $6.1B $5.8B $4.7B $4.5B $4.4B $3.6B $2.2B $1.6B $782M Apple Google Oracle HP Motorola Cisco Sony Intel IBM Microsoft SOURCE: 10K & 20K SEC Filings

18. Microsoft and Unified Communication Benefits the larger enterprise • Investment areas: Unified Messaging Instant Messaging Enterprise Telephony Conferencing “In June 2007, we saw almost 200,000 conferencing minutes on Office Communications Server 2007. Now, if we would otherwise pay 10 to 20 cents a minute that’s an estimated $20,000 in savings.” OyvindKaldestad, Director of Information Technology, Lionbridge

19. Changing Face of CommunicationVendor-centric PBX Era Phones Applications Vertically-integrated communications Firmware Hardware & Network

20. Transforming Business ModelsUnified Communications Era Phones Innovative Phones and Devices Applications Interoperable Applications Vertically-integrated communications Multiple Vendors Firmware Open Communications Software Platform Industry Standard IT Infrastructure Hardware & Network