1. ISV Vision and Strategy Gianpaolo Carraro Director, Developer and Platform Evangelism gianpc@microsoft.com http://twitter.com/gcarraro

2. Agenda A Look Ahead Key trends Business models Q&A

3. A Look Ahead...

4. Rich Experiences

5. 3 Screens Rich and powerful application UIs 3 Screens Development continuum across form factors (.net)

6. Windows 7 Improved experience Focus on fundamentals Application modernization Software Logo Program msdn.microsoft.com/swlogo

7. Mobility / Work-Life Merge (7 days Week End)

8. is this your office?

9. or is this your office?

10. how about this?

12. Always access / Shared context

13. Cloud As elastic computing fabric As elastic storage fabric As distribution channel As shared context

14. SaaS PaaS IaaS

15. Business Models

16. The XBOX example

17. Subscriber Acquisition Const (SAC) and Churn Based on public SaaS company SEC filing Does not matter who Not Microsoft

18. Revenue GOOD! Not so much!

20. Subscriber Acquisition Cost (SAC) “Exposed” for 22 months

21. Impact of Churn: 10% Churn Ouch!!

22. Impact of Churn: 4% Churn Still Ouch!! Still Ouch!!

23. Break Even but < 1% churn!? Impact of Churn: Break Even

24. 0 Churn?

25. What to do? (business side) Long term contracts (24 months locking) –Remove some of the value proposition –Often very large churn at end of contract –Or “re-acquire” customer (more SAC) Get money upfront –No more churn sensitive Lower SAC –Distribution channel (e.g. white labeling)

26. What to do? (architecture side) Have a CLIENT strategy! –Not subsidized device (otherwise SAC) Examples: –Mobile phone (of course) –Heart monitor device connected to cloud service –Appliance

27. Selling Hosted Version vs. License ↓ Lower margins –Cost of sale is higher e.g. hardware depreciation (from pure bits, to bits + atoms) ↑ Bigger addressable market –Not only ‘software line’ in IT budget Illustration (overly simplified math): –80% margin on $1M (software) line -> 800K –20% margin on $5M (software + support + hardware) line -> 1M

28. Attached Services Additional revenue streams (typically with much lower cost of sale) Leverage the installed based The well proven “any fries with that?” strategy

29. Next Steps

30. Understand the platform

31. Understand the business models

32. Final thoughts: 2 fundamental questions you should ask yourself (if not asking already)

33. Note: I don’t have the answers... But I have strong opinions. Happy to share them at the party

34. 1) Do I believe rich experiences are a competitive advantage? 2) Do I believe providing choice to my customers in terms of how and where to use my application is a competitive advantage?

35. THANK YOU!