Bill Gates: Microsoft Government Leaders Forum Europe 2006

BILL GATES: Well, good afternoon. It’s been a great conference in terms of the attendees and the key topics we’ve had a chance to address. I thought I’d talk a little bit about the fast changes in the technology that we’ll see in the years ahead, and some of the implications that that has.

The key drivers — the adoption of broadband, the miracle advances in the chips, the arrival of large, high-resolution screens for the high definition era — all of these are proceeding at very full speed, and it’s fantastic to see countries really looking at policies that include getting broadband down to lower cost, getting PCs into both schools and homes, and driving that as a very standard infrastructure.

One thing I think that’s important to recognize is that the revolutionary nature of using the Internet for voice communications and for video delivery really has just been touched. Many regulatory regimes don’t recognize that as voice moves over the Internet it’s going to be a very different product; it’s not just a substitute for the phone that we have today, although it certainly can do that. In terms of the quality of connection, the richness of determining how to connect, eliminating the need for phone numbers, the ability not just to connect up voice but connect up video, and even more importantly to connect up productivity so that you’re working together, collaborating on documents, browsing, and approving a presentation at a distance; these are really revolutionary changes in the communications market.

For video it’s not just a cheaper way of doing the broadcast video that we’ve had today, but it’s a way of giving people total choice over the video content they’re interested in, seeing it at any time, seeing any selection, even having it be personalized.

This revolution will touch business as the idea of how we do training, how we make available product information, how we communicate with our employees; all of those things will simply piggyback on the incredible investment in the Internet and the high volume software that Microsoft and others are providing.

In terms of the home experience for video means a change in how we think about advertising changing to be targeted, changing to be interactive, and it’s fascinating that this video application doesn’t require dramatically higher investments than what’s been put in for the typical data use of the Internet, but, in fact, some of the models that are being used in countries actually discourage this incremental investment to have full video capability because that investment has to be essentially passed over to others that sublease the network at a price that doesn’t reflect the money that’s been spent.

That means that this revolution in TV will actually be taking place at different speeds in different countries. It’s less a problem for business because business, there’s the rights model for competition in investment in terms of Internet connection to businesses, but it’s far more complex, and some regimes are not creating those incentives when we talk about connecting up to the home.

The digitization of all of our activities, the great thing about it is that the more you get involved in this, whether you’re initially drawn in for using it to pursue curiosity or to even play games or to find videos or to use music, whatever it is that draws you in, that encourages you to do more there, to do more shopping there, more scheduling, more learning, more of all your different activities that really count. And that’s led now to a rapid shift of advertising dollars into this medium, and yet we can say we’re just barely scratching the surface in terms of how we target those ads, how we make them rich, how we make sure that they’re delivered based on the local requirements of that user.

The shift of the advertising market is not only very dramatic, but it also gives us a funding model for a lot of activities that would not have been possible before. And so these bid networks where people come in, buy audiences, buy targets, those will be a commonsense way that advertising is done, very different than what we have today.

Let me focus on some basic activities in the knowledge economy, and how those can be made more efficient. I talked about the phone and getting rid of phone numbers and simply connecting up to a user essentially by picking them from a contact list or an e-mail name list. Actually, in some cases you’ll just have pictures of people and point there, but the fundamental idea is that you won’t have a special string of numbers, and you won’t have to think about which phone the person has, because their presence information will be registered with a software service, and so the ability to find them whether they’re at home, whether they’re on the road with a particular mobile phone, at some office that they’re in, all of those things can be handled by the software.

In fact, the logic for whether that person wants to be interrupted or not will be based on identifying who the caller is, understanding what based on their schedule their activity is, and making that a very straightforward decision that depending on who it is they get connected, they get automatically scheduled for a nearby time, they get information about what you’re doing; that is not every caller getting exactly the same thing, but it all being based on exactly what group you’re in and the caller ID that comes out of that connection.

Today, when we think about electronic mail, it’s a very separate thing from voicemail, voicemail systems are somewhat inefficient, and yet even this year the products that we come out with will unify these two ideas so that as you are replying to an e-mail, if you’ve got your phone it will be a very accepted thing to just simply dictate information into the phone, and that will show up for the user just like their normal e-mail. So there is a complete interchange, you’ll be able to call up with your phone and have text to speech tell you about your messages, or you’ll able to receive the voice messages, along with those text messages.

Even more important is the way we’ll look at letting people work together. Today, often people are reluctant to use electronic mail because as soon as you use that, the ability to keep the information to a small group goes away, because it’s so easy for it to be forwarded, there’s no way to track and audit exactly where the information is flowing. Advances in e-mail coming out this year from us will actually make that a built-in feature so that when you start an e-mail you can say is this just for our financial executives, is this just for employees, is it for people who work on a certain project, or is it something that can be passed along without any restriction whatsoever. You can also indicate that you want to keep track of how that mail is forwarded and how that mail is used, and the recipient will be aware of that.

Likewise, getting e-mail onto phone devices, today that requires adding servers and getting special devices to have that e-mail be protected and kept up to date. Again, that’s something that will just be built-in, all the standard devices will give the option of being able to control who sees that e-mail, being able to back up that e-mail, even when it’s on the phone.

And so there’s a theme here of instead of the software thinking about a single device at a time, rather thinking about the user and how they work across those devices, and simply using software and the Internet to make sure that the files or contacts or schedule or e-mail shows up on every one of those devices in a very automatic way, without the user having to take a lot of effort in pulling those things together.

The biggest hole that we’ve had in terms of how people work together is in this area of collaboration. Today, people either use electronic mail or they use Web sites to collaborate as a group. E-mail is good because it can reach everybody, but then when you want to go back and forth quite a bit, some people more interested in every change than others, and if it’s a rich set of information with some structure, e-mail with lots and lots of attachments is clearly an inferior way to do that.

What we need is the ability for an individual, very easily without contacting the IT department, to essentially create a Web site, and as they do that to decide, based on a set of templates, exactly what type of Web site it would be. You may have heard people talk about blogs and wikis as things that are flourishing on the Internet; those are ways that lots of people can contribute and comment on things, you can edit different things, see who is agreeing or disagreeing, and they’re wonderful bottom’s up tools. But none of those have been connected into the IT infrastructure in terms of auditing information flow, backing it up. And so as we take and build a single point of collaboration software, which in our case we call SharePoint, it will have every one of these templates built in, templates for all the kind of rich interaction that you want for a group type environment. Every process within the business, a review process, a sales analysis process, introducing a new product, tracking a project, all of those will have templates that can be edited on a very individual basis.

And so it’s a big change from just saying that the only standard thing that workers know and take for granted is the office individual techniques; now many of these collaborative techniques and the interface there will also be sort of a commonsense thing, the building block that you start with, and then take the different roles in your company, the different activities, and build things around those.

The costs that can be saved as you do training with video there, quizzing there as you build up the idea of quizzing the users and testing their knowledge, all of those things are a substantial advance over just being able to do that on a face-to-face basis.

There are many investments that need to be done for this. I mentioned the investment in the infrastructure to get the video capability out, not only to businesses, to the homes. There’s a lot of ongoing investment that we’re doing in areas like security and auditing so that the IT overhead to provide those things can be reduced substantially. The basic view is that as those things are simplified, the money that’s saved can be put into developing these templates, developing these things that really relate to the activities within the company specifically, and not just managing the infrastructure that’s similar enough inside companies that we ought to have software elements that can do that in a very, very automated way. We’ve done that with things like updating, we’re doing that with things like monitoring, and so rapid progress that looks at the personnel costs and just takes the things that are the most microprocessor there.

There’s a lot of talk about allowing small- and medium-sized business to come in and participate in the use of technology, we’re very excited about that, that’s very important. It’s certainly a case where we see under utilization. Many of the partners we have that we work with country by country are actually themselves fairly small- or medium-sized businesses. In fact, as we do business in countries, every dollar of business that’s done with us, about seven dollars of those go with those partners, and not only them but their ability to take particular solution areas, particular industries and map these standard templates to those needs make them a very, very important part of the ecosystem. We need to energize them, make them more effective so that they’re reaching out to those businesses and able to take the complexity of the technology and make sure that that’s not a problem.

I’m sure that the global competitiveness that was a major theme at the World Economic Forum with all the improvements taking place in China and India will affect all of the work that we do here. In some ways it’s very much an opportunity as those countries offer low cost products and become bigger markets for products, but it’s also a challenge for all of us to renew the things that have allowed the high income countries to do as well as they have, to think about university education, particularly in the science and engineering and math where so much innovation arises, and also to think about broad education where the job market will change in a significant way.

Portugal is a great example of this where a number of the industries like the textile industry here will either have to move up the value chain or move into other areas, and that’s why partnerships like we have in terms of retraining the workers in that area are part of the key things that need to be done to prepare for the future.

So Microsoft is betting on these things, we’re encouraging countries to invest in their universities, we’re encouraging the incentive systems around intellectual property, including copyright protection and the idea of protecting innovation, and making it streamlined so that small and medium sized enterprise can participate in that, we’re pushing that forward.

And I think we’re seeing more receptivity; as people look at the Lisbon Agenda and say that there’s only less than five years remaining on that, I’ve been excited to see that it’s really come around to thinking about research and development, and education, centers of excellence, and apply that both to areas where Europe is very strong, and to the broad set of smaller companies and using that as the way that moving ahead, doing the job creation that will meet the needs of tomorrow, that that can be pulled together.

This conference has been great for me in terms of the meetings I’ve had to learn about what people are seeing, what they’re expecting Microsoft to do, and I have to say I’ve come away with a very optimistic view that the embrace of the investments, whether it’s infrastructure or education or the new cooperation to build these e-government systems, these are coming together at an even faster pace than I would have expected. And so I think a lot of people are underestimating these advances, particularly a lot of the things going on in Europe, and we’re very pleased to work in partnership with so many of you to help drive these things at full speed. So we thank you for coming, and with that I’ll turn it over to Q&A. Thank you. (Applause.)

JAN MUEHLFEIT: Thank you, Bill. Thank you, Bill, very much. And with that, we’re opening the Q&A session. If we have a question from the audience, if you can raise your hand? No, we have some pre-submitted questions, so we’ll wait.

Bill, there was kind of the bunch of the questions around really that the European economic success depends very much on how we will drive efficiencies within the government. So the question was what is Microsoft doing to provide a roadmap to the governments to improve the delivery of the public services and really make government more efficient and effective through the technology?

BILL GATES: Well, there’s no doubt that government services are not subject to the same sort of competitive dynamic that businesses are, and yet as you say, it’s such a high percentage of the GDP goes into these government activities that when we think of competitiveness we have to bring a sense of comparison, a sense of measurement and excellence to that, and I think this kind of benchmarking is very, very important. After all, government, it’s not just the percentage of the economic resources that are commanded there, but often the kind of structures that encourage creating a new business or creating a lot of overhead for that, it’s strictly in the hands of the government.

There’s an initiative here in Portugal where they’ve decided you’re going to take less than an hour, about an hour to create a business. That’s down from literally months that it would have taken in the past. It’s a completely online process, there’s no paperwork involved.

I do think this sense of competition between governments about who gets recognized for doing good e-government work is one of the positive dynamics that we can capture, and the EU from time to time has done contests, done ratings, and I think we should absolutely carry that forward.

The ability to take a good e-government project in one location and apply it another location is extremely high, and so there’s no reason why the best practice and the average practice should be as far apart as it is, and that’s one thing where we see a role for ourselves is to highlight some of those best practices, and be able to highlight is it governmental policies, political decisions that have to be made to get rid of that.

I’d still say there’s a strong correlation that the smaller a government is, the easier it is to do e-government, because getting the departments to work together, getting the public infrastructure of what are the kiosks, how do you have those represent all the services in a way the citizen understands instead of the way the government might be organized, it just happens on a much better basis. There are extreme examples of that, places like Ireland and Singapore that have done particularly well, and then places like the United States where there are some good things that have been done, but relative to the technology adoption that you usually see where in businesses of all sizes the U.S., our universities or even schools, the U.S. is usually very much out in front on that, and e-government is sort of in the middle of the pack, with some success stories but a lot of things that are lagging behind, and it’s just the size seems to work against fast movement.

JAN MUEHLFEIT: Do we have some question from the audience? Don’t be shy; show the European competitiveness here. (Laughter.) Here we go; please.

QUESTION: Hello. I’d be interested in your thoughts about the citizen perspective on the use of e-government services. There’s kind of been a theme of citizens being a bit nervous, a bit wary of these government services. As the next generation comes through that just breathes technology, do you think it will suddenly change from being government pushing services to citizens pulling services?

BILL GATES: Well, I think we’ll always see a mix of those things. The citizen that has comfort with a Windows machine, can use a browser, they’re obviously advantaged in terms of being able to find these things and use them. And so it’s very important for governments to think about how citizens that don’t have that, how they’re going to have either the support or the training or go to service centers to get those equivalent things.

The ideal is to eventually eliminate the non-electronic ways of doing things by making sure that as you go into a service center somebody guides you through doing it in the automatic way or simply that you make it so simple, so pervasive that everybody is going to work that way.

Typically what’s happened is that when it comes to dealing with businesses, the idea of mandating a digital ID number and digital filing for, say, VAT payments, the interface with business and the desire of business to work efficiently, even small businesses, is such that many countries, more in Asia I’d say, but many countries have gone to 100 percent digital as they interface with businesses.

As you talk about citizens, certain systems, if you get to the extreme, say, voting systems always have to be extremely friendly, even to the non-technical user, and so naturally you see more conservatism in terms of how those things are done.

What citizens really need to hear are the success stories about how government employees have been deployed to more value-added services, that they need see the turnaround times being reduced, and that’s almost a marketing story that each government has to get out there and set the expectations right and then be willing to be benchmarked by statistics.

JAN MUEHLFEIT: Are there some questions from the audience?

Bill, you mentioned during the ministerial breakfast this morning the topic of blogging. So the question is recently there has been a call for Internet companies to take a stance on censorship requests from the government. What is Microsoft’s current position and policy, and how does this impact users around the world?

BILL GATES: Yeah, I think many of you heard Brad Smith take this on very directly, because it’s an important issue, both for Microsoft and for the industry. It’s important to note that the availability of Internet technologies, the ability to e-mail, search, browse, these have been incredible factors in opening up societies. The ability to really withhold information no longer exists, even in the case where somebody is asking for things to be blocked; the ability to send e-mail, to encrypt things, you may be able to take a very visible Web site and say that something shouldn’t be there, but if there’s a desire by the population to know something, it’s on a peer-to-peer or e-mail type basis, it’s going to get out very broadly.

I remember it was about four or five years ago where Singapore was faced with this dilemma, that they’re a very high-end economy, and yet they’ve always believed that controlling what their citizens are exposed to was part of their job to maintain a distinct set of values. And so with the Internet, they were sort of faced with the contradiction between their position as the highest productivity location in the region and sort of the parental position they felt in terms of controlling information access. And they decided that they would simply have to make the Internet be completely open, and then perhaps in education or through other techniques offset whatever confusion that broad availability of information might create. And obviously that was the right decision because today we know the Internet is dramatically more important than even they would have assumed it was back at that time.

So in Microsoft this idea of free e-mail where you can go and get an e-mail account, sometimes it’s an e-mail account you identify with your name, sometimes it’s an e-mail account you can create anonymously, that’s really fostered a lot of communication. On the Internet there are cases where people should be allowed to be anonymous, there are other forums where you want to be able to know who somebody is, and so that the type of statements made there can be tracked back and have somebody responsible for the statements that are made. Both forums make sense, and fortunately the technology can support that kind of mixture.

Where we are faced with a government asking us to take something down, we only do that where’s there’s an absolute clear legal requirement to do so. We only do that in the country where we’ve been asked to do that. We leave a notice of what happened and why so that people have that capability. And having done that, we continue to operate the broad service that we offer. And so I think there’s basically a view that withdrawing the service altogether would be more of a negative than continuing and doing this compliance.

As you see actually the rules of different countries vary quite a bit, you see variances in terms of what people might consider a copyright violation or banned political speech, say Nazi with Germany, Nazi speech versus the U.S. where that’s allowed, and these are varying rules, and so we have to respect the rules of the individual countries as we create these filters upon legal requests.

JAN MUEHLFEIT: I’m not giving up. Ah, there are some questions. Please.

QUESTION: Well, you just mentioned the identity problem in the Internet, the possibility to be completely anonymous, but on the other hand when you talk about e-government it’s important to identify who is the source of the information. Where do you position Microsoft in this area?

BILL GATES: Well, e-government is a great example where you want in some cases anonymous contribution and in some cases you want to know who the person is. If they want to know their tax status, they’d better identify who they are in a reliable way because that’s controlled information. If they’re expressing an opinion where you’re trying to take a poll and really see whose opinion, how many people think one thing versus another, even if it’s not a vote, you’d want the people to be identified so that you’re making sure people aren’t outside the group that you’re polling and that people are only indicating their opinion once, and so it’s actually very representative.

But I also think when the government is asking for feedback on their political policies, on their e-government systems, it’s absolutely appropriate to allow someone to anonymously send in something that might be very unfriendly and have people look at that and say objectively is that true or not true. It’s possible it will be just kind of nonsense, but fine, allowing people to speak up in that way is very, very important.

JAN MUEHLFEIT: I think we have another question here.

QUESTION: Hi, Bill. How do you compare the adoption of technology in Europe versus the United States in terms of government? Where is the difference, if there is any?

BILL GATES: Well, government, as I said, is a tough one because in the United States we have many government departments that are somewhat independent of each other, we have state level and then we have county level and then we have city level. And in every one of those cases I can give you examples where I think the United States is the best in the world, and I can give you cases where they’ve done nothing. And so it doesn’t come together as a whole in quite the way that a system that’s really somebody has stepped back and thought about it across the levels and the different departments.

The United States continues to be the best in business use of Internet technology and in education. For example, I still find it amazing that you can go to universities outside the United States and they have a paper course catalogue, the dormitories aren’t equipped with broadband, the entire campus doesn’t have Wi-Fi, people are turning in things on a paper basis, the notes for the lectures aren’t there; it’s just not as much — and I’m talking about across all subject areas, not just the computer science department. The sort of Internet digitization of university teaching, including the videos online, every classroom with big screens that connect up and browse the Internet, that happened far more rapidly in the U.S. even five years ago, and it still hasn’t become kind of the commonsense in Europe that that’s the way a world class educational institution does things.

In fact, in the United States we’re already seeing specialization where many colleges that can’t give lectures as good as the top ones actually just use the Internet resources for the basic lectures, and then they have their people do study groups that are interactive, smaller scale, and so they’re really getting the best out of what the big universities do and the kind of hands-on thing they get to focus their resources there. So already we’re starting to see a restructuring of education and more specialization that you wouldn’t have seen there before. So that’s one where I can say there’s still a lesson to be learned.

If you were going to take a tour of good e-government activities, you’d go to Northern Europe and see quite a few good things, you’d go to some of the small Asian countries and see some good things, and then it would be more one project in an area.

The idea of a single ID card that’s a smart card that can protect your privacy and works across all these things, there are governments like Belgium and others that are moving down that implementation state, but it’s amazing to me today, there’s not a single government in the world that’s really fully done that, done that right, and yet it would create quite a bit of efficiency, and there are quite a few governments that are talking about doing it, at least have a plan on paper to move forward with that, or to get it to all the applications, all the citizens.

JAN MUEHLFEIT: Thank you. Ladies and gentlemen, if there is one last question, as we are running over the time, please.

QUESTION: While you’re on this global picture, Bill, can you step back just one more pace maybe and just give us a big of insight about innovation as a concept, the DNA of innovation? Because you’ve already mentioned huge differences even in the territories you’ve talked about, but across the globe there is a very, very strange mosaic, isn’t there, of innovation of cultures and non-innovation of cultures. Do you have any thoughts on that?

BILL GATES: Yeah, actually I would disagree; I don’t know any culture that’s non-innovational. I think there are cultures where they haven’t invested in their top universities as well as they should, they haven’t had the salaries there to keep the most capable people in the country to stay instead of going somewhere else.

But sort of the most famous statement about non-innovation was this statement that some people made that the Japanese couldn’t write software. Well, at the time that people were saying that, by far the most innovative games, videogames that totally dominated the world market, were all being created in Japan. And you would go and meet with these people and they were as wacky and as innovative as anybody that you’ve ever met.

And if you look at what Toyota has done in terms of thinking through the work process, how their engineers spend time, what counts, it’s a very disciplined kind of innovation, it’s not this wacky, totally off the wall type innovation, which has its place, but they’ve done an absolutely fantastic job of doing that innovation.

And take India and China; of the innovations being done in the United States today, if you walked through the halls of Hewlett-Packard or Intel or Microsoft, you will find either a third or more — actually, in Intel’s case quite a bit more of the people there are people from India or China. And if you go to the university departments in computer science, engineering and math, Asians are well over half of the people that are there. And particularly if you look at the trends in terms of who are getting science, math, and engineering degrees, Europe is shrinking, the U.S. is shrinking, and India and China are growing.

And so definitely we should accuse them of being the future innovation cultures, because innovation, yes, it’s got all these different aspects, but the really big, fundamental innovations have always come from, will always come from science-based advances, breakthroughs in energy, breakthroughs for global warming, breakthroughs in materials science, breakthroughs in car engine design, breakthroughs in medicine; all of these things are very, very scientific. And I do think that there’s a real imbalance now in terms of how attractive or exciting many of the developed economies have made those activities.

We have research centers all over the world, and I really can’t say there’s any country or culture or something that is not willing to come in and do new and innovative things. There are certainly governmental structures or investment policies that drive those people away or don’t give them the optimum opportunity to do those things, but I’d say that’s almost certainly the innate ability is identical in all cultures.

JAN MUEHLFEIT: Bill, with that, thanks very much for this session. (Applause.)

END