Ballmer's Doha deal

Microsoft's Steve Ballmer on why the Middle East is the most vital ICT market in the world.

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By  James Bennett Published  May 6, 2007

"This is something we've been waiting for for a very long time," I overhear one expectant guest saying to another. And no wonder. It's not every day the CEO of one of the world's largest company's and next year's successor to the legendary Bill Gates graces Qatar and its IT and business community. In fact it's taken a team of 20 people nine months to plan for Ballmer's few hours on the ground - his first visit to the Gulf in over two years since he last made a whirlwind stopover in 2005.

"I flew in at midnight and have to leave in a second," says Steve Ballmer shaking hands with every conceivable VIP in Qatar.

The time is only 11am but no sooner has he landed, slept a few hours and put the lid back on his fountain pen, than he has other people to see and more of the Microsoft word to spread across the region. "I'm going to Kuwait to open an innovation centre but have loved my time here, despite it being so short," he says.

"I had an amazing set of discussions in a very short time and we can do amazing things here because Qatar has an amazing infrastructure and amazing possibilities.

"This is a very computer advanced society in some ways and in others there are a bunch of opportunities for improvement. This is not only a good place to do business but also a laboratory for leading edge research, development of ICT companies, using computers to advance education. It's all very exciting."

It's not surprising that he's excited. According to the US$15 billion rich chief executive, the IT market in the Arab world is the fastest growing on the planet, overtaking the globe's two rising economic powerhouses, India and China. "We're serious about this region and want to showcase what technology can do to improve services within government, education, healthcare, society and the business world," he says.

Ballmer, dressed in his trademark black suit, white shirt, red tie and surprisingly scruffy black shoes, is in Qatar to sign, in his own words, "the most significant deal in the GCC" - a memorandum of understanding (MoU) that will form the basis of a strategic partnership with ictQatar, the country's policy making and regulatory body for information and communication technology, to transform the emirate into a successful knowledge-based economy, increase the impact ICT has on its GDP, and to diversify its interests away from oil and gas.

The deal will predominantly cover education, healthcare and e-government, says Ballmer with Microsoft "providing ictQatar with advice, assistance and tangible initiatives" in the use of technology, research and development, e-programmes and to enhance the learning experience through the use of IT, "building capacity to facilitate the creation of a digitally connected society".

ICT currently accounts for a mere 0.6% of the country's GDP, however Ballmer and the strategic partnership's co-signee, Dr Hessa Al-Jaber, secretary general of ictQatar, suggest this will rise "significantly" in the next six to 12 months with "major concrete announcements" materialising in June. "Steve has promised that by the first week of June we will have a very concrete proposal from Microsoft and some references to some very specific projects. People think that signing an MoU is very easy and they would be right," Dr Hessa points out. "But making sure that we will be achieving and monitoring our targets and projects is much harder but we are determined to push ICT in Qatar forwards.

"I want to create and develop our own ICT industry, not compete with Singapore, for example. I don't just want to be in the GCC like some kind of supermarket, we want to be part of the growth and impact of the country and I think we will do it."

The MoU between Ballmer and ictQatar, says Dr Hessa, has "12 very specific" but as yet undisclosed projects. The only one she can talk about is the establishment of an innovation centre, an issue very close to Ballmer's heart and Microsoft's regional agenda.

"Like I said, I'm opening a Microsoft Innovation Centre (MIC) in a few hours in Kuwait", says Ballmer hurriedly. "These centres foster collaboration between the government in question, the academic sector and the IT industry to enable software companies, entrepreneurs, students and independent software vendors throughout Qatar and Kuwait to develop in areas of skills growth, partnership development and innovation.

The issue of a knowledge-based economy (look out for an in-depth analysis of the country KBE in a future issue of Arabian Business) is very high on the Qatari government's priority list. The Qatar Foundation - where Microsoft's local office in Doha is based - and the Qatar Science and Technology Park (QSTP) are two of the emirate's top-notch initiatives that have the brief of diversifying its economy away from the traditional oil and gas route to a more IT and research and development-geared path. US universities such as Carnegie Mellon and homegrown internet businesses such as iHorizons have already established offices in the park.

Ballmer says that this is one of the reasons Qatar was chosen by the IT-giant as an "ideal location" in which to showcase what technology can do and how it can change people's social and business lives for the better.

"As we at Microsoft look out at the next 10 years we see so many positive possibilities for technology to transform society, healthcare, education, learning, the future of connectivity, communication, making the world smaller and more connected," he says.

"It is quite unbelievable that if we look back ten years how primitive the world was. I've been really struck by the forward looking and aspirational focus Qatar has is in terms of what ICT can do and how Qatar can be at the leading edge of applying technology in government, society and business. This has been one heck of an eye opening and exciting first visit for me."

How this will specifically affect business in particular, however, remains unclear with projects only set to materialise in the coming two to three months, nevertheless Ballmer takes the drip-feed approach, investing and implementing technology in schools, universities, R&D projects and in government departments that in turn have a knock-on effect on businesses and their workforces.

"The strategic partnership agreement comes in pieces," he tells me. "A security cooperation agreement is a big part of what we are all looking to focus on in the ICT world, alongside some great work going on to help connect e-health, e-government and e-education.

"We are also doing some work designed to promote skills and development starting in schools and then moving on into the workforce. We want to encourage and introduce ICT and computer skills and computer literacy in government with special focus on the youth and the women here in Qatar, while internet safety is also key and we are working with the ministry of interior to make sure that these systems are safe and appropriate for all the citizens of Qatar."

Ballmer is keen to re-emphasise that the strategic partnership is not just the signing a piece of paper. "That's always the easiest bit," he says, "the deal means "much, much more" to himself, the business, and the ICT industry and its community in Qatar.

"The partnership agreement that we've just signed is just a first step in a much greater and longer-term relationship. We are all focused on making concrete progress, not just signing nice sounding agreements.

"We have had a very exciting discussion in the context of the Qatari government's view of public private partnerships (PPP) and how we can get very concrete results and very concrete deliverables from our cooperation. The Qatari government will also have many more PPP discussions and agreements with many other companies for them to do business here and that is very important for its growth and future."

Ballmer, however refuses to comment on how much Microsoft is investing in Qatar instead calling it a ‘significant effort'.

"We have 20 people here in Qatar [...] we have intellectual property and we are going to take a significant percentage of our effort and leverage a lot of software," he explains.

"This is not a capital investment; it is a need of the Qatari government with a focus on skills and knowledge transfer as early as possible and that's consistent with our global strategy."

The Arab world is crucial to Microsoft and other software companies' long-term strategies. It has talent, wealth, growth, rising GDPs and a youthful IT hungry population and Ballmer is fully aware of all of these issues. "We have hundreds of Arabic speakers in our campus in Redmond in the US who have grown up here in the region and some of our most senior people and our highest technical fellows are Arabic," he explains.

"I see it as a great source of talent and supply, we recruit from a number of universities in the region and that will continue to grow.

Ballmer tells me he will almost certainly be back very soon. If the IT market and diversification towards ICT continues to grow at lightening pace in the Gulf, let's hope it's sooner than once every two years.

Microsoft: targeting the next five billion users

What is MUP?

MUP is all about bringing in and consolidating a lot of the work we've done over the years in many different aspects. These include community affairs, corporate social responsibility, technology development, developing local language programmes and local language packs, running grant programmes, and working with NGO's and donor organisations - we are bringing all of this together under the umbrella of MUP.

What does Microsoft hope to achieve?

The aim behind it is really for Microsoft to bring sustained economic opportunities to the next five billion people in the world. Of the world's population of around six billion, we know that today we address very effectively the top one billion people in the economic opportunity pyramid. So there are five billion other people in that pyramid that are not being addressed, and we want to bring all the assets, all the knowledge, and the opportunities that Microsoft has, and address those five billion people.

By 2015, we want to have reached one billion new customers, or one billion new people in the emerging segments of the world, so that we can actually bring them into the world of technology usage.

How will you go about this?

Through structuring three pillars. The first one we are calling ‘Transforming Education', which is about educating those segments of countries that are not touched by technology today.

The second one, which we refer to as ‘Fostering Local Innovation', is really around saying ‘how do we actually turn education into creating local relevance?' We want to help people create solutions and opportunities that are relevant to the local communities, and that are applicable for use within their own countries.

The third pillar, ‘Enabling Jobs and Opportunities', is basically creating jobs and creating entrepreneurial opportunities. We're doing this right now in Kuwait, Qatar, Oman, Yemen, Egypt, and the UAE. In addition, we're also working with the government of KSA to try and promote the development of entrepreneurship among the young population. For example, we are working with the Egyptian government, and have now established a three-year programme that will generate and create 100,000 small businesses.

What other measures will you employ?

The Microsoft Student Innovation Suite is effectively a stack of software that we have put together with governments. For governments purchasing PCs for the personal use of students, we will license a combination of software for US$3 per PC so that students have the ability to use state-of-the-art, latest-version software. It's effective because you can create a very affordable PC that's has a very compelling and very interesting value proposition and software stack that enables people to go way beyond just surfing the web or doing homework. We're driving the three pillars on a very simplistic motto, which is ‘accessibility, affordability, relevance'.

Is this philanthropy, or simply a business decision?

This is not philanthropy, and that's an important thing to understand. This is about enabling governments and enabling local communities to benefit from technology. The ultimate objective for this is to build an IT economy; to have countries modernise and automate. In doing that, Microsoft creates a market. This is a long-term strategy. Microsoft has to help build the economy that is going to become its customer.

What you can't do is focus on the top of the economic opportunity pyramid, concentrate on that segment, and try and milk them for all they're worth. It's not a sustainable strategy.

So how do you reach that other 5 billion people?

You can't just go to them and say ‘you have to buy software'. You help them to build their own economy, and that the economy in turn will become a consumer of the products that Microsoft creates and sells. This is not philanthropy - this is a long-term business strategy.

If you look at the past, it has taken 30 years for Microsoft to reach where it is today and to achieve what it has. That has all been about targeting the first one billion people. We'd like to multiply that by a factor of two or three and get to the next five billion, ideally in the same timeframe. For now, however, we are focused on 2015, giving us eight years to reach another billion people, which last time around took us 30 years.

How will Microsoft ensure that the project benefits those who need it most?

We're working with the World Bank (WB), and it has classifications based on income. The WB defines governments. As long as the government is defined up to and including upper-middle income economies - which covers 152 countries worldwide including Yemen, Jordan, Iran, Syria, and Iraq then they can get the relevant access. At the moment we are not allowed to do work in Iran because of the US and the UN embargo. As soon as we're able to, we will respond, and we will actually go and work with governments in these countries.

As long as those governments are using these programmes to target those underdeveloped or underserved segments of the population, then we will work with them. We work very carefully with governments and our partners to try and manage the process. I think that corruption unfortunately happens everywhere, but we have been very successful in places like Nigeria, in actually delivering accessibility and affordability to people and at the same time minimising levels of corruption. We're optimistic we can do it and we will.

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