Newsmaker: Gates explains why Microsoft needs Yahoo

newsmaker PALO ALTO, Calif.--For a man a few months away from leaving his job, Bill Gates has a lot on his mind.

The Microsoft chairman is looking ahead to the time later this year when he will be focused full-time on fighting disease and poverty, while also trying to do everything he can to help his software company in its battle against Google. These days, that includes trying to sell Microsoft's $40 billion plus offer for Yahoo, not only to Wall Street, but also to all those Yahoo folks that Gates has his eye on.

Gates spoke to CNET News.com on Tuesday about how Microsoft needs Yahoo's engineering talent, how Windows 7 will make the keyboard and mouse less essential, though far from obsolete, and what journalism will look like in the future.

Q: You mentioned in some of the phone interviews earlier today that Microsoft isn't really looking to up its bid for Yahoo. I was hoping you might be to talk about why acquiring Yahoo is important, what is it that they have that they could bring to Microsoft? And then as a follow-up, do you think the company is ready to go the proxy fight route? Is that what's needed to get the deal in front of shareholders?
Gates: We have a strategy for competing in the search space that Google dominates today, that we'll pursue that we had before we made the Yahoo offer, and that we can pursue without that. It involves breakthrough engineering. We think that the combination with Yahoo would accelerate things in a very exciting way, because they do have great engineers, they have done a lot of great work. So, if you combine their work and our work, the speed at which you can innovate and get things done is just dramatically more rapid. So, it's really about the people there that want to join in and create a better search, better portal for a very broad set of customers. That's the vision that's behind saying, hey, wouldn't this be a great combination.

So, it's not a scale question but more a people question?
Gates: With people, you get scale in terms of the number of brilliant engineers and the speed of innovation that they're really driving. If you take mobile and video and neat new things for advertisers with targeting, and just the basic search algorithms, and the kind of computational platform we're building that we're using for search and we're going to use for cloud computing generally, the amount of computer science it's taken to do that is phenomenal. As you get more scale of engineering, you can just pursue that agenda more rapidly.

It's really about the people there that want to join in and create a better search, better portal for a very broad set of customers. That's the vision that's behind saying, hey, wouldn't this be a great combination.

So, yes, the advertisers and the number of end users is good, but we'd put the people in the engineering as the key thing that we say, yes, what can we get when we put their brilliant people and our brilliant people together.

Since you mentioned the people, how big of an issue do you think the cultural difference is? Because, I mean, obviously the key to retaining people is making sure that they actually want to work for Microsoft. Do you think there are significant cultural differences?
Gates: We've had an extremely successful group here in Silicon Valley that's done brilliant product work like Mediaroom and PowerPoint, and we have a research lab down here. Yahoo wants to do breakthrough software. The engineers there want to compete very effectively against Google or any other thing that comes along. So, I don't think there's really a different culture. If Yahoo had gone the direction of just being a media company, and not said that software innovation was important to them, then, no, there wouldn't be that intersection, because we're about breakthrough software. And that's where you can take search, portal, and these other things, and really bring them to a whole new level.

(Yahoo CEO) Jerry Yang, to his credit, has kept a lot of very top engineers that have just been doing their work and improving those things, and that's why we see the combination as so powerful.

One of the things that you've been talking a lot about is this idea of the new digital decade. What are some of the things that we can't do today that we're going to be able to do in the coming years through digital technology?
Gates: Well, everything is evolutionary in that things that start with a few people, get very widespread, and then eventually at least among younger people in the more developed markets just become common sense that that's the way things get done.

A cell phone that does photography; that's easy for your photos to just be shared and available. A cell phone that you can talk to and it will find the information that you're interested in. The next 10 years will have a lot of those (things) where they're not very commonplace today. If you look hard, you could find a little bit of location-based software or a little bit of interactive TV. But over a period of a decade, these increases become dramatic enough that it's a qualitative change, that you almost laugh at why did we have physical film, why did we have TV that was very channel-oriented.

There are a lot of these things about books, and note-taking, and TV watching that are basically unchanged by the digital revolution today, even though there are some avant-garde users. Whereas 10 years from now, the mainstream users will act like, well, of course, it was always supposed to be this way.

More Newsmakers

[t8]

Not a good mix

Yahoo is open source and Microsoft is proprietary.

Not a good mix.

[goosgog]

Microsoft/Yahoo

Remember all those OIL COMPANIES that competed with one another, gave you a choice and kept the price within reason. Now Look what's happened, The Big Three and the price per barrel is out of site and will soon be over $100. a barrel.We once had ANTI-TRUST it was just that! Long since gone!!
If you think this deal would be good....all I can say is too bad Sucker, cause your gonna regret it !

[xcgeek]

Expensive for People

45B for Yahoo is a bit expensive if all you want is some engineers. They could be individually bought off for a fraction of that price.

[Cauthon]

Gates answers a question or two about Yahoo... the rest is unrelated

What happened with this article? I thought it was about Microsoft and Yahoo... who cares about schools using Tablet PC and natural language in Vista?

[tundraboy]

This is how Microsoft will lose all those great Yahoo engineers:

Ballmer: Welcome, welcome to all Yahoo engineers. We've got a great retention package for you and we're waiting for brilliant new ideas.

Ex-Yahoo Microsoftie: Wonderful. I've been working on this exciting new internet application that . . .

B: Wait, wait. This idea of yours, will it run exclusively on Windows servers? Is it optimized solely for Windows PCs? Will it protect and preserve our Windows and Office monopoly?

E-Y M: Well actually no because frankly it leapfrogs the Windows infrastructure, which is frankly kind of old technology.

B: Oops, on second thought your idea sucks. Forget about it. If it doesn't protect and preserve the Windows-Office monopoly it's not going to see the light of day.

E-Y M: Can you tell me again what highway goes from Redmond to Mountain View?

[bartszyszka]

Make engineers want to come to Microsoft

This is so ridiculous. If Microsoft is after the engineers, why not
make Microsoft a place where people want to work instead of
stealing them from another company? After Yahoo has turned them
down and everyone's pretty much in agreement that they don't
want to work for Microsoft, how could any good come out of
Microsoft taking over the company so aggressively?

[wildchild_plasma_gyro]

Caping the billionare

What If you capped Billionares for two resons.

I was thinking what about 14 billion and increased year on year decided by inflation.

1) To Create a higher distribution of billionares and to work a higher representative group.

2) to create a stronger Kasian Bilionare market (Especially usful when considering the amount of managment minds needed to solve Earth affairs and make the future space market work properly not to mention to give a better stand point politically.

This way it could actually social capitalistlically work that infact Billionares had a strong but Fairer voice and Gained more Bang for there buck in an even more sustainable way.

Uncapping this leads to more potential for market inbalance and less balanace that could allow better bang for buck.

If you held everyone down at a couple of mill then you would risk falling into a burocratic nightmare and if you went down further than that you could risk having very low market dynamics indeed and less cultural spread.

So just as much as there should be a clever Minimum wage stratagy and good fair population control in the future we should consider Capping Fairly billionares but not in a way that would prevent good strong industrious minds from achieving good potential just to bolster dynamic strengh at that range to let more solutions occur in the world.

Either way the issue must be addressed and handled with care the last thing anyone need is a nanny or to great a market distortion or other poor Market equlibrium nightmares the last century of industrial revolution was far bad enough in those respects.

[wildchild_plasma_gyro]

Not just the Engineers there Mr Gates

MSN is and could be better for basic communications reliability and a technical solutions system.

Microosft the growing Software solutions group.

These two ventures are heavily dependent on very strong engineering communities.

Yes indeed somthing like yahoo or google need a damn good Engineering communty and Backbone but it Needs highly lingustically trained experts in everything and Managers who are Masters in Nash Equilibrium alwys looking to socially capitalise and balance the professional load.

It's not the same.
Infact if MSN dosent support technical solutions well in the future it could be to the detriment of the wider Engineering community.
And if Microsoft dosent push at the Heels of the software community with others at their heels it could stiffle progress an cause the dreded world of generic products and Burocracy(I can hear the Jaw theme tune in my head for some reason).

Anyway my point you need more than just those very important engineers for that one mr gates.

[Joe Real]

Refresh my memories please!

What original "breakthroughs" did Microsoft originally made?

Microsoft is successful at packaging and marketing the works of others via its monopolistic powers, but breakthroughs? There's none that are have really helped mankind.

Microsoft's cancer-like tendrils that contaminates mankind is the only breakthrough that it made.

[Ted Miller]

The questions we would liked to have asked...

1. We have noticed many of or CNet readers are not happy with Vista (except for a few MS bootlickers). What do you thik of that.

2 It has been noted many home users are not able to function well with Vista. What do you thik of that?

3. Many have noticed that much software does not work well with Vista but works excellant with XP. What is your reply to that?

4. Do you use Vista (honestly now) on your home computers?

5. What is the dominent operating system being used at Microsoft?

6 If it is Vista, how are the employees putting up with the abuse?

I could go on and on, but I am sure you got the drift

6.

[JCPayne]

Would YOU rather "MSN it" or "Google it"????

I'll stick to "Googling" something.... Sorry gates.

[bdennis410]

Buggy whips

Mr. Gates' vision about the future of software, and hardware, is admirable. However, his offering regarding the classroom setting and hardware/software potential may be misdirected.
Why? Because modern teaching, like medicine, is still a people-based enterprise when so much of the process could be computer-assisted, even directed.
If teaching is defined as conveying a skill set of facts, and then learning applications of those facts; math, reading, then a computer is much more able to convey a programmed learning environment that moves students as fast as they are comfortable in going, doesn't tire or get angry at the process of correction, even motivation. An education environment designed around the technical and productive capability that the computer could deliver would be far and away the greatest advance possible. And then teachers could do the real job of teaching, helping students learn how to think; rational and reasonable thinking through the Socratesian-teacher process has everything to offer for children that we expect to be the leaders of the next generation. Our current system is focused on the wrong things, at the wrong time, even in the wrong place. Why couldn't peer networking, all live and in real time be part of the education day? Why can't we "wiki" our education process into real collaborative learning? Does it have to be in a classroom?
It's time for Education 2.0.
As for medicine, it's the same thing. We have the technological tools to enable medicine to absolutely leap forward in the health care arena; we're talking just adaptive processes, some good software, and a different mindset. The current drive towards centralized, personal medical records is an important part of the process. What precedes that record keeping and medical evaluation of what happens over time, historically, is more important.
How often do we evaluate our health? Could we do it daily with the right software-bio interface? When you get up in the morning would it be valuable for your system to record your blood pressure, temperature, heart rate and a hundred other things automatically? "Joe, your blood pressure continues to increase. It should be checked."
Could we do it monthly, every six months completely, top to bottom in a health diagnostic facility designed just for this purpose? I'd love to be able to walk through a computerized diagnostic scanner, have my blood, and eyes, and hearing checked through the automated process, get to the "checkout" desk, where Doctor Bill would advise me on the "state of health" I'm enjoying, and provide whatever information necessary regarding lifestyle choices.
Invasion of privacy? Driving force for hypochondriacs to get their health "fix"?
Maybe, but how about the other 99% that would appreciate the diagnostic and preventative care information that would offer?
And so much more would be aided by the efficiency that technology would offer. Computer-aided diagnostics in some experiments are already "right" over 95% of the time, and don't "miss" information and symptoms that generate a real diagnosis. Doctor's time should be reserved for the treatment process, the consultative process, the personal health care teaching process.
Health may be personal, but that doesn't mean it can't be efficient!
It's time for Medicine 2.0 as well.
Now we're talking real missions for computer technology!
NOW, we're starting to see what real societal improvement could look like!

[videography]

"The Age of Videography" & Monopoly

In OCT 1972 I wrote the seminal article describing the workflow of the emerging field of film style video making which I termed "videography" for "American Cinematographer" Magazine. Within months of publication thousands of independent video makers around the world began calling themselves videographers and the their field of occupation, videography. I knew the term was "hot" before publication and trademarked and copyrighted the word forming the original "Videography Company" in 1973 & Studios by 1976.

The company pioneered many basic workflows and techniques like "Ultimatte" "quad split" "non-linear video editing" and others. In 1975 Industrial Photography started a column called "videography". I wrote them a "cease and desist" letter. They responded by publishing Videography Magazine. I sued them and the judgment of the court came down to them proving first authorship, which we held hands down.

During discovery phase of the trial, the magazine's lawyers found one letter I had written to the Hollywood Reporter saying "videography is an important generic term". When the judge saw that it was a disaster for "Videography Studios. An out of court settlement was agreed upon for "chump change" and we faced an amorphous future.

The magazine flourished as it catered to the ever growing universe of "videographers". As PCs began to emerge and home VCRs, lazer discs, CDs, MTV, digital still camera, low priced camcorders etc. I realized that the videography had grown well beyond the sphere of the magazine spawning competition getting close to "googol" proportion. I gave the keys to the studio to my backers and withdrew into the realm of theory in 1982.

By 1986 I realized that videography meant something much broader than just "video making". Combining Latin video "knowing" with Greek "writing" it described the entire universe of bit map and vector based content production and distribution that included all things digital. I published a videography treatise which was reviewed by linguists and verified as reasonable. In 1996 the Miller Freeman Company, which by than owned the magazine published a book entitled "The Age of Videography". [generic usage]

I knew at that point that the grand confluence of digital communications technologies fit the into the purview of videography. To put it simply "Best Buy" stores are videography stores and the "cloud" around it.

So how does Google get away with using their tradename as a verb. [You can google "videography lab" using Yahoo search]. How come they get to work both the generic and commercial side of a word. Furthermore "googol" was a mathematical term of art as early as 1920 described as "10 to the hundredth power", a fact that is I am sure is not lost in Google's business plan.

A lot of people have given Microsoft a bum wrap for heavy handed competition, but Bill Gates has been consistent in his vision and usage of his trade name. His vision of taking on Google is not monopolistic IMO and the algorithms for search need to be more diverse or we will all be homogenized into a bunch of "vidiots". Yes, we own a blog called vidiots.us

If Microsoft sans Gates can withstand the "slings and arrows of outrageous fortune" that is coming soon, it will take engineering elegance on a par with Apple or Google which PCs and Microsoft have never achieved. It will take a leap in vision that I don't hear in his interview. I fear that Microsoft, with all it's assets and grand intentions will drop like a dinosaur absent such vision.

Godspeed to Gates and Company,

Bob Kiger
Videography Lab

[Mechie89]

Business talk

World understand this the situtation with yahoo and microsoft its this simple to me Like Microsoft yeah they have billions of dollars and the company is doing well kinda but everybody has a computer well almost everybody and every is looking at windows like its all the same so they are really not worried about which one they have so now microsoft is looking for a third option and why not anything is good for business but I came at them with my stuff but they said they were not taking any ideas but I called again to tell them that Its was better and going for a lot lessers but they still wouldn't budge I mean Its not just an idea when ppl make something original its an innovation to me so it so way I was kinda offended I mean I have it down tight so tight that if done right google and yahoo could team up but if the business plan is followed right at the end It will be standin on top. Now Im still willing to get this to microsoft even better Im willing to give them a bundle My innovation for the game systems which would dominate the gaming industry also.But if they do not take my offer Im willing to give it to anybody who's up for grabs.