Newsmaker: It's all about software, says Gates

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Does Warner's move to support Blu-ray exclusively mean that HD DVD is dead? If so, what does it mean for Microsoft? Obviously, you've been a big supporter of HD DVD.
Gates: The last studio announcement was Paramount going exclusively to HD DVD, so there's been some back-and-forth. It's kind of a classic format war. You have to think of what we are doing with our HD-interactive software as being actually neutral to any of these platforms.

The third platform, which I don't think anybody would dispute will win in the long run, is directly downloading over the Internet. That's the way Mediaroom TV works. That's the way Xbox Live works.

We've got more content with Disney and MGM coming onto that. It's been very, very successful. The convenience of not using media--we've seen that in music. iPod, Zune, your phone--that's how you are going to carry your music.

Your collection, it's up in the cloud. Any new device you get, it's there. That will happen for video too. The actual physical-format battle here isn't really, in some sense, that important. But getting the movies so you can access it through any broadband device--that's the future.

Would you do a Blu-ray add-on for Xbox?
Gates: Third parties can do peripherals for Xbox. Obviously, all of the different optical-drive technologies are supported in Windows. At the core, we are about software and making sure the HD activities get to critical mass.

I'm proud of the product...Vista will be a lot stronger in the next year. We're taking the lessons learned from that and building the next great version of Windows, which will be even better.

I was reading a bunch of "Biggest Tech Disappointments of the Year" stories, and Vista was on most of those lists. Do you think Vista has some work to do, in terms of convincing people it's something that they need?
Gates: Vista passed 100 million (units shipped), which is a pretty phenomenal number. A lot of people put it on their favorite-products-of-the-year (lists) because they are using neat new features that are there. We certainly got a lot of feedback about getting device drivers (out). There were some compatibility things we didn't handle well. Definitely, we're a lot smarter there.

I'm proud of the product. There are a lot of things that, as the year went on, we got the polish and the extra drivers out there. Vista will be a lot stronger in the next year. We're taking the lessons learned from that and building the next great version of Windows, which will be even better.

Is there an opportunity, where it's not tinkering with the OS, but rather making the overall platform more compelling?
Gates: There's none of that we haven't been in, way before there was an iLife. Microsoft Works goes back 15 years. The photo stuff in Windows just keeps getting better. We did a Windows Live release that had photo gallery (component). Movie Maker is a very strong product, and we are continuing to invest in that.

Related blog
Gates on OLPC

Not all of Gates' answers fit into Monday's Newsmaker piece. Here are a few more.

Can we package it up so it's a clearer message around Live? I think definitely, there's things to do there, but having those neat scenarios be part of what you just get with a PC, having that be clear--I think that's important for the consumer market.

It seems like Windows Live has become the primary vehicle for that. Is that true?
Gates: (For) most of those experiences, because you want those photos online, a lot of the innovation will be in Windows Live. Some things like Movie Maker will stay as Windows client things. But Live is the center of attention. That's a product we will update in a pretty dramatic way on something like a yearly basis.

It seems the notion of Media Center specifically as a way of getting content doesn't seem to be a huge platform. Does merging the Media Center folks with the IPTV folks open the door for one platform?
Gates: Yes, we can bring those together. What you are going to see is that IPTV and Media Center have gotten to a size (such) that content people are doing unique things. Robbie (Bach, head of the Entertainment and Devices unit) is going to show some Nascar things, some Fox things. Interactivity and personalization really count.

Our deal with NBC on the Olympics is about taking video, and we'll offer that on general Internet PCs and other ways of getting that video. The idea of programming video and bringing in the interactive pieces--that's a vision we've had for a long time now. It's becoming reality, with Mediaroom with over 1 million (set-top boxes) and Media Center a bigger percentage of Windows than ever.

More Newsmakers

[Manhattan2]

Content is King. Software simply pushes content.

It is content that people seek. Software is simply a tool that delivers or captures content. There are a lot of companies out there with the creative talent to compete with Microsoft and Google. Just search for information coming from a company called Sensible Ventures and you will see where software and content is headed.

[stockyjoe]

true but

Even the greatest software or hardware means nothing if you dont have the right people that know how to properly promote it to Joe Q public.

Bill was brilliant at not just understanding tech or tech people, but understanding how to "promote" and grow that business to an advantage from its competitors.

Look at somebody like Digital Equipment Corporation with their mighty superior DEC Alpha. Why did they die and fizzle out? How did Novell succumb to NT?

Think about it.

[penguinista4]

True but content is also made up of software

True, software pushes content but content can also be software...like games, tools, digital animation and embedded software in a device (it is incorporated as part of content)

Regardless of whether it pushes content or is content, the key is value. As long as it provides value to whoever is using it.

[t8]

Software is becoming less relevant

All that matters is the browser and the services on the Web that you can access. What ever loads that browser is becoming less relevant.

Devises accessing web services enables devices to become smaller and services to become bigger, because you do not have a constraining device that tries to store and run everything, not to mention the time and money in keeping it safe and running.

I am afraid that Bill's head is truly in the clouds. If he were starting out now, he would be like Google and would realize that software is winding down, and web services are winding up.

But Bill has legacy products to protect, so he will always be the evangelist for software, but then that is a good reason as to why it is not worth listening to what he says. He is not talking true innovation, rather trying to get people to believe in something for his own benefit.

[jaytee0]

Web services are software

"All that matters is the browser and the services on the Web that you can access. What ever loads that browser is becoming less relevant."

You do realize that web services are SOFTWARE, right?

[voyager529]

I'm not convinced that this is the case

Yes, alot of content is now accessed through the web. But it seems that there is alot that doesn't work well in the cloud...

-A friend of mine lives in a semi-rural area. He's 15 minutes from wal-mart, but far enough away that the only broadband connection available is satellite dish DSL. Cable, telephone DSL, and fiber just aren't available in his area for now, and odds are that they won't be for a while, and if they are, they won't be at speeds capable of reliably delivering HD content.

-There will always be people like myself who prefer purchasing content on physical media. I've bought TV shows on iTunes and subscribe to Napster, but while both are wonderful for mobile use, home use is a different story. Apple TV experienced very limited success in the market; if downloading content was the way of the future, I'm sure that it would have done better, so I can't be alone.

-Downloading content relies on two critical components: reliable access to 'the cloud' to validate licensing (Gates' description of his vision sounds awfully like the DRM used in the PlaysForSure scheme, but centrally located and accesible across platforms). Ever have a hard drive crash? How long do you think it will take to restore the 3TB of content we'll all have if this takes off? days? weeks? months? most people seem to be able to bite the bullet of buying their favorite movie twice if they scratch the disk. Asking them to redownload everything in the event of a disk failure may be a bit more challenging.

-the concept of loading a disc into a player is more natural and makes sense to more people than aggregating content on their computers, especially older people.

-The content provided by media companies like NBC and Paramount provide a different entertainment experience than the experience PCs currently provide. PC entertainment is much more interactive. myspace/facebook/flikr/Crysis/The Sims....it's all interactive and is a result of the user's actions. TV/Movies/Music are not interactive; instead they are a means of one group of individuals (writers, actors, directors, etc.) telling a story to another group of individuals (the audience). because of this, it is natural for the means of accessing and manipulating the content to differ. I don't expect to provide feedback to the director when i'm watching a movie, just as going onto myspace and not having new messages or comments in a week can be disappointing.

-I'd be interested to see a study done on how many people habitually use Windows Live services (besides Onecare which is still software run on end user's machines). I'm sure that there are plenty of hotmail users, but how many 'live spaces' users are there? Live Writer? AFAIK, Livejournal, Myspace, and blogspot take care of that market. Live events? I still get invitations the old fashioned ways - mail and telephone (and the occasional text message). Live Messenger? I've found IM services to be more or less regional. My friend in the netherlands says that nearly all her friends use MSN. my german friends all use ICQ. all my american freinds use AIM. I don't know anyone who uses Live Messenger, although according to a CNet poll a few months back, there are plenty of them. Still, everyone I know that uses one IM client or another, regardless of service and platform, do so via installed software, not a browser.

-accessing the web via a mobile device will never be the same as using the web via a desktop or laptop. while the iphone and lg voyager both have wonderful mobile internet experiences, a sub-VGA screen will always be a sub-VGA screen, there's no changing that. the trend seems to be smaller devices with larger screens. This presents an inherent problem that the iphone seems to be decent at marrying, but still has drawbacks. Even putting aside the screen size issue, certain things just won't be the same on a mobile platform. ActiveX, Flash, and many other web technologies that enable rich content to function can't reliably and universally be supported on the mobile platform due to things like battery life, memory constraints, and the need for the phone to function like, well, a phone. Mobile devices can never provide the exact same experience that a desktop or laptop computer can, and both Microsoft and Apple need to understand this. To bring this full circle, there's still a need for third party applications for a mobile environment; the web can't always cut it. Let's say that you need driving directions through a known dead zone. How does everything depending on internet access help you?

-Privacy, hacking, phishing, pharming, government access. These are five issues with living in 'the cloud' that need no further elaboration.

Maybe i'm just old school and resistant to change. If I pay for content, I want some tangible means of accessing it. I prefer purchasing software on a disc. I prefer getting movies on DVD. I prefer full albums on CD (though I prefer individual tracks via download). I think that there will always be a market for content on a physical medium. Sorry Bill, I'll be the one to stand up and say that I don't think that the internet will ever 100% or even 90% replace traditional distribution methods of TV, movies, and music.

Joey

[Andy kaufman]

Software is still relevant

only now software will run inside of a web browser instead of an operating system.

Web services are provided by software that runs inside of a web browser. Software is therefore still relevant. Software now has to be written to run within browser standards instead of operating system standards.

Windows has become Windows Live, in which operating system features have evolved into web browser software features. What used to be native Windows programs, now become software that runs within a web browser and does the same things as their Windows native counterparts do.

[Dango517]

What? Nothing that is done in the virtual world is without software.

Nothing!

Some basics have been missed by someone.

Start here:

http://computer.howstuffworks.com/computer-programming-channel.htm

[penguinista4]

Re: Software is not less relevant

True, all that matters is browser to access services on the web but the truth is that all the services are powered by software and the services itself are software. Whether you access amazon, pandora, salesforce.com etc. they are services, like salesforce.com's motto: software as service.

Most people, techies included just want to get things done. So yeah, software as service makes sense but that is as it should be...

[ethana2]

Ubuntu, Jamendo

When you take the proprietary nature out of information, you can really see it soar. Gates doesn't understand that. It's not about software. It's about service. The only business that I'd bet on at this point in time is that of being an ISP.
...and that's about to really heat up with 700MHz and WiMax.

[jerrymerfeld]

Software + Services ?

I'd rather make this quick. Here's the link.

http://msdn2.microsoft.com/en-us/architecture/aa699384.aspx

[TOREY RAY]

Bill Gates at CES: The final keynote: Big Pimpin' w Jay-Z

Bill lovs his software but there is some thing else with loveing jay-z! very funny video
http://www.webcastr.com/videos/technology/bill-gates-at-ces-the-final-keynote-big-pimpin-w-jay-z.html

[mjonathan]

"It's about content" - duuuuhhh

Comments about "it's the content not the software" are all driven by the growth in what? Google, iPod, Facebook, YouTube, Wii, Flickr and the way you use them with your content right? But none of these products and services is unique - what MAKES them work for you, sometimes in your browser, the way you want - SOFTWARE knuckeheads! What would your music, videos, photos and social connections be without software - a pile of useless 1's and 0's that's what. Whether it's on the web server, the device or the PC - it IS software that makes the difference between useless and useful.

[Manhattan2]

If Bill wants to compete with Google he needs to own the data.

Search is worthless without a destination. That will be what hurts Google.
Software is worthless wihout data. That is why Bill Gates is wrong.
Data, as in knowledge is key. Content is data, images are data, news is data. Distributing this data with fancy applications is the easy part. Getting that data and being able to own that data. That is key and that is what Sensible Ventures does better than anyone. Ask Mitch Govansky.

[Andy kaufman]

Microsoft provides the software customers provide the data

The software keeps the data private, the customer owns the songs, the videos, the spreadsheets, the text documents and it is stored within a private area of the cloud that the customer can access from any device.

Except for data that has been published to the public or stored on web pages, anyone using the software can search that data. Google does not own the data that web sites have, they only index it via keywords like Yahoo, MSN, Altavista, etc do as well. The search engine is just another piece of software, it is a tool for searching data. For example, Google does not own stories on CNet, but you can search stories on CNet via Google or any other search engine that indexes web sites via key words. To say that Google owns the data on CNet's web site is false. CNet owns the data on CNet's web site, but allows the public to access that data.

I certainly doubt that customers want to share their own private data with the rest of the world, citing privacy. They own their own data, and should have control over who has access to it. Microsoft wants to store that data in a cloud, so the customer can access it from any device, be it an iPhone, or Zune, or Palm Pilot, or Mac or PC or even a video game console, the software should work the same on any device it runs on. I guess Bill Gates is stating that Microsoft has become Platform Agnostic, in which it doesn't matter anymore what Platform the software runs on, customers will have equal access to data no matter what platform the Microsoft software runs on.

[Guyfrom2007]

Big Companies cannot think of what we want

My experience working with big companies is that they are too much focused on making money out of products than what the consumer or the user wants.

Bill has good ideas but whether Microsoft can implement them is the moot question.

For example, I have created my own version of a Free Online operating system that runs from my Pen Drive.

Using freely available portable applications, I have managed to achieve what I have been waiting for a Google or Microsoft to deliver.

You can check out the demo on http://www.freeonlineos.com/

[maverick_nick]

Online OS?

I've heard people talk about online operating systems, but it doesn't make sense. It's either you don't understand the purpose of an operating system or you're using the wrong term. An OS is main supposed to bridge the hardware and software layers on a computer, amongst other things. How can software running on an operating system be called an operating system?

[maverick_nick]

The future is not entirely in the cloud

Your mobile device won't replace your PC. Your PC will become a mobile device. Essentially the PC will never die. It'll just get a whole lot smaller. The internet hasn't been designed to replace desktop applications, but to connect people all around the world. The web browser has been designed to replace desktop applications. Desktop applications were created to do what client/server applications couldn't. Remote connections will never be fast enough. Remote connections will never be personal enough. Applications that have rich user interactivity as well as high processor usage need to reside on the local device. Home servers will be globally accessable through seamless virtual private networks, and the residence of personal data and applications.

[Manhattan2]

We agree search views the data but anyone can write this software.

Selling and leasing data to make content legitimate is the next phase of the Internet. Yes software can search and users can provide data but owning the songs, images, and the copyrights is where the money is. Search engines simply help you find data. The data is the value. The clicks only work if the users get somewhere worthwhile or they will stop clicking and stop searching.

[RompStar_420]

and how is MS going to own that ?

How is anyone going to own the Data ? Google or Microsoft ? or anyone else ?

I run a photography web site, and all the photos are freaking mine!!! - not Googles' or Microosft's, but mine. Someone said in here that MS needs to own the data, please enlighten me as to how they will do that ?

[Manhattan2]

Microsoft & Google don't own the data. We do & you do. We just have more!

Sure your pictures are your pictures but we may already have taken those same pictures with our devices. No we are not in your studio but we are other places capturing as we go. The value is not necessarily in the image or photo; it is in the data that can be derived from that photo. Google is coming close to what we are doing but falls short. People are looking for legitimate content not just web software that links you to other links. Control and distribute the data and you have something worth coming back for.

[RompStar_420]

please clarify

What do you mean by, "we may already have taken those same pictures with out devices ?"

If I didn't give you permission to do that, how can you anyone ?

Data in some pictures is almost impossible to duplicate, some situations are too unique.

[guildin]

Hats off to Mr Gates

I have to give my regards and respect to Mr. Gates and what he has accomplished with Microsoft. He is a business professional and inspirations to up and comers like myself. A positive role models who's show, no matter how expensive they are, i would surely like to fill one day.
Jeremy lesser of both the evils and than some~~~

[Dango517]

A Tribute to Bill Gates

As Bill Gates moves into another phase of his life a moment might be taken out of each of our lives to consider his amazing achievements. Without The artful implementation of Windows the PC would have not achieved the prominence it holds today and the world would have been a very different place. I suspect a much lesser place. Having achieved this Bill again moved us forward with Microsoft's attention to the Internet. These two insights have transformed the world. Certainly Mr Gates has rivaled the achievements of Henry Ford and Thomas A. Edison. Only time will tell but perhaps he has out achieved them. Do enjoy your retirement Mr. Gates you have certainly earned it but let us hear about your hobbies if you would :) .

[stockyjoe]

Yes Google is big ...on share value not revenue

If you think about it, what does Google really have? They have their search hardware devices that dont really make up much in revenue. Yes they are the dominant search engine but just being a free search engine does not make you money. Their big money is Ad sense and advertising which is exactly what Bill mentioned. Google really isnt the revenue generating giant people seem to think they are. They just have the name for the search engine space and that name is driving investor interest, but if Google does not "up" their revenue to match that investor money people will pull out. They are trying to enter the software space with "android" and become dominant on cellphones.

[bbneo2]

Microsoft is becoming less relevant

All you need is a browser and good web applications/services.

Play catchup and copy again, Microsoft.

[Penguinisto]

When all you have is a hammer...

...every problem looks like a nail.

Thus explains why BillG is all about the software.

/P