"There are a lot of software companies in Houston in the oil and gas business."

Steve Ballmer joined Microsoft in 1980 and became chief executive officer and president in January 2000. Thirty years later, he still waxes enthusiastic about the software giant. Meeting him, one can understand why media reports describe him as ebullient, funny, focused, and high-energy. These traits were on display when he spoke at Microsoft’s 7th annual Global Energy Forum in Houston in January.

In an interview with Oil and Gas Investor editor-in-chief Leslie Haines and E&P editor Judy Maksoud, before he delivered the keynote address at Microsoft’s annual energy forum, he spoke about how social media (such as blogs and social networks) and workplace collaboration software are blurring. He also discussed whether businesses are ready to move their IT capability to the cloud — a scalable, elastic Internet-based group of servers and databases provided by software companies like Microsoft.

Investor What innovations are on the horizon from Microsoft that apply specifically to your customers in the oil and gas world?

Ballmer There are a number of things that I’ll highlight. Cloud computing is No. 1. It’ll be a big deal to all enterprises. It’s particularly a big deal in an industry like oil and gas where there’s so much data involved, and so much need for computing, and having elasticity on those things is helpful. There’s so much collaboration that spans company boundaries today — the way the service companies work with the oil producers, and the way the oil producers work with one another in partnerships and joint ventures. It’s an environment where people want to share information across organizational boundaries in unique ways.

The cloud allows that. It drives cost out and drives agility. When we think about offerings like our Windows, our SQL Azure, our SharePoint online offering, I see huge potential applicability specifically for these cloud-computing technologies in this energy industry. That would be number one.

Haines What else?

Ballmer The second thing I’d highlight has to do with the user interface and particularly things that have to do with visualization and/or communications. You know, there’s a level of visualization that people want to engage in, particularly on some of the discovery aspects of oil and gas. When you think about what the hardware permits now in terms of rich, almost photo-realistic-type visualization, you think about what’s possible in terms of processing a lot of data to do better visualization, simulated or not.
We’re showing the Xbox controller with Landmark Graphics, and the navigation that that permits. Again, it’s not visualization. But everything has to do with user interface and visualization. I think it’s extremely important. Even our Project Natal, which is this new Xbox camera thing we have, where essentially, the camera and its microphone recognize your voice. It’ll recognize the gestures you make.

Investor You are getting away from having to touch a keyboard.

Ballmer You think about that now, stuck in the PC environment. In the future, you will get control over devices without touch, without a keyboard. You put that in some of the weird environments in which business gets done in the oil and gas industry, and I think it’s pretty interesting.
So, user interface, visualization, let’s say large-scale business intelligence and number processing, and then cloud computing, and in our case, that means Windows Azure. It means being online. It means new versions of Windows. It means some of the things we’re doing with Excel, as well as some of the new UI (user-interface) technologies that we are prototyping first, and then we’re putting them in the market, but first, on the consumer side.

E&P We heard today about Excel being able to show how many millions of columns of data?

Ballmer We have shown up to 190 million rows.

E&P That’s unfathomable, actually.

Ballmer Yes it is, but if you look at the kinds of readings and sorts of data coming from your production side, off all those oil and gas wells…I mean, it’s easy to generate that much data. It turns out the real world generates data a lot faster than people do.

Investor What do you mean by that?

Ballmer If you look at the big data-processing or “computer-intensive” tasks, they almost all have to do with the real world — whether it’s mapping the globe as we are with Bing, or financial markets. There’s not a whole lot of difference in the sense of the amounts of data you get from the real-time financial world and real-time rig data. The ability to model and simulate and see and understand trends is important on the financial side of the oil and gas industry, whether upstream or downstream, trading or financial.

E&P I was interested in the role you play in social media, knowledge sharing, and collaboration.

Ballmer You say social media, and nobody knows exactly what that is. I know it when I see it. Collaboration, I know it when I see it. I can show you a collaboration site and you’ll say, “Darn, that looks a lot like a social network site.” The line between social networking and collaboration in the workplace starts to evaporate. We’re working hard to make sure you have it all — Windows Live and SharePoint bridge the divide in the consumer market and in the business market. You know the uptake will be there. It’s just going to be about colleagues, instead of fan groups.

E&P Are you saying Windows is going to be more like social networking than prior Windows?

Ballmer Yeah, absolutely. You’re not going to see it and say “Hmm, Facebook,” but you’re going to say, “I get it.” The notion of who I know and who I trust applies just as appropriately in the commercial world as it does in the social world.

Investor What do you think is Microsoft’s biggest challenge in the near term?

Ballmer We have constant challenges, none of which bites you immediately. Are we hiring the best and the brightest? We’re doing very well, but I worry about a lot of competition out there.
Our industry is constantly changing. I wouldn’t say every minute of every day, but we need to be on our toes, designing for tomorrow and not just for today. The way competitors come into this business is that they bet on something before you do. We’re all constantly shooting ahead of each other.
Some things in our business move more slowly. Take cloud computing. I sit here and ask, “When do I bet the farm on cloud computing?” It’s a clear bet. It’s going to happen. But when do you take the full gamble? The 50% gamble? When do you do the incubation?
One thing I am assessing is the cloud for oil and gas.

Investor Why is that?

Ballmer I would say your industry is a conservative industry given the levels of capital you invest and the safety issues in refining and the like. There’s a real engineering and precision about a lot of what happens in oil and gas. The question is, is it reasonable to bet that within three years, people in this industry will be working just in a cloud environment? That’s one of the things I’m trying to get a feel for in this visit to Houston. You get answers all over the sun.
Sometimes you bet on things too early. We all bet that TV would be interactive and delivered Internet-style 13 years ago, and everybody who made that bet then is out of business. We’re not.
I bring that up because it’s one of the things I worry about. What’s the thing out there that can get you? Leading-edge indicators, whether it’s guiding a new product, a brand, people — those are the things that consume me. We’ve got to make the right bet now for a year, two years down the road. But that’s not the same bet for five, six, eight years from now, which tends to be more of the case, I’d say, in the energy business.

E&P You say we’ll all be in the cloud, meaning we’ll do everything there and nowhere else?

Ballmer Nobody’s going to get rid of what they have today. The question is, when will people start moving things to the cloud? I’ve met with CEOs and CIOs at a lot of big companies in Houston, and some people say they are ready to go whole hog tomorrow. But then other people will say, “What about security? Let’s talk about security.”

E&P What else did the CEOs tell you today? What did the energy people say?

Ballmer We’re not just talking abstractly. But you know, I get lots of “What do you think about the economy; do you see signs of recovery?” and all that. (Laughs.)
We don’t get into technical details with the CEO. We do talk about his needs, security, where do things go next? A lot of people are trying to rethink what I call collaboration workflow.

E&P What about all the independent software vendors you partner with? How does that affect what you do in oil and gas?

Ballmer They are out there doing cool stuff with us, using our platforms like SharePoint, which is a great enabler. I saw the CEO of iStore earlier.
You have a nice community of people here trying to get out in front. There are a lot of software companies in Houston in the oil and gas business. They don’t call themselves software companies, but they smell like that to me. (Laughs.) Hey, if you’re Schlumberger or Landmark or Baker Hughes — there are plenty of guys in Houston writing software for a living, it turns out.