GATES ON BULLIES, BROWSERS--AND THE FUTURE
Correspondent Steve Hamm used older, analog technology--the telephone--to talk with Bill Gates about the future of Microsoft, competitors, and his concerns about the Justice Dept. The following are excerpts from the conversation.
MICROSOFT'S FUTURE ROLE:
I'm a big believer that this is the Information Age and that the PC as it evolves is the tool of the Information Age. The word ''PC'' will be under some stress because there will be all these new [devices]. Do you call them PCs or not? The key issue for us is they all require great software. Whether it's an intelligent TV or a handheld [PC], we're working hard on the opportunity to build the software that drives those things.
So 5 or 10 years from now, our best-selling products will be the three that they are today: Windows, including Windows NT; Office; and BackOffice. In the same way that we have great businesses like Flight Simulator, Barney, and many others, we'll have some new ones that relate to the Internet sites we're building [today]. But our strategy is to focus on what we do best, which is building the software.
THE ECONOMICS OF WINDOWS NT:
Windows NT 5 is a big thing for us. What it does [to lower the] cost of ownership and [improve] security will take NT to a new level. There's a certain efficiency in the way the PC industry is structured. What happened on the desktop? The PC did very well because it's so competitive and so volume-oriented. And the same thing is happening on the [corporate] server. The share of PC technology on the server is going to grow quite a bit. We can charge very little for the operating system and yet, because we're spreading it across high volumes, it's a business we can continue to invest in.
THE PAYOFF FROM ONLINE EFFORTS:
The revenues and profits are modest compared with the classic software industry. Anybody involved in this is projecting out 5 to 10 years and asking what can they start to build now that can become more valuable as the Internet becomes more mainstream. We wouldn't be doing any of this stuff if we didn't think the Internet will get a lot more mainstream than it is today.
WHO THE COMPETITORS ARE:
IBM is our biggest competitor. They're more than 10 times our size in terms of employees. What people don't understand is how IBM--after they divorced us [ending joint development of IBM's OS/2 operating system]--set out to eliminate us. Their influence is way beyond what we have. As if being larger isn't enough, they also have weekly announcements with Netscape, Sun, and Oracle about what they're doing to work in cahoots to attack us.
KEEPING JAVA PURE:
Java as a language is being taken very seriously. We're one of the companies providing tools for Java development. People don't want you to write one piece of code [software] that runs on a wristwatch and just say here it is, it runs anywhere. They want you to take advantage of their screen, their graphics, their security. The few Java applications out there tend to be optimized to run on popular environments--like Windows.
THE BROWSER ISSUE:
We are putting new features into Windows. That kind of enhancement is great for customers--making it so when you turn on a PC, the Internet is there and it's easy to use. We think that's a great thing. Our priority isn't thinking about if there's a competitor who is politically influential and spending money on lawyers and ex-politicians. That's not supposed to be how we decide what to do--and it's not. We say: Are these things that people want? And sure enough, we're building those things into Windows.
What we're doing is quite straightforward, and it's quite pro-customer. We have never held back, in any way, the ability of [PC makers] or people using Windows to put other browsers on their systems or to download those browsers and use them. The choice has always been there.
TURNING THE I-WAY INTO A TOLL ROAD:
We have no scheme, and we never had one. No one will have the ability to charge tolls for people using the Internet. Windows doesn't give it. There's nobody in a position to do that.
We've been in business for 23 years, and look at our track record. Do we believe in high volume, low price? The whole thing about charging transaction fees is just nonsense--utter nonsense.
ON THE JUSTICE DEPT.'S STANCE:
Unless we're allowed to enhance Windows, I don't know how to do my job. Windows would certainly be eliminated. I don't know what Microsoft is unless we have the clear right to design the product with new features, including things we've sold separately in the past.
LOBBYING WASHINGTON:
The people who compete with us are a lot more sophisticated about spending money on politicians than we are. I've been very naive. I thought just sitting here and writing great products was enough. I've been criticized for not realizing that's how the world works, and maybe I made a big mistake. I wasn't back there [in Washington] like they were. And now that we've done tiny things in that direction, the headlines are: ''Microsoft Buying Influence.'' You're damned if you get involved and damned if you don't. It's an awful situation to be sued by the government. It certainly is bad for our reputation.
WHAT COULD DERAIL MICROSOFT:
This is the world's most competitive business. The products we have today will be worthless four or five years from now. The only question is whether we're the ones to make [future] enhancements. The amount of competition in this industry is really quite incredible. You've got the biggest company ganging up with basically everybody else to attack us. You've got coverage of Java. You've got breakthroughs in speech [recognition] and other things that we'll have to prove we can lead in. The list of challenges Microsoft has to deal with in its products and its communications with customers is quite daunting. We've always been in a very competitive [environment] but it's clearer today than ever.
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