Remarks by Bill Gates
Microsoft Corporation 
COMDEX/Fall '99
November 15, 1999
Las Vegas, NV 
MR. GATES: Thank you. Has anybody here heard any good lawyer jokes recently?
(Applause.)
MR. GATES: This industry really keeps on being amazing. We've gone to new heights this year, new breakthroughs, new companies, new products. And it's great to know that all over America here are entrepreneurs working in their garages, also there are lawyers working in their 20th floor offices, both groups working to do what they do best.
On a serious note --
(Applause.)
MR. GATES: -- I want to say how much I appreciate the people who've sent letters and email during the last week. The strong sentiment from all of the people who've written is that the PC industry and Microsoft's role in it have benefited consumers immensely. And the sentiment is also that instead of doing less innovation in Windows, we should do more innovation in Windows. Thank you for your support.
(Applause.)
MR. GATES: Well, the topic of my presentation tonight is the Personal Web, and I want to share how the advances in the PC, the advances in the Internet, and perhaps most importantly the advances in software are going to create an amazing new tool, a tool that brings together all the good things that we think about in a new world of communication. And it will be different than how we think about the Internet or the PC today.
Microsoft got started in 1975, and that's when Paul Allen and I had a vision that the personal computer would be a fantastic tool on every desk and in every home. And so we set out as the first microcomputer software company to build a platform which would allow for choices in hardware, and choices in software. At that time, the hardware industry was vertically oriented, and once you picked a piece of hardware you couldn't mix and match. It was low volume, high-priced in nature. But the breakthrough of the microprocessor together with standardized software allowed a complete change in that. And so computing became personal, and a huge software industry was born around that.
Year after year, people look at the personal computer and think, wow; it must have reached its peak. There hasn't been a year that analysts haven't said, well, this is really it. Boy, the growth has been so fantastic over the last years; this has got to be where it cuts off. So what I did is, I took the projections for home penetration of PCs in the United States, and I compared the projections to what actually happened. And you can see that we've passed over the 50 percent mark. And in surveying consumers, that's going to go even further, it will certainly go over the 60 percent mark.
So, when you get a tool like this, and you get a phenomenon around it, thousands of companies having successes, creating jobs using that as a center point, and adding on top of that the connections to the Internet and everything that's available there, you get something that even surprises the people whose job it is to make projections about what's going to happen. So, the PC has gone to new heights. And I believe it will continue to do so.
In the last year, the PC prices have come down a lot while the features have continued to improve. PCs today include amazing 3D graphics, more and more we're getting microphone support so we can start to have voice chat, voice annotation as part of the PC experience, every Web site is bringing you the ability for voice interaction and voice support. PCs are overwhelmingly being connected to the Internet -- just crossed over 50 percent, but that will continue to go up very quickly. And the richness of that experience, having audio, including music, and video as part of the mainstream of the Internet, that's really just happened in the last year.
In fact, people are beginning to ask, will that be the primary way that people get their audio and video, and I think the answer to that is, absolutely yes. The fact that you can go to any site and choose anything you're interested in makes it a superior way of delivering information in all forms. Shopping on the Internet has really exploded, and we're looking forward to this Christmas where the records will be broken once again.
Now, the opportunity for new ideas has never been greater. Venture capitalist funding is up 70 percent from a very high level. It's been growing way beyond expectations to over $12 billion in funding in the first half of 1999. So that creates an atmosphere of expectation, an atmosphere of fast movement, an atmosphere where every CEO is now asking themselves, what is my Internet strategy, why do I have to learn about all these things and redefine my business around that? But a lot of people then say, hey, that's a great thing. That means we can reinvent the company. So a time of opportunity for businesses of all sizes.
Really, wherever you go, the Internet is everywhere. It's in every magazine, it's even on the talk shows. The pundits are now talking about the things going on in this industry, who is doing what, what's going to happen next. I brought a little video that will give you an illustration of how mainstream this industry has become. Let's go ahead and take a look at that.
(Video shown.)
MR. GATES: All right. So computing is everywhere. How is it going to evolve? Well, we've gone from the text interface to the graphics interface, and with that came this idea that you could go out on the Internet and get screens full of information. But each one of the pieces of information you wanted to go to get, you had to go to a different Web site. And the idea that you could gather up lots of information from different sites and either sort through that information or present it in exactly the way that you want, that's not part of the architecture today. And yet, it's starting to become the case that by using XML and schema standards that we'll get this Personal Web. You won't have to go to pre-organized screens, rather you get this ability to pick and mix and match. And your computer will keep track of what you've done. If you've bought different books, different recipes, it will log that history, and so it will be easy to go back to those sites, look warranties, get similar products. The computer will be working on your behalf across all the different things that you care about.
And so XML is very central to that. XML, for the first time speaks to interoperability at the semantic level. It deals with a question of, if one person wants to buy, another person wants to sell, what information do they have to send back and forth. It's not a simple thing to get those standards in place, but there's some really great work going on now, and there's a whole generation of tools, including new language extensions, extensions to the existing languages, and some new languages built around XML that will be very important here.
And what this means is that the different Web sites can compare information and participate in business processes with a full understanding of the information that they're exchanging without all having to run one computer language or one software application. It can work between any suppliers and any buyers by the use of those XML records. Our initiative for this is called BizTalk, and it's partly the standard schemas and partly the very rich tools that go with that.
For the user, it means getting a lot of services. All the different services, making it so you never have to reenter the same information again and again. This is one of the huge problems that we have on the Web today. You won't have to move your information, your files, your favorites, your contact lists from one site or one device to another device. If you personalize, it will show up on all your different screens, whether it's the TV or your PC at home, that will simply be done automatically without you having to learn all these utilities for replicating things around.
And so as all these new devices come in, the rich cell phone, the TV with that digital set-top box, even the computer in the car that we'll show a little bit of later, your personal Web services will span all of those, and so you won't have to think about what's going on underneath, even though it will be a very rich XML exchange that's allowing this to happen for you.
One of the biggest debates we've got in this industry is one that's actually left over from over 20 years ago. It's about how this empowerment is going to be done. We've actually updated the Microsoft vision, for the first time in 25 years, to talk about this more comprehensive benefit coming from the Web, the personal Web services. We've talked about anytime, anyplace, any device. And we really think that a lot of the tough problems to making that a reality are software problems.
Well, there's still a group of companies that see it primarily as a hardware problem. And so the debate we've got here, left over from even 1977, is the "big box" philosophy versus the PC philosophy. I remember that at the very first West Coast Computer Faire, Ted Nelson got up and said that the small boxes would eliminate the big boxes. And he predicted a dire future for IBM and other big box companies. Although those big boxes certainly went through a dip in the 1980s, today that approach is still there. And, in fact, there's a reason it's still there. The philosophy of the big box is very much about centralization, take away the mobility, take away the choices that people have, but then get the benefits that centralization can provide. And so, it's a unique view, it's a view that criticizes what's gone on with PCs, and PC software. The price performance is nowhere near what it is in the PC world with many, many suppliers.
Recently people have realized that even though these boxes are very, very big, there is a problem when you think about how they relate to reliability. Some of the highest volume, most visible Web sites have had major outages even though they've spent money to buy the big box, and that's because the single point of failure approach that any pure hardware solution leads to simply doesn't solve the reliability needs of these sites.
So, why did it survive at all? Why in the '70s and '80s the people who predicted that the small boxes simply bring grouped together would replace the functions of the big box? Well, the answer is that whether at the hardware level or at the software level, we didn't have the high level scalability, reliability and manageability that people expected. And now, when they're building these Web sites, they need those things more than ever. Being down for 10 minutes means, boy, you have customers that were coming to your URL, and they didn't get a very good experience. So the problem is very, very important.
Well, tonight what I want to lay out is that there's a different way to solve this problem, a better way to solve this problem, that does not involve the use of the big box. The PC model contrasts this point for point -- high volume, many different manufacturers involved, a wide range of applications that come from the incredible volume, low barriers to entry, lots of flexibility, including the ability to have mobile devices. You get the responsiveness of having the computing be right there. But the scale has not been there. And so the two camps have coexisted. In fact, the huge profit margins on the big box side have meant that even with those lower volumes, those companies often get the lion's share of the hardware profits.
The PC benefits, really all of them, can be summarized pretty simply in terms of choice. Choice of hardware, choice of the applications, even choice in the language arena, where you can write the software in any language you want, including using your existing code, and there's no point that says that to get interoperability you have to go back and re-code those things. In fact, there's been embracing of the new things going on in all the different computer languages.
So, how do we get around this, how do we stop it being forever the big box world or the PC world, and even the big box is not delivering what people expect in terms of hard core scale and reliability. Well, mostly when people think about scaling, they think of hardware scale, bigger chips, more memory. And that's very important, that's continuing to go on and it's giving us very good results even on very low cost servers that improvement is amazing. In fact, it's even faster improving than in the higher cost servers. So there is some convergence where the low cost servers now with higher speed memory buses, 64-bit processors, and using lots of processors in the cluster, that they will move up and match what the big boxes had.
But, as I said, even if you match, even if you have the better tools, you still aren't solving the tough problem. So, we have to come up with a form of scaling that is not a hardware approach, but a software approach. And I call this software scale. Now, actually, if you look back at applications that needed very high levels of reliability -- stock exchanges, phone companies, they didn't even use the classic big boxes, they actually used specialized boxes from people like Tandem, who recognized that scale and reliability are fundamentally software problems. So, when you use software to distribute the load automatically and be able to move any work that's not done when a system isn't working to be able to automatically move it over using an approach called transactions, that's software scale.
And what it means is quite simple, if somebody wants more capacity, they simply add in a new server, an industry standard server, and boom, they get that capacity. If one of those servers has a problem, the load is redistributed, and people don't notice it. So, this is really a breakthrough approach to be able to go sites and say to them that they can have the scale and reliability that they want.
Now, the foundation for us to deliver this is actually on Windows 2000 -- it's a set of add-ons to Windows 2000 that deliver the interface that make this very straightforward. Windows 2000 is quite important for us. It's not just that we've been working hard for the last three years to build this product, but it's really the kind of feedback that customers have given us that have had us prioritize what the key features are here. Reliability, you know, top of the list, people don't want to reboot systems ever, not to change configurations, not to deal with software problems, they want those systems to be rock solid. They want a richer way of doing management. They don't want to visit desktops, they want to be able to see what's on the desktop, deploy software, control the policies, without a visit there. Cost of ownership is still a very big issue. When you give people all that empowerment, you need very advanced software tools to do the management. And that's one of the key things we've built in here.
Internet enablement, everybody wants to share documents in a secure way across the Internet. They want to have high-end Web sites on the Internet; they want the Internet name space, the URL name space, and their directory name space to be viewed as one name space, not as separate things. So, when they go about securing things for internal use that also applies for anybody they want to grant permission to who is coming in over the Internet.
It's also all these new devices, the idea of having Windows NT capability on a laptop, or the great new peripherals that have come along, or the high-end servers that have come along. All of those things are optimized in this environment. So, for us it's a major milestone. The most comparable thing we've done in our history is really Windows 95. That took the industry up from the 16-bit level of development to the 32-bit level. And the effect for everyone was quite positive there. Here, with Windows 2000, for the business user, we're making that same type of leap in terms of these key capabilities.
Now, I'd like to ask Doug Groncki to come on out and just show us real quickly what it looks like when you've got Windows 2000 running one of these state-of-the-art Web sites.
MR. GRONCKI: So, Bill, we're going to start by focusing on two of the areas of Windows 2000 that you were just discussing. First, Windows 2000 is really designed to scale to the Internet, with the scalability and the availability that the largest dot com sites require. Secondly, how we have the most comprehensive set of web services that developers that ISVs can use to develop e-commerce solutions. Let's take a look at our site here.
MR. GATES: What site do we have?
MR. GRONCKI: We have Ford.com here, and Ford has committed to using Windows 2000 for all of its dealer and e-commerce applications. And they've also partnered with Trilogy, a leading provider of e-commerce software for the Fortune 500, to develop this site for their thousands of dealerships, and their millions of car buyers worldwide. Now, the system that we're running here is pretty interesting. We have five Web servers here, Compaq SMP systems, running Windows 2000 Advanced Server, with a network load balancing server for high availability and scalability. And we also have two additional SMP servers, clustered again for fail over support, running SQL Server and running all the data that's powering this site. Now this configuration has been designed with no single point of failure, and it's also handling some significant loads. So why don't we open the curtain over there, and take a look at the clients that are generating load against this system. Now, we have 100 clients that are generating loads against this system, and they're each generating multiple connections. And you can see on the screen that there's lots of activity going on.
Now, we have over 20,000 simultaneous users hitting this web server right now. And if you aggregate that, that's about 500 million hits per day. To put that in perspective, the industry estimates that the largest web sites are handling around 450 or 460 million sites per day. So running Windows 2000 we can run the largest web sites, and to scale out you simply add a new web server. Now, let's take a look at what this looks like for the average end user, Bill. I know that you've been looking to buy a new car.
MR. GATES: Sure.
MR. GRONCKI: So let's take a look at the new Ford Focus.
MR. GATES: Every year, I buy a new car.
MR. GRONCKI: So let's look at the Ford Focus, and you can see how leading e-commerce vendors are integrating streaming media into their sites, to really speed the purchasing process, and to educate you as a consumer about the perspective products. So we're going to play this video, and we're going to right click and make it go full screen, so you can get a closer look, and hear what they're saying about the new Ford Focus.
So, Bill, it sounds like this is the car for you.
MR. GATES: Definitely.
MR. BRONKEY: So let's configure the car. We're going to choose the DX3, does that sound good? And we'll take a look at some of our different options. We'll choose a four speed automatic, and you can see how the options change here on the right, and how the price gets updated, and we can even look at the different colors that we want to purchase. So let's take a look at this infrared, nice looking car, but let's stick with the sangria for now. And now let's find a dealer, so that we can complete this transaction. So it asks you for your user name and password. And we'll type in your password here, Bill. And we have to enter the zipcode for a local dealerships. And I believe our zipcode is 89100, and we'll see a list of the dealers that can provide us with the Ford Focus.
Now, we see that Gaudin Ford is only two miles down the road on Sahara, and they have six vehicles matching the selections that we just chose. So if we go to this dealer, something that you'll see is that we've encapsulated all that data for Bill's car in XML, so that it can be compared against the other cars available on the lot. So you can see them in terms of availability, and also the percentage with which they match your selection. So since we want a car right now let's just choose the infrared, and you can see that a page comes up here highlighting the differences in yellow between my ideal car, and also the dealer available car. And those look like things that we can live with, we can get an audio system for the car later. Let's continue the purchase.
Now, Ford has also been working with Trilogy, and their multi-channel commerce solution to integrate their dealerships, their distributors, and the manufacturing to provide a better experience for you as a car buyer. So you have more options available to you as you go and purchase your car, rather than seeing what's just available on the lot. And we'll take a look at Web integration, and we'll choose the CD player, we'll choose some headlights, and we'll continue the process, and you can see that you get a nice screen here that summarizes all the options that you've chosen on your screen.
Now, Bill, while you were doing this, let's switch to the server, you had each server handling about 1200 requests per second, in addition to the requests that you were sending against the server. And if we switch back to the client here, I want to call your attention to how we've enhanced this page. And you can see there is some red text on the bottom of this screen here, called Web five, this is indicating the server with which we're communicating with. Now, for the first time we're actually going to cause a system failure in a demo here. So unplug it from the network, power it off, and why don't you just get rid of Web server five. Just pull it out of the rack. It's clear that that server is no longer on the system. And let's go back to our client here. Now, what would happen today if that Web server was lost, and you lost all that data? You'd be a pretty unhappy customer. You'd have to reenter all that data in order to continue your purchase process. But, with Windows 2000 Advanced Server, and network load balancing, when I click order the next available Web server picks up that transaction and can send it off to the dealer, so you can finish purchasing your car. And what I've just shown you here is how Windows 2000 can really scale to meet the highest demands of the leading dot com sites, and has the built in Web services, including XML support and streaming media, so that developers like Trilogy can really build compelling commerce solutions.
Now, for the final demonstration here, we're going to show you how we're going to improve the manageability of these Web systems, and Garth Fort is going to help us out with that.
MR. FORT: So when customers are building high availability sites like this out of multiple servers, they've told us they need help managing all of the individual boxes. And what I'm going to show you today is a sneak peak at a product due next year called Microsoft Application Center, which is going to make managing these systems much simpler. Now, the first thing we do is we can go take a look at Microsoft's AppCenter. And we're going to look at the applications themselves. And when we look at the Ford application it's composed of a web site, some files, some registry settings and COM components. What application center lets me do is define a single application image, and then run and manage that, spread across multiple servers simultaneously.
So when we take a look at the Ford site, you can see that we can view in aggregate, where we're rolling up all of the performance and the event data into a common console, so I can manage at the application layer, instead of having to manage individual components on individual servers. So I can look at the CPU utilization. You can see we're running a little hot here. That's because we've got one of the servers disabled. Now, what Windows 2000 enables in on demand scalability, meaning that even though we've crippled the system today by removing a server, we can restore the capacity and then grow it by simply adding off the shelf, industry standard hardware.
Now, the hardest part today is going to be actually just plugging the machine into the network, and I'm going to have Doug help me out. Now, traditionally this is a manual process, where you take your application and you clone it, and you have to do all of this work manually, to get all your code running on that new machine. Well, for most tough situations, Microsoft simply goes and builds a wizard to automate that. So we're going to go ahead and step through, that machine is Web six. And when I step through that we're going to interrogate the machine to pick up its network settings, and in this case I'm going to have the server automatically brought online immediately.
Now, when I click finish here there's going to be a bit of a delay. What we're doing is we're synchronizing. We're picking up that entire application image and moving it to that new machine. And it's not just the files, it's the components, the database connections, registry settings, security certificates, it's the whole process. And we're moving it onto that machine automatically. Now, this could take anywhere from a few minutes to a few hours, normally, but we're just going to automate that with application center.
When we get done, we're automatically going to recalibrate the load balancing, so that we automatically redistribute load to that new server. So you can see here, when I go to look at the new server, you can see that that new machine in the blue line came online and our CPU use went from about the 95 percent range down into the 80 to 60 percent range, which is actually pretty acceptable.
(Applause.)
MR. FORT: Now, remember, we're still running about 500 million hits a day, and we could get bigger and bigger, using that on demand scalability, simply by running the wizard and adding additional industry standard hardware.
MR. GATES: It's great to see that at work. Thanks.
MR. FORT: So let's take a look at this Ford site again. Now, that looks like a great looking car, and I believe we have Brian Hall here to take you and introduce you to your new vehicle. So I'm going to turn it over to him.
MR. GATES: Thanks.
MR. FORT: Thanks, Bill.
(Applause.)
MR. HALL: Hi, Bill.
MR. GATES: Hi, Brian.
I've asked Brian to show us how Web services could make the things you do after you buy the car even more simple and more accessible.
MR. HALL: Great. So, as you said, one of the things that we really want to do is we want to make the Web more personal. One of the things that's really important in order to do that is to make it programmable. It will allow you to bring together all of the Web services that are out there on the web, information from all of my devices, as well as my personal preferences, and personalization.
So what we're going to do is we're going to take a look, what you see up on the screen is a concept application that looks very much like a trip planner. And here comes the car you ordered.
MR. GATES: It's nice.
MR. HALL: Beautiful, isn't it?
MR. GATES: Infrared.
MR. HALL: Infrared. We'll be using that infrared in a little bit. So what this application does is it looks very much like an application you would normally use to plan out one of your trips, or something like Expedia maps out on the Web. But, what this has different is it has this bar along the left side. This makes it so that I can get any of my different services and integrate them in with the application. It also has access to many of my files, my music, my video, my work, my photos. I can integrate them in with this application, or any other application that takes advantage of Web services and the programmable Web. Finally, it has a list of all of my devices. You can see that right now I have a phone, a PC, a TV and a palm sized PC, and all of these are enabled for me to take advantage of Web services, and take advantage of the services that those devices add. But, for something like a trip application, like we're using here, what I really want to be able to do is take advantage of the information that's in that car. So let's go see how we could do that.
Normally, in an application in order to let it know about your car you'd open up a form and you'd type in the name so that you can identify it, and then I'd type in miles per gallon, all the very general information about it. But, I want to get the actual information from the car that you just ordered. So we're going to go to the Ford Web site, and I'm going to grab the icon, and just drag it into the application. So now what's happening is my application has gone out to the Web site, it's queried it, and it's brought an XML file into the application, and that XML file describes all of the different services that the Ford site offers.
In this case it identifies what particular car I'm authenticated to use, and it brings down the information on that car. So now you can see that two things have happened. First of all, it's added the Ford Focus to my services bar, now any of my applications can work with that Ford. Second, you can see that it's now scoped in on Las Vegas on the map, and it's also included the Venetian, and the address right down here in the starting location. Of course, I could have typed in the address, but what happened here is when I downloaded that XML file it told me that the car had a GPS service in it. So the GPS information was downloaded to my application, we resolved the information over the Internet, and it's right there within my starting location.
(Applause.)
MR. HALL: So this isn't quite as fancy, but I'm going to type in work into my ending location. It knows who I am and it adds in Microsoft. So now, like most trip planning applications it's going to tell me the route we're going to take. And the one thing that's different here is I have two gas stations I'm going to stop at, as well as a service stop that I'm going to make. The gas stations, by knowing how many miles per gallon, and what size the gas tank is, it knows when we're going to need to stop for gas, and it's gone out over the Internet, and found real time price information, so that I now know how much I'm going to have to pay at each of these like that.
Second of all, the Ford Focus told it that it was going to need to have some service done about halfway through, so we can click on that, and I can see that it's my new vehicle check up, and that I'm going to be coming through town right around 2:45. We were able to, over the Web, go out and find out the schedules for all of the different Ford dealers in the area, in particular Dengler's Ford had an opening right at a great time. I'm going to schedule this on my Outlook calendar, and I'm even going to be reminded via the MSN Messenger service, to my phone, as we're approaching the right exit. So I'm going to schedule that. So as you can see, the world of Web services has made a very, very easy to create trip planning application that's really smart, and it's really personal for me.
So, before I go, the last thing I want to do is I want to make sure that I have all of my music when I'm traveling.
MR. GATES: In the car?
MR. HALL: In the car, so we're going to go out and we're going to go to my music files, and you can see these are all the files that I own. One of the reasons that digital media is becoming really popular is because you can use it on many different devices. Windows media audio format, the format that Microsoft does, is really good for that. You can use it on your palm sized PCs, and in this case I'm going to use it on my car. You can see that I don't have that song that was playing as you came out, so I'm going to type in the name, do a search. And what happened is it searched Broadcast.com, and Dedicated Radio, two sites that I've purchased from in the past. This is how I got all of these. And it didn't have it on all those. Once again, in order to add it we could go through this site, do a search as you normally would, but I'm just going to drag the site into here. I drop it, it goes out there, grabs the XML file, learns how to search the site, and when it's done it will do a search on Windows Media and you can see if they have it available.
To buy it, I'm not going to put in a whole bunch of information; I'm going to use the Passport Web service. I drag it into the details section, it asks me to confirm that I do want to buy it. It's $1.99. I'm going to click yes. It will send my Passport information. I'm confident that it's being securely transmitted, and that everything will work great. And I have my confirmation. So, the last thing to do is synchronize with my car, and we're ready to go.
MR. GATES: Super.
MR. HALL: So, as you can see, Web Service is going to be great. Thanks, Bill.
(Applause.)
MR. GATES: Now we've seen how this personal Web might be used when you're buying a car, and using your car in some new ways. Let's talk now about people at work, what will be different as we get this fully rolled out? Well, my belief is that information today is quite hard to find. It's kept in file folders, it's anecdotally understood by the people who are involved in older projects. It's basically very hard to find information inside a company. And so the value of that corporate memory is really lost. It's not typical that people think everything is going to be there that might have been learned about a particular topic in the past.
We can change that. By having rich storage and search capabilities, not only against Web sites, but by unifying that with the way that files are stored, and that messages are stored, we can really give people a fantastic corporate memory. And we can build the navigation of that and setting that up, build that into tools like Microsoft Office. We can also let you walk up to your PC and see the things that you care about, not just this Web page or that Web page, but the things that you've pulled together. And that's not going to be just information from the Web, or just information from your local computer, or just information from your corporate service, it will mix all of those things. What about the sales forecasts, what about the project schedules, how many messages do you have in your inbox, how many are important, and perhaps the weather forecasts coming from out on the Web, or some stock quotes. You want to mix all those things together.
The Digital Dashboard is the concept that allows you to do that. And, again, it's very dependent on this XML approach so that Web sites aren't just places you go to look at, but they're places that your Digital Dashboard can go and ask for their XML, and then put that in the comprehensive presentation.
It's also important for these knowledge workers to get all their communications brought together. Right now, if you want to give somebody a phone number and email, you have many phone numbers, perhaps multiple email addresses. That shouldn't be necessary, you should have one identifier that should let somebody contact you and then you can set the policy of whether they should be able to page you, or whether they should be able to instant message you and interrupt the work that you're doing. You should be in control and have a single contact list where you get to specify what the properties of those various people are, can they sent to your inbox, can their ring your phone in various hours, all of that, what I call the universal inbox.
(Applause.)
MR. GATES: Somebody wants the universal inbox, clearly. So, that's about having the right information at the right time. We also have to deal with the fact that for knowledge workers, it's not about working in isolation. You've got to share things, and yet that is so hard today, so many meetings where you just sit and see slides come up, things that you don't need to know, things that you already know. How could we change that? Well, the answer is that by having a wireless environment where any time you have your device, whether it's a tablet PC, a portable PC, a cell phone that happens to have a screen on it, you should have access to that information. So sitting in a meeting, you can take notes, as soon as you go into that meeting room, it recognizes everybody who is there. You can put information up on their screens and annotate that as you go along. And so really taking the time that's spent in meetings and making it quite different than it is today, getting rid of the paper forms so that information can be navigated up on any of those screens. And then using the Internet to find out what's going on in a better way, getting feedback loops inside the company, or perhaps most importantly, getting feedback from customers. It's a world where polling your customers becomes so simple that you can really inculcate that into your whole decision making process.
So knowledge workers will be operating in a different way. It's not just about companies building Web sites. It's about changing those processes inside the company to be purely digital and to get more out of the biggest investment they make, which is having those knowledge workers come in and be making key decisions and provide customer support.
Another scenario to look at is the home. Today we're finally making progress on getting high-speed Internet connections into the home. Cable modem sales are doing quite well. DSL is just now starting to come on, and it looks like some people will be able to offer it at prices and in neighborhoods where it will become an alternative for consumers. We'll also start to see some wireless alternatives. That's a little further out, but the standards and the equipment are getting into place, and I think it will have a significant role to play in providing these connections.
Inside the house itself, we can not only use the high-speed connection to get our video and our music, or to get photos from our relatives, but we can use that to share it within the house itself. So, for example, let's say I've got my PC and I'm storing my digital music on the very large hard disk that PCs have. That PC will be more than just a client, more than a device that you have to go into the room with the PC and use that PC screen to take advantage of it. The PC will actually be a server, and it will use the home network, whether that's a wireless network that I think will be a very important form of it, or these home networks that use your phone cables, or AC power lines, it will be able to use the network to project all the information you have on that PC disk to anyplace in the home.
And so, if you have a little PDA device as you're walking around your home, you'll be able to select what songs you're interested in and it will be sent across the network to the speakers that are there. Or, if you have some digital video that you'd like to play, or some photos that you'd like, say, on the little screen that you've got on your refrigerator, all of that will be as simple as just giving the command from any screen that you have in the house. So, the PC will be more than a client, it will actually be a server in this environment.
We're very enthused about digital books. This year there was a lot of progress there, progress in screen quality and software, and getting the book publishers to see that this is a huge opportunity for them that a lot of the costs they've had traditionally, the inventory challenges they face, a lot of those go away in the electronic book environment. So, unlike digital music and photos, where things are happening, digital video and digital books will just be getting going in the next year. But, again, I think people will be surprised at how quickly consumers will say that the flexibility of having that in digital form really makes that the way that they'd like to work with it.
So, let's go ahead and take a look at some of the devices that are going to be part of that environment. As I said, the PC will be a server, it will be the place that you store lots of information, it will be the place you create and edit documents, but in terms of browsing information, seeing what's going on, you'll have many, many different device types.
You can see I've got almost a "muscle beach" here, of neat, new, innovative devices. Let me quickly just describe what these are. Here on this end we've really got industrial devices. Every one of these actually runs Windows CE, and so this is an industrial product for managing TLCs. These are also factory floor automation devices. This is a lab device here. This is a banking check processing device down here. Honeywell has a security environment with a camera for remote control with Windows CE. And lots of different flavors. We've got a Windows Terminal device there. So these, even though looking at them you'd have no idea, those are actually all running Windows CE.
Here we have two devices, the Bio here, and this Compaq machine, these are the first commercial legacy-free devices that are designed for Windows 2000. This Compaq I-Paq, which you're seeing here, it brings the power of the Internet really down onto the desktop in a pretty strong way, and it will actually be a Windows 2000 device starting with prices as low as $499. So pretty phenomenal in terms of getting to that legacy-free environment and the power that's available there.
Now next, we have some products that are used in different environments. Doctors like to have a tablet-like device they can carry around, and so that's the device we're seeing here is used in the medical environment. This Telzon device is used in the warehousing environment to enter inventory, and lots of other people are using it. This is a symbol device, this data entry device is part of a recent one-quarter-billion Department of Defense contract, where they're going to manage their supplies in a much better way using a digital process where this device is a very key part of that.
Now, some of these devices are ruggedized. You can see these rubber cases, that's to be in a military or a very tough kind of environment that's out there.
In front, you have all the different flash memory, and cameras, and smart cards that interact with the different devices. Here we have some very small devices, mobile terminals that can be used as Windows Terminal Server devices. The miniaturization really continues to amaze me, look at how small these things are getting down to.
One of the ones that I'm very excited about is this Aero 1500. It's a palm-sized PC, you probably can't get a sense of how thin this is, but people said we couldn't get Windows CE devices to be this thin. And, in fact, Compaq is now shipping this product in the last few months that gives us that really small form factor that people want.
We've also got the Casio here, which was the first palm-sized PC to have digital music and digital video capabilities built in. And, in fact, this product with its rich color screen has been doing very; very well in the reviews because of the power it provides. It's sort of a digital media device. In fact, this version here has the digital camera, the Compaq Flash camera actually built into it. So, lots of neat new things going on with Windows CE.
Next, we've got some devices that are completely new, haven't been seen before, and I'd like to ask Vijay to come on out and tell us what are these new devices all about, how do these what we call web companions let you operate in a new way.
Hey, Vijay.
MR. : So, what I want to do is give you a quick preview of a new device that's going to give consumers really easy and affordable access to the Internet. It's called an MSN-based Web Companion. Now, Microsoft is providing OEMs a software platform of Windows CE, MSN Service, and MSN Internet Access. You can see here that the OEMs are already taking that and creating some really neat devices. For example, we've been working with Compaq for almost a year to create this type of device, and even though we're only in the technology preview stage, we have devices up here from a number of OEMs like Phillips and Acer, just to name a few.
What I want to do is show you just how easy it is to get online with one of these. Because they come pre-configured with your email address and your dial-up number, all you need to do, plug in a power cord, plug in a phone line, turn it on, it connects you to the Web.
MR. GATES: And how does that work? Actually the retailer knows how to enter the information so you don't ever have to do that yourself?
MR. : It's somewhat like a cellular phone, it just comes provisioned for you ready to work. Take a look at that for a second.
MR. GATES: That's very nice.
MR. : That's a unique device from Compaq there. So, what I have on the screen here is a Web Companion, and right now it's powered off. I have a nice little family picture for my screen saver. When I turn it on, it automatically goes out -- there we go, it automatically goes out and it dials up to the net using the reliable MSN Internet Access service. In a moment, I'll be presented with a broad array of MSN services as well as a pretty easy way to get out to the rest of the Web.
So, here you go. A super-intuitive user interface designed around the things that people do most often, like read email, or shop, or search the Web. And all those are powered by MSN's best of breed services. Now, even though we've done a lot of simplifying of this user interface, we still give you the power to have a really rich Web experience. This start page is still personalizable. So, I go here to my favorite pages, get a little preview there of a thumbnail. And I'm going to go to Weather.com and see what the actual forecast is. So, like I said, simple device, easy to get online, very affordable, still a very rich experience because it supports things like Windows Media. So, there we're getting the current forecast right off of Windowsmedia.com.
One of the neat things about this is, no matter where I go on the Web, I just have a couple of buttons down here, and the start button always gets me back home to my comfort zone, to my personalized start page. So, once I turn it off, it disconnects from the Web. It's just that simple.
So, we're really excited about this new class of devices called the MSN-based Web Companion. And we think they're going to be a key component of delivering on our Everyday Web strategy, and they're really a great supplement to things like MSN Mobile, and Web TV in terms of providing consumers with access to Internet anytime, anywhere and on any device. And continuing on your theme here, you've got another choice there on how they get online.
MR. GATES: That was great. Thanks, Vijay.
(Applause.)
MR. GATES: Now I'd like to show another great new thing that's available online, David Jaffe is going to help us take a look at what we call Office Online, and this is a new way, just one of the new choices you have, of how you want to get at any Windows application.
MR. JAFFE: As you mentioned, that's absolutely right. As you mentioned, another element of choice for users is something that we announced earlier this week called Microsoft Office Online, which delivers Office 2000 as a service over the Internet. This provides even more choice for users in accessing their software and on any device. So, let's go ahead and see how this works. You'll see here that we have a Windows 98 PC and that there's virtually nothing on this machine other than the operating system.
Now, the real excitement of Office Online is that with just a user name and a password, I can go ahead and access the Windows 2000 desktop and all my Office applications via the Internet without even a single bit residing on my local machine.
(Applause.)
MR. JAFFE: Now, one key advantage of Office Online is that users can get the most up-to-date software without having to do a single thing. So, for example, if there was an update, such as a service release, the latest anti-virus software, or even a new expense report template, it can be updated automatically without the user having to do a single thing.
So, let's go ahead and check out our Office applications. So, I'm going to go ahead into Excel 2000. As you can see, this is the full version of Excel with all the tools that I'm normally familiar with, such as the Office Assistant, which allows me to ask my questions in my own words. Now, the Office Online has a number of interesting user support scenarios.
So, for example, say I'm a new Excel user, and I have no idea how to access the expense report template that was previously added. Office Online makes it possible not only for a support engineer to watch what I'm doing with my permission, but actually take control over my machine, and show me how to solve that problem. So, we'll go ahead and have my support engineer actually show me how to find this expense report template. So, you'll see, hands-free, it's going out and showing me exactly where my expense report template is. Now, this is a pretty simple example, but you can imagine the benefits that this will show with even a more complex scenario.
So, now here that we have our expense statement, I'm going to go ahead and fill out a little bit of information, such as my name, my Social Security Number, and my department. Now, suppose we had a power outage and my machine were just shut down without warning. Now, in the past, this might have been very problematic. I would have probably lost a lot of my data. With Office Online, this is not a problem. Now, I could go ahead and reboot the same machine or, in this case, I'm just going to go over and switch to a new machine, and I'll go back and log on with Microsoft Office Online, and I'll put in my password, the same password that we used before.
In just a second you'll notice that the expense report template comes right back up, exactly where we left it. You'll see that all the data is there, and in fact, even the question that I asked the office in this thing would still be there, as well. Now, what makes this possible is that the applications are actually being run on the server instead of my local machine. So we've recently seen how Office Online helps users who are concerned with centrally managed software.
Another big advantage for Office Online is the ability to be able to access information in applications, no matter where you are, and on a range of devices. So I'm going to go ahead and open up a document that I was creating in word, and I'm going to want to go ahead and publish this up to the web. But, before I do so I want to go ahead and make some customizations. Just because I'm using Office Online doesn't mean that I have to give up the customizations that I'm used to. So I could go ahead and add my custom dictionary, add to my auto correct list, or I could even go ahead and float the formatting toolbar, I'll just bring that over here, or go ahead and update my standard toolbar, as well.
So now that this document is pretty much done, I'm going to go ahead and save this up to the Web. Office 2000 makes saving to the Web as easy as saving to my hard drive today. So I'm just going to go ahead and save this up to the Web. In fact, I could be using the same application service provider that I'm hosting these applications from to also host my Web site. Let's go ahead and log off and see how we can access this information anywhere.
So I'm going to go over here, not only can I access this information anywhere, but I can also access this information on a variety of devices. So here I have a Windows CE machine that I'm running remotely and wirelessly. I'm just going to go ahead and log on, to Microsoft Office Online, using the exact same password that we used before. You'll notice that after I put in my password that we have access to the Windows 2000 desktop, just like we saw before, with all my Office applications. Now, I could easily go ahead and browse to the web page that I just created. We'll see that it comes up in a second. And we're going to go ahead and switch the view so that everybody gets a much clearer picture of what I'm doing. So you can see that I can browse through this page, but even more importantly, I can bring this document back into word for easy editing. You'll notice that all my customizations when I bring this back into Word has been saved, so the formatting toolbar is still floated. And I can go ahead and make any edits that I choose.
So if I want to change the look and feel of this Web site, I can easily go ahead and add a different theme. I'm just going to choose a theme down here, and apply it. And we'll see that it's automatically updated. Now, I can easily go ahead and save this back to the Web. And we'll go back to the browser and refresh it. And it would automatically be updated. So you can see what this means in terms of mobile users. They'd be able to access their information anywhere, such as an airport kiosk, a library, or for that matter they would even be able to go ahead and from their hotel room be able to access this information.
So, as you can see, Office Online not only gives users the applications they're familiar with, but allows them to have more choice in how they receive those applications and use those applications.
MR. GATES: Thanks, David.
(Applause.)
MR. GATES: A key point is this ability to run applications up in a hosted environment should simply be one choice of where you want to run code. When you write the code you shouldn't have to think, do I want it hosted, do I want it running on a PC server, or do I want it to be possible to run that code on a laptop, so that a mobile sales person or worker could actually have that application with them when they go home or when they visit a customer's site.
What you need is one architecture that lets you write an application and allows the code to run in all three of those places, without any modifications. And the ability to roam the state of the application, the ability to support the user, all of those rich things should be identical no matter which place the code is running in. So this is another element of choice that the Personal Web needs to provide, a set of development tools to let you write in a way that all three possibilities are there. We think that every one of these choices will be of critical importance, and no one will dominate over the other. And that's why people need that flexibility.
One issue that I think gets a lot of attention, and deservedly so, is the whole idea of what this new environment will mean for privacy and security. One of the "big box" CEOs has said that we should just get over it, that we won't have any privacy. And I don't think that's right. I don't think that will allow the Web to achieve its potential. And I think we can keep improving what we do in this area. Certainly, when we poll users, that's the feedback we get. The technology is getting better, things like P3P, the industry working together through W3C and other organizations, I think is really starting to build momentum. We're also starting to be able to do better authentication.
Smart cards are going to play a very important role here, and the prices of those are coming down. We've actually built into Windows 2000 for the first time the ability to simply log in by using a smart card. So that capability an administrator can simply activate it, and say that you can't just use a password, you also need a smart card to eliminate one of the weak links in the whole security, privacy scenario. Another fantastic development took place just in the last month, and that is that the U.S. government has decided that it's okay to export strong encryption.
Now, this is something that our industry worked on for a long time. In fact, at times it looked like we wouldn't get this flexibility. And it meant that the real expertise in encryption was advancing more outside the United States than here. But, under the new policy we'll be able to ship products like Windows 2000 with 128 bit, full powered encryption, on pretty much a worldwide basis.
So what can we expect in the next 12 months? What are the things that are going to be happening to make this Personal Web come together? Of course, the Windows 2000 generation, not just Windows 2000 and the many Microsoft products, like an updated SQL and Exchange, and this new AppCenter that goes with it, but the work that we've had going on as an industry. Great new hardware, great updates to applications and applications that take advantage of that new platform. And we're really pleased with the cooperation that's developed there. Next year is the big year where you'll start to see the roll out of very high-end PC servers. This is hardware scale at its finest, very fast memory BUSes, very fast IO speeds, certainly matching what the most expensive UNIX boxes have been able to do there, as well as bringing in the rich 64-bit capability. And so the investments that Intel is making in Itanium, and what the industry is doing around that, including our work on Windows, I think that's going to come together in a really exciting way.
The milestone of taking those scale and reliability problems, really showing people, if you want to build a site, and you want to be able to have arbitrary scale, and arbitrary reliability, that's really a software problem, I think that will be firmly established, which is not the commonsense wisdom today. I also think wireless is going to be a big enabler. These cell phones are going to move from being primarily voice devices to being voice and data devices. They're going to have great little screens on them. Already in places outside the United States, in Japan, and Hong Kong and Finland, there are very creative things being done with those wireless screen-based phones.
We also will be connecting up to full screen devices, the portable PCs, to those wireless networks, and we'll be sharing information in really new ways. And in terms of making the Web easy to get to, that idea that your wireless device is always on, and with you wherever you go, I think will really bring the Web into the mainstream in a much stronger way.
A final point here is one that we'll be talking about a lot more in the next year, as we hit some key milestones. And this is the idea that building Web applications has been very, very difficult. All those different file types that were mentioned, the difficulty of duplicating some of the system services. Some of these web applications are the toughest to maintain and evolve that are out there. And people have had a hard time knowing if their scale is good, or their user experience is good. And so it's time to have a set of development tools that are really designed for these Web sites that are really designed around XML. And so that's a huge area of investment for us, in something that we already have out many pieces of that in early forms, getting feedback from developers. And next year, we'll get that out as a very comprehensive offering.
What it all adds up to is I think that we're really moving at an incredible pace. The work of the people who are here, I think is going to allow us to make the Personal Web the best tool ever invented.
Thank you.
(Applause and end of presentation.)


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