Bill Gates on … the Competition
on Wall Street Journal
by , June 18, 2006
Microsoft Corp. Chairman Bill Gates is leading the powerful software company at a time when it's facing new threats from nearly all sides. He talked with Walt Mossberg and Kara Swisher about the new Vista operating system, the challenges from Google Inc. and Apple Computer Inc., and watching old Harlem Globetrotters movies on the Internet.
KARA SWISHER: When are you going to ship the new Vista operating system?
BILL GATES: Well, we're shipping...a lot of new products. And I don't think people remember the ship date of the product as well as they remember whether it's a great product or not. With Vista, that's probably our most visible ship date. We're quite confident in the January date, but again, we're only getting the Beta 2 out now, which is right on the schedule we set.
WALT MOSSBERG: How should people judge whether Vista is a great product? [Microsoft Co-President] Jim Alchin said to me recently that the biggest factor that he thinks it should be judged by is security. Is that right, or is it more complicated than that?
MR. GATES: Well, it's certainly a multidimensional product. We put many billions of dollars of R&D into the product. And whether it's finding your information, setting up wireless, exploiting graphics hardware, there's just feature after feature.
MR. MOSSBERG: Is security the biggest of these things or is everything of equal value in there?
MR. GATES: [Based on] the man-hours that went into this product, security is the biggest area of work. Security is a huge part of it. And in some ways, security is the feature that when you don't see it, you're happy.
MS. SWISHER: Now, one of the elements of it that's going to be big is search. And you put a lot of money into it.
[Bill Gates]
'There's a lot of this user-generated content that's showing up. That's a fantastic thing because that's where the full-screen PC comes in.'
MR. MOSSBERG: But you haven't made that much progress.
MR. GATES: We've made a lot of progress in terms of the work we're doing. [Google is] still very much [the] leader in that space. [But] if you want to look at people who are trying out neat, new things, you actually have to look far and wide to some of the lower-market-share search engines. Google has actually done less in the way of innovation than I would have expected a year ago.
We have a lot of work to do to get the kind of credibility you need to be viewed as really strongly in the game. And we're very intent on that.
MR. MOSSBERG: One target we talked about last year was Apple and music and the iPod. You don't seem to have had much success in blunting their momentum in music either, have you, this year?
MR. GATES: Well, Windows Media Player [software] is way more popular today than it was a year ago. Apple, in terms of portable players, has captured a very high share of those. Obviously, we need to find a way to participate in the growth there, and we'll go back and think hard about how do you improve the experience, what are the opportunities for innovation. But again, a year is not much time.
MR. MOSSBERG: You have a project at Microsoft in the Xbox group to make some kind of hand-held player, right?
MR. GATES: There's such a rumor. We're looking at various ways we could bring more to that space. We think it's a growth space. There's a lot that hasn't yet been done.
MS. SWISHER: Xbox has been a huge success. Sony's PlayStation 3 is coming out. Talk a little bit about that market and what you see developing.
MR. GATES: In the last generation was PlayStation 2 versus...Xbox. We came out more than a year late, we were more expensive...we were a bigger box and a heavier box. And so this time we decided we don't want to do any of those things. We did take the bet that we'd made on it being an online experience, not just playing the game locally, but having your friends and contests and achievement records, and chatting with people and even using voice and video and connecting that back even to what we do on the PC. We made that the centerpiece, what we call Xbox Live. And that's really exploded. We had a week a few weeks ago that people downloaded five million pieces of content onto Xbox Live. This time, we got rid of all the things we thought we did wrong last time. If I had a choice to trade my position versus the other guys, I'd take my position.
MS. SWISHER: Why is that?
MR. GATES: It's a very software-intensive field now. It's also much stickier. In the old generation, if one kid bought a PlayStation 2 and the other kid bought an Xbox, at his house you played PlayStation, at your house you played Xbox. Now that it's online, all those early buyers who...you want to play with, they've got their reputation online of who they are and how good they are at these games. [Consumers, in theory, will want to get their own Xbox to challenge them online.]...So the advantage to the early mover...is quite substantial.
MS. SWISHER: Google just bought Writely, which is a much cruder version of Word [that lets you write and store documents on the Web]. Do you see these things being online, where people store their documents on the Web?
MR. GATES: WordPad, which comes for free in every copy of Windows, has more features than [Writely]. It's important to distinguish between storing information online and the...responsiveness that you get when you run the software. You can work [with WordPad, but not Writely] offline. Absolutely more and more storage [of personal files] is going to be in the cloud [online], and you know, a lot of that'll be free. What's not free will be very inexpensive for people, both for syncing and backup and collaboration. And so, Office connects up to things like Office Live [an online-collaboration program]...to let you have your documents wherever you want to have them.
MR. MOSSBERG: There's been an alleged leak of a Google product called GDrive which is about storing all your documents, all your photos, your music, your spreadsheets. Are you working on something like that?
MR. GATES: Sure. The idea of having petabytes [one million gigabytes of storage] in the sky that are there for backup, file roaming, collaboration -- the economics of that are getting better and better. So we'll have a variety of services that connect up to these petabytes in the cloud. We already had to do some of that for things like free Hotmail and Spaces [Microsoft's blogging service].
MS. SWISHER: Let's talk a little bit about the social-networking space [sites such as MySpace]. How does that impact things like MSN [Microsoft's online service]?
MR. GATES: Yeah, Spaces is the highest-volume blogging site. So there's a lot of this user-generated content that's showing up. That's a fantastic thing because that's where the full-screen PC comes in. Smaller-screen devices tend to be largely about consumption. Yes, you want to listen to your music [on a compact music player with few controls]. You might want to offer up a piece of email [on a pocket gadget], there's a [small] keyboard there.
But when you really want to go up to your MySpace site and say cool things, you want to edit the video to put up on YouTube, or do your Spaces thing, you want the full-screen PC that lets you have the keyboard and other ways of doing input. The person who has a phone is likely to have a PC that they use for the tasks where the full screen makes sense.
MR. MOSSBERG: All of a sudden all hell broke loose with television moving to the Internet. Talk to us about where you think this is going and why you don't seem to be involved in it at the moment.
MR. GATES: Well, the biggest thing happening with video on the Internet is actually taking all of TV and putting it on the Internet, and that's this long project that we've had, called Microsoft IPTV. That's where you have AT&T, Verizon, various people using our software platform to create a video experience that blows away the broadcast model. It's not channel-based watching. If you like your local high-school sports show...it shows up in your menu. This is the year that all those pieces come together and get rolled out.
Broadcast, of course, has got to limit itself to the things that are popular. And so, a physics lecture I might want to see would never show up there. Or your children's sports activities. We're finally getting to the point where the bandwidth is there, the richness is there.
[In Microsoft's labs, there's] software that recognizes video [and] can, say, take the baseball game and say, OK, you want to watch this 90-minute game in 10 minutes. It's smart enough to find exactly the highlights of the game [and] just show you that 10 minutes. Or take the boring meeting that you didn't attend and boil that down just to the part that you care about.
MS. SWISHER: So, what does that do to the broadcast model from your perspective?
MR. GATES: It's gone. People want to watch whatever video they want to watch whenever they want to watch. If you provision your Internet infrastructure adequately, you can do that.
MR. MOSSBERG: Talk about YouTube. What do you think about that? Why aren't you doing something like that?
MR. GATES: If we did YouTube, we'd be in a lot of trouble. First of all, people would say, "How do you make money?" Second, they'd say, what about all that copyright violation taking place up there. It's a neat site. I saw a bunch of old Harlem Globetrotters movies up there the other night, it's great.
MS. SWISHER: You watch physics lectures and Harlem Globetrotters?
MR. GATES: This social-networking thing takes you to crazy places.
MS. SWISHER: But those were stolen, correct?
MR. GATES: Stolen's a strong word. It's copyrighted content that the owner wasn't paid for. So yes.
by , June 18, 2006
Microsoft Corp. Chairman Bill Gates is leading the powerful software company at a time when it's facing new threats from nearly all sides. He talked with Walt Mossberg and Kara Swisher about the new Vista operating system, the challenges from Google Inc. and Apple Computer Inc., and watching old Harlem Globetrotters movies on the Internet.KARA SWISHER: When are you going to ship the new Vista operating system?
BILL GATES: Well, we're shipping...a lot of new products. And I don't think people remember the ship date of the product as well as they remember whether it's a great product or not. With Vista, that's probably our most visible ship date. We're quite confident in the January date, but again, we're only getting the Beta 2 out now, which is right on the schedule we set.
WALT MOSSBERG: How should people judge whether Vista is a great product? [Microsoft Co-President] Jim Alchin said to me recently that the biggest factor that he thinks it should be judged by is security. Is that right, or is it more complicated than that?
MR. GATES: Well, it's certainly a multidimensional product. We put many billions of dollars of R&D into the product. And whether it's finding your information, setting up wireless, exploiting graphics hardware, there's just feature after feature.
MR. MOSSBERG: Is security the biggest of these things or is everything of equal value in there?
MR. GATES: [Based on] the man-hours that went into this product, security is the biggest area of work. Security is a huge part of it. And in some ways, security is the feature that when you don't see it, you're happy.
MS. SWISHER: Now, one of the elements of it that's going to be big is search. And you put a lot of money into it.
[Bill Gates]
'There's a lot of this user-generated content that's showing up. That's a fantastic thing because that's where the full-screen PC comes in.'
MR. MOSSBERG: But you haven't made that much progress.
MR. GATES: We've made a lot of progress in terms of the work we're doing. [Google is] still very much [the] leader in that space. [But] if you want to look at people who are trying out neat, new things, you actually have to look far and wide to some of the lower-market-share search engines. Google has actually done less in the way of innovation than I would have expected a year ago.
We have a lot of work to do to get the kind of credibility you need to be viewed as really strongly in the game. And we're very intent on that.
MR. MOSSBERG: One target we talked about last year was Apple and music and the iPod. You don't seem to have had much success in blunting their momentum in music either, have you, this year?
MR. GATES: Well, Windows Media Player [software] is way more popular today than it was a year ago. Apple, in terms of portable players, has captured a very high share of those. Obviously, we need to find a way to participate in the growth there, and we'll go back and think hard about how do you improve the experience, what are the opportunities for innovation. But again, a year is not much time.
MR. MOSSBERG: You have a project at Microsoft in the Xbox group to make some kind of hand-held player, right?
MR. GATES: There's such a rumor. We're looking at various ways we could bring more to that space. We think it's a growth space. There's a lot that hasn't yet been done.
MS. SWISHER: Xbox has been a huge success. Sony's PlayStation 3 is coming out. Talk a little bit about that market and what you see developing.
MR. GATES: In the last generation was PlayStation 2 versus...Xbox. We came out more than a year late, we were more expensive...we were a bigger box and a heavier box. And so this time we decided we don't want to do any of those things. We did take the bet that we'd made on it being an online experience, not just playing the game locally, but having your friends and contests and achievement records, and chatting with people and even using voice and video and connecting that back even to what we do on the PC. We made that the centerpiece, what we call Xbox Live. And that's really exploded. We had a week a few weeks ago that people downloaded five million pieces of content onto Xbox Live. This time, we got rid of all the things we thought we did wrong last time. If I had a choice to trade my position versus the other guys, I'd take my position.
MS. SWISHER: Why is that?
MR. GATES: It's a very software-intensive field now. It's also much stickier. In the old generation, if one kid bought a PlayStation 2 and the other kid bought an Xbox, at his house you played PlayStation, at your house you played Xbox. Now that it's online, all those early buyers who...you want to play with, they've got their reputation online of who they are and how good they are at these games. [Consumers, in theory, will want to get their own Xbox to challenge them online.]...So the advantage to the early mover...is quite substantial.
MS. SWISHER: Google just bought Writely, which is a much cruder version of Word [that lets you write and store documents on the Web]. Do you see these things being online, where people store their documents on the Web?
MR. GATES: WordPad, which comes for free in every copy of Windows, has more features than [Writely]. It's important to distinguish between storing information online and the...responsiveness that you get when you run the software. You can work [with WordPad, but not Writely] offline. Absolutely more and more storage [of personal files] is going to be in the cloud [online], and you know, a lot of that'll be free. What's not free will be very inexpensive for people, both for syncing and backup and collaboration. And so, Office connects up to things like Office Live [an online-collaboration program]...to let you have your documents wherever you want to have them.
MR. MOSSBERG: There's been an alleged leak of a Google product called GDrive which is about storing all your documents, all your photos, your music, your spreadsheets. Are you working on something like that?
MR. GATES: Sure. The idea of having petabytes [one million gigabytes of storage] in the sky that are there for backup, file roaming, collaboration -- the economics of that are getting better and better. So we'll have a variety of services that connect up to these petabytes in the cloud. We already had to do some of that for things like free Hotmail and Spaces [Microsoft's blogging service].
MS. SWISHER: Let's talk a little bit about the social-networking space [sites such as MySpace]. How does that impact things like MSN [Microsoft's online service]?
MR. GATES: Yeah, Spaces is the highest-volume blogging site. So there's a lot of this user-generated content that's showing up. That's a fantastic thing because that's where the full-screen PC comes in. Smaller-screen devices tend to be largely about consumption. Yes, you want to listen to your music [on a compact music player with few controls]. You might want to offer up a piece of email [on a pocket gadget], there's a [small] keyboard there.
But when you really want to go up to your MySpace site and say cool things, you want to edit the video to put up on YouTube, or do your Spaces thing, you want the full-screen PC that lets you have the keyboard and other ways of doing input. The person who has a phone is likely to have a PC that they use for the tasks where the full screen makes sense.
MR. MOSSBERG: All of a sudden all hell broke loose with television moving to the Internet. Talk to us about where you think this is going and why you don't seem to be involved in it at the moment.
MR. GATES: Well, the biggest thing happening with video on the Internet is actually taking all of TV and putting it on the Internet, and that's this long project that we've had, called Microsoft IPTV. That's where you have AT&T, Verizon, various people using our software platform to create a video experience that blows away the broadcast model. It's not channel-based watching. If you like your local high-school sports show...it shows up in your menu. This is the year that all those pieces come together and get rolled out.
Broadcast, of course, has got to limit itself to the things that are popular. And so, a physics lecture I might want to see would never show up there. Or your children's sports activities. We're finally getting to the point where the bandwidth is there, the richness is there.
[In Microsoft's labs, there's] software that recognizes video [and] can, say, take the baseball game and say, OK, you want to watch this 90-minute game in 10 minutes. It's smart enough to find exactly the highlights of the game [and] just show you that 10 minutes. Or take the boring meeting that you didn't attend and boil that down just to the part that you care about.
MS. SWISHER: So, what does that do to the broadcast model from your perspective?
MR. GATES: It's gone. People want to watch whatever video they want to watch whenever they want to watch. If you provision your Internet infrastructure adequately, you can do that.
MR. MOSSBERG: Talk about YouTube. What do you think about that? Why aren't you doing something like that?
MR. GATES: If we did YouTube, we'd be in a lot of trouble. First of all, people would say, "How do you make money?" Second, they'd say, what about all that copyright violation taking place up there. It's a neat site. I saw a bunch of old Harlem Globetrotters movies up there the other night, it's great.
MS. SWISHER: You watch physics lectures and Harlem Globetrotters?
MR. GATES: This social-networking thing takes you to crazy places.
MS. SWISHER: But those were stolen, correct?
MR. GATES: Stolen's a strong word. It's copyrighted content that the owner wasn't paid for. So yes.
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