January 28, 1998 4:00 AM PST

Gates: WebTV, PCs to get DSL

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SAN FRANCISCO--Microsoft chairman Bill Gates outlined the future for computer hardware manufacturers yesterday morning, and it's heavy on high-speed DSL technology.

DSL, or digital subscriber lines, will be integrated into PCs by the end of the year and incorporated into an increasing variety of set-top boxes in the near future, Gates told the audience of investors, analysts, and high ranking technology executives during his keynote at the Montgomery Securities conference here yesterday.

"You will see a WebTV box that has DSL in the coming year. You will see WebTV with cable. You will see a WebTV box with satellite," he said. Consumer electronics manufacturers will dominate this small Internet device early on, he said, adding, "You will start to see some of the PC manufacturers moving into this area."

The high-speed technology would likely boost the popularity of set-top boxes, including WebTVs, which now use tortuously slow dial-up connections.

In another potential advantage, DSL can be incorporated using standard phone lines. To date, almost all high-speed set-top initiatives have been centered on boxes that use the cable TV connections.

Hardware developments in the near term and long term will form the basis of a more wired world, Gates said. Components will continue to get faster, smaller, better, and cheaper. Hard drives with 16GB of capacity will start to come onto the market in affordable quantities, as will 20-inch LCD screens, DVD drives, and DSL and cable modems.

In turn, these improvements will prod manufacturers to develop both faster, more efficient computers as well as better portable devices. Electronic writing tablets with low heat dissipation will replace notepads in five years, he speculated. Stored video will become feasible for ordinary consumers.

While much of this has been said before, Gates maintained that the impact of component developments is still regularly overlooked.

"People still underestimate the impact that low-cost wide-screen technology will have," he complained. "Today, it's hard to buy anything less than a 4GB hard drive. It's a new world when the hard drive you buy can store more than you can type in your entire lifetime."

Handheld devices will also sell well, according to Gates. Color handheld devices, he pointed out, are currently selling out. "They can't make enough," he said. WebTV boxes are also selling well, but he admitted that hardware manufacturers acted conservatively in their manufacturing of the new generation of WebTV Plus boxes.

On the corporate side, Gates said that transaction servers for the Web will be one particular focus of research and development. Corporations will also begin to develop "digital nervous systems," that is, high-speed internal networks that upgrade in a nearly automatic fashion.

Not all technology is on a bright and shining path, however. Digital photography still needs to be improved, and the printing and communications technology required to support digital photography still needs to be developed. This could take another five years, Gates said.

Middle-tier computer manufacturers will face an uncertain future. "The mid-tier ASTs are going to have a tough time. The top four are likely to gain share," he said. Nonetheless, he added that more deals like the acquisition of Digital Equipment by Compaq Computer do not appear to be on the horizon.

Gates also said Windows 98 will be released so that computer vendors can include the new operating systems in their boxes for the second half of the year.

As with recent Microsoft presentations, gag videos occupied the center of the presentation. Gates not only screened the parody of the Dah-dah-dah Volkswagen TV ad again, but also rolled out some new material. Richard Simmons comforted a woman who could not load her printer driver. In another vignette, Martha Stewart told people that they could make Christmas ornaments out of outdated 16-bit processors.

"Symmetric multiprocessing, now that is a very good thing," Stewart told the crowd.

 

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