A rchive Date
[ 18-11-2003 ]
Category
[ International Relations ]
sub-Categoy
[ Microsoft ]
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[ http://www.australianit.news.com.au/articles/0,7204,7664710%5E15382%5E%5Enbv%5E,00.html
"Very solvable problems" says Gates
James Riley
OCTOBER 28, 2003
Middle age and family have knocked some brittle edges off the Bill Gates persona, but he remains passionate about software. It is three years since he stepped aside as chief executive of Microsoft, but Gates remains very much at the heart of the company as its chief software architect.
He passionately espoused the features of the new software model Microsfoft is taking to the world - the latest version of Office, now called Office System - at its launch in New York.
You rolled out Windows XP as a secure system, and Windows Server 2003 as the most secure platform Microsoft has ever delivered. In the past you've talked about Trustworthy Computing, and yet we've seen more problems with viruses and worms in the past few months than ever - what's going on?
This is a case where the industry and Microsoft need to do better. The vast majority of our customers have not been affected by these problems.
You might wonder why some were affected and others weren't? The answer is that there were a couple of techniques that would have avoided any problems. If your software is up to date, you had no problems. If you had a firewall, where you're blocking bad files or bad calls from coming in, you would have had no problems.
Clearly, we're glad that most of our customers were either up to date or had firewalls, and they were unaffected.
But we take responsibility for the fact that it was too hard for people to know whether they had their firewalls up the right way, and that it was too hard for them to keep their software up to date.
If we can make those incredibly easy, then we'll bring down the scale of these incidents and the frequency dramatically.
So, we have (issued) a very strong message that has started in the past few months of how software updating works, how you set it up, how you keep your internet-facing systems up to date, and firewalls.
We have firewall features in XP, and there were some technical reasons why it was not turned on by default. In the next release of XP, we're going to make it so that you can turn it on by default and we're going to give people scanning tools so they can see whether they have their firewalls turned on and whether they have their software up to date.
This is a very solvable set of problems. There is some work that Microsoft has to do and there is industry standard work. The mail protocols in the internet standards doesn't let you authenticate whether it really came from who it appears to come from. That's just a hole in the standard.
With internet packets, you can't tell who they come from. The internet was designed very cleverly for parts of the system to go down and for it to still work, but it wasn't designed for anybody malicious to be on the system.
So, Microsoft has a lot of work to do in this area. It's our biggest area of investment in our R&D budget, and the industry has a lot of work to do.
But we will be able to make the advances that tackle spam and viruses and bring the levels down so dramatically that they don't hold people back in using these tools.
How do the productivity promises that are being made here compare to some of the productivity promises of the late 1990s? Are those promises now being delivered on, and are these productivity increases around XML going to push profitability of software companies up again?
As far as productivity goes, that's what this launch is all about. The backbone of the information economy are the information workers and what is changing for them: the pens aren't any better; the offices are about the same; the copying machines are a little better.
What is changing is the software. In the '90s that was email; it was the browser; it was the graphics interface. And it really did grow the economy in a way that stunned the economists.
But it really got ahead of itself. The valuations got ahead of themselves and even some of the investments got ahead of themselves.
Now, in this decade, we'll be doing a lot more for productivity than we did the last decade, as we make collaboration work; as we use XML to reduce paperwork; as we let people have these LiveMeeting capabilities.
We are doing more for productivity (through these products) than we did last decade. And yet the general notion is very different. It's like going from a manic state to a depressive state.
To be honest, I would prefer that people underestimated what we're doing, rather than over-estimating what the start-ups are doing, or how the internet would change things overnight.
A lot of the things that we're doing are building on the advances of the last decade - internet connectivity, and the recognition that we needed a standard like web services to put things together.
So, I would tell you that the economy as a whole is a very positive one because of this productivity message. But in terms of the IT industry, I don't think you'll see huge increases in profitability. We're just too competitive as an industry.
We have exponential improvements in the hardware and we have radical improvements in the software. But it is the IT industry that will make all of the economy more productive.
It's in the same way that the airlines competed with each other. Airlines have provided a nice tool for productivity, but they are just so hyper competitive that in the airline business itself, the profitability has not been that high. IT is getting hyper competitive at this stage.
The collaboration tools you describe seem to enable people to work on their own more effectively. But doesn't Microsoft recognise the importance of the tap on the shoulder, the working with other people to get things done? Isn't there a more personal aspect to collaboration?
We do more in this version of Office in the things that you do sitting by yourself than anything else. With the time that you save individually, you can go and do more group meetings; think about dealing with email that's sitting on your desk; dealing with spam that's sitting on your desk; trying to find information, that's sitting on your desk, about your next meeting. We've done so much for that part of your work day, we thought we should do more for when you're actually in the meeting.
We thought the more we could do to help you take notes from those meetings - if you just take paper notes, you can't share them with your colleagues and you can't make absolutely sure that you've followed up those notes.
So, there isn't some balance here where we think you should change between how much time you spend by yourself and how much time you spend with other people. Those things will stay about the same, but we need to make each of those more productive.
LiveMeeting will take some things that would have been a phone call and make it far more productive, because you'll be sitting looking at the business plan, or the forecast on the screen together, and you can sit there and edit it together.
So, you can make the phone call far more effective. It will allow people to make fewer trips and save companies money. And in terms of having happy workers, people want to minimise the amount of time they have away from their families.
But there is no plan here to have less time with your colleagues. We know that's valuable, and we'll give you tools so that even in that setting we'll help you be more effective.
Some governments around the world are trying to create laws that will increase Linux adoption and the adoption of open source software like StarOffice and OpenOffice. How do you respond to that?
Our position is that organisations should simply buy the best software for their situation.
Why force people to use software that is inefficient? Do you want your Government to be efficient? Don't you want to get rid of paperwork and bureaucracy? Don't the citizens of every country deserve government workers to have the best possible tools?
If you look at what it costs to pay an information worker - to have their office and have their travel and their benefits, you're talking about .1 per cent cost to have the latest software.
If we're still talking about them having a PC and a network, then maybe we're getting into the 5-to-6 per cent range. But any worker that's got a PC that's already connected to the network, shouldn't they have the software to make them effective - to plan what's happening in the economy, to reach out to constituents, to work well with businesses?
A lot of these government organisations are working with InfoPath to get rid of paper in government.
Government's are very information driven. They are not factories - it's all just information. And they are getting a great effect from it.
I think it's just commonsense that people won't choose to use inferior software. People want their tax dollars to go as far as possible, and in most cases they will see more value in the offerings we provide.
How will Microsoft compete in markets where software is increasingly commoditised? Especially if you look at StarOffice or OpenOffice?
If, by commodity, you mean all software is identical, like steel - your steel is the same as the next guy's steel - of course not.
Software is always different: it's an innovative thing. The way our software works and the way that other people's software works is very, very different.
So, that term (commodity) doesn't really apply.
It's kind of cheeky of Sun to take something that is free software and try and charge for it. But, you know, Sun can do what they want.
Most people think of OpenOffice and StarOffice as something that is completely free. And we compete very effectively against it when it is free. When they start charging for it, then it's trivial to compete against it.
But it (StarOffice, OpenOffice) is not a major factor in the marketplace. There is way more Corel, and more Chinese and Japanese-specific product. Around the world, I would say that number two is Corel, which is the whole WordPerfect thing.
But compared with our installed base, those things are pretty small. OpenOffice sometimes makes headlines because it is free. But, really, sit down and try to use it. I mean, yeah, I could waste what, and hour a day just trying to read files? Yeah, if you don't value your time, then absolutely, it's the way to go.
But even students, who are very price sensitive, we have been able to come up with prices so that 98 per cent use Microsoft Office.
The US and Australian Governments are negotiating a free trade agreement right now, and the US has just signed one with Singapore. As far as Microsoft goes, or the software industry goes, are there any pre-requisites that you'd like to see in those kind of agreements?
We're not involved in any of those issues. We build great software, we make it available at low prices, and that's about it.
For people who choose not to take advantage of it, that's fine. But it turns out in Australia we have some wonderful examples of how our software has been used in government by customers there.
Technology adoption - of really using the best stuff - is very high in Australia. And that's been a great thing for the Australian economy.
In Australia, things that let you work from a distance are of particular value, because the distance many Australian organisations face in reaching the customers they need to sell to is so large.
Things like LiveMeeting, much better email, and better products such as SharePoint, are of particular value to Australian users.
There's nothing political about new technology. Companies in the US and in China will be using this technology, and it will be a windfall if companies in other locations choose not to use the same tools.
But it's being politicised right now.
No, I don't know of any case where a company has chosen not to use the best value in terms of software.
Copyright enforcement in countries with extremely high levels of piracy is somewhat of a political issue, but in Australia that's not an issue like it is in some countries.
I don't know of any political issues that involve us. We're just making new versions of Office.
Why should people upgrade to the new version of Office? How do you see the take-up of the latest version progressing?
There is no doubt a lot of things in the new Office that make a lot of tasks simpler.
It is fair to say that the existing versions of Office are our primary competitor, because those people have a heck of a deal.
They pay nothing more, and they get to keep using it. It never wears out. That's the great thing about software. After you've recouped the initial cost, you can sit there and use it for free.
Microsoft only makes sales if we make breakthroughs, and if we communicate those breakthroughs, and make upgrading and learning the new features - all of those things - so attractive that they are willing to pay us for our breakthroughs. If we don't make breakthroughs we get zero revenue. We'd still have a lot of people using our software, but we wouldn't be getting new revenues. That's why we strive for innovations. That's why we've increased our research budget so aggressively and we've raised our development budget so aggressively.
It's awfully easy to move up to the new version, and it's important not to underestimate how much people want to use the best tools.
It's very strange to buy a computer, pay for an internet connection, pay workers their salary, pay their office rent - all of those things - and then say: "No, we're going to save 0.1 per cent, a few hundred dollars, and have them use inferior tools."
We will see a faster and higher upgrade rate for this version than we've seen for virtually any version of Office.
It takes time, though. Companies have cycles that they want to go through. Over the next couple of years you will see the vast majority of Office users move to this next version.
How do you plan for succession at Microsoft? What will you do? Who will move to the top jobs?
In my current job I guess I have 10 years more, working full-time. Both Steve Ballmer and I are spending a lot of time developing the team, making sure that they are coming along.
It's nothing imminent. There is quite a bit of time to develop the people and to make sure we have the right kind of person.
Certainly part of our job description is to make sure that Microsoft continues to succeed even if Bill Gates and Steve Ballmer are not in those top positions.
Microsoft is very unusual in that we've never really had management turnover. We had Steve take over as chief executive three years ago, but he was number-two and I was number-one, now he's number-one and I'm number-two. It was not exactly as dramatic as passing the baton to a new generation, which is what we'll have some time from now.
People who don't really know Microsoft probably over-estimate the central nature of my role. I think I can galvanise people and draw things together in a somewhat unique way, but Office, for example, was written by 5000 people doing incredible work. I didn't write a single line of code.
I was part of the thinking, the priorities, the choices, and I have to say they beat my expectations.
Where is Microsoft going with search? You've signalled that you'll not renew your relationship with the Australian search firm LookSmart. It used a kind of hybrid method of software search with some human interview. I'm wondering how Microsoft intends to use search, and where?
In the world of search there is still a lot of innovation that needs to be done. It's still not very good at finding local information and if you subscribe to something, making sure that your search can look into your subscription information.
We have a long way to go in search. Clearly, integrating local search with network search, with web search, there is a lot still to be done there to make it richer.
In the web search category, Google has done the best job, but they would be the first to say it is not nearly as good as it could be. We have a lot of deep technology in terms of the web search and integration, where we will push the state of art forward and make a contribution - and keep Google pushing forward as well.
We are a very serious player in the search area, and we are investing a lot in it.
Some of the algorithmic approaches are extremely powerful. We just renewed our relationship with Overture for a couple of years, which is a sort of search monitorsation piece.
For the actual search engine, we've made no secret of the fact that we are building up some of our own technology and over time we'll be providing it to the marketplace to keep that as a very vibrant, competitive activity.
Any timeframe on that?
It's not overnight. You'll see it over the next couple of years. It'll get rolled in and you'll see it get more and more use, but there is nothing overnight.
A lot of countries can't afford Microsoft software in the same way that US customers can. Will Microsoft continue to charge for its software at the same rate across the world?
Microsoft is responsible for driving the cost of software down to be affordable to everyone.
Before the PC model came along - so the same software worked on all the different hardware - computers were very expensive.
Today, when you buy hardware, whether it's desktop machines or server machines, you can buy things at very attractive prices, knowing you can run the same software whether you buy from Dell or HP or some local brand.
You get that choice. The flexibility of buying with no software incompatibility changed the computing industry.
Today a $10,000 server can do what a $10 million server did just 10 years ago, so I love the fact that IT is now affordable around the world. Some companies around the world have been able to sell into international markets, and we have helped them with infrastructure, without them having super-high IT budgets.
The US is less than 5 per cent of the world's population and we get 50 per cent of our sales out of the US, so penetration levels and use of technology is somewhat correlated with GNP.
The second-biggest PC market in the world now, though, is China. It goes US, then China and then Germany.
The small business and standard editions of Office appear not to include the same XML features as the professional and enterprise editions. Isn't one of the points about XML to get governments and large businesses talking to small business suppliers through an automated XML data exchange process?
That's right. So, Word, Excel - all the work we have done to enable those for XML is in every version of Office.
The thing that's not in the Small Business Edition is InfoPath. So, if you want people to view information you take the run-time version of InfoPath - which is not the version that allows you to create and do things - and you let the small business use the run-time version. That's a no-charge thing.
If they want to create InfoPath documents, they need to license InfoPath. That's if they want to create their own forms, their own schemes, and stuff like that.
It's possible that in the future InfoPath may move down to the Small Business Edition, which actually has the business contact manager that is not in the Enterprise Edition.
It also has the Publisher, which is not in the Enterprise Edition. It is cheaper, it drops two modules and adds two different modules and is cheaper than the Enterprise edition.
We have special pricing for small business customers that want to add InfoPath or Access.
All the people doing small business software now - including our own - are creating XML connections to the small business software.
That's the big trend. You can go and talk to Oracle, PeopleSoft or the people building software in Australia, everybody is building these XML connectors.
Where do you see 64-bit computing going in the near future? Do we need it? Is Microsoft designing applications specifically for 64-bit?
Not in the near future. All these 64-bit chips run 32-bit applications. The Intel Itanium runs 32-bit so-called x86 applications and AMD's Opteron runs 32-bit applications.
What you want to do is to convert the things that really need 64-bit, like Windows itself. It has been converted for both Itanium and Opteron. Our SQL Server product has been converted for both.
The idea of using more than 32 bits of memory is very helpful - you get extra performance, but you've got all those compatibility issues with the application software. This is a much simpler transition than moving from 16-bit to 32-bit.
Reaching far back into history - the 286 to 386 transition - there was a completely different, incompatible memory model. We went from so-called segmented memory to linear memory.
That was a tough transition. That was Windows 95 and Office 95. Here, we're just going from a linear memory model to a bigger linear memory model. Modifying software is much less of an issue.
So you'll see 64-bit software on the server over the next two or three years, but mostly on the server. Maybe a few people on the desktop will be using 64-bit at the workstation level for are doing statistics or business modelling or scientific modelling or applications of that level.
You won't need that much memory for Office software for three or four years, but we'll support 64-bit in everything we do.
As the head of a large company, what keeps you awake at night?
It's a challenge to keep making software breakthroughs so people will go to the trouble of licensing a new version of our software and installing it, and all those things. We need to drive ourselves.
BILL GATES ON:
Profitability: "I don't think you'll see huge increases in profitability. We're too competitive as an industry"
Management succession: "I have another 10 years, more. People probably over-estimate the central nature of my role"
Prices: "We're responsible for driving the cost of software down to be affordable to everyone"]
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