Warren Buffett’s Family Secretly Funded a Birth Control Revolution (BusinessWeek)

In the past decade, the Susan Thompson Buffett Foundation has become the most influential supporter of research on IUDs and expanding access to the contraceptive

Katherine O’Reilly, a certified nurse midwife in her 30s, works full time at the Mesa County Health Department’s clinic in Grand Junction, Colo., and she’s eager to show off the clinic’s stash of one of the most effective forms of birth control. First, though, she has to get out her electronic badge to unlock a heavy wood door with a paper sign, “PLEASE KEEP DOOR CLOSED AT ALL TIMES!!!” She surveys shelves packed with boxes of gloves and gauze, then walks over to an unmarked metal cabinet. She opens it and bends down to look at the bottom shelves. “There they are!” she says, as if they’d been hiding from her.

She points to a stack of long, slim packages the size of a box of chocolates. Inside each is an intrauterine device and a tall, skinny straw that clinicians use to insert the flexible, T-shaped pieces of plastic into a uterus, where it can prevent pregnancy for as long as 10 years. “When I see patients, my goal is to be able to initiate contraception today,” she says. 

That means having IUDs in stock is essential.

It’s also expensive. IUDs can retail for more than $800 each, so a public health clinic such as Mesa County’s that attends to women with little or no medical insurance treats the devices almost like a controlled substance. The clinic spends $774,000 a year to serve a rural county of some 150,000. It can stock the pricey devices thanks in part to a statewide initiative to reduce unplanned pregnancies. The $24 million for the six-year effort came from an anonymous donor.

That funding ended in July. Luckily, O’Reilly says, there’s now a lower-cost alternative. This summer, the clinic got its first shipment of an IUD named Liletta that hit the market in April. Liletta is manufactured and sold by Allergan but was developed by a nonprofit, Medicines360, whose entire seed funding—$74 million—also came from an anonymous donor. “Our clinic can get Lilettas for $50,” O’Reilly says. “With our population, once we get that going, Liletta will be the one most women choose.”

A decade ago, almost no one in the U.S. had IUDs because of the device’s awful history and lingering reputation. By 2013, however, as women learned about superior, safer designs, IUDs had become the method of choice (PDF) for more than 10 percent of women using contraceptives, according to data from the Centers for Disease Control and Prevention. Among women age 25 to 34, they’re as popular as condoms, and they’re far more effective. The U.S. contraceptive market, including pills and IUDs, totaled more than $6 billion in 2013, according to Transparency Market Research.

A multiyear study of almost 10,000 women in St. Louis found that when providers offered women all forms of contraception for free, 75 percent chose IUDs and hormonal implants. The study’s been cited by several medical groups, including the CDC as part of its recommendation to doctors to encourage IUD use. This study received close to $20 million, also from an anonymous donor.

Almost all women—and therefore men—use a form of birth control at some point in their lives, yet contraception is so politically and legally radioactive that legislators and pharmaceutical companies avoid funding it. So it’s no coincidence that the money behind the Colorado initiative, the St. Louis study, and Liletta all came from an unnamed philanthropic source—they all were from the same discreet foundation. Very few people will discuss The Anonymous Donor on the record, but tax filings, medical journal disclosures, and an archived interview with a foundation official show the funds come from Warren Buffett, the chairman and chief executive officer of Berkshire Hathaway, and his family.

“You can’t send out a press release, and you can’t talk about, 

‘We got Buffett money’ ”

Named for Buffett’s first wife, the Susan Thompson Buffett Foundation is the third-largest family foundation in the country, behind only the Bill & Melinda Gates and Ford foundations. In 2013, the most recent year for which tax filings are available, it gave away almost half a billion dollars, largely to organizations dedicated to reproductive health. It barely maintains a website, studiously avoids press, and has about 20 people on staff. The foundation and Buffett didn’t respond to requests to comment for this article.

But in a January 2008 interview for a reproductive health oral history project that hasn’t previously been made public, Judith DeSarno, the Buffett Foundation’s former director for domestic programs, was candid about the foundation’s giving.

“Buffett alone will give more than all of the other foundations combined in reproductive health,” she said. “We already are this year, and that will continue.” DeSarno declined to comment for this article, other than to say, “I am incredibly proud of this work and the dramatic decrease in unintended pregnancies.”

In the past decade, the Buffett Foundation has become, by far, the most influential supporter of research on IUDs and expanding access to the contraceptive. “This is common-sense, positive work to help families meet their dreams and their needs in planning their pregnancies,” says Brandy Mitchell, a nurse practitioner who coordinates family planning at Denver Health, a state-run provider. “Why we have to rely on a donor to make this happen is beyond belief.”

Quietly, steadily, the Buffett family is funding the biggest shift in birth control in a generation. “For Warren, it’s economic. He thinks that unless women can control their fertility—and that it’s basically their right to control their fertility—that you are sort of wasting more than half of the brainpower in the United States,” DeSarno said about Buffett’s funding of reproductive health in the 2008 interview. “Well, not just the United States. Worldwide.”

Distrust of IUDs dates to 1971, when A.H. Robins Co. started marketing an IUD called the Dalkon Shield. It was a circular piece of plastic resembling a crustacean with 10 little arms. More than a dozen other such devices were on the market in the 1970s, in part because the government didn’t regulate IUDs. “You could make your IUD in your garage,” says Eve Espey, a doctor who helped write IUD guidelines for the American College of Obstetricians and Gynecologists.

With aggressive marketing, the Dalkon Shield quickly became the most popular IUD in the U.S., selling more than 2 million devices in three years. But soon horrific problems arose. All IUDs have a short string that’s used to eventually remove the device, but the design of the Dalkon Shield’s string drew bacteria into the uterus, causing infections that made some women infertile and have ectopic pregnancies. Several women died. In 1974, A.H. Robins, hit with what would total $12 billion in lawsuits, discontinued the Dalkon Shield. After that, almost no one would touch IUDs, pharmaceutical companies especially. For almost two decades, medical guidelines cautioned against them, stipulating their use mainly for older women who smoked so much it interfered with the effectiveness of the pill.

The Dalkon Shield fiasco propelled the U.S. Food and Drug Administration to gain oversight of medical devices, and in 1984 it approved the Paragard (PDF), a copper IUD developed by the Population Council, a nonprofit whose funders have included the Buffett Foundation. But the Paragard never gained mass appeal, and for more than a decade, medical research into IUDs all but stopped.

At least in the U.S. In Europe, research indicated that well-designed devices didn’t increase the risks of infections or infertility. Oddly, the research was less conclusive on how, exactly, IUDs prevent pregnancy. They make the uterus inhospitable to sperm, so maybe that’s it. Some also act to thicken the walls of the cervix, which reduces the space for sperm to wiggle into the uterus. IUDs may also make it hard for a fertilized egg to attach to the uterine lining. And, unlike the pill, they don’t require daily maintenance, which reduces the risk of user error. Whatever the combination of reasons, IUDs are 99 percent effective in preventing pregnancies, making them as effective as sterilization.

In late 2000 the FDA approved another IUD, Mirena, which emits a synthetic hormone. It was also developed by the Population Council. Its label allowed use by women who’d already had a child, and Bayer eventually owned the distribution rights. In 2002, fewer than 2 percent of American women used IUDs. But that was about to change.

Warren Buffett met Susan Thompson through his sister, who was Thompson’s college roommate. The two married in 1952 and lived in their hometown of Omaha for more than two decades, during which Buffett bought and began building Berkshire Hathaway into one of the largest companies in the world.

Susan was a cabaret singer and passionate about women’s rights. In the 1960s, the couple set up what was then called the Buffett Foundation, which focused on nuclear disarmament and reproductive health, including helping to fund Planned Parenthood as well as the development of RU-486, the so-called abortion pill. In the late ’70s, the duo entered into an unusual arrangement—they remained married, but Susan moved to San Francisco. She also introduced Warren to the woman who would become his longtime companion, Astrid Menks, whom he married decades later after Susan’s death.

Susan and Warren’s daughter, Susie, moved to Omaha from Washington, D.C., in the mid-1980s, and her then-husband, Allen Greenberg, started running the foundation’s day-to-day operations in 1987. (Now divorced, the two work together at the foundation.) It’s housed in the same downtown mid-rise as Berkshire Hathaway. In its fiscal year ended June 2002, it gave away $33.4 million. Then, a series of events changed its giving exponentially.

For years, Berkshire’s stockholders could designate a recipient for their share of the company’s corporate philanthropy. Buffett and Susan often allocated their sizable portion to the foundation. Anti-abortion activists weren’t pleased, but it wasn’t until the early 2000s that the donations became a liability. In 2002, Berkshire acquired Pampered Chef, which sold kitchenware through a direct sales model akin to Tupperware parties. Pampered Chef brought Berkshire into the living rooms of homemakers in Middle America, opening a vulnerability anti-abortion activists exploited. After protesters called for a boycott, Pampered Chef’s founder, Doris Christopher, appealed to Buffett.

“I thought we could tough it through, but we can’t,” Buffett told biographer Alice Schroeder for her 2008 book, The Snowball: Warren Buffett and the Business of Life. He said he felt Pampered Chef’s saleswomen were at risk of losing business. “It hurts Doris, and these are her flock. They’re getting injured.” Schroeder went on to write, “He didn’t say it, but implicitly, not just their livelihoods but their physical welfare was at stake.”

The Pampered Chef clash forged a line between what Buffett, investor and employer of hundreds of thousands, would tolerate and what Buffett, the individual, could endure. “When it’s his own view—it’s his own money—who cares what you think?” says Jeff Matthews, an investor who’s written several books on the company. “He is not going to change his own personal behavior.” Berkshire ended its shareholder corporate-donation program in 2003. But Buffett kept on giving from his personal wealth.

In 2004, Susan died of a stroke at age 72, leaving about $2.5 billion of her estate to the foundation, which was renamed after her. The foundation’s board reorganized. Buffett relinquished his seat, and Susie became board chairman. Buffett later said he’d always assumed his wife would outlive him and be the one “who oversaw the distribution of our wealth to society.” Her death forced him to reassess his plans for the more than $40 billion in Berkshire stock he held at the time.

In 2006, Buffett announced his decision in a cover story of Fortune (PDF), pledging to eventually donate 85 percent of his Berkshire stock, valued then at $37 billion, to philanthropic causes. He committed the bulk to the Gates Foundation, with the remainder going to the three foundations run by his children and a million shares, then worth more than $3 billion, promised to the Buffett Foundation. According to tax and regulatory filings, since 2006 Buffett has given $1.7 billion of his Berkshire shares to the foundation. Almost 60 percent of the original bequest, now worth roughly $4.2 billion, remains pledged to be transferred to the foundation over the coming decades.

Foundations must spend at least 5 percent of their assets each year, so the new influx from both Susan and Warren forced the foundation to expand quickly. In September 2006 it hired DeSarno, the longtime president and CEO of the National Family Planning and Reproductive Health Association, a group that represents women’s health clinics that receive federal support. She’d led the group to push for broadening access to low-cost contraception.

In the 2008 interview, DeSarno said Pampered Chef did affect the foundation in at least one way: It continued to fund what it wanted to fund but made anonymity a condition of its bequests. “It has to be as ‘anonymous,’ ” DeSarno said. “You can’t send out a press release, and you can’t talk about, ‘We got Buffett money.’ ”

In 2005 the Buffett Foundation gave away about $60 million globally. In 2007 it donated $79 million in the U.S. alone, DeSarno said in the 2008 interview. “Next year I’m going to give at least $50 million more than I gave this year.”

DeSarno also worried that the foundation’s huge gifts would cause other donors to move their funding to different causes. “That scares me to death, and that really does say, ‘Judy DeSarno gets to figure out what happens in the United States on reproductive health in terms of who gets funded and who doesn’t,’ ” she said.

As the foundation’s spending grew, so did its focus. Earlier, it had concentrated on abortion-related work. Its new spending would expand to include at least $200 million to avoid abortion by building the research, policy, and commercial foundations to promote the rise of IUDs.

  

The first step involved building better academic, peer-reviewed research on IUDs, particularly looking at the public health effects on teens and women who haven’t had kids. Increasing the medical literature would help win over doctors who remained averse to promoting IUDs to these very women.

“In December 2006, I got a call from an anonymous foundation, and they said they would like to help women use the most effective methods of contraception,” recalls Jeffrey Peipert, a doctor and leading researcher with the Department of Obstetrics and Gynecology at Washington University in St. Louis. “They said, ‘You come up with a program to promote and encourage the use of the most effective methods,’ and I suggested we do a project where we make all contraceptive methods free and see what they choose.” The foundation asked for back-of-an-envelope calculations for a budget, according to an account published by the university’s press office. “He e-mailed the head of the foundation asking for some idea of how many patients he should plan to recruit,” the university reported. “The director told him to ‘THINK BIG! Happy Hanukkah!’”

Peipert says he can’t discuss his benefactor. “We were told in all correspondence and all journal articles, we would list them as the anonymous foundation,” he says. “I’m sure they have good reasons for this, and it probably has to deal with the other things they fund.” Much of the foundation’s other grants go to abortion-related work.

Katherine O’Reilly in the Mesa County Health Department’s medical supply room.

Katherine O’Reilly in the Mesa County Health Department’s medical supply room. Photographer: Morgan Rachel Levy for Bloomberg Businessweek

The New England Journal of Medicine, which requires funding disclosures, reported the Buffett Foundation’s support for the study known as the Contraceptive Choice Project, and tax forms show the foundation gave Washington University about $20 million beginning in 2007, when the study was launched, through 2013. (Peipert says his budget was “not quite” that amount.) The Choice Project remains the biggest U.S. medical study of IUD users conducted.

In August 2007, Peipert and his team began recruiting 9,256 women from across the St. Louis area. About half had never been pregnant, and more than 20 percent were teenagers, some as young as 14. At clinics around the city, researchers counseled the women about all the different types of birth control, with an emphasis on IUDs and implants, offering them all for free. They followed the women for more than three years.

In 2010, Peipert and his colleagues published their early findings in the American Journal of Obstetrics & Gynecology, reporting that 56 percent of the women chose IUDs, with an additional 11 percent opting for hormonal implants. The findings immediately provided a jolt to the field, making a powerful argument to practitioners and policymakers that women would want IUDs if they knew about them and had access to them. The St. Louis researchers published at least 50 more papers.

The Choice Project has had the kind of wide-ranging impact that donors rarely see. In 2011, the American College of Obstetricians and Gynecologists updated its guidelines for the first time since 2005 to support a broader use of IUDs. It cited the Choice Project findings in the first paragraph. In 2014 the CDC also pointed to the Choice Project (PDF) in its recommendations for practitioners teaching women about birth control options: They should start by introducing the most effective ones, such as IUDs.

 Academic research wasn’t enough, though; the foundation wanted to get inside the clinics where women were making birth control choices and ensure they were aware of, and could afford, the most reliable options. So it decided to pick two states and pour resources into them—supporting provider training, social marketing, and lower costs—to change the perception of IUDs and build political support for the devices. The first, ahead of the 2008 presidential primary, was Iowa.

“Allen was hoping we would be up and running … so that presidential candidates would have to comment on access to family planning, not abortion,” DeSarno said in the 2008 oral history. When her assistant first called local family planning clinics, no one had heard of the Buffett Foundation, even though it was already a major donor, DeSarno said. They recognized DeSarno’s name, though, and some people cried when they heard there was money coming their way. Over five years starting in 2007, the Buffett Foundation would spend more than $50 million in the Hawkeye State.

The foundation began making a big push into Colorado, a far larger and more diverse state, in 2008. “They didn’t want some completely blue liberal-leaning state, where people could go, ‘Of course they can do it there because of the politics,’ ” says Greta Klinger, the spokeswoman for the Colorado Initiative to Reduce Unintended Pregnancies, as the effort was known. Klinger acknowledges the Buffetts provided the funding but still generally talks about “the foundation” when discussing it.

Tax filings show that from 2008 to 2013, the Buffett Foundation spent about $50 million in Colorado, with roughly half going directly to the state. The state spent about half of its funds to purchase the devices, so they’d be free. The rest of the state’s funding went to hiring and training clinicians. Mesa County Health Department head Jeff Kuhr says it took several years and almost a complete staff turnover to be able to introduce IUDs. The clinic hired O’Reilly and another nurse midwife who have been trained in counseling and insertion. In 2013 the clinic inserted 101 IUDs and implants; so far this year, it’s inserted 189.

Last year, Colorado Governor John Hickenlooper released results of the initiative, showing the kind of change DeSarno said she’d hoped would persuade policymakers to back family planning. The teen birthrate dropped 40 percent from 2009 to 2013, and the teen abortion rate was down by more than a third. “This initiative has saved Colorado millions of dollars,” Hickenlooper declared.

The teen birthrate dropped 40 percent from 2009 to 2013, and the teen abortion rate was down by more than a third

This spring, when the legislature debated taking over the funding after the Buffett donation ran out, conservative legislators voted against providing support, saying the efforts amounted to mini abortions—and anyway, private donors could fund it. The state is now soliciting other foundations, but even without additional funding the initiative may have lasting effects. “A couple of years ago, there wasn’t a lot of interest from outside providers,” says Klinger. “I think that’s shifting. We have hit a critical point in the state that people are saying, ‘Oh, oh, there really is a demand for this.’ ” With minds changed, the remaining barrier is the cost of IUDs themselves. The Buffetts have a fix for that, too.

  

“You know, it’s worth taking a look at getting a generic IUD,” DeSarno mused in the 2008 interview. “People can’t get it at a good price.” Now, seven years later, a good price is just what the Buffett Foundation has achieved. This April, Liletta, the low-cost IUD, became available. Its design isn’t revolutionary, but its business model is.

From the beginning, the aim for Liletta was a product that would cost public clinics just $50 and wouldn’t require foundation funding in perpetuity. In 2008 the foundation hired Victoria Hale as a consultant, according to tax filings. The following year, Hale, a MacArthur Genius Grant recipient, founded Medicines360.

The patent for the Mirena, which Bayer distributes and retails for as much as $800, expires later this year, so Medicines360 could have waited and made a knockoff for cheap. But at the time, the FDA didn’t have a way to approve a generic IUD, according to David Turok, a gynecologist at the University of Utah who worked on Liletta’s clinical trial. Merely selling a low-cost device also wouldn’t guarantee Medicines360 could generate enough revenue to support itself. “The initial funder said, ‘Look, I will fund the R&D, the full ride to approval, but then you have to be self-sustaining,’ ” says Pamela Weir, Medicines360’s chief operating officer.

The Liletta IUD.

The Liletta IUD. Photographer: Brea Souders for Bloomberg Businessweek

So Medicines360 developed a hormonal IUD almost identical to Mirena. The idea was for the nonprofit to partner with a company that would sell it at market rates for people with good insurance, essentially subsidizing the low prices for the public sector. For the nonprofit to have a branded product whose distribution rights it could sell, Medicines360 needed a clinical trial, Turok says. Most drug trials are as small as necessary to get approval, but Medicines360 designed an expansive trial to broaden access, hoping the IUD’s official FDA label would show that nearly all women of childbearing age could safely use the device. 

It signed up 1,751 women age 16 to 46. The multiyear study found Liletta to be 99.45 percent effective in preventing pregnancy, regardless of factors such as age and weight. This February, Medicines360 and the Buffett Foundation got what they wanted. The FDA approved Liletta (PDF) for use of up to three years, saying it’s safe for almost any woman, with a few exceptions, such as if she’s pregnant or has acute pelvic inflammatory disease.

Jessica Grossman, who recently replaced Hale as CEO, says she can’t discuss the funding source, yet according to the Buffett Foundation’s tax filings, it’s given more than $74 million to Medicines360. “All we can say is that we had an anonymous donor,” Grossman says. “I wish I could be more helpful, because I know it’s a fascinating story.”

Allergan sells Liletta for slightly less than what Mirena costs, but, as the foundation required, public clinics pay only $50. Allergan agreed to pay Medicines360 $50 million upfront, plus as much as $125 million more in addition to royalties. Grossman says Medicines360 is using the proceeds to develop new products for women and keep the Liletta trial running in the expectation of getting FDA approval for using the device up to seven years.

The Buffetts’ strategies have been so successful in building the medical, policy, and market infrastructure for IUDs that even proponents have begun to worry enthusiasm has gone too far. While IUDs produce great results from a public health perspective—and, as the Choice study found, women tend to be happy with them—there are many reasons for a woman to choose other contraception, they say. She may like how the pill reduces her acne, how a condom protects against sexually transmitted diseases, or how she can simply stop using other methods, rather than having to go to a clinic to have an IUD removed.

Rachel Benson Gold, a longtime researcher at the Guttmacher Institute, which receives Buffett support, published a paper last summer arguing that policymakers need a “delicate balance” between making IUDs accessible and ensuring women aren’t coerced into using them, particularly since so many efforts target low-income women.

There are reasons Gold and others might be nervous. This March, a state legislator in Arkansas proposed a bill that would pay unwed, low-income mothers on Medicaid $2,500 to get an IUD. That echoes a not-so-distant controversy over the Norplant hormonal implant.

After it hit the market in 1991, legislators in more than a dozen states introduced bills that would have pushed women into getting the implant as a condition of welfare, in lieu of jail time, or in exchange for cash. The Norplant inventor expressed horror that women could be coerced into using a contraceptive he’d designed to help them gain control of their own fertility—and future.

If more policymakers try to contort the effectiveness of IUDs into a tool for social engineering or make its use a condition for state support, the Susan Thompson Buffett Foundation may find itself needing to fund yet another battle—to ensure that a woman not only has access to an IUD, but that it is her choice to get one.

Bezos Adds More Than $7 Billion to Fortune as Amazon Surges (BusinessWeek)

Jeff Bezos, CEO of Amazon.com Inc. and founder of Blue Origin LLC, speaks at the 2014 Ignition: Future Of Digital conference in New York

Jeff Bezos added more than $7 billion to his personal fortune this morning after shares of Amazon.com Inc. surged more than $75. The chairman and largest shareholder of the world’s biggest Internet retailer lifted his wealth to $50.5 billion, according to the Bloomberg Billionaires Index.

The surprise $92 million profit from Amazon, reported after the close of regular trading on Thursday, heartened investors and sent Amazon to an all-time high of $564 a share as of 10 a.m. in New York.

Bezos, a former Wall Street computer engineer who founded Amazon in 1994, is set to become the world’s fifth-richest person, overtaking brothers David and Charles Koch, who were each worth $50.1 billion at yesterday’s close. Only 199 people have fortunes larger than what Bezos has gained this morning, according to data compiled by Bloomberg.

The 51-year old Seattle native’s net worth has risen more than 75 percent this year. He began 2015 with $28.6 billion, which put him in 20th place on the Bloomberg Billionaires Index, an exclusive daily ranking of the world’s richest people.

Microsoft Wi-Fi: Why you need to know

What is Microsoft Wi-Fi, and Will it Matter To You?

Microsoft wants to be the company that provides the service you want, wherever you are, no matter what device you’re using. They’ve taken their biggest properties like Skype and OneDrive cross-platform. They even have Office running on iOS and Android. With Microsoft Wi-Fi, the software giant takes another step in the quest to be your go-to service provider.

Using Microsoft Wi-Fi, road warriors and casual travelers alike could save time, money, and headaches connecting to for-pay wireless hotspots wherever they are. One account, one payment, over ten million locations around the world.

What is it?

Microsoft Wi-Fi is a new feature being rolled out with Windows 10. Well, the name is new. The feature has existed under the name Skype Wi-Fi for a few years now. It’s a service you can use to connect to for-pay Wi-Fi hotspots around the world without having to create an account with each Wi-Fi provider.

If you’ve traveled by air any time in the last 10 years you’ve probably encountered Boingo and Gogo wireless hotspots. Boingo and Gogo work well for frequent travelers because they’re pretty much ubiquitous in airports and on commercial flights. Regular travelers can create an account, buy a month worth of access, and use Wi-Fi anywhere Boingo and Gogo are available for the entire month. If you’re an infrequent traveler, this is nuts. You can still buy access by the day or hour, but the price may be ridiculous. You won’t know until you get there though, as it varies by location.

Gogo in flight WiFi is expensive.

There are similar for-pay hotspot systems across the world. The problem with these systems is if you’re not frequently in places with the same system, using any of them doesn’t make financial sense. This is where Microsoft Wi-Fi comes in.

Microsoft has partnerships with Wi-Fi providers covering over ten million locations around the globe. If you connect to a partner hotspot, Microsoft Wi-Fi will negotiate the setup with the vendor and complete your connection. No need to create a new account, provide yet another company with your credit card information, or remember another username and password. You also presumably won’t need to negotiate changing fee structures. You’ll buy a chunk of time from Microsoft at a given price, and use it on any partner network you please.

Boingo’s prices vary if you want anything less than their $9.95 monthly plan.

Microsoft’s Wi-Fi Sense has been getting a lot of press lately. This isn’t Wi-Fi Sense. Wi-Fi Sense is a way for you to share network keys with contacts. The idea is that you’ll be able to access secure networks your friends use without ever having to be given the keys, and they’ll be able to do the same for networks you have access to. Microsoft says these connections will only allow access to the Internet and not local network resources (i.e. printers, other computers, media devices), but hasn’t provided any specifics as to how that will work yet.

How does it work?

Artist rendition

Microsoft’s goal is for this to be as seamless as possible. In the Skype Wi-Fi days, you had to open the Skype Wi-Fi app and connect to participating providers through the app. That’s not a huge hurdle, but it’s annoying. With Microsoft Wi-Fi, you connect like you would anywhere. Just click on the Wi-Fi icon in the system tray and select “Purchase Wi-Fi from Windows Store”. Microsoft does the rest. This connection option will only show up when a partner hotspot is available for use.

What is the fee structure?

Lots of for-pay hotspots have fee structures that work for regulars, but punish transient users. Frequently you can buy access for a month, week, day, or by the hour for increasingly ridiculous amounts. If you’re spending three hours in a coffee shop 500 miles from home, this can be a real pain in the wallet.

Details are still vague, but right now it looks like you can buy a chunk of access time from Microsoft and use it on any partner network. So if you buy eight hours from Microsoft you can use 30 minutes in St. Louis, another 90 in Seattle, 60 in Detroit, 45 in Milwaukee and still have four hours and 15 minutes to burn. One account, one payment.

There is one catch for international travelers. Your time is only good in the country you purchased it. So if you buy six hours in Germany and cross the border to Austria, your time is no good. Presumably, you can bank time in each country you frequent, but you’ll have to make multiple purchases. Still one account though.

---

The impact this has on you is really dependent on how and where you travel. If you’re constantly in search of a Wi-Fi signal, this could be huge for you. If you’re more of a homebody, you might never think about it again. Where you travel matters just as much. If you’re in places that Microsoft doesn’t have partnerships, the service is pointless for you.

Microsoft Wi-Fi is aiming to simplify something that is likely headache-inducing for a lot of people. If the price point is right and the availability is good, this could be a very valuable and popular service.

What Your Boss Is Worried About: You (BusinessWeek)

Employers expect to be sued for discrimination, a new survey finds

A worker builds a light fixture at the Roll & Hill manufacturing facility at Industry City in the Brooklyn borough of New York, on July 2, 2015. Photographer: Victor J. Blue/Bloomberg

Your company is bracing itself for lawsuits. Yours included.

U.S. employers are anticipating a rise in workplace discrimination claims based on their own hiring policies, a survey released last week shows. In the study (PDF), employment law firm Littler Mendelson asked 500 representatives of companies with both small and large market capitalizations about their deepest legal anxieties this year. Fifty-seven percent said they expected an increase in discrimination claims because of their interest in an applicant's criminal history—the companies' top concern when asked about the Equal Employment Opportunity Commission's enforcement efforts. 

A growing number of states have adopted laws that prevent employers from asking on job applications whether applicants have a criminal record. Thirty percent of the employers surveyed by Littler Mendelson said they had removed such questions from their applications. An additional 40 percent said they are hiring contractors to do background checks for them. The report suggested that this strategy may be risky because people are filing a growing number of lawsuits tied to third-party investigations of criminal history and seeking class action status. "This trend will not slow down soon," the report said. 

Still, this year's respondents were less likely than last year's to say that they expect an increase in over discrimination claims.

The employers' second-biggest concern is potential claims over equal pay and the treatment of workers based on their sexuality, age, and disabilities. Employers seemed especially confused as to how to run employee wellness programs without getting into trouble for discriminating against disabled people.

The programs generally offer incentives to employees who hit health or fitness benchmarks and are encouraged by the Affordable Care Act. Recently, the Equal Employment Opportunity Commission sued several companies for programs that it charged were unfair to workers with disabilities. Overall, companies said they were having fewer problems with the new health-care law than in previous years; one-third said they were anxious about implementing Obamacare, down from 64 percent in 2012. 

The timing of the survey may have played a role in employers' concerns. The poll was conducted in April and May, when the Supreme Court hadn't yet ruled in favor of gay marriage. Forty-seven percent of companies said they already had rules protecting lesbian, gay, bisexual, and transgender workers, but 20 percent said they were either waiting on the court's decision to expand their regulations or had no policies in place.

Getting nailed by the National Labor Relations Board for the working conditions of subcontractors is a further concern. As federal and state authorities continue to scrutinize company decisions as to who counts as an employee, most employers surveyed said they had taken some action to mitigate potential legal challenges, such as auditing independent contractors. Thirty percent said they had made no changes to policies.

A growing share of C-suite executives and human resources professionals—17 percent—said they expected to "hire aggressively" this year. Compared with previous years, companies were also less likely to say they had unhappy employees staying in their jobs because there were no alternatives, or that people were stuck in jobs that didn't make good use of their skills.

Hackers Remotely Hijack a Jeep, Crash it Into a Ditch

Researchers Charlie Miller and Chris Valasek recently took Wired writer Andy Greenberg on a ride he won't soon forget

Chrysler has quietly released a Jeep software update to fix a major security vulnerability that could allow hackers to remotely hijack your vehicle.

Nextcar Bug artThe flaw, discovered by security researchers Charlie Miller and Chris Valasek, affects an Internet-connected computer feature in the dashboard called Uconnect—an optional upgrade that does not come standard in Chrysler vehicles. The duo recently demonstrated how they can leverage the flaw to remotely hack into a Jeep, taking Wired writer Andy Greenberg on a ride he won't soon forget.

Greenberg agreed to be the researcher's "digital crash-test dummy" and willingly got behind the wheel of a Jeep Cherokee on public roads in St. Louis. That's when things started getting weird.

"Though I hadn't touched the dashboard, the vents in the Jeep Cherokee started blasting cold air at the maximum setting," he wrote in his account of the incident. "Next the radio switched to the local hip hop station ... I spun the control knob left and hit the power button, to no avail. Then the windshield wipers turned on, and wiper fluid blurred the glass."

The hackers—sitting comfortably on the couch in Miller's basement 10 miles away—flashed an image of themselves on the car's digital display. Greenberg didn't panic; the hackers had assured him they wouldn't do anything life threatening. Then they cut the transmission.

"Immediately my accelerator stopped working. As I frantically pressed the pedal and watched the RPMs climb, the Jeep lost half its speed, then slowed to a crawl. The experiment had ceased to be fun," Greenberg wrote.

He then grabbed his iPhone and started to "beg" the hackers to stop. They had one more trick up their sleeves, though.

"The most disturbing maneuver came when they cut the Jeep's brakes, leaving me frantically pumping the pedal as the 2-ton SUV slid uncontrollably into a ditch," Greenberg wrote.

The hackers said they're still working on "perfecting steering control," and for now can only hijack the wheel when the car is in reverse. They can also track the vehicle's coordinates, measure its speed, and drop pins on a map to track its route.

The attack is especially notable because the hackers executed it wirelessly, while not physically connected to the car with a laptop, which is how other car hacks have been carried out in the past. Miller and Valasek said they plan to reveal more details about the flaw at the Black Hat Conference next month.

For now, owners of vehicles with the Uconnect feature should install the update as soon as possible. The patch must be manually installed via USB stick or by a dealership mechanic. The flaw is said to affect several 2013-2014 models of Dodge Ram; the 2013-2014 Dodge Viper; the 2014 Jeep Cherokee, Jeep Grand Cherokee, and Dodge Durango; the 2015 Jeep Cherokee and Jeep Grand Cherokee; and 2015 Chrysler 200s.

In a statement, Chrysler didn't seem thrilled about how the researchers disclosed the problem.

"Under no circumstances does [Fiat Chrysler Automobiles] condone or believe it's appropriate to disclose 'how-to information' that would potentially encourage, or help enable hackers to gain unauthorized and unlawful access to vehicle systems," the company said.

Chrysler did, however, tell Wired that it "appreciates" Miller and Valasek's work. "We appreciate the contributions of cybersecurity advocates to augment the industry's understanding of potential vulnerabilities," Chrysler said. "However, we caution advocates that in the pursuit of improved public safety they not, in fact, compromise public safety."

The software update is free; customers with questions can call Vehicle Care at 1-877-855-8400.

Why the IRS Hung Up on 8.8 Million Taxpayers: Courtesy (BusinessWeek)

Just 37 percent of taxpayers who tried the Internal Revenue Service’s toll-free lines reached a real person this year, down from 71 percent last year.

The IRS hung up on about 8.8 million U.S. taxpayers during this year’s tax filing season, using what it euphemistically labels “courtesy disconnects” to manage call volume amid budget cuts.

That’s up from just 544,000 hang-ups the year before, according to a report released Wednesday by the National Taxpayer Advocate, the tax agency’s in-house critic.

Just 37 percent of taxpayers who tried the Internal Revenue Service’s toll-free lines reached a real person this year, down from 71 percent last year.

Your accountant can’t get through either. The IRS Practitioner Priority Line fielded just 45 percent of phone calls this year -- after an average 45-minute wait.

“Thus,” the report says, “the use of the term ‘priority’ has understandably evoked a combination of frustration and amusement from tax attorneys.”

At least someone’s amused.

CEO Nadella talks Microsoft's mobile ambitions, Windows 10 strategy, HoloLens and more

Microsoft CEO talks about his thinking around product differentiation and being ahead of the curve in this Q&A with Microsoft watcher Mary Jo Foley.

Minutes after he left the Worldwide Partner Conference stage after delivering a keynote for 14,000-plus resellers, integrators and other Microsoft partners on July 13, Microsoft CEO Satya Nadella sat down with me in the backstage green room for a 30-minute interview.

His appearance at the annual partner show followed by just a few days the latest of his "hard choices" kicking off Microsoft's fiscal 2016. Last week, Nadella announced Microsoft would be cutting 7,800 employees, most of which are in the hardware and devices unit.

Despite the fact that he committed to continuing to make up to two new Lumia handsets in the value, flagship and business segments each year, moving forward, many company watchers considered last week's moves as signifying Microsoft's abandonment of Windows Phone and concession of the mobile market to its competitors.

I asked Nadella about his plans for continuing to compete in the phone/mobile markets; his expectations for Microsoft's HoloLens augmented-reality technology; and his partnership plans, in particular with regards to Microsoft's long-time nemesis, Google.

I've edited this transcript for clarity and length.

MJF: You just got off the stage. What do you hope partners take away from your keynote this morning?

SATYA NADELLA: I really mean this when I say I want us to be a very mission-driven company in the choices we make and the things that we do and how we do it, because the lesson learned for me has been to not conflate or mistake a particular goal with a particular technology and your mission.

When I joined the company in '92 it was about the PC in every home and on every desk. Guess what: We achieved that. And a company has to outlast any given technology paradigm and any ambitious goal. And so for me this going back to what is it that drove Bill (Gates) to build even the BASIC compiler or the interpreter to what we did in terms of inventing productivity or democratizing client-server computing.

That's where I come back to this notion of empowerment. When I even think about the three broad ecosystems out there in the world, we are the only ones who both (consumer and business). Because of what we do in our economic model, we are fundamentally focused on saying it's about our customer's product. IT can be a student writing a term paper or a big enterprise driving their own differentiation of productivity. Both of them are the things that we as an ecosystem care about. And that's what grounds me on what choices we make, what markets we participate in, how we do it.

In this world we have these three big ambitions (reinvention of productivity and business processes; building the intelligent cloud; more personal computing). Of course they're grounded in real product today, But it's also beyond what we're delivering today, beyond the brand names of today. Where are we going? That's where the morning's keynotes were all about and that's what I'm focused on.

MJF: That's a great jumping-off point to one of the things I want to talk about. After last week a lot of people I'm talking to -- partners and customers -- are really worried about your prospects in mobile. You just said not to conflate the technology with what you're going to do next. So, does Microsoft cutting back on the number of Windows Phones you make mean you are getting out of the mobile market?

NADELLA: Not at all. Quite frankly I think it's sort of about the lens through which you view what's happening. I view the mobile opportunity, even today in its broadest sense, and in the future, as being richer.

First, I want to be able to be present on every mobile endpoint. That's a very explicit core goal. It's not (just) the notion of having our application endpoints, Skype, Outlook, Wunderlist, Sunrise, on every one of the two billion devices. We want to have Microsoft experiences, because to me that's a platform play. It's not like, oh, they're just application endpoints. Guess what is behind those applications? It's One Cloud. It's Office 365, either for the consumer or for the enterprise. There's MSA (Microsoft Account) in there.

So to me it's very important to think of our operating system more broadly than some old definition of an operating system. So we want to be in every device, not only have our application endpoints on every device. I want the identity management. It's not MSA alone, it's Azure Active Directory. It is managing those devices, securing those devices in terms of data protection. These are all core capabilities that we have.

Then on top of that, to me, one of the great structural pieces is we don't have with Windows is this problem of Mac OS/iOS. I'm not in some quest to say let me try and replicate Mac OS and iOS or iOS and Mac OS. We don't have the Chrome versus Android. We are Windows, from Raspberry Pi to HoloLens. And when you saw the demo of HoloLens today, to me it's part of my mobility strategy. When the person was using Autodesk and Maya on the desktop and just moved to a 3D model and interacted, they weren't using their phone.

If anything, one big mistake we made in our past was to think of the PC as the hub for everything for all time to come. And today, of course, the high volume device is the six-inch phone. I acknowledge that. But to think that that's what the future is for all time to come would be to make the same mistake we made in the past without even having the share position of the past. So that would be madness.

Therefore, we have to be on the hunt for what's the next bend in the curve. That's what, quite frankly, anyone has to do to be relevant in the future. In our case, we are doing that. We're doing that with our innovation in Windows. We're doing that with features like Continuum. Even the phone, I just don't want to build another phone, a copycat phone operating system, even.

So when I think about our Windows Phone, I want it to stand for something like Continuum. When I say, wow, that's an interesting approach where you can have a phone and that same phone, because of our universal platform with Continuum, and can, in fact, be a desktop. That is not something any other phone operating system or device can do. And that's what I want our devices and device innovation to stand for.

Last week's announcement was not about any change to our vision and strategy, but for sure it was a change to our operating approach. The way we're going to go about it. I'm not going to launch a phone a day. I'm going to focus on a few phones that actually grab share that, in fact, showcase our uniqueness. When you have three percent share of that (phone market), but you also have a billion desktops, you have Xbox, you have innovation in HoloLens; you have Band. It's a graph. It's not any one node. It is the entirety of the device family. And I want to be able to think about our strategy, our innovation, and progress as one.

If anything, the thing that I'm signaling most to the investors, to the employees is let's stop this thing about trying to atomically dissect any one. They will all have a temporal current position and a future ambition. But it is one thing that we need to move on.

MJF: It sounds like you're saying that right now when people talk about "Windows mobile," (lowercase m), they only think it's the phone operating system. But you are saying it's much more than that. You're saying Windows mobile, going forward, is bigger?

NADELLA: That's why whenever I talk about Windows 10, I talk about mobility broadly across all of those devices. For sure there is a form factor today which is the below six or seven inches, which is powered by a very specific operating system instance of Windows 10, which is Windows Mobile. But what do you call that (device) when you use Continuum and then you're using applications on a big screen with a mouse and keyboard? It's Windows 10.

That's why I like to think about Windows 10 as not being bound to any one form factor. What is Alex (Kipman) doing with a HoloLens? It was a Windows 10 UAP (Universal App Platform). I think is what we need to do a better job of communicating.

In my case I have a Band. I have my phone. I have my Surface. I have my Surface Hub and I'll have a HoloLens. And that to me is all Windows 10. And I'll seamlessly move between all of these. I want the notifications to flow between all of these. I want my data and apps to flow between all of these things.

MJF: I saw (COO) Kevin Turner's mail about the moves you made last week, and he made a Surface analogy. He said now what we're doing with phone is more like what you're doing with Surface. Your phones are going to be more of like showcase devices for what Windows mobile can look like on a phone.

NADELLA: Correct. There's a little bit of a distinction because, in some sense, in the world of PCs, we are trying to create new categories like Surface did. Now every OEM has a two-in-one, which I celebrate, which is great. Surface Hub -- I'm sure next year there will be many OEMs with Surface Hub like devices. We will do HoloLens, and then, since the holographic computing platform is right there in Windows, there will be people who will build holographic computers beyond HoloLens. So I want all of that to happen.

If no OEM stands up to build Windows devices we'll build them. There will be Lumia devices. So I'm not afraid of saying, okay, it's all about the OEMs, or it's all about the ecosystem. It's about Windows. It is about the overall health of Windows and being grounded in any given day's reality, but having ambition of where the market is going versus being bound by current definitions.

MJF: Does that Surface analogy break down, though? Microsoft built Surface but there were still many other OEMs building successful Windows devices. But with Windows Phones phones, that's not the case, right?

NADELLA: We will do everything we have to do to make sure we're making progress on phones. We have them. Even today Terry (Myerson, the head of Windows and Devices) reinforced, again, yes, we will have premium Lumias coming this year.

If there are a lot of OEMs, we'll have one strategy. If there are no OEMs, we'll have one strategy. We are committed to having the phones in these three segments. And I think the operational details will become clear to people as they see it. I want people to evaluate us on the phones that we produce, but not the inside baseball -- what are we doing to produce -- because that should not be relevant to our broad consumers. It may be relevant to people like you who are critiquing us. That's okay. But what matters to me is what customers care.

MJF: I'm curious if you see last week's decisions around Windows Phone affecting your universal app strategy. Some believe that if Microsoft makes fewer Lumias -- and Microsoft is making more than 95 percent of all the Windows Phones in the market -- doesn't that kill, or at least weaken, your universal apps play, which is key to Windows 10? Why as a developer do I now want to build an app that runs on Windows Phone if there's going to be even fewer Windows Phones?

NADELLA: Universal Windows apps are going to be written because you want to have those apps used on the desktop. The reason why anybody would want to write universal apps is not because of our three percent share in phones. It's because a billion consumers are going to have a Start Menu, which is going to have your app. You start the journey there and take them to multiple places. Their app can go to the phone. They can go to HoloLens. They can go to Xbox. You talk to somebody like Airbnb. It might be more attractive, given our three percent share on phone, for them to actually build something for the desktop and for the Xbox.

And by the way, when we hook them on that, we have a phone app. This strategy is path dependent, which is a term I use that means where you start is not where you end up. And therein lies a lot of the nuance. The fundamental truth for developers is they will build if there are users. And in our case the truth is we have users on desktop.

Why then make all these changes to the Start Menu with Windows 10? It's not because I just want to bring back the old. It's because that's the best way to improve the liquidity our store. Windows 8 was great except that nobody discovered the store. In Windows 10, the store is right there and done in a tasteful way.

I want that to translate into success for our developers. That's what's going to get them to write to the phone. If anything, the free upgrade for Windows 10 is meant to improve our phone position. That is the reason why I made that decision. If somebody wants to know whether I'm committed to Windows Phone, they should think about what I just did with the free upgrade to Windows, rather than -- hey, I making four more phone models of value smart phones.

MJF: How does making Windows 10 free show that you're committed to Windows Phone? I'm not quite following that.

NADELLA: Because all of this comes down to how are you going to get developers to come to Windows. If you come to Windows, you are going to be on the phone, too. Even if you want to come to Windows because of HoloLens, you want to come to it because of Xbox, you want to come to the desktop, all those get you to the phone. It's not about let's do head-on competition. That will never work. You have to have a differentiated point of view.

MJF: I have a HoloLens question. I've heard that when you first saw HoloLens -- back when it was Project Fortaleza -- you said we need to expand this beyond just gaming. Where do you think the initial demand for HoloLens is going to be? Is it going to be more in gaming, or is it going to be more in business and research?

NADELLA: For sure in the first version, it's going to be more about developers and enterprise scenarios

I did buy Minecraft to create a new genre of gaming for mixed reality. We bought Minecraft for many reasons: because it's the number one PC app; it's the number one console app; it's the number one paid mobile app on iOS and Android. I wanted a hit game even for the new medium of mixed reality. And we will have that. Gaming will always be a scenario and there will be other entertainment broadly. But, with the V.1 of HoloLens, I want us to push a lot more of the enterprise usage.

In general Microsoft's approach will be always this dual-use focus, or this multi-focus. What we can uniquely do is bridge consumer to enterprise. That's in our DNA. That's why it's even in our mission statement of empowering people and organizations. I want every technology of ours to seek that out. In the HoloLens case, when I look at the interest, it's amazing how many are in hospitals, healthcare, retail. That's where I'm seeing the interest and we'll definitely go after it.

MJF: A question on partnerships. Since you've been the CEO, it feels like Microsoft is very different in how it's approaching partnerships. If you look at how (former CEO Steve) Ballmer dealt with companies like Salesforce and Adobe, and how you're dealing with them, it's very different. What is the difference in your philosophy here?

NADELLA: Microsoft, even during Steve's time and Bill's time, was a platform company. Rhetoric aside, and stylistic approaches aside, at the core I'm just doing what we have always done well. How many multi-billion-dollar software companies got built on top of Windows? Google wouldn't exist if they couldn't have built a browser for Windows, they couldn't have put toolbars on IE. We were the most open ecosystem on the planet ever.

We were always a platform company. I want us to be able to live that in our approach. That means Salesforce should extend Office, they should integrate, they should use Azure. Same thing with Dropbox, Box, Adobe. They should build great applications. It makes all the sense in the world for us to think about the construct fundamentally as non-zero sum. We may compete with many of these folks in some categories, but at the core we are a platform vendor. In fact, we have three platforms I like to talk about: Windows, Azure and Office. I like to think all three of these will be open for others to extend and, of course, we will construct them together.

MJF: In that vein and you're thinking about partnerships, do you think there's any hope you're going to have a partnership with Google where they build apps for Windows 10?

NADELLA: I would love to. It's for them to decide. I would love for them to have YouTube on Windows Phones. I would love for them to do their best work like they have with Chrome on Windows.

MJF: Is Microsoft actively talking with them about these things?

NADELLA: We'll talk to every developer. Some of these relationships with large players require a level of maturity, which I'm sure we will achieve with all players. I'm hopeful that there are more applications. After all, we now have our apps on Android, and that's good. And then we just hope that it's reciprocated and our users mutually benefit.

MJF: You just announced here at the show a new service and app called GigJam that seemingly creates a whole new application category. It crosses a lot of boundaries. I've heard you talk about Microsoft making fewer, bigger bets. So how does something like GigJam fit in here? Aren't you going off in a whole other non-established category?

NADELLA: It is about the core. It's one category. It's about productivity and business process. Think of it as a new module of Office 365. It's not bound to today's definitions of categories. It's not just a creation tool. It's not just a communications tool. It's not just a development tool. It's all of that. And it spans all devices. It's not bound to one device.

The notion is to be able to generate applications on the fly to adjust to the work that you're doing versus sending you off to five different apps, five different devices, and five different communications sessions. We brought all of that. That's a very revolutionary concept. If you think about the first time you saw Outlook, up to that point I had a contact management app, I had e-mail, and I had a calendar. Outlook took those three categories, came up with a new scaffolding, and since then, nobody has thought about these three things as separate on the desktop. So it's fewer, but big bets with growing addressable markets, not looking back.

MJF: We've heard stories about your decision that the Surface Mini -- that small, ARM-based tablet that nearly came to market last year -- was not differentiated enough, so you axed it. How do you decide what's differentiated enough when it comes to new devices?

NADELLA: What I want us to stand for is not have envy for somebody else's success. I want us to stand for what is it that we've done that customers actually care about. Why is this important for us to take to market? I actually don't even care as much about initial grand success in terms of volume or share. Does it meet a specific scenario that we have done very well for some set of plans? It's a shorthand for doing customer scenarios that are differentiated.

I want to be more customer-led. When we say customer-led, that doesn't mean just listen to customers about X and then do the same feature. It's about being able to anticipate what we can do to really differentiate their own lives. GigJam wouldn't have come from the thinking of let's look out there and see who is doing something.

That is how we created Microsoft. Nobody had done Visual Basic. Nobody had done Access. Nobody had done Outlook. We created categories or democratized categories. We either took something very complex and made it simple so that everyone in the world could adopt it, or created something where it didn't already exist -- where nobody came to us and said, this is what we want. Once we did it, everybody wanted it. That's the bar for devices and our software and services.

MJF: So back to phone, then. You've said one of the three categories of phones you want to make are "business phones." What's the differentiator for you there?

NADELLA: Businesses are actually the place where we're growing fastest among all our phone ones. Think about it. Some of the real (attraction) of Windows devices is management and security. The fact that your latest soccer app is not available, or some social networking app is not available is not much of an issue (in business scenarios). What matters to you is identity management, security, protection.

The other thing that matters is rapid application development. In our case, we take a Lumia device, you power up Azure App Services, and out come Universal Apps that automate workflows. I think that's unbeatable in terms of a value proposition. That's why we have something unique to contribute.

Those three segments, I picked them because we have something unique to contribute. For people who love Windows, we'll have a flagship device. It's not just a flagship device, but it also supports things like Continuum. For business customers, it's about custom apps they want to deploy onto those endpoints with management and security. For the value smart phone segment, I want to focus on where we can put Office and our communications and Skype, so it's more like a Skype and Office phone for the first time smart phone buyer. Those are places where I feel like, yes, that's a kind of uniqueness. Let's grow from there.

You've got to remember even the Apple regeneration started with colorful iMacs. So let us first get the colorful iMacs. I think with what we're doing with Lumia, we're at that stage. I want to do good devices that people like, and then we will go on to doing the next thing and the next thing.

MJF: Are you using a Windows Phone yourself?

NADELLA: Absolutely I do.

ZDNET: I heard you might use Talkman (one of the next expected premium Windows Phones) pretty soon.

NADELLA: I don't think I said that.

MJF: Not publicly, at least :)

NADELLA: This is the 830. Of course I'm using a Windows Phone, but that doesn't mean I'm not going to make sure that everyone I see with an iPhone here , I'm going to get them to download one of our apps. And that's our goal.

We had a CEO conference recently and I did a demo of all the things that we have on the iPhone so that they could all walk out with Wunderlist, and OneNote, and Outlook. By the way, Outlook client on the iPhone is the best Gmail client and the Exchange client on iOS. Now that to me also signals our mobility strategy.

MJF: So bottom line -- your mobility strategy is not just about phones.

NADELLA: It's about phones. It is about our apps on other end points. It is about EMS (Enterprise Mobility Suite). It is about new categories like HoloLens. In the full arc of time, that's what people really value. It's not about one mobile device that rules them all. That would be like saying there's one PC that's going to rule all as a hub.