Orlando Ayala, group vice president, worldwide sales, marketing & services, Microsoft Corporation, is on a visit to the Middle East. Molouk Y. Ba-Isa met with him on Sunday. Here are excerpts from that interview.
Q: Saudi Arabia is a $4.4 billion market in IT spending — the largest in the Arab Middle East — when and what would it take to have Saudi Arabia at the center of Microsoft’s activities in the region?
A: I think it is amazing how this marketplace has grown in the past five or six years. I remember, because I was running this region five or six years ago and it was at the very beginning of that growth when I left the place. We had six people at that time and we have 70 today. If I am not miscalculating, 20-25 percent of our total revenue in the Arab Middle East is from Saudi Arabia. That is the largest percentage of any country in the region. When you think of future potential there is no doubt in my mind that this market will be the largest for many years to come.
The most important breakthrough in the region was when Arabic became one of Microsoft’s tier one languages. That means that all products are released in Arabic simultaneously with the English versions. We were pleased to be able to take that initiative.
People need to look at the contribution of a company to a country not the way a region is run. I think it is the attention provided to the local market that really matters. Are we close enough to customers to ensure that we fulfill (their) needs? That is what matters. Should we be investing more? Probably we should and you are going to see that happening.
Q: Saudi Arabia is a consumer of technology, not a producer. Microsoft has worked hard at marketing its products in the Kingdom but we haven’t seen investment in local development. Does Microsoft have any plan to assist in the development and transfer of technology in Saudi Arabia?
A: We never say we are not going to do development. In places like the Kingdom, we really don’t know. For the most part though developing software is done more efficiently in a single place.
Q: But Microsoft has invested in this area in India.
A: Very little, when you think about the percentage of investment that we’ve done. That doesn’t mean we shouldn’t do more and that all our activities have to be concentrated in one place. In fact I think that Redmond is getting quite big. I believe that over time the company will need to invest more aggressively outside the United States. But at this point there is no plan for Saudi Arabia. If a good opportunity arose it would be considered.
In terms of our presence and scaling up our investment in the Arab Middle East, right now we have direct presence in eight countries in this region. The most that any company in our sector has. That means 12 offices with our own people in the Arab Middle East. In the Kingdom we are aligning ourselves with the market. In no other country in the region do we have three offices in one country. Why are we doing this? Because we are ramping up for future growth. Yes, these offices are still for marketing and services, but we are trying to get closer to our customers and the market.
Q: Microsoft has always claimed that is avoids involvement in politics, so how was it possible for the situation in Israel with the billboard ads to occur?
A: We have already made a statement on this issue and my position isn’t any different. There is a lot of autonomy in our subsidiaries in general and the decision to participate (in the billboard campaign) was made at a local level. Clearly this situation was one that we wish never happened. We acted promptly to correct it. The company has been clear with everyone that we don’t get involved in politics. We abhor the human costs of this conflict, but we will not take sides. We are a company that believes very deeply in the ability of people to realize their potential. That ideal has no religion and no country.
Q: Many people in the Arab world believe that boycotting Microsoft products is a stand in support of Arab nationalistic causes. This is not the first time Microsoft has been in such a position. How does Microsoft feel being the target of a boycott and do you believe boycotts are effective?
A: For me it is very hard to make comments about why this is happening. I think every company has the obligation to deliver value locally and deliver value that is perceived as great value for customers. I tell you, at Microsoft, we wake up every single day and that’s what we think about. If Microsoft, or any other company, if they are not doing a good job for their customers then there may be consequences. But for Microsoft the investment we make every day is an investment in trying to ensure that we deliver value locally. Microsoft simply is not involved in politics. For me it is very difficult to imagine that we would be involved in any boycott controversy because our company is completely focused on ensuring that every dollar we put into R&D really fulfills value in every single market where we are. There is no other multinational company that has put so much investment into the Arabization of its products. I hope this would be interpreted as an example of our long-term commitment to this region. I can’t really comment any more than that.
Q: Some companies have made substantial donations in cash or kind to the Palestinians. Does Microsoft intend to make such a gesture?
A: We look at every market and we make contributions especially in the area of education. If it makes sense, if there are precise opportunities, absolutely we will be involved. We are always looking for opportunities to make a difference in the local community. We have made these contributions in many places around the world. There again people talk about all these concepts more as political causes. At Microsoft we like to see them as a way of enabling society. Worldwide we have worked closely with educational institutions, either providing them with our products at low cost or often just giving them away to help transfer knowledge and education to people. That’s what we believe in.
People try to start polarizing these things. I don’t come from the United States. I was not born in the United States. Should Microsoft give to my country Columbia or not? I don’t look at it that way. We have the obligation in every local market where we do business and even in places where we don’t do business, to do as much as we can to help technology enable society. There is no information technology company that has donated more than Microsoft.
Q: We have seen Microsoft’s new “Trustworthy Computing Initiative.” Why only now has there been a strengthening of the commitment to security in Microsoft products?
A: I think the company has been working on security for a long time. This is an evolving problem and challenge. Clearly I think that in general society is more concerned with security, not just security of our products but security in general. Our world has changed. How we do computing has changed. Now the company has an opportunity to come together with other people in the industry and with governments because so many security issues have to do with government regulations. There are a lot of tradeoffs to be made between privacy and security. This is more than Microsoft just reacting to a technology fix. It is an issue that is so much larger than that. That’s why the initiative is called “Trustworthy Computing,” not security.
Q: How is it possible that Microsoft releases so many products, which once they are on the market, are found to have so many vulnerabilities?
A: We produce our products to be very flexible. For instance most of the features of our products we leave, “open.” This means that it is up to the customer to close them if they need to secure them. There are different parameters, which can be moved back and forth. Also, hundreds of millions of people use our products in innumerable ways. It is part of the scale on which our products are used and consequently tested, that the problems in the code are discovered.
I accept the fact that as a company we must find better ways to absorb changes in the code. We are investing in technology to make that happen. Office Update, which is a part of Windows XP is one example. But expecting the code to be absolutely clean and perfect, that’s not reality. Not just Microsoft but mainframes and other systems have the same problems. Yes, developers need to develop code that is more secure, but that’s a challenge for the whole industry, not just for Microsoft.
Q: Does Microsoft create technology for the sake of technology, or are its new products business need driven?
A: It is very crazy to think that a company is in the business of creating technology just to create a new release. I will accept the argument that people are not absorbing technology as quickly as we expect. But every one of our new releases brings significant business value in my opinion. We need to be better at helping people learn to absorb technology. At Microsoft everything we do is scenario based. In my case now I use a little digital camera for very inexpensive one to one video conferencing. Wireless is a scenario. The ability to diagnose a computer remotely is a scenario. Whiteboarding, where two people cooperate on a single document, is a scenario. People used to pay hundreds of thousands of dollars to do all these things.
Q: Is Saudi Arabia ready to do e-business and e-commerce successfully? If so what will it take to move forward and what will be the driver?
A: There are millions of dollars in efficiencies that can be had simply in connecting what we call business logic across systems that already exist. Millions of dollars have been invested in Windows systems, UNIX systems and others, and I believe that the ability to unlock the power of business logic resident in these systems and using technology to connect the business logic in these systems together is an opportunity for everyone. People tend to think in these areas about the consumer mostly, while in reality just connecting the back end of systems could provide a huge opportunity. E-commerce is not really about me buying something on the web. It’s the entire process up to getting the product in the hands of the consumer.
Q: Some people feel that a move to e-business and e-government will simply exacerbate the problem of unemployment in the Kingdom. What would you say to that?
A: I don’t think this is an issue of e-government or e-business. I think it’s an issue of how and where you use the skills of your people. Inevitably societies must operate more efficiently. If you don’t put an emphasis on reshaping the skills of your people you will never overcome the challenges facing your society. There must be a strategy on re-skilling the work force in general to overcome any negative effects of introducing technology. I don’t think the way to maximize the use of an available work force is by maximizing service inefficiency. A well-defined national plan for retraining and upgrading of skills in the work force is vital.
Q: Is it necessary to bundle so many different applications together? Why can’t people be free to pick and choose which applications they want, and are willing to pay for?
A: I wouldn’t call it bundling. We try to think of ways to make our technology simpler. In general we try to think of scenarios and evaluate everything necessary to ensure those scenarios get fulfilled for users in the easiest way. That is the concept. In putting a product together such as Microsoft Office, we want to meet the requirements of today’s knowledge workers. There may be a unique situation where someone wants an independent application, but it’s not common. In general people haven’t complained about having integrated scenarios. I think we have tried to make things easier for people. I don’t think people want complexity. People are looking for products that offer them simplicity and ease of use. They don’t worry about whether it’s this product or that product, they worry more about whether it meets the needs of the scenario. We are a company that is moving very fast and very aggressively to scenario based computing.
Q: In which three ways will Microsoft’s involvement in the Kingdom be the most important in the coming year?
A: I think more than in any other region we must work harder to get ourselves committed to being local in every sense — not just the Arabic language. I want the company to be local, to be there, and to make a difference, not just for our software, but to have a positive community impact. This is the directive I am giving to my people.
The commoditization of computing has been very important and Microsoft has been and will continue to be an important part of this revolution. It used to be very expensive just to type a simple letter and get it out. I feel very proud of us commoditizing the desktop. The fact that computing is now reaching more people is in part because Microsoft was able to introduce technology that pushed down the prices of computers around the world. This brought technology within the reach of more people and that is very important. We are seeing a massive growth of IT in the Kingdom at all levels. That will continue and Microsoft will be a part of it.
We also want to be the company that is contributing to create a really strong software support industry. The value of intellectual property is very high. What I have seen local companies producing in Saudi Arabia on top of our products is extraordinary. There is world class talent in this part of the world that could turn the Middle East into a great exporter of ideas.