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Ballmer’s Key Recommendation
A few days later, Ya-Qin Zhang formalized the idea in a proposal to Microsoft’s senior vice president Rick Rashid, who oversees Microsoft Research’s worldwide operations. The plan focused on four prime goals: amplifying technology transfer by moving more products to development more efficiently; tapping Chinese talent in new ways; preparing for an emerging Chinese market hungry for cool new things; and incubating technology created in China in order to spread it to the rest of the world.

Rashid embraced the concept and asked for a detailed proposal. He then took the plan to Bill Gates, laying out the initial projects the center would take on and requesting a 50 percent increase in Beijing lab staff. The Microsoft chairman gave the plan the green light.

The last person to convince was CEO Steve Ballmer, who had to approve new personnel additions of this magnitude. Ballmer surprised Rashid by asking whether the 50 percent staff increase was adequate. His point was that by the time an innovation made it to the new Advanced Technology Center, it should be pretty much assured of becoming part of a commercial product. Therefore, unlike the research division, whose projects usually face a less certain future, ATC should have no rigid size limit. Ballmer told Rashid, “I am going to eliminate the ceiling.” Moreover, he noted, since the product groups would be the main beneficiaries of the new center, they should pay for the predevelopment effort.

Hongjiang Zhang says that Ballmer is “very smart” and that his funding idea proved particularly astute. When product groups pony up for an ATC project, he notes, they have a bigger stake in making it work, increasing the odds of success.

The Advanced Technology Center’s opening in November 2003 was timed to coincide with the five-year anniversary of Microsoft Research Asia. To help handle the flood of résumés that poured in, Zhang began holding written exams in 11 cities around China, with two sessions in late 2003, one in February 2004, and two in October and November 2004. Late last year, the center also began using one of the Beijing lab’s prototype technologies, a résumé screener that categorizes candidates by test scores and other parameters and gives priority to graduates of top computer science and engineering programs.

Zhang and Beijing lab managing director Harry Shum almost glow with excitement when they talk about the talent that those résumés represented. They wasted no time in putting their new hires to work. The first product to go to market was a video-editing technology that can easily summarize sports and news highlights, compressing an hour of video into five minutes. The software is now standard in Movie Maker 2.1, part of Windows XP. The Windows XP Media Center Edition 2005, a version of the XP operating system designed to make it easy to manage home entertainment from a PC, also features technologies created by the Beijing research lab and further developed by ATC. These include automatic image processing for digital photos and a function that automatically locates the center of attention in a photograph and highlights the area most likely to be cropped.

At the beginning of 2005, Microsoft was closemouthed about projects now in the ATC pipeline—projects it expects to yield commercial products within the next two years. But Zhang says six of Microsoft’s business divisions currently fund projects inside ATC.

One big push, he hints, will be in search technology. Microsoft researchers have been working in search for a decade and, says Zhang, the Beijing lab has been at it for five years. It’s only natural to expect that some of that work is nearing commercialization, presumably for Microsoft’s MSN Internet portal business and the Windows Client group, which is respon­sible for the company’s operating systems.

The Natural Interaction and Services division now run by Kai-Fu Lee, who founded the Beijing lab in 1998, is also sponsoring several projects. But ATC’s biggest customer is the Mobile and Embedded Devices division. “We’re putting a lot of focus on mobility,” says ATC assistant director Eric Chang. “China is the number one market with the handset, and the penetration rate is really low, so I think it will stay number one for a long time.” Chang says the center is building a team to work more closely with handset operators and manufacturers to more quickly create new technologies and get them into products.

Heading Microsoft’s mobile business, of course, is Ya-Qin Zhang, who conceived the Advanced Technology Center notion in the first place and is intimately familiar with the work being done in Beijing. Zhang couldn’t be happier with his creation. “ATC is a super success,” he says. “ATC now in Redmond is a star organization. Every product group wants to work with ATC.” Although the center is focused on Beijing lab creations, Microsoft officials say it could eventually handle innovations from the company’s other research groups in Cambridge, England; Bangalore, India; Palo Alto and San Francisco, CA; and even Redmond.

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