Bill Gates: Microsoft CEO Summit 2007

Bill Gates: Microsoft CEO Summit 2007

Excerpts from a Transcript of Remarks by Bill Gates, Chairman, Microsoft Corporation
Microsoft CEO Summit 2007
Redmond, Wash.
May 16, 2007

BILL GATES: Well, good morning. I have the honor of getting to talk about where technology is going, and not just the breakthroughs in technology, but also the changes in how it's being used. If you look at things like how people think about the Internet and video, over the last couple of years it's dramatically different. It's really become the mainstream of how people think about creating, distributing, and getting video, and that has some implications that are pretty profound.

Now, part of the reason that that things keep changing is that the pace of innovation is very, very rapid. We see that at the chip level where we still have the ability to double the number of transistors on these chips every two years or so, and it looks like there's another decade where that will continue; so no limitation in terms of the kind of power that's coming out of these devices.

Now, the size of the hardware also makes a very big difference. We continue to reduce the number of components, reduce the size, and so we're getting even some new form factors. You can think about, where do PCs stop if you take smaller and smaller PCs, and how far up do phones go, and is there a gap there in the middle? Media devices like the iPod or navigation devices or dedicated reading devices, will there be specialized things in between or will these two more horizontal platforms that run many applications come down and even overlap each other? I tend to believe that the phone will move up and the PC will move down and there won't be any special device categories, because the power of being able to run any application, whether it's media, reading, navigation, is very strong.

And so as we get down into these form factors and you think about some phones that are coming out with bigger screens and motion video, you can see that they really are meeting and then just taking on the applications like still photography, motion video, incredible maps where you can see data about commercial establishments or traffic or even your friends that are nearby showing up on that map.

One new thing is taking the phone that you carry around and putting some of the business information there. Electronic-mail has become pretty standard, the calendar sharing, but also documents about customers that you might be going to visit or metrics that you might need to be updated on because there might be something urgent to be done about that; having the software platform expand the information empowerment out even to that small screen device is becoming far more typical and the environments are making that far easier to do.

The last thing here I wanted to mention is that with video arriving on the Internet, it's possible for a company to create essentially their own TV channel. And it's actually better than a TV channel in that people can come in and watch at any time video on demand.

Now, communications, when we say it's changing, you might ask, well, why? What's so unique about this timeframe? Well, historically the networks limited what could be done. The quality of the voice was quite limited. You were working the phone numbers. You had no idea who was where. And so that hardware piece limited the creativity of what you could do.

I want to talk now a little bit about media and how that's changing. Historically, only very high volume media had a simple distribution channel. So, if you had something that was interesting only to a few hundred people, and those people were spread out all over the world, it just wasn't economic to print something or get a channel, to be able to carry on that type of communication.

Well, the Internet has really changed that. No matter what device you're connecting up with, the ability to find people with a common interest, the ease and low cost of authoring means that even these small groups now can effectively have shows and newsletters or any type of thing that only worked for mass media in the past.

And as we drive this forward, it's interesting how it's changing behaviors. This is an article that was in Variety just this last week, and it talks about how these young writers and producers actually meet at night and play videogames. They don't go to the same house and play poker, they don't meet on the golf course; they're sitting there in these games talking to each other with the headset, and it's actually considered you have a strong relationship with somebody if they are willing to give you their gamertag, which is the thing that lets you connect up and play with other people.

The phone itself is changing quite rapidly. We have a big investment in doing software that runs on the platform. We work with a wide variety of hardware manufacturers, including people like Samsung, Motorola, HTC, doing different devices. We're way beyond this just being a voice communication device. I talked a little bit about how maps and photos are coming into this. Media storage will be one of the things that works very well, particularly as the capacities go up there.

Some of the things are in the early stages. The idea of how you do payment with this device, it's actually interesting given the pervasiveness of mobile phones to think about this being a device that can actually bring banking and financial services to people where it wasn't economic to do it. So, actually even my foundation is looking at this as an empowering tool. As the technology allows you to see your savings account and transfer money and those types of things, it's going to make a very big difference.

The innovation in terms of form factors is pretty incredible. You know, every year I see a lot of new devices out there, certain ones of them catch on, but richer and richer in terms of what they're doing and very much a software driven device.

Now, this is changing all the mobility and the Internet is changing media in quite a dramatic way. Historically a typeset document was a sign that a big company had made the document or the brochure. Well, personal computers changed that some time ago. The printers that you have, you can use those rich fonts, and everybody can make great documents.

Well, it still wasn't the case for things like video. The kind of editing tools and bringing things in, sound editing really required pretty large budgets. But now what you can do on a standard PC is actually almost as good as the most expensive system. So creating is different, distribution is different, and consumption is changing.

One fun example of this is that advertising is moving to be more embedded in certain ways. A little bit of that is because the skipping that people are seeing, but it's also just creative ideas. We bought a company called Massive that's the leader in putting ads into a videogame experience, and so when you're watching the baseball game those ads come up, where you're racing around the track. We've also got now with what we call Virtual Earth where you can go and see a city and that's the photo on the right there is a view of the 3-D buildings -- that's actually downtown Seattle. As you navigate around, we actually put up these virtual billboards, and you can see that little orange ad that's there in the distance. That doesn't really exist but we can put that up without interfering with your walking around, seeing the buildings, click a building you want to go into. And so there's advertising inventory in that Virtual Earth experience.

Well, that's going to take some time before people understand is that really valuable real estate, does it cause people to do something different, but our guess is that if you come in and said, you know, I want to find a restaurant, I'm going to a movie nearby, that the idea that that billboard can come up and suggest something to you, that's a context of great value.

And so the types of advertising are quite different, and we have the flexibility to experiment with a lot of things. We can put video onto that virtual billboard. It's not limited to just seeing a static display like a typical real world advertisement.

So, what do we see looking ahead? No slowdown in the rate of innovation. Even if the innovation stopped, of course, there would be a lot that would change as people were taking advantage of what we have today, but that innovation curve is creating new opportunities all the time.

Some of the change agents of this are often the younger people who are so immersed in these digital activities in their entertainment activities, the way that they think about college, their courses, connecting up to their friends, they come into the workplace with an expectation they're going to use these tools in a rich way, and that companies that they are going to do business with will be state of the art in how these things are done. So, year by year things will move into the place where it's really the productivity and the information empowerment will simply be expected.

We've got a long way to go on these things, but the reason we've got our R&D up at record levels, and the industry as a whole is investing in record levels is there are so many opportunities to take the hardware platform that has gotten so much better, and build software on top of that that can create far more natural experiences. And so that's why it's a very exciting thing to be involved in, and I'm sure it will create opportunities for all of you.

Thank you.