In the second half of a two-part interview (part one--With Vista, seeing is believing) with CNET News.com, Microsoft's chairman talks about what's on his to-do list, including having a say in the next versions of Office and Windows and helping shape the company's strategy in search and online commerce.
"No shortage of important work," Gates said, speaking in Manhattan, where he took part in Monday's Vista launch festivities before heading back to Europe for more Vista events as well as a Government Leaders Forum in Scotland.
In part one of the interview, Gates gave his pitch for Windows Vista, the latest version of Microsoft's dominant operating system. In part two, Gates addresses some of the areas where Microsoft is trying to come from behind, including Xbox and Windows Live.
Q: One of the things Microsoft is introducing for the first time is if you want, you can go online and download either Office or Vista and buy it directly from Microsoft. Is that the future?
Gates: If you look at the beta period, where we had over 5 million users, those were online downloads, so obviously people are very willing to have that as a way to upgrade. It certainly beats standing in line. I don't know what the mix will look like over these next several years. We're going to give people the choice. Maybe next time it will be the main way they decide to upgrade.
One of things Microsoft said on the earnings call last week is that you are not going to ship quite as many Xboxes, at least in the near term, as you had forecast. What's behind that?
Gates: The Xbox had a great Christmas, but we actually provided enough inventory to go even beyond that. People in the first half will be working off that somewhat. We're always quite conservative in terms of how we do forecasts. We feel our competitive position with Xbox 360 could not be better. We got out a year ahead of our competitor, got the volume up there so that software people see it as the platform they really want to build on. Even with the conservatism, I've never felt better about Xbox 360 and where it is.
I'm sure you guys assumed the Windows Live effort would be a challenge. It seems to have been a bigger challenge than you expected. Is it time to rethink the strategy there? Is it just a matter of time?
Gates: Windows Live is fairly new for us. Ray Ozzie came and took charge of that. With Vista shipping now, we'll get a higher percentage of R& D on that Live-type capability. Over the next year you're going to see some neat things coming out. No one has done the platform on the Internet the way we think it needs to be done. We've got a lot of breakthroughs that we're going to be rolling out.
You just got back from Davos, the big conference of business executives and political types. Were there some things you came away with?
Gates: That's a conference that hits on every topic imaginable, from global health to global warming to various political things. The biggest change agent in the world has been the Internet. Now it's a question of getting that out, not just in the rich countries, but for all of the different countries. How can we make that happen?
People want to know "Are they missing something? What should their country do?" It's a great chance for me to have dozens of side meetings about where technology is going and what people might do with it.
One of the things you talked about there is Internet television and the way it's changing things. Is the television of today really on the verge of being outmoded?
Gates: You won't have to give up what you have today. But when you watch the news you can avoid the things you don't care about and see more of the things you do care about. The ads can be very targeted to you, so they won't be as bothersome. The content that is not very popular, like your kids' sports game or some lecture, will just be right there in your guide. The use of the Internet means it doesn't matter how many people are watching it. We can bring it down to you. We get rid of these limitations, the time limitations and the number of channel limitations that the old broadcast approach forced us all into.
It strikes me that, in your foundation hat, that might be a challenge, since a lot of what you try and do is bring attention to things that people aren't thinking about. This world of customization and personalization...is there a societal challenge? Who tells us what we need to know that we don't necessarily want to know?
Gates: Part of the beauty of the online world is it will let us find people we trust who want to recommend things. Certainly if people want to know what I think is interesting, they'll see what they might read about global health. I do think there has been more attention paid to global health in the last five years than ever before.
People would like it if it could be put into terms where they can get involved. Where can their money have an impact? How can they see that it gets an impact? Online lets us do that. Just (reading) a newspaper or watching a TV show didn't draw the person in.
Is the line between professionally produced content and user-generated content shifting? Will there still be a mix of those two things?
Gates: Once upon a time a typeset document was a clear sign that a big company was behind it and had put some real money into it. Today, anyone with a copy of Office and a laser printer is making documents that look as good as a big company.
There is still a gap there in terms of movie editing. But now with this high-definition movie editor that's in Windows Vista, that barrier has really been changed.
In photography, we have this stitching capability and rich software algorithms to improve photo quality. The things that are out of reach of just a person with a PC are getting smaller and smaller. Eventually, we want them to be able to do anything, all of their creativity fully unleashed.
It's still a year before you are stepping away from full-time work at Microsoft and moving to part time. What's on your to-do list?
Gates: Certainly, the big decisions about the next round of Windows and Office. A lot of things about Live, including what we do in commerce and search. Steve (Ballmer) expects me to share a lot of ideas and make sure those things get going on the right track.
No shortage of important work. I'm thrilled to see Ray Ozzie and Craig Mundie stepping up to their pieces.
Have you picked a couple things yet that you plan on working on when you do step away from full-time work?
Gates: It's too soon to really decide what those things will be. I'd be surprised if some things related to search or tablet PCs aren't in there. It's up to Steve to think, in that new role, how can I be most effective.