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10 Questions

with Jan Mühlfeit
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October 10th, 2007 issue

KURT VINION/THE PRAGUE POST
Jan Mühlfeit, chairman of Microsoft-Europe, as he discusses the computer industry and its place in the world.
The Mühlfeit File

Job title: Chairman Europe, Microsoft Corp.
Nationality: Czech
Previous job: Regional director of Mircosoft, Eastern Europe
Education: Czech Technical University, Prague

Jan Mühlfeit was given his first computer, a Sinclair Spectrum, at the age of 19, when he was a student in Czechoslovakia. He has since risen rapidly through the ranks of the information technology field.

Mühlfeit joined the league of Microsoft vice presidents in 2002 and was named chairman of Microsoft-Europe in April, holding a higher position than any other Czech executive outside the country. Mühlfeit talked to The Prague Post about European competitiveness, open-source software, and emotional intelligence.
➊ Who is your biggest competitor?
We spend almost $7 billion [136 billion Kč] every year on research and development. But the industry is shaping up. Today, we don’t compete with any specific company, but with two different systems.
On the one hand, proponents of open source software are saying software should be free, and the services should be paid for. It’s good for companies like IBM, but it’s not good for software developers who should be paid for what they do. On the other hand, Google is saying software should be almost for free, and advertising should subsidize the whole model.
The beauty of the IT industry is that if you have a computer, you can still challenge companies like Microsoft. I’m a former professional tennis player and I have always said: If you play tennis against the wall, it’s boring, and the wall wins at the end of the day.
It’s still possible to have a great idea and make a breakthrough. Take search engines, for example. Today, they are not super-sophisticated. I can put together a structured question — what I really need from the search — but it doesn’t work like that. It only gives me a couple of links.
For example, I’ll be at a roundtable discussion tomorrow, and I would like to know what the other participants said about this specific topic during the last five years. But there is no way to get that information. Sometimes search engine users are very inventive, and they know exactly what they want.
➋ On Sept. 17, the European appeals court upheld a 2004 decision to fine Microsoft a record 497 million euros [$706 million/1.4 billion Kč] and forced it to share information about proprietary Windows network protocols with rivals. Are relations with the European Commission tense?
There are two basic parts of the case: We were asked to offer an end-version of Windows without Windows Media Player, which we did, but there was nearly no demand. Second, as far as the protocols are concerned, we needed to agree on the pricing, and we needed to agree on what would remain a trade secret. The case is 9 years old, and since then the industry has changed a lot. Today, Apple has the same market share in music on the Internet as we have with our operating system. Look at Google in the server trade.
In a broader sense, we have a very good relationship with the European Commission because we cooperate on several initiatives to help Europe become more competitive. We realized three years ago that it is very hard for small- and midsized businesses in Europe to apply for funds from Brussels. It’s a lot of paperwork. Together with HP, Intel and other partners we train EU grant advisers who help these businesses file applications for EU grants.
➌ Do you expect companies to then buy Microsoft software?
Obviously, it’s an open consortium. If we earn one euro, our local partners are making 7 to 10 euros, from services, training, and other products built on that platform. We call it an ecosystem.
➍ Will the idea of software on a subscription basis, accessible through the Internet, be particularly attractive to companies in the Czech Republic?
In the Czech Republic, the software piracy rate is below 40 percent, which is almost the EU average. Because of good economic development, people can afford to buy software. But I believe there will be a combination of both software and services.
➎ In Africa or Asia, users might not be able to afford to buy a retail copy of Microsoft Office.
You obviously need a broadband connection to use the online services. If big companies will invest in Internet access, it can be a viable option for Africa. While many companies in China are buying Office or Windows, the consumer’s first computer in China or India is generally a mobile phone. If there are half a billion mobile phones in China, I suggested we sell a light version of Office for mobile phones. Maybe they pay only $1 a year, but it’s still a lot of dollars.
➏ Does the future for IT companies lie in emerging markets?
Bill Gates’ vision, to have a PC at every desk, is true only for 1 billion desks. Between now and 2015 we would like to bring another 1 billion people into the game. Obviously, people first need to have food and shelter. There are 500 billionaires, and they have the same amount of money as the 3 billion people [who live on less than $2 a day]. By chance, I know No. 1 here, Bill Gates, and he will distribute almost all of his money — through the Bill and Melinda Gates Foundation — on health care and education. Because 20 years from now there can be 1 billion more consumers in Africa, or half a billion people with AIDS; it depends on what we will do.
➐ Do you think Indian specialists will move to Europe in the future, or that the Czech IT sector will be outsourced to India? Or a combination of both?
In three years, 120,000 skilled IT professionals will be missing in Europe. We need to have a smart immigration policy to bring in people from India, and society should be more open to bringing foreigners in. I don’t think they should be forced to speak Czech. I think the next generation here should be fluent in at least English and one other foreign language. Computers cannot beat the brain in creativity. Education will be more and more about creativity, about innovation, about right brain development. You will move from the model “made in China” to the model “invented in China.” And the countries that will be more inventive will be better off.
➑ When filling positions, are you looking for creative heads or technical prowess?
I think you need the right balance. We have a very high IQ at Microsoft. As far as the EQ is concerned, the emotional intelligence, I think we are improving it.
In the past, we were sometimes disconnected from the customers. Great functionality was enough, but today, it’s more and more about the design. You need to touch the feelings of people. Apple, for example, got it right. In our industry, companies would really like to shift a little bit more closely to the consumers, and become more touchy-feely.
➒ What capabilities will computers have 10 years from now?
What lies ahead one to five years from now is already in development today. Whatever is beyond 10 years is a guess. But imagine the possibilities: Your computer or your device will book movie tickets, even before you think about it. The computer can figure out: Jan wants to go to the movies, and there’s a new Simpsons movie coming out. Maybe it’s sold out, so let’s just book it now.
➓ Microsoft sells the Xbox video game console and, in the United States, the Zune mediaplayer. Is Microsoft entering the hardware business because it promises higher profit margins?
In my opinion, two businesses are very profitable, if you spend enough in research and development: pharmaceuticals and software. But we realized with the Xbox that there is a war for the living room. With the Zune, we face entrenched competitor Apple, which is far ahead of us, but through innovation we can really serve the market well. While people will spend a lot of time at work, these devices will shape up their digital lifestyle. Personally, I try to be strict: This is my personal life, and this is Microsoft. But, as you can imagine, these worlds are merging more and more.

Want your manager to answer our 10 questions? Send a message to Paul Voosen at pvoosen@praguepost.com


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