A lunchtime chat with Bill Gates at CES
by Ryan Block 
posted Jan 8th 2007 at 2:01PM
This may be the last time Engadget gets to speak with you. I don't know exactly what ...
No, no, it won't be. I promise.
So you'll be around in 2008? You'll deliver the keynote?
I'm full time until mid-2008. And we're mixing it up a little bit. Robbie's doing a big part of the keynote tonight. We'll have even more than one chance to talk between now and when I'm not full-time.
Ultimately when you do depart, what do you want your legacy as a technologist with Microsoft to be?
Microsoft's always been about software that empowers people. What could happen over the next ten years is probably even bigger than what's happened throughout the entire history as we get speech and vision. And we're just getting rid of constraints. Storage constraints. Resolution constraints. At the end of my keynote ... everything that I talk about product-wise is all here and now, this year kind of stuff. Almost everything's shipping except the Home Server, the photo stitching thing, but everything is here. I take this thing where I show and say if you have projection throughout the home and it can project onto the walls and surfaces -- what kind of things can you do? There's no specific thing, but I've done some neat things like student tablet that in terms of the few projects that Ray and Steve have picked for me to still be involved in, like the tablets since I've been very involved in that. The switch is I go from being the person who's looking at the overall thing and how the pieces stick together -- making sure they're not missing pieces or duplicating pieces -- and Ozzie picks up that. I go to where I'll have a few project very focused and he's got the total driving overview of how it all comes together.
[continued]
There's nothing magic about mid-2008. It's a year where research is strong, Ray's stepped up to his role, Craig's stepped up to his role. It's a big year for the foundation in terms of how it's scaling up and some of the breakthroughs we wants to make. You could think we're more like a startup, a pretty good sized startup, in terms of what the path is for that foundation. There's a lot more shaping that and this industry -- the most innovative and fast-moving industry -- sort of understands the shape of it better than that philanthropic goal. So I hope Microsoft does well. I hope software keeps empowering people. I don't have much doubt about those things. I know I'll miss some of the things I get to do. I mean, today's a fun day where I get to talk about the whole strategy, saying to people, "Hey you heard me say something last year and here's what we really did and here's what went slower or better or worse than we expected."
What new direction do you think Ray Ozzie is going to take Microsoft that hasn't really been explored yet?You can go back to Vannevar Bush's writing about the Memex machine. Nothing's been invented since then, you could say, depending on your perspective. Ray gets to pick which things are ripe to go after, just like I've gotten to. Getting the company into tablet earlier, internet TV earlier -- let's get into video games, that's key to the living room. How do we get in, how much risk and investment are we willing to take? Making sure Microsoft research in terms of its homework its relation to the universe stays up in the front. So he'll be making lots of choices about things but it's not like some totally new direction. Microsoft was a software company in 1975, they'll be a software company twenty years from now. That's what we're good at, that's our unique contribution. Live is the thing that he, as I'm still in the software role, he's got this huge chunk that relates to Live that he is driving the company to. That's a very big deal. If you go inside Microsoft right now and said, what's the thing when Ballmer shows up, Bill shows up, Ray shows up, they just try to hammer in your head? It's Live, Live, Live. We've got to get Windows more Live-enabled, Office more Live-enabled, we've got to get some of the online properties more integrated, we've got to connect the phone, the Xbox, the PC. So Live is sort of his big focus for the next several years making sure we stun people with the Live platform.
You talked about software empowering people, Microsoft has this big push -- starting with the Xbox and now the Zune -- from doing not only software to empower the user, but to helping hardware manufacturers, and then to actually making the hardware yourselves.
Most hardware we don't make ourselves. The PC is a great example. One of the big news things you'll see at this show, is the degree to which during the development of Vista we were able to sit down with the hardware companies, hear what they were going to do make sure Vista enabled that, and made sure they focused their new hardware advances on things Vista supported, so you'll see the SideShow-type laptops, the touchscreen stuff from HP, this Toshiba has this wireless docking, which means it's not docking. It uses ultrawideband to take the video signal out of it as a DVI digital signal and send it up to the screen. Anyways, a ton of things where hardware meets software, because of the partnership there. You know, with the Tablet PC we actually did a prototype of that, and we keep doing prototypes. We've always done that and we're doing more and more of that prototyping type stuff, like our relationship with HTC and others on phones. We've gotten a lot better at getting the hardware and the software to come together.
If you look at something like the 360 which many consider to be a huge success, and now you have the Zune following in its footsteps, you have Robbie Bach up on stage with you tonight, and that's all based on that idea of using your software prowess but building the hardware yourself.
We're only semi-religious about not building the hardware. [Laughs.]
[Regarding the 5m Live subscribers announcement] So how many are paying?
That's Gold and Silver. I know the majority are paying, I don't know the exact percentage. Of course, there are two ways to pay. You can be Silver and buy points and buy things à la carte or you can be Gold which you pay the subscription and you buy some things à la carte. The majority are Gold. There's a big lag, there's a ton of people that bought Xboxes in the last few months who just don't show up because they just haven't connected it up yet. So our numbers these next two months will see a big increase there.
I know there's no discussion of anything like that. You get out past five years, who knows. Everything we do is about software. What you're going to see -- if you haven't already -- is Xbox Live connecting up to the PC so your presence -- the ability to send messages and talk, you can even play some of the games that are cross-platform enabled -- that Live asset is going to make gaming on Windows a lot better. Just give people a new kind of experience. Given what we think about being connected where you get your schedule on your phone, you get it on your TV, you get it in your car, it's cross-device. The idea that you'd ever split and say that these devices are here and these devices are here, that goes against the whole direction, which is user-centric.
Living room being the goal for the Xbox project, you're there now. You have all these Xboxes out there, they're connected to the internet, you're rolling out IPTV. Is gaming an ends to a means, or is gaming still the primary goal?
The reason we got into Xbox at the beginning was not just gaming. It was very, very important --
It's a gaming machine, no less. Yeah, but it's a general purpose computer. In terms of that first generation in particular where we were still known as a PC company, the need to make clear how we were prioritizing the needs of demanding gamers, that was super important. That was super important in terms of the culture of the team that was doing the work and how they thought about their marketing. But, we wouldn't have done it if it was just a gaming device. We wouldn't have gotten into the category at all. It was about strategically being in the living room. And this is not some big secret. Sony says the same things. During that first generation, they had more latitude to talk about it since Sony has already gotten their gaming credentials but they were not there even more than gaming. For us, people sort of take it for granted -- hey, you do phones, and set-tops, and IPTV and all these things so it's easier for us now that that's part of the message for people to say, of course Microsoft's is going to make Messenger work on the Xbox. They're going to let you look on your phone and see that someone beat your record on this game and schedule an Xbox gaming thing. There's a huge milestone this year -- I'm basically agreeing with what you're saying -- Xbox was a gaming device. Now you can download videos on it. I sit and watch high-def videos never touching a plastic disc. You can take all the PCs in the home and use this extender capability so you get your PC richness up on that screen, in Media Center or whatever, and we're announcing that it's a set-top box so if you're somewhere that's got IPTV now you've got live TV, the most state of the art experience; downloading movies, state of the art; gaming, state of the art; and projection of the full PC experience. It's not a PC but it brings that PC into the living room. So when you talk about convergence it's the first device that says, oh yeah, this is convergence. It's real.
Those little plastic discs that you mentioned. You told Engadget last year that downloadable was the future. Now you have Xbox Live Marketplace which, by all accounts, is doing very well -- it's beating Amazon's service for downloadable movies -- and you're adding IPTV. But there's this format war that's still going on. Is the push for downloadable content for Microsoft going to expand? There's still no announcement whether you'll be able to download movies on your computer and watch them on the 360 -- is it still going to be 360 focused or is the idea to really leverage the power of the company as a whole to push downloadable content?
We're going to push downloadable content as much as we can. You've got the challenge there with rights management of making it so that creators get paid and it's simple to use. There's some progress there but that's a challenge to the industry to meet those --
-- so it's a technological limitation at this point?
No, the content people have to take the leap of faith. With Xbox, where we've got pretty rich protection capability, we'll probably get slightly more video on Xbox than on today's PC hardware. We're going to have the same video service on both, but the catalog might be larger where you've got a stronger hardware protection. We think HD-DVD is great. It's a fantastic experience. I bought a lot of the discs, played with them. It's neat. But over time, eventually online is going to be more important. But we're super pleased with our Toshiba partnership. We had a great year in terms of the devices, the attach rate, the movies, the quality. Also, there's this whole format thing about VC1 and how VC1 has emerged -- that's pretty hardcore -- but our codec's emerged as the highest quality even versus the MPEG-4 stuff which if you'd asked people a year ago they would have said there's no chance of that happening and that's happened in a very big way. Yes, we're going to get way more content into that Xbox. Robbie's got an announcement about some new partnerships there, got some new content in Media Center. It's both breadth of content and interactive content. You're actually seeing some of the interactive more in Media Center. You should look at this Fox Sports experience where you can, as you're watching the game, get more information. It's high def, interactivity, breadth, and simplifying rights management. Those are all the things that you need to do. Plus the normal march of broadband pervasiveness.
Part of the technology driving vertical integration was what allows better rights management, allows you to get content deals for the Zune and for the Xbox that might not otherwise be obtained on the PC. So, I would assume at a certain point in the future that the living room is going to be the more important platform than the PC. Do you ever see that happening?
No. The boundaries between devices shift over time and even these definitions will get kind of tricky. The Media Center is way richer. That's the richest device. That is the superset device. Remember: PCs, you carry them around with you, you use them at work, it's a gigantic market. I can stick up for both the PC model, where you don't pay any royalties, you can introduce games without asking anybody -- that's a great thing, and you'll see a lot of PC gaming innovation, some of which we're very directly involved with, some of which just happens because DX10 is there, these graphics chips have gotten pretty incredible. NVIDIA and ATI's roadmaps are kind of mind-blowing in terms of the number of parallel units that will be there for us to execute on. And PC gaming is where you'll see that really cutting-edge high-end stuff happening. As the Xbox gets cheaper and cheaper, some very cool things are happening there. Both of these models, even in the living room, are still very important. The kind of openness and variety of the PC and the kind of very inexpensive deep integration that Xbox represents really bootstrapping off of video gaming but being far more than that.My final question is one that's on a lot of peoples' minds right now. As Microsoft definitely gets into IP, high-def movie downloads, content on your PC and your Xbox and all these different Microsoft hardware platforms, how are rulings on net neutrality and net neutrality law going to affect Microsoft's business?
Microsoft wants people to build internet infrastructure that has the ability to feed high definition video to every screen in your house, so we want the incentive to be there for people to build up new networks and we want that network to be something that content from everyone is sort of treated in a reasonably equal way. So we had the content people saying things that would have eliminated the incentives to build better networks, and we have the people who want the network incentives saying, hey, just trust us, we won't do those things. Those were the two sides. Craig Mundie was kind of a fair broker because we need both. We need the content people to see this as an open platform so they'll keep innovating, including ourselves, and we need these new networks built. There's regulatory models in Europe where the high-capacity networks just won't be built because they've set sort of equalization in terms of the sublease rate, the wholesale pricing rate that means you're just not gonna do a high-definition interactive network. And you're not going to get the enablement that comes with that. It's this complicated stuff. Craig, and the people that work with Craig spend time in DC. We thought there was a way that gave people the best of both worlds. Apparently, AT&T committed to some flavor of this as part of their FCC thing. Every country is different on this, and this is a very complex thing. In its purest form you eliminate the incentive to build better networks so you have to be careful about that.
Right! But you're either a network company who don't want any restrictions, or a content company who doesn't understand the disincentive to building out the networks. There were tons of things proposed that would have made the US just like Europe. These are complex issues. What the consumer wants, in terms of, hey, my network gives me access to everything but it's also very high-speed -- that's the ideal for us. And as a big company in the industry, it's incumbent -- it's a part of our responsibility is to learn these complex issues and not let either the extreme things block what really should happen. The US did have a problem in the 1996 act that it had as an assumption that sub-leasing could do this magic thing, and how did that go? Why is Korea ahead of us? It's a complex thing. I think we're doing the right things. Go and look at the AT&T filing; I haven't looked at it specifically, and see if you think that strikes a good balance.
Thanks so much!
Reader Comments (Page 1 of 1)
Simon P @ Jan 8th 2007 2:08PM
Hmmm, is it just me or does Ryan look just a little too stalkerishly pleased to be stood next to the Bill in that main pic? Nice interview though!
Digital Freak @ Jan 8th 2007 7:13PM
Man, that was a weak interview. Sounded like nothing but another PR rehash. Where were the hard hitting questions about DRM?
Mark Deab @ Jan 8th 2007 2:14PM
Bill Gates is the one of the few people i respect in the computer industry, he tell the truth in detail, and by the sound of things, likes being interviewed. He doesn't insult other companies , and looks into the future. I agree, in ten years time, it is probable keyboards will be extinct!
Dave @ Jan 9th 2007 3:13PM
*yawn*
rightclick @ Jan 8th 2007 2:43PM
Impressive. Thank you for the interview.
xVariable @ Jan 8th 2007 2:44PM
I actually had the opportunity to spend about 45 minutes with Gates once when he came and made a presentation to a kid's computer camp, back in the 90s, at Carleton University, here in Ottawa.
I found his optimism infectious, but can't help but ask where it's all leading. How, for example, can the digital revolution take place when it's being choked by DRM? If it's a revolution, who's it for? If DRM restricts the rights of users to manipulate data, copyrighted or not, then the revolution is for the corporations, and us consumers are subjugated by it, NOT liberated.
Another side-effect of that climate of restriction is the proliferation of expensive, proprietary hardware and software, and the disappearance of ubiquitous, cheap, general-purpose computer technology. How is any of this supposed to liberate the user? Certainly not in the same way that the personal computer did.
Here's what I think happened: your industry developed super
powerful information processing technology, on the backs of the population, on the premise that it was going to liberate us. All along though you actually planned to enslave and control us and, now that your computer systems are powerful enough, you're finally in a position to do just that. It was never about us: you only needed us to consume your technology so that you could finance its development. Now you are in a position to utterly and completely enslave us with it.
Now, increasingly, we live in a world of digital techno fascism. Am I the only one that sees it? We've been duped.
Greg Thompson @ Jan 8th 2007 2:49PM
He should say "thing" more.
Carl Winslow @ Jan 8th 2007 2:52PM
"Alright Mr. Gates... so there was this monkey knockin' about..."
Geoffe @ Jan 8th 2007 2:58PM
xVariable: Careful what you say dude. In the digital world, there is only 2 states: on or off. Yes or no.
We all no what happens to people that say no. To the people that rebel, that reject? You don't want to be on the bad side of The State my friend...
Chris @ Jan 8th 2007 8:57PM
the hell are you talking about? "the state"? he's talking about a company with world domination plans, and I kind of agree with his point. the answer is that as a user you don't need Microsoft these days. at all. MS has enslaved the masses with marketing, but you still have a choice, and a very good one. I use linux on my desktop, firefox to browse, have a Rio MP3 player that needs no special crap software like itunes or any of the fairplay stores, have a nokia smartphone, a linux based PDA, use OOo for my docs, Gimp for picture editing, and HR Block's web based taxcut works fine in firefox for my online e-filing needs. When I have to use windows, I get pissed off that it doesn't work the way I need it to, and often times the only way to get it to work is to spend more money on sub-par software.
you don't have to be a slave to Windows.
mb @ Jan 8th 2007 3:42PM
The tech world has grown up, and so has Mr. Gates. However, Microsoft is the same as it's ever been. Grandiose claims about digital convergence and "the future" always require Microsoft to go out on a limb, take risks, and innovate; but that's never what happens. They always take the safe bet, and while it makes excellent business sense, it makes it even harder for them to do anything new: they're stuck in a feedback loop. Bill has big dreams, but Ballmer is the knife that cuts now, and he's trying to push mediocre products as the biggest whiz-bang since Windows 95, and I don't think people are buying his brand of hype anymore, which is really all about consumer lock-in and half-assed attempts at novelty.
Matt @ Jan 8th 2007 4:13PM
I'm just impressed we still have cascading windows, even in Vista.
I'm not looking forward to Mr. Gates leaving Microsoft.
Tony @ Jan 8th 2007 7:18PM
@mb
"They always take the safe bet, and while it makes excellent business sense, it makes it even harder for them to do anything new"
Do you really think that Xbox, Xbox360, Zune, and Live are all safe bets?
mb @ Jan 8th 2007 6:26PM
@Tony
"Do you really think that Xbox, Xbox360, Zune, and Live are all safe bets?"
Insofar as them all being devices introduced into already fairly saturated markets, yes.
As far as gaming consoles, they just made the duo of Nintendo and Sony into a trio. There's nothing amazingly innovative on any scale with either unit. And they both were a success, mostly because of marketing and the efforts of the third parties that made the games.
Zune? Another DAP? This is about as innovative as releasing slightly thicker sliced bread, and doing it with someone else's knife.
I'm not saying these products won't make it, or that they are crap or anything like that; they just aren't anything new.
Matt B @ Jan 8th 2007 4:16PM
I loved the interview and embrace was lies ahead the next 10 years(accept the part when I have 2 teenage daughters).
FDR @ Jan 8th 2007 6:57PM
Bill said: "If you go inside Microsoft right now and said, what's the thing when Ballmer shows up, Bill shows up, Ray shows up, they just try to hammer in your head? It's Live, Live, Live... making sure we stun people with the Live platform."
BOMBARDMENT! BOMBARDMENT! Helter-skelter! Overwhelm 'em! Keep 'em off-balance!
mb @ Jan 8th 2007 6:30PM
Oh, and Live. The Web 2.0 "From Microsoft," doing... the same thing Google does.
K3V1N @ Jan 9th 2007 4:41PM
Who here plays Halo 1 for the pc with their xbox 360 controller?
joey @ Jan 8th 2007 6:55PM
"We think HD-DVD is great. It's a fantastic experience. I bought a lot of the discs, played with them. It's neat. But over time, eventually online is going to be more important. "
I take this as Bill could care less which format comes out on top HD-DVD/Blu-Ray or otherwise. He wants downloadable content.
So does this mean that Microsoft HD-DVD support is not at a full 110% and more of a one toe in the pool type of thing.
From a business point of view you wouldnt want all your eggs in one basket but you have to wonder exactly HD-DVD means to Microsoft.
glacia00 @ Jan 8th 2007 10:53PM
xVariable, you do realize the Gates has said publicly that DRM basically sucks for consumers. But the fact is the music download business model was written before MS got there by RIAA and Apple.
Every piece of DRMed music you buy is one more reason not to change DRM. Itunes is the posterchild for the success and public acceptance of DRM. And as long as itunes is successful there is no reason to think the recording industry will relax DRM.
Veritas II @ Jan 9th 2007 4:26AM
Whether or not he dislikes it, MS has clearly caved on it in areas where it really hurts their products (Zune squirting for example). That's not being dedicated to innovation, no matter how nice a guy Bill may be.
Abbas @ Jan 8th 2007 10:46PM
A disappointing interview. No questions on 360 V2 or Vista's restrictive DRM
James @ Jan 10th 2007 1:43PM
To all those who wanted DRM questions: previous interviews imply that his answer would basically be the same as the answer to the last question in the interview (about net neutrality). You have to balance things that suck for one party (like letting network companies screw over content providers that don't play ball, or in the DRM case supplying restricted content that consumers hate) with things that suck for the other party (like scaring off content providers, be it because they risk getting screwed by the networks, or because they risk having non-protected content stolen).
IMHO, the argument for legislating net neutrality is actually weaker than the argument against DRM. Why? DRM hurts without helping: it *will* be broken, but will always inconvenience legitimate consumers. Non-neutral networks will probably, as Gates implies, be bigger/faster networks -- if I have to choose between more expensive IPTV that works, and cheaper IPTV that doesn't, I'd go with the functional one.