BETTING BIG ON THE NEW FRONTIERS OF HIGH-TECH

Exclusive extracts from the chapter: BEYOND THE CLOUD

Originally, I thought of this book as a collection of meditations from a CEO in the midst of transformation. As someone both navigating a corporate transformation and creating transformational technologies, my aim was to share these experiences in real time rather than look back on them years later. The Microsoft transformation, of course, is ongoing. In the face of global economic and technological uncertainty, we reset our mission, reprioritised our culture, and built or rebuilt strategic partnerships in order to solidify the foundation of our business. We also needed to hasten our innovative spirit and place new, bold bets. This is what has made Microsoft a trusted tech brand for more than 40 years.

We looked beyond the PC and the server to drive success in the cloud. But we also had to look beyond the cloud. Forecasting technology trends can be perilous. It’s been said we tend to overestimate what we can achieve in the short run, but underestimate what can be achieved in the long run. But we are investing to lead in three key technologies that will shape our industry and others in the years to come—mixed reality, artificial intelligence and quantum computing. These technologies will inevitably lead to massive shifts in our economy and society.

Here is one way to think about the convergence of these coming technology shifts. With mixed reality, we are building the ultimate computing experience, one in which your field of view becomes a computing surface and the digital world and your physical world become one. The data, apps, and even the colleagues and friends you think of as being on your phone or tablet, are now available anywhere you want to access them—while you’re working in your office, visiting a customer, or collaborating with colleagues in a conference room. Artificial intelligence powers every experience, augmenting human capability with insights and predictive power that would be impossible to achieve on our own. Finally, quantum computing will allow us to go beyond the bounds of Moore’s Law—the observation that the number of transistors in a computer chip doubles roughly every two years—by changing the very physics of computing as we know it today, providing the computational power to solve the world’s biggest and most complex problems. Mixed reality (MR), artificial intelligence (AI) and quantum computing (QC) may be independent threads today, but they are going to come together. We’re betting on it.

A technology company that misses multiple trends like these will inevitably fall behind. At the same time, of course, it’s dangerous to chase untested future technologies while neglecting the core of the current busi-

ness. That’s the classic innovator’s dilemma—to risk existing success while pursuing new opportunities. Historically, Microsoft has struggled at times to get this balance right. We actually had a tablet before the iPad; we were well along the path toward an e-reader before the Kindle. But in some cases our software was ahead of the key components required for success, such as touchscreen hardware or broadband connectivity. In other cases, we lacked end-to-end design thinking to bring a complete solution to market. We also got a bit overconfident in our ability to fast-follow a competitor, forgetting that there is inherent risk in such a strategy. We were perhaps timid in disrupting our own highly successful business models. We’ve learned from all this. There is no formula to inventing the future. A company has to have a complete vision for what it can uniquely do, and then back it up with conviction and the capability to make it happen.

To avoid being trapped by the innovator’s dilemma—and to move from always focusing on the urgency of today to considering the important things for tomorrow—we decided to look at our investment strategy across three growth horizons: first, grow today’s core businesses and technologies; second, incubate new ideas and products for the future; and third, invest in long-term breakthroughs.

The New Mixed Reality Natives

Our industry is full of eureka moments of discovery. My most startling moment arrived, surprisingly, on the surface of planet Mars—standing in the basement of Microsoft’s Building 92. It was there that I first slipped on a HoloLens device, a small head-mounted computer that is completely self-contained. Suddenly HoloLens transported me—virtually, of course—onto the surface of the Red Planet, 250 million miles away, thanks to a feed from NASA’s Mars rover, Curiosity. Through HoloLens, I could see my two street shoes walking, in the most convincing and baffling way, on the dusty Martian plain near a rocky waypoint called Kimberley along the rover’s journey to Murray Buttes. HoloLens made it possible for me both to walk around the actual room—to see a desk and to interact with people around me—and to inspect rocks on Mars’ surface. That’s the amazing, unprecedented nature of what we call mixed reality. The experience was so inspiring, so moving, that one member of my leadership team cried during that virtual excursion.

What I saw and experienced that day was a glimpse of Microsoft’s future. Perhaps this particular moment will be remembered as the advent of a mixed reality revolution, one in which everyone works and plays in an immersive environment that blends the real world and a virtual world. Will there one day be mixed reality natives—young people who expect all of their computer experiences to be immersive blends of the real and the virtual—just as today we recognise digital natives, those

for whom the Internet has always been there?

Companies are taking different approaches with headmounted computers. Virtual reality, as provided by our Windows 10 MR devices or Facebook’s Oculus Rift, largely blocks out the real world, immersing the user in a completely digital world. Google Glass, for example, projects information onto your eyeglasses. Snapchat Spectacles let you augment what you see with relevant content and filters. HoloLens provides access to mixed reality in which the users can navigate both their current location—interact with people in the same room—and a remote environment while also manipulating holograms and other digital objects. Analysts at Gartner Inc., the technology research firm, have made an art from the study of the hype cycles and arcs followed by new technologies as they move from invention to widespread adoption (or demise), and believe virtual reality technologies are likely five to ten years away from mainstream adoption.

AI’s Breathtaking Potential

A confluence of three breakthroughs—Big Data, massive computing power, and sophisticated algorithms—is accelerating AI from sci-fi to reality. At astonishing rates, data is being gathered and made available thanks to the exponential growth of cameras and sensors in our everyday life. AI needs data to learn. The cloud has made tremendous computing power available to everyone, and complex algorithms can now be written to discern insights and intelligence from the mountains of data.

AI today is some ways away from becoming what’s known as artificial general intelligence (AGI), the point at which a computer matches or even surpasses human intellectual capabilities. Like human intelligence, artificial intelligence can be categorised by layer. The bottom layer is simple pattern recognition. The middle layer is perception, sensing more and more complex scenes. It’s estimated that 99 per cent of human perception is through speech and vision. Finally, the highest level of intelligence is cognition—deep understanding of human language.

I believe that in ten years AI speech and visual recognition will be better than a human’s. But just because a machine can see and hear doesn’t mean it can truly learn and understand.

Natural language understanding, the interaction between computers and humans, is the next frontier. And so how will AI ever live up to its hype? How will AI scale to benefit everyone? Again, the answer is layered:

Bespoke. Today we are very much on the ground floor of AI. It is bespoke, customised. Tech companies with privileged access to data, computing power and algorithms handcraft an AI product and make it available to the world. Only a few can make AI for the many. This is where most AI is today. Democratised. Democratising AI means enabling every person and every organisation to dream about and create amazing AI solutions that serve their specific needs. It’s analogous to the democratisation that movable type and the printing press created. And so our vision is to build tools that have true artificial intelligence infused across agents, applications, services and infrastructure.

Learn to Learn. Ultimately, state of the art is when computers learn to learn—when computers generate their own programs. Like humans, computers will go beyond mimicking what people do and will invent new, better solutions to problems. Deep neural networks and transfer learning are leading to breakthroughs today, but AI is like a ladder and we are just on the first step of that ladder.

Mind-blowing Quantum Computing

If the potential for this AI work is breathtaking, the potential for quantum computing is mindblowing. Defining quantum computing is no simple feat. Originating in the 1980s, quantum computing leverages certain quantum physics properties of atoms or nuclei that allow them to work together as quantum bits, or qubits, to be the computer’s processor and memory. By interacting with each other while being isolated from our environment, qubits can perform certain calculations exponentially faster than conventional, or classical, computers.

Photosynthesis, bird migration and even human consciousness are studied as quantum processes. In today’s classical computing world, our brain thinks and our thoughts are typed or spoken into a computer that in turn provides feedback on a screen. In a quantum world, some researchers speculate that there will be no barrier between our brains and computing. It’s a long way off, but might consciousness one day merge with computation?

Among those racing to understand it are Microsoft, Intel, Google and IBM as well as startups like D-Wave and even

governments with hefty national defence budgets. The shared hope is that quantum computing will utterly transform the physics of computing itself. Of course, if building a quantum computer were easy, it would have been done by now. While classical computing is bound by its binary code and the laws of physics, quantum computing advances every kind of calculation—math, science, and engineering—from the linear world of bits to the multidimensional universe of qubits.

Today, we have an urgent need to solve problems that would tie up classical computers for centuries, but that could be solved by a quantum computer in a few minutes or hours. For example, the speed and accuracy with which quantum computing could break today’s highest levels of encryption is mind-boggling. It would take a classical computer 1 billion years to break today’s RSA-2048 encryption, but a quantum computer could crack it in about a hundred seconds, or less than two minutes. Fortunately, quantum computing will also revolutionise classical computing encryption, leading to ever more secure computing.

The search for a quantum computer has become something of an arms race. Needing to move more quickly and to be more efficient and outcome-oriented, we have set a goal and timeline to build a quantum computer that can do something useful, something classical computers can’t, and that will require thousands of qubits. To get there, we’ve pressed for greater collaboration. We brought together some of the greatest minds in the world and asked them to work together on an equal basis and to approach problems together with openness and humility. So far, we’ve had more than 30 patents issued, but the finish line remains distant. While the race for the cloud, artificial intelligence and mixed reality has been loud and well-publicised, the quantum computing race has gone largely unnoticed, in part because of its complexity and secrecy.

The quantum hardware architecture that could ultimately lead to scalability will require today’s computer scientists, physicists, mathematicians and engineers to work together to overcome challenges on the path toward universal quantum computing. At Microsoft, we are betting that quantum computing will make artificial intelligence more intelligent and mixed reality an even more immersive experience.