OECD Working Party on the Information Economy, Paris June 2, 2006

Thomas Myrup Kristensen EU Policy Manager Microsoft EMEA Overview yMicrosoft’s value proposition yIndia and Microsoft yChina and Microsoft yBroader aspects Microsoft’s value proposition IP + IQ = IT

7.0 IP and IQ, Microsoft’s perspective y 5000+ Patents/15,000 Patent Applications y US$6B+ in R&D in FY05 y Approx. 65.000 employees plus ecosystem y Continuous Research and Innovation India and Microsoft y MS will invest $ 1.7 billion in India over the next four years y Aim is to make India a major hub of Microsoft’s research, product and application development, services and technical support for both global and domestic companies. y Moving from 4.000 to 7.000 employees Microsoft in India y Microsoft India Development Center (MIDC) focuses on strategic, IP sensitive, software development projects y Sales, Marketing and Services Group (SMSG) provides business solutions and technical services to customers in India y Global Delivery Center India (GDCI) works on Microsoft’s internal worldwide IT applications work and global IT infrastructure management y Global Technical Support Center (GTSC) provides technical support and customer service to global clients y Microsoft Research India (MSR) conducts advanced research in multilingual systems, digital geographics, software productivity, mobile and sensor applications y Microsoft Global Services Center India (MGSI) provides Consulting Services for clients abroad Promoting Innovation in China y Investing directly in R&D y $100M annual investment in R&D and outsourcing y 1,500 Microsoft China researchers and developers y Supporting Information Industry y $63M investment in local companies; $ 100M planned y 10K senior software architects trained – national software parks y 200K IT professionals trained y $1B annual hardware procurement from China y 300K participated in MS programs in 40 Universities/Institutes China and Microsoft y Sales and Marketing department y Microsoft China Research and Development Group. y All research and development facilities located in Beijing, Shanghai and Shenzhen including Microsoft Research Asia, Microsoft Research Asia Advanced Technology Center, Microsoft China Technology Center, MSN Technologies (China). y Microsoft Global Technology Support Center Greater China Region y Joint Ventures (Censoft Co. Ltd., Wicresoft Co. Ltd., Shanghai MSN Network Communications Technology Company) Adaption to local needs y icrosoft Windows XP starter edition y lexGo Competitive Human Capital Assets: y Education in math and science 14 of 102 countries y Good quality producing enough engineers

Challenges According to Policy Influentials: y Best & brightest being exported y 1990’s India supplied 9x as many temporary IT workers to US than the next country y 33% all Silicon Valley workers are foreign born. 66% of those are Asian. y 55% of PhDs in Silicon Valley are Indian y Not working on domestic IT projects y Not well dispersed across country y Not generally educating consumers Success is not all about technology

• ICT Trained Teacher, Support Workforce • Inadequate telecom infrastructure ¾ Capacity /Infra Building ¾ Is wireless the answer? ¾ Scale successful ventures such as Education/ • Support infrastructure – electricity, Microsoft Shiksha? Skills Connectivity/ transportation etc.? Access

Right Content/ Audience Applications • Overall cost of a connected PC • Little content relevant to local needs ¾ Alternative form factors Affordability ¾ Is incubation of local ISVs and ¾ Mobile phones as the first computer? content providers the solution? • Software - Solutions such as Microsoft Language/ • Online Digital Resources: e-learning Windows Starter Edition UI foundations and online curricula • Support, Training Costs • Can we work together as an industry and drive costs down? • Digital Illiteracy ¾ Will non conventional i/o devices bridge the divide? • Limited content in local language ¾ Local language enablement Locally relevant content

Success is about creating a sustainable ecosystem Bridging the digital divide w Partner in Learning y $10M investment in rural IT education y 124 Computer Classrooms/4 Teacher Training Centers built y 1,000 Master IT Teachers/15,000 IT Teachers trained y 3 curriculum developed w Unlimited Potential y 8 Community Technology Learning Centers (CTLC) set up y 1,000 migrant workers trained at CTLCs in BJ and GD y 1,700 micro finance workers and farmers trained at CTLCs in rural areas w Employee Volunteer Project y Company Policy： full time employees entitled to 3 days of paid-leave for community service y Projects including computer and English skills training, environment protection, donations for SARS and Tsunami, etc. y Project beneficiaries including migrant workers, poor children, teachers and students in poverty-stricken areas, etc.

y India: Project 2007: y VKC’s in 600.000 villages by 2007 Thank you ! [email protected] IT adoption essential for growth GDP

Infrastructure/ Skills & Business Access Device Connectivity Abilities Services Models

ƒ Computer ƒ Dial up ƒ Sales ƒ Income ƒ Self sustainable ƒ Mobile Phones ƒ Mobile ƒ Business generating ƒ Revenue ƒ Hybrid Devices ƒ VSAT ƒ IT ƒ Education sharing ƒ Offline ƒ Interpersonal ƒ Communication ƒ Incentives ƒ corDECT ƒ Assessment ƒ Agriculture ƒ Franchise ƒ Hybrid ƒ Entertainment ƒ Powergen/Solar ƒ E-Commerce ƒ E-Governance ƒ Micro- Enterprise Microsoft Research, (Bangalore) India y Established in January 2005, is Microsoft’s sixth research lab worldwide. y Conducts long-term basic and applied research in multilingual systems, technologies for emerging markets, geographical-information systems, sensor networks, and software productivity. y The lab also collaborates with Indian research institutions and universities to support scientific progress and innovation. Microsoft India Development Center (MIDC) y Located in Hyderabad, India y Approximately 600 software developers y Focuses on strategic, IP sensitive, software development projects. y Second biggest Microsoft development center outside of Redmond. Microsoft China Technology Center (CTC) y CTC was launched in September 2003 y Mission: to accelerate and strengthen the development and growth of China's computing ecosystem with Microsoft’s technology. y CTC, as a non-profit institution, y Commitment to deliver access to technology and innovation, and to envision, design, develop and demonstrate a customized solution based on Microsoft and partner technologies. Microsoft Research, Asia y Located in Beijing, China y Started in 1998 y more than 180 researchers, plus support staff. y MSR Asia's ambitious research agenda highlights five areas that are central to Microsoft's long-term vision and strategy: y A next-generation user interface, which will allow users to interact with a computer using speech, gestures, and expressions. y Next-generation multimedia technologies, which will enable people to search for and be immersed in interactive and realistic online shopping, educational, meeting, and entertainment activities. y Digital Entertainment, which will allow users to have a more networked, interactive, and realistic entertainment experience in the future. y Wireless and networking technologies, which will empower people to access information any place, anytime, on any device. y Web Search and Data Mining, which will bring the current web search to the next level by applying data mining, machine learning, and knowledge discovery techniques to information analysis, organization, retrieval, and visualization.