(continued from previous page)

I'll have to read a lot of books and go out and do a lot of visits to play the right role in terms of strategy making and education.

Then you have new areas like agriculture where I'm just amazed, you know, the way seeds work and how they can be improved. I didn't even understand fertilizer. I mean, 10 years ago, if you asked me, you know, how do you make fertilizer, I would have given you this vague thing about nitrogen, but I didn't understand where it is, why it costs money, how you apply it, how much of it drains away, could it be put in something where most of it doesn't drain away, so you don't need as much. Anyway, there are some really brilliant things that are coming along in that area, where you need far less of it.

And things like cold chain (with) vaccines--what is the gating factor once you have a vaccine of actually getting it out to rural areas? It's the fact that they have to be in refrigerators the whole way, and if they ever get too cold they freeze and they're bad, and if they ever get too warm they denature and they're bad. A lot of these new vaccines we're making unfortunately are quite large, and so the refrigerator capacity of this delivery chain is nowhere near adequate for the new things that we want to put into it. So, thinking through, OK, do you do better refrigerators, do you do these super Thermos things. The answer is super Thermos things, you know, but how do you design those and what are the particular needs of developing countries. So, there's a lot of technologies, but if you had to pick one, it would be immunology.

industry response
Thanks for the memories

Technology insiders say their goodbyes as Gates steps down.

You mentioned early on there was this question of would IBM be the IBM of the software world, and it's still an important company but it doesn't occupy the role that it did. A lot is written that Microsoft is going to find itself in a similar bind?
Gates: Someday they will write that Microsoft has peaked, and someday they will be right. They said we didn't understand server operating systems, and that only Sun Microsystems with Unix understood those things, and I can show you the articles. They never do follow-up articles; I don't understand why. When they predict my death, they never reincarnate me.

But it's an appropriate dialogue, yes. There is a question, whenever something new happens in the industry: will the leader be agile enough to take what they're good at and this new thing, and bring them together or not? That's always fair game.

People always tend to underestimate the assets that the leader has. I mean, how many times was it predicted that IBM would do well in various things? Well, heck, they did well in a lot of things for a long time.

So, our core skill set is software. Software on phones is a lot the same, software in TV sets is a lot the same, software in video games is a lot the same. We've always done software for a huge variety of devices.

Google is a very strong competitor, and so people will enjoy watching whether they can be challenged. The world will be better off if they are challenged effectively, and I think there's only one company left in terms of the depth and breadth and staying power that you need (to) really give them a big challenge.

Which is the bigger challenge? Is it Google the company because of their approach and their ambition and their assets and their talent, or is it the changes in the economics that's come with search and advertising and changes in software?
Gates: The economics haven't changed. I mean, the economics of software are very simple. Most of the profitability is made up out of making businesses more efficient. We saw operating systems and we saw productivity software, and those are not advertising-driven things. The online is changing some of how you deliver e-mail and collaboration and those things, but we've been doing that off of servers, we have great cloud stuff that Ray (Ozzie) is driving. So, it's not really the economics.

The consumer side has always been you weren't going to make a ton of money there, but you could get great exposure.

So, the business dynamic is very much the same, and the amount we can save--if you think of our economic impact, by making a worker have that intelligent whiteboard and intelligent desk and be able to look at business sales trends and look at what product you should buy, how do you work with your colleague in another country, improving those things. That's the huge impact of software in these next 10 years, not whether ads gleam on the left-hand side of your computer.

The breakthroughs have to do with natural user interface, data mining. Taking Office to the next level, that's way more impactful than anything about search-based advertising. I mean, Microsoft fortunately can be involved in both of those.

Were you relieved or disappointed that Yahoo didn't go through?
Gates: Well, I've gotten a chance to help Steve (Ballmer) as he's worked this thing through. He feels very good about that he made an offer that if they, in an enthusiastic and timely and reasonable way, had responded to that in terms of, OK, let's get going, let's keep people on both sides and mesh them in the best ways and get the regulatory review under way, get that thing going; if they had embraced that thing, he and I would have been very happy with that. They didn't, and we're very happy with our standalone strategy.

So, I think it's kind of strange for people to say, oh, what a blow to us. Well, hey, we created an option that was out of our control whether or not they had the right timeliness, enthusiasm, reasonableness. That was completely in their control, that's fair. Well, it's between them and their shareholders whether that's fair, but we knew they had a choice to make, and they--during the relevant time frame they--in none of those three did they meet what would have made it make sense for us.

We have a good standalone strategy. It takes longer to get scale in terms of scale of advertising, end user share, but it's all predicated on brilliant innovation. You can't have a standalone strategy or a strategy that involves any acquisition unless you're going to have a search that in important respects people view as a better search. So, it starts with something that the world at large doesn't have to believe yet but we believe, which is that we can have something that's really fantastic and competes for consumers in. If you have that, even without the acquisition, that's a great thing. It's just how do you go and get the scale? It will take you longer.