Microsoft Sees Fruits of Civic Engagement in Tuition Reform


Just a few years ago it was tough for any local publication to get the attention of Microsoft. Narrowly focused on its corporate mission,  the software giant stood aloof from most civic concerns. The company was a little like another great software giant today that distances itself from local issues–

Yet, when the Washington legislature passed painful legislation yesterday giving state universities control over their own tuition rates, an unpopular measure that could result in sharply higher tuition, Microsoft played an important role in its outcome. And the company was there to soften the blow. Microsoft and Boeing each company offered $25 million to launch a fund for scholarships.

Microsoft, a company that had studiously avoided civic engagement in the first decades of its life, has become actively involved in the local scene. And it’s largely the consequence of Microsoft’s General Counsel, Brad Smith. Perhaps it’s because Smith enjoys public discourse. Or perhaps Smith, who led Microsoft’s defense against the U.S. Department of Justice’s antitrust suit, came to understand the importance of dialog. During the antitrust case, there was a great deal of animosity toward Microsoft in the region in spite of the fact that the company was so important to the state’s economy that the chief economist regularly adjusted the state’s economic forecast to account for Microsoft’s hiring plans.

Smith says the reason Microsoft is more engaged in the local community is simple: “With 40,000 people employed here we feel it is good to have a dialog about our state,” he says.  “There are few companies that have as high a percentage of their employment in one state. We feel the health of Washington State is important.”

Last year, as chair of the Washington Roundtable, a group of large Washington businesses, Smith led an effort to focus on reform in higher education. It makes sense to set tuition rates to match what the market can bear and then use some of that extra money to offer scholarships to help out those who can’t afford the tuition, says Smith.

At a Seattle restaurant tonight, Smith spent two hours discussing these and other issues with a group of local journalists.  Among the things Smith had to say were the following:

Microsoft’s Future:

The industry is in such a dynamic stage of its evolution...In the last two weeks you’ve seen three significant things:  The Mango upgrade to the Windows Phone, Windows 8 and the new TV initiative with the Xbox.  The pieces are coming together.  We believe software will do as much to transform TV as it did to transform the telephone.

On the legislative session:

This was one of the most challenging years for the state government, but Olympia did a good job of making difficult decisions. When we look back, this will turn out to be a watershed year in terms of setting the foundation for new growth.

On the End Last Month to 8 1/2 years of antitrust oversight:

IWe deliberatley didn't celebrate it, but it's important. It frees up 50 Department of Justice lawyers and 400 Microsoft lawyers. There are things Microsoft will have the flexibility to do like make Windows boot up faster by preventing computer vendors from adding other applications that run during boot up.  

On K-12 reform:

Last year we failed on getting tuition flexibility passed in the legislature because people were fragmented. This year we came together on a common issue. We need to build on the momentum in higher education to find a cohesive way to support K-12 reform. There is a common concern around the 32 percent drop-out rate among high schools students. This decade we will produce 300,000 drop-outs. [In terms of drop outs, Washington fell this year to 42nd place in the nation, down from an already low 35th.] Yet, it’s clear that the jobs we create require more education. Unemployment is 9.1 percent overall but it’s only 4.6 percent among those with four-year degrees. We can attract the best talent I the world, but you want some of that talent to come from here.

Why do private universities with no funding do better, in general than universities with state money? It’s because private universities get endowments. But those are mostly universities in the northeast. In the West we have few schools with endowments. How do you create a third leg of the stool for higher education?  That's what we are trying to do with the fund. I’ve made calls to other companies [to encourage them to contribute to help boost the fund to $1 billion by the end of the decade.] Currently only state residents at 65 percent of the median state income have access to state scholarships. Under the new approach, students form families with as much as 125 percent of the median income can apply for the scholarships.

Tax Reform:

Microsoft opposed proposition 1098 because the measure would have pushed up Washington state tax rates to a level where it would be difficult to compete with other states for talent.

On Workers Comp:

It’s not a Microsoft issue. We self-insure. We don’t have people who are injured typing too fast on their keyboards. But workers comp is about giving people options.

Light Rail:

“We see it as something that will get cars off the freeway. It’s something that can be used by our employees in Redmond…It’s important for Bellevue to be decisive about light rail.”


We are generally in support of the deep bore tunnel. It’s clear that we can’t assume the viaduct will survive the next earthquake. But if we lose the viaduct it would bring transportation to a much slower level and that would be a challenge to the business community. The tunnel would allow a higher volume of traffic. It also allows us to make the most of the waterfront, which is our crown jewel.

AT&T Merger with T-Mobile:

We support it because we see it as one of the better ways to expand broadband capacity.

On Microsoft $42 billion cash hoard overseas:

We can’t bring it back under current tax laws. That’s why we issued commercial paper. It was more economically rational. The Skype acquisition will be paid for with foreign money because it’s a Luxemburg company. Tax reform would allow us to bring that money back. It would make our country more competitive.



[Virtual] Reality Check

[Virtual] Reality Check

Seattle companies will cash in on the coming VR explosion. How it plays out beyond gaming is the next big question.
After years of hype about virtual reality, it stands ready to move from The Matrix and Avatar into real life, with applications ranging from gaming to e-sales, from collaborative product design to remote surgery. What’s more, many companies in the Seattle region will reap the benefits.
“It is a paradigm shift,” says Bob Berry, CEO of Envelop VR, a virtual reality startup in Bellevue. “It’s a new form of computing that is just as transformative as mobile was. We are entering the age of immersive computing.”  
Those heralding the arrival of market-ready VR aren’t merely the ones developing the technologies. Investors have become true believers, too. Matt McIlwain, managing director of the tech-oriented Madrona Venture Group, says he was a VR skeptic until recently. “Eighteen months ago, I started meeting with a group of companies that had very early developer kits,” says McIlwain, who noticed two things had changed from earlier efforts. First, the VR experience was “pretty darn good.” Second, he adds, “I didn’t feel woozy coming out of the experience.”
Forest Key, CEO of Pixvana, a Seattle startup developing cloud-based tools for VR, couldn’t agree more. “VR in the 1990s made me vomit,” Key relates. But thanks to rapid advances in the underlying technologies, such as faster processing, better graphics and new methods for tracking movements, says Key, virtual reality systems that will hit the consumer market this year are more immersive and much less likely to induce “simulator sickness.”
“For hundreds of dollars, or certainly in the low thousands, you can build a rig that is superb in its capabilities and fully capable of tricking your brain into the effect that virtual reality strives for,” Key says. “Once done correctly, it’s like time travel, teleportation and science fiction all in one. It magically transports you to different places and profoundly allows you to have a psycho-perceptual experience that is different than watching a rectangle on a web browser.”
The launch this spring of three much-anticipated VR headsets — Facebook’s Oculus Rift, the HTC Vive and Microsoft’s HoloLens — spurs the optimistic frenzy. The Oculus Rift costs $600 and the HTC Vive goes for $799; both are aimed at the consumer market. Microsoft is selling 
HoloLens as part of a developer’s kit for $3,000. It’s aimed at game makers as well as those developing practical applications. 
Of the three companies that have introduced new headsets, only Microsoft calls the Seattle region home. But HTC, which developed its Vive headset in partnership with Bellevue’s game colossus, Valve Corporation, headquarters its United States operations in Bellevue, and its VR offices are in Pioneer Square, about a mile from the SoDo site where Oculus VR recently opened an R&D office.  
Los angeles, Silicon Valley and Seattle constitute the three major hubs for VR development, but Seattle may be ideally positioned to benefit most favorably from the coming VR explosion. While Los Angeles has a large pool of entertainment talent to draw from and Silicon Valley has an edge in hardware development, Key says Seattle has two major advantages: companies with long experience in game development and a vast knowledge of cloud services. While single-person VR experiences can run on isolated computers, Key notes, running interactive VR applications requires a cloud-based infrastructure.
“In three years,” he predicts, “no one will be debating whether the hardware is ready. It’s going to entirely become a question about software, about content.” In fact, Tom Furness, a professor of industrial engineering at the University of Washington and considered by many to be the godfather of VR, says, “The hardware is here. Now it’s about the content and tools to help us develop content easier and better. We don’t have those tools right now.”
Furness recently joined Berry’s Envelop VR as its senior scientific adviser. He says he chose to work with Envelop because it is developing what he considers “the most essential component” for the VR industry. “It is the superglue that brings together and integrates all of the hardware, software and experience design components that make VR an empowering tool for mankind,” Furness says.
Madrona Venture Group has been a lead investor in many of the burgeoning VR companies in the region, including Envelop and Pixvana. McIlwain believes the concentration of game and cloud application developers makes the Seattle region the natural location for developing VR content and the tools required to create and deliver the content.
“The gaming ecosystem in Seattle is really good,” notes McIlwain. “But, then, this is also the cloud capital of the world. I can go down the street and talk to my buddies at Microsoft and Amazon and ask, ‘What kind of use cases are people using you for? What are the next things you’re building? Why do you need to support this kind of video encoding?’”
Key says gaming will be the primary driver of consumer VR sales, but investors and developers alike see VR as a much broader game changer — from education to health care to manufacturing. “[For example,] meetings and conferences,” Key observes. “Meeting with your doctor or your trainer. Any kind of one-to-many or one-to-one communication will be very powerful in VR.  It might be education, or therapy.” 
Furness matches Key’s excitement at VR’s potential for bridging distances. “It’s basically a transportation system for the senses, where you can meet with other people even though you’re not physically co-located,” Furness notes. “You can bring people together and get bandwidth not only to the brain but between brains.”
It’s not quite the Vulcan mind meld Mr. Spock used to great advantage in Star Trek, but it’s close. “[VR] will let us look through somebody else’s eyes, let us communicate our perspectives and [give us a space] where we work on things together,” Furness told KUOW last year.
In the training sphere alone, whether it’s showing surgeons how to remove a gallbladder or giving aircraft technicians a how-to on painting a helicopter — without wasting any paint — VR promises to revolutionize how teachers teach. 
Even Seattle companies you wouldn’t immediately associate with VR are getting into the act. Boeing, which has long used augmented reality for flight training, used VR in the aforementioned example on painting helicopters. Amazon and Vulcan are hiring software engineers with VR expertise, Amazon apparently with an eye on its growing position in film and television production and Vulcan expressing a vague interest in “developing cutting edge solutions in augmented and virtual reality technologies.” 
“There are a lot of exciting applications that are in the commercial realm in addition to the consumer realm,” adds McIlwain. He envisions a group of architects “walking around” inside a building in VR, discussing design changes. “Or I can Skype into an interactive session to help a doctor figure out a diagnosis, or help someone repair something in a manufacturing facility. I don’t have to be physically present.”
Microsoft designed HoloLens primarily for such nongaming markets. At its Redmond campus last fall, the company demonstrated HoloLens by giving users a full-size 3-D view of a new Volvo sedan, with the ability to look under the hood and remove elements to explore the chassis and power train. Volvo is exploring having its engineers use HoloLens in the design process. One Microsoft video shows a designer looking at a motorcycle and simply touching and pulling on the gas tank, for example, to change its shape.    
E-commerce constitutes one of the most immediate and massive nongaming markets for VR. Imagine, Berry says, shopping on for a tent that sleeps six. How big is that tent, really? Big enough for six large people?
“I have no way to reason about the actual size of that tent other than looking at 2-D images, or maybe a little 3-D model I can spin around,” Berry says. But imagine clicking on a button next to the tent to summon up a VR view. “Suddenly,” he explains, “you’re inside the tent at scale and you can actually get a sense of how big the thing is. VR allows you to sense scale in a way that your brain can actually understand.”
As game makers move into the VR space, new startups in Seattle zero in on developing the tools that will simplify developing those games, as well as any other type of VR application.
Envelop VR, which launched in July 2014, developed a VR shell that goes around the Windows computer, allowing users wearing an Oculus Rift headset to work in Microsoft Windows in a 3-D environment. A camera on the Rift headset offers the user a view of the keyboard or mouse so he or she can control the immersive experience of Windows.  
The company is also building tools that let developers convert 2-D objects created in, say, AutoCAD, into 3-D objects in a virtual app in the environment. Besides allowing users to explore tents in 3-D while shopping online, the technology can be used in other sectors, such as manufacturing. “An engineer on an auto manufacturing line could put a headset on, export a 2-D design into a VR environment and walk around the object, lean their head into it and evaluate in a much more intuitive way,” Berry says.  
Pixvana focuses on delivering a cloud-based video-processing and delivery platform for virtual reality applications. After working on the Silverlight team at Microsoft, and before that as a visual effects specialist at Industrial Light & Magic, Key was aware that VR hardware, to be effective, will require new technologies for processing video at required speeds, especially when interactive applications require cloud services.
The new VR applications, says Key, “will require new kinds of tools, new kinds of production process, new kinds of experiential viewing processes. That’s what Pixvana’s mission is.”
As engineers put the finishing touches on the soon-to-be-released VR headsets and technologists of various specialties prepare the infrastructure the headsets will run on, industry insiders are not entirely specific on how VR will affect the economy and society. But they are convinced the impact will be huge.
In the near term, McIlwain predicts VR products will be adopted quickly. “Smart headsets will become pretty ubiquitous in two to four years,” he says. “Based on what I’ve seen, this stuff is pretty high quality and the chances are good that we are going to get some pretty good headsets out there in the second quarter. And then we’re going to have a big uptake cycle for the holiday season.”
As for the longer term, Key believes VR will be as disruptive to earlier technologies as cinema was to vaudeville. “The idea of sitting and watching a static rectangle on a screen will be very passé in 10 years,” he predicts, “because virtual reality is so fundamentally compelling. It’s magical.”  
Thanks to that magic, VR pioneer Trond Nilsen told a meeting of the Washington Technology Industries Association last November that we’re all going to live at least part of our lives in virtual reality at some point. “[And] the world,” Nilsen promised, “is going to get strange.”