Bill Gates |
October 21, 1993
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Bill Gates
Chairman and Chief Software Architect, Microsoft Corporation
Answers to Written Questions from the Floor:
Q: In your view, would the computer and software industry be helped or hindered by the passage of NAFTA?
A: During the first 15 or so years of Microsoft's existence, we managed not to have to ever visit D.C. to deal with political issues at all. That's a tribute to the U.S. government; they were sort of staying out of our way. I'm not referring to anything specific there. Now, we find, with issues like free trade and information highway, that at the size we're at, these are such important issues that we are getting more involved.
Earlier, I did come out in favor of this NAFTA treaty as part of a panel that was put together. One of the elements of NAFTA is that Mexico has agreed to strengthen its protection of intellectual property - that is, to enforce their copyright law very vigorously. This has been on the trade agenda of the U.S. government for some time. The high-technology industry has benefited immensely in sales in places like Taiwan, Korea, Hong Kong, because of the strict attention to getting copyright laws out there very broadly. I also believe in the principles of NAFTA that by promoting free trade, the U.S. will adapt to the economic realities of the future in advance of other countries; that they'll come along slowly, and that we will benefit on a relative basis and an absolute basis by the passage of NAFTA, which will hopefully develop momentum and lead to the passage of the GATT.
Q: You mention that the United States is by far the leader in software technology and presumably the information highway and multimeadia fields as well. What other countries are actual and potential competitors, and what does the United States have to do to maintain its lead?
A: When we look at most of the components - the microprocessor, advanced networking, optic fiber, software technology, software tools, branded content, in every one of those areas, the U.S. is ahead. We have a vibrant competition among our cable and phone industries, and as long as in every region there are still two of those, I think we are going to get rapid deployment that is absolutely the best thing to have.
Other countries that are very serious about this include Singapore, that's going to run a large optic fiber network, they'll have the infrastructure faster than we will. Unfortunately, they don't have critical mass, so you're going to have a lot of this Chinese-branded content, and so I don't think that it will have quite the impact that it will have here. Japan talks a lot about this but their plans are not very concrete. Certainly, in some elements of the technology, they have a huge contribution to make; I believe in taking the best technology, wherever it is. In particular, in flat-screen technology, they are a leader, with HDTV there are some companies here in the U.S. with new proposals and its not clear where that will go. Screen technology will improve, so the quality of the experience will be greatly enhanced because of that. I'd say in Europe, the countries are by and large behind. The UK has one thing that they've done which is they've allowed the cable people to offer telephone service in competition, but I think the U.S. will have that in a few years. So it's a pretty substantial lead, and only by really messing up, by letting the government get too involved or not clarifying the regulations, could we fritter away that advantage.
Q: Computer folks have been predicting for years that we would soon be able to sit by our TVs and control many features of our lives. Assuming for a moment that technology is available, do you believe that people will want to use it? (i.e., are movies-on-demand worth all the fuss?)
A: Well, certainly with movies-on-demand, it's pretty easy to do tests on that. It's got to be superior, to be able to browse a large selection, with lots of information about the actors, and what they did and what the reviews are, it's got to be better to do that than to go down to the local rental place. So, I think that's very direct. And remember, if this is done with the cable-type regime, peole will be given the hardware; the network will be set up for them. Then it's just up to each of these individual services to justify it's usage by being very appealing.
I tend to think it'll be much broader, that video-on-demand will be a much smaller percentage of what'll happen across this network than many other people think. The idea of controlling things in your home, that is, having your lights come on at a certain time or changing your heat, that to me is still kind of a nerdy thing, and I don't think that's a very big thing. We will have, over time, what we call a wallet-PC, that is, something you carry around that is not directly connected to the Information Highway. It'll use wireless communication to reach a nearby cell, or node, of the Information Highway. Within that wallet-PC you'll have a replacement for everything you carry today; you'll have thousands of nice digital pictures of your kids, you'll have what we call digital value certificates, that is, the equivalent of keys and moneies and traveler's checks and tickets, will be in that device. Something that shows you maps of the area, your messages, your schedule, will all be there on that little screen. And wherever you go near to a larger screen, like if you're in a waiting room somewhere, you just wave your little wallet-PC over that screen and it'll authenticate who you are, so the things you're interested in - essentially your mailbox or your newspaper - will come up on that screen. So if you love basketball, the whole first page will just talk about what's going on in basketball; it'll be what you're interested in.
Q: In light of the coming ubiquitous wireless access, do you think it is possible to have too much information and too much communication, and if so, what should we do about it?
A: There certainly is a concept called information overload. Even when I walk into the video store I think, "Geez, am I ever going to get time to see all of these videos?" Or it's worse when you go into a bookstore and think, "Gosh, I still have all those books sitting at home that I haven't finished yet." So the whole process of allowing you to select the things of greatest interest, you know, to find out from your friends, "What are they reading? What did they like?" To really select carefully, I think this network has to be really helpful in that sense. It can be very overloading. People don't want to go off on their own pathway. They want to know the same knews that other people are reading; they want to have topics of common interest.
The technology is immensely flexible. Literally, everyone could go off on their own path and never watch the same movie ever again. But the technology will allow you to use it in various ways. So the secondary effects of "Do people really want to buy merchandise across this network?" It's not known. Take something like travel. The tests we've done suggest that when it comes to choosing a place to go and activities to do there, that this system can do far better than going down to see a travel agent. There's other products; perhaps, buying insurance and things like that, that people will still want the face-to-face contact instead of doing it across the screen. But the proposition that this should be built is only predicated on a tiny tiny percentage of these applications actually paying out. And the rest, well, we'll just have to wait and see.
Q: What do you think the government's role should be in the information highway?
A: There is a role for the government. The whole communications area is highly regulated today: what the TV networks can do, what the cable guys can do, and what the phone companies can do. And it's up to them to take these very separate regimes that have been out there and enable the most vigorous competition between phone companies, and cable companies, and power companies, whoever else wants to jump into this thing.
There are some positive steps are being taken. There's the National Information Infrastructure Bill that may get passed that has some very positive elements. The FCC's decision to take additional spectrum and auction that off - that's a very positive step. There's other things that government needs to do: They need to set very strict privacy standards for these networks. When things haven't been in electronic form it's kind of been informally understood that privacy is there, but when you have everything on this network, we'll need to be very explicit about what the rules are. Likewise, as these networks get built, there will be the equivalent of public service broadcasting; that is, it will be important to connect up the schools and the hospitals. It'll be important to take government applications where you'll never have to visit a government office ever again; you just can find out what's going on with your Social Security or your real estate taxes just by sitting in front of the screen, perhaps at some point even voting at home, but that's off in the future. Those services should be given free carriage across this network so that it serves the important social purposes of the day as well as making economic sense.
Q: Should the government, through subsidy or regulation, take steps to ensure that the information highway is available to the entire population?
A: This is a tough question. The information highway will provide a number of services, some of which are purely kind of like MTV where it's not necessary for everyone to have access. If you can afford it, great, but it's more of a privilege than a right. Many other things coming across this - access to government services, voting is an extreme example, the ability to express your opinion, and when you have these electronic town halls - those things suggest very much that having every segment of the population being connected in will become very important.
Certainly in areas where you have a lot of density, the ability to (at not much incremental cost) say, "Yes, let's get everybody connected in," will probably make sense. That's further down the road. I'm not sure that that should be a requirement at the very beginning. It's only as these other socially related applications are coming along that you would want to be that rigid about it. It is a tough problem as you get geographic dispersion, as you get way out into rural areas, exactly how we'll fund getting everybody connected in; but it would certainly be a very positive thing.
Q: How will the information highway be financed? Will the government have a major financial role?
A: The government - this is just my opinion - doesn't need to spend even $1 of taxpayers' money on financing this. There are many very entrepreneurial people who are glad to make this happen. The Bell Atlantic-TCI merger is great evidence of the number of businesses that are looking forward to taking this risk.
Q: Many of us who are low-tech types are getting overwhelmed by the electronic highway that you described. What advice would you give us on: (1) getting through the jargon and understanding what's really happening and (2) overcoming our fears?
A: In a sense, the press is getting a little bit ahead of itself in its zeal to out-predict the other person. It's going to take a few years before this is out there. The best way to understand most of these things is that as it's available in prototype form, to sit down and get a chance to use it to see, "What does it mean?" "I can talk to the other teachers, or I can see what special interest groups are out there." The user interfaces today are completely inadequate. I do expect in the next couple of years we will have these systems available so people can get exposure to them.
They won't necessarily appear first in your home. They'll appear in hotels, perhaps on the plane; they'll appear in public spaces - sort of the replacement of the payphone or the automatic teller machine. You can go out and buy any of these tickets, look at schedules, maps, and things like that. If we can't make it easy enough for you to understand, then it's a few years away from happening, and you don't need to worry about it.
Q: Will elementary and secondary education be able to keep up in the education process in order to prepare American students for the electronic age and how will companies like Microsoft aid our public schools in this process?
A: The potential here is very dramatic, to even improve education. I'm certain that virtually all schools will be connected together. So not only will teachers be sharing ideas, but students will be communicating with each other. Certainly there is an open-mindedness on the part of young people, when you expose them to tools like this, to really inculcate them very quickly and really use them to the fullest advantage. It's even possible that young students will understand this thing and use it far better than most of us here in this room.
Now what does that mean about education? Well hopefully it means that teachers can spend their time with smaller groups, and that some elements of interactive learning can be done by the student working with the system. It's not perfectly clear what shape this will take; we need lots and lots of pilot programs; we need to have schools taking different approaches to how this technology can help. But I certainly see it going far beyond the rather limited role that the computer has in the classroom today.
Q: What is your thoughts on the software programming industry for export such as the one that's developing in India?
A: Microsoft has recruited people on a worldwide basis. We, every once in while, go over to India. When you have a billion people, it turns out that a number of them are very good programmers. When you want the best, you should be open-minded about people from everywhere. But it doesn't make any sense for a company like us to actually do development so far away. The need to have these teams talk together closely, to go out and meet with the most demanding customers that are here in the U.S. on a regular basis. It's just so important that even if you could cut your development costs in a quarter, you would fall behind. I would love it if one of my competitors said they're moving all of their development to India.
But there are types of software that can be developed on a worldwide basis. The software industry will lend itself to entrepreneurs in various different countries, whether it's Israel or Russia or India or China, coming along and taking advantage of very low-cost, well-educated people over there. It's unclear exactly what shape this is going to take. Certainly if you take the entertainment industry, the fact that there's low cost labor elsewhere, that hasn't led to any export of these activities. I tend to think it will be a very narrow part of the software industry that will end up going offshore.
Q: What American colleges and universities are you using for resources for scientific employees at Microsoft?
A: Again, we're open-minded. Dropouts or graduates alike are encouraged to apply. We do get an immense benefit from so-called "co-op programs," where people can come work for us for three or four months and then go back to their school. To understand whether or not our environment is one that they thrive in, both in their opinion and our opinion, it's wonderful to have that three or four month time to get to know each other.
It exceeds what you can do in even a two or three day interview process. It's actually surprising to me that it's Waterloo University up in Canada that has the most developed co-op program, although we're encouraging lots of schools in the U.S. to do the same thing. We do have about 20 schools that we put particular emphasis on. We know the professors there, we hire students from them every year. Of course, a number of them are in this area, like Stanford and Berkeley. We make donations to make sure that their research programs are going strong.
American universities are a key element of why the U.S. high-technology industry is strong. In fact, you'll think I'm very political if I mention that the same week I came out in favor of NAFTA, I also got involved with a Washington state thing, where they're proposing to roll back taxes, which would lead to huge cuts in our university system, even worse than what other states have had to go through. That's very short-term thinking. Our universities are the best; there is a direct cause and effect between that and the strength of our companies here.
Q: Has the Americans with Disabilities Act had any impact on Microsoft's products or services?
A: Part of the Americans Disabilities Act is a requirement, for anyone that vends to the government whatsoever, to put a lot of research into making products more accessible. That means that people who have a problem with dexterity, people who have a problem hearing, or people who have visual problems, trying to make it as easy as possible for them to still use those products. We have a group of five people focused on this. A lot of what they do is find outside experts and put the hooks in our software so that people can work with it.
It has turned out to be very straightforward to come up with special types of keyboards for special entry, to come up with good visual substitutes for any of the audio clues that we're using in the software. The toughest one of all is making software work well for the visually impaired. As you move to the graphics interface, in a certain sense you are exploiting the high bandwidth that visual communication can provide. But even there there's been some really excellent use of speech synthesis and context-awareness in the software. So anybody who is particularly interested in this, we'll give you the name of the people in our office who focus on it.
Q: The electronic information highway could have a significant impact on thousands of community service organizations across this nation, making them more effective in communicating and coordinating social impact on a very troubled nation and increase participatory democracy. What role does Microsoft and the electronic industry have in helping small, low-funded, human service non-profits become a part of the electronic community?
A: Fortunately, personal computers are inexpensive enough that they actually can be used as very powerful tools by non-profit organizations. We do have a program of donating software to non-profit organizations, and we have a group of people who are focused in on that. We do have a set of things we've done with our local United Way to help them, in their campaigns, to use computers more effectively. We're hoping to spread those around, in a best-practices way, to other United Ways as well. Keeping small databases of donors or customers, those are things that personal computers do and can help agencies like this. Likewise, there will be, on this highway, lots of bulletin boards where people in need or people who provide services can exchange their ideas and really reach out to one another.
Q: With John Sculley having departed Apple, does Apple need a vision to be successful, or does it need to redefine its business?
A: Well, this vision thing is interesting, because I doe think that technology companies need, somewhere in their top leadership but not necessarily in the top person, someone who is very product-oriented and who understands chip technology, communications technology in a very deep way. So for the CEO that doesn't come off that path, it's a matter of embracing a small group that does those things very well.
Lou Gerstner, who runs IBM now, people have given him a hard time for saying that vision is not that important. Vision is important for an industry, but vision is not a competitive advantage. Here I am, I'm sharing my vision with you; how can that be an advantage for Microsoft? It's widely available. It will even be on the radio. Vision can only take you so far. You have to have great engineers, you have to manage those engineers, you have to have them very focused on products so that you'll have enough of an edge in order to generate a lot of profit. Apple is certainly in a time of transition. Microsoft has been the software company that has put the most into writing software for the Macintosh and helping support the Macintosh; that's something we're very committed to. I feel pretty confident that Mike Spindler will find a way for Apple to continue to thrive in this new generation.
Q: Is the information highway a threat or an opportunity for the travel and tourism industry?
A: Well, it's certainly a threat...and an opportunity. The idea that we might not have to travel such long distances to collaborate with each other, both in terms of being in visual contact and sharing data, it could cut business travel significantly. It could change the idea that inner city real estate values are so much higher than other property. Over a period of time, now we're talking 10 to 15 years, you could see some substantial changes. The No.2 person at Microsoft, Steve Balmer went to Europe for about four months and I thought, "Boy, this is going to be a shame, I'm not going to see him." But we simply got on that video-conference machine once a week and it was great. It absolutely was as good as having him there; in some ways, even better. So I think business travel, in total, could be cut.
Of course, at the same time, we're seeing the average size of a company going down as people outsource things more. That could lead to people working at greater geographic distances, so those two cut against each other. As far as leisure time, leisure time will go up. These advances are making the world, in a certain sense, richer, although the way those things get reflected through in numbers like the GNP is a very complex thing. These are improvements in the choices we have to make about how we get things done and how we spend our time. Leisure time will go up, fairly substantially, and people will be interested in pursuing the diverse travel opportunities that this system will provide to them.
The notion of what is a travel agent, is it somebody who you can just push a button and call up on your screen, or is it somebody you have to drive down to their office and sit there? The notion of, is the system nice enough to find you the lowest fare, or do you have to go through an intermediary? Those will change the nature of the value-added of the travel agent, but there still will be an immense business there.
Q: As you can imagine, we've had a great number of questions regarding the future of Microsoft in many dimensions. But let me just ask you, point blank: What's next for Microsoft?
A: It's a little hard to answer that question, because there are a lot of things that we're doing. This week, we're announcing a new round of our products that are over half our revenue. Word processing and spreadsheets, Word and Excel, are sold as part of this Office product. So that's a very exciting thing and every 18 months, you'll see us come around with bi improvements in that kind of software.
Likewise, we're pushing Windows ahead. We have a new version that the trade press loves to talk about: we've got Windows NT, which is now shipping. And that's kind of redefining computing. There used to be this idea that there were workstations and then there were PCs. Well, that distinction is meaningless now. PCs have as strong system software and performance as any other thing. Scott McNealy might come here and tell you otherwise, but tell him he's wrong. In any case, the opportunity for us as computers move into the home, as you get these very broad networks, it's an incredible opportunity. We may need to use new approaches. You know, the first time I met John Malone, he said, "Hey, there's two things wrong with your company: first of all, you're underleveraged." Because we have two billion in the bank, and no debt. And "second of all," he said, "hey, I've done two joint ventures this week, what have you done?" So it made me think, there are different ways of doing business. As these industries come together (they don't merge), but as these industries start working together with each other, certainly some of the practices of these industries will meld together and so we'll be in more joint venture things and we'll even have to stretch our expertise into some new areas. But I do see us as a company that has an opportunity to be one of the companies that really drives this new world forward.
Q: Unfortunately, we're at the point in the program where we'll only have time for one more question, and I can't resist it: Have you gotten your Porsche off the impound dock in Oakland?
A: If I had a little spare time, I could direct my lawyers to work on this problem. As it is, that Porsche is sitting there, hopefully appreciating in value, and I have another Porsche that's only 80% as fast that I console myself with meantime.
Generously funded by:
Tom Campbell
Dee Dee Myers