Where does verticalization fit into all of this? So, if I were to frame how the Microsoft story comes together for innovation, its this: our platform and our software plus the Microsoft partnersinnovation across both to deliver customer advantage.If you look at how we build to deliver across this view of empowering people, its great software and partners on top of it that are going to deliver the ultimate solution. As partners deliver, theyre going to deliver whatever way the partner needs.We think there are three key ways partners express their needs for this sort of technology deliver. One is very horizontal. Were going to talk about an information worker solution, were going to talk about an infrastructure solution, or a security solution. Very horizontal isnt going anywhere, and in fact I think its a huge opportunity. The second major area is really around a concept that I call role-based specificity. So, if you drill into "information worker," not at the vertical level but a horizontal level, theres a rolea finance professional, a customer relations professional, and in that case, youre not in a vertical line of business, youre in a horizontal area, but with role-based situations. So, when you drill into "information worker," youre going to get role-specific. And thats where you get partner opportunities. Read more here about Microsofts business application roadmap. The third is what I call vertical- and industry sector-based solution. I need an equipment-tool manufacturing solution that understands how I bring my equipment tools from point A to point B. Often those needs will be expressed at the industry, or down to a vertical layer. So, Microsoft Partner Programs promise, and the innovation were driving, is going to accommodate the business productivity problem across all of those. Very, very horizontal, traditional Microsoft Classic fundamentals; roles-specific horizontals; and then the vertical line of business applications. When you talk about partners taking a vertical approach, are you talking about partners who already sell the Microsoft [Classic] stack, or who sell the applications? Who is more important in this scenario? In terms of where we are today, the call to action at this conference is about those partners in the Business Solutions business, those partners who are building ISV applications of any type that are vertical in nature, and for those partners doing custom development solutions that are line-of-business specific. Those are the three partner types, where we are encouraging them to go further and forward with declaring the verticals theyre in, and anticipating how they can be repeatable in their solutions. Thats who were targeting. Now if I am an entirely a big-stack partner, a guy that says I want to go all the way from infrastructure all the way to business solutions and information worker along the way, if their business can be suited to a vertical market, we have them going there as well. Were not excluding them, but our primary focus is around people that are going there anyway. That sounds like a push also to get those stack partners to sell the applications. Talk about the power of the Microsoft ecosystem in the market. I often talk about the multiplier effect: Why does Microsoft matter in the market, and why does it matter for customers? Take a partner of any type, doing either one or multiple areas of focus, and another partner doing complementary work, theres two ways we grow our business: partners who bring it all under one fold, or partners partnering together. The genesis is partners partnering together along the stack. I am hearing from partners that 40 percent of growth is coming from those types of partners. Partners that I have talked to have talked about some of the things youve done to alleviate some of the partner issuesterritory overlap, a lack of response from Microsoft, not a lot of incentive for companies to actually grow. So, youre putting out new concepts here, but there are still some old issues out there. What are you doing to tackle the remaining issues in the partner channel? The way were doing it is were stating the direction of where were going, and then were holding the Microsoft team accountable to deliver, and were holding Microsoft partners accountable to make sure we are delivering. I frankly am not hearing [about issues] as much anymore. I am hearing feedback from partners that if they take the time to understand the range of innovation we are delivering for them, and they sit down and put a business plan together, that their profits are increasing, revenues increasing. So, Ive painted a picture of where were going and I, on behalf of Microsoft, have done significant incremental investment over the past three years. Were approximating $2 billion annual investmentthats marketing dollars, salesforce investment, and tools and infrastructure systems investment to drive profitability, with the No. 1 goal of profitability for partners. I cant guarantee that theyll be profitable, but I can guarantee that I can show them how were creating profitable business models for them. How are you holding Microsoft employees accountable? At the executive level of Microsoft, 750 level, so the top 750 executives at Microsoft, have a significant portion of their bonus compensation based on partner satisfaction. We rolled that out two years ago broadly, and we set a very aggressive measure. Our partner satisfaction results, which we measure not only at the highest level of satisfaction, but every step along the way: Are you satisfied with sales and marketing? Are you satisfied with business opportunities? Are you satisfied with how you interact with us? We look at all partners, from all types around the world, and were at the highest level weve ever been, within the past three years, and were on a continuing upward trajectory. Stay tuned for Part 2 of the interview, when senior editor Peter Galli joins the conversation with Watson. Check out eWEEK.coms for Microsoft and Windows news, views and analysis.