Bill Gates: Japan—Windows Digital Lifestyle Consortium

Remarks by Bill Gates, Chairman, Microsoft Corporation
Tokyo, May 7, 2008

BILL GATES: Well, good afternoon. I’m very excited to be here to talk about the Windows PC and where it can go in the future, connecting to all the great innovations taking place. There’s a lot of milestones I think that are taking place now. It was about 30 years ago that I first got involved working with partners in Japan on helping to create the personal computer market. Kazuhiko Nishi came over and showed me a kit computer called the TK-80, and asked me if there was some way we could work together on the software and find some partners and, in fact, that led to some of the most important partnerships that Microsoft has anywhere in the world. In fact, the market here has always been a great leading edge market with some amazing things taking place. And it was one of the first countries that we established our subsidiary in.

One of the great challenges, of course, was establishing graphical user interface, and that was a challenge that we took on together. And, of course, today everybody accepts that as a very standard thing. In the photo here we have the occasion, it was 1986, where we went to a full subsidiary, and people like Mr. Furukawa, Mr. Hosogi were involved on our side, and many of you were already working with us very closely, and very supportive of that. That’s when we really started the pitch for graphics interface, a lot of special work that we needed to do, the machines weren’t quite powerful enough, but that was an incredible success and something that we can build on.

Another milestone that I think is a very important one is that it was 10 years ago when the Internet first really exploded. And so we’ve seen a lot of new ways that the personal computer is being used around the Internet. In fact, it’s fair to say the Internet hasn’t just had a big impact on the personal computer business, it’s changed the way we do business in every industry. But I think the opportunity for taking that Internet, together with the great hardware and software that we all do, and using it in new ways is more exciting today than it’s ever been. We have a lot of strengths that we build on. The Windows PC standard is definitely one of those. If we look at the size of the install base, it’s grown quite dramatically, now well over a billion machines. The original statement of Microsoft was, we wanted to have a personal computer on every desk and in every home. And so we’re not quite there, that would be more than six billion, but certainly in lots of countries, like Japan and the United States, we’re not too far away from that. And as we work together to make it more relevant, better performance, I think that original dream absolutely is still the vision that guides Microsoft and should guide the work that we do together.

Now, when we think about the Internet, of course, we’re thinking mostly about broadband connections. The dial-up connections were an important tactic to get things going, but the way that we really want to use not only images, but video and audio, and those things, requires the broadband connection. And amazing investments have been made in that. And so today we have over a quarter-billion households connected worldwide, and still a very sharp increase in this. Of course, we want to see that connection not just to every home, to schools, to libraries, pervasive in business, and then, of course, with the new data services, we want this kind of connection taking place wherever people go, and so you never have to give up the connection to the business data, electronic mail, the information that’s out there on the Internet.

In some ways, we’ve just scratched the surface of what’s possible with the Internet. There are some activities, like buying and selling stocks, or books, or travel, that have changed a bit, but some very fundamental things have not yet changed. The way e-government is done, still very much at the beginning. The way we think about education, you know, our textbooks are still very much on paper, and they’re not interactive, they’re not as up to date, or customizable as they should be. One role I see for the Windows PC in the future is that we want every student to have one, and so instead of carrying textbooks around, they can get that information through their Internet connection. In some ways that’s far superior, not just in terms of them knowing it as a tool, but the kind of learning they can have. Already if we think about the  if we compare a print encyclopedia to an online encyclopedia, it’s a very different thing in terms of the richness that’s there even though the online encyclopedia is so widely available. And so that will change, I think, in many areas.

Another great trend is, of course, now video is such a mainstream thing on the Internet, and one of the ways that’s being used is that the world’s top universities, all of them are putting their lectures out on the Internet for free. And so, for example, MIT, who started this, has a lot of the courses that I like to go up and watch, and learn. They have the tests and the homework. And so every student around the world is empowered with the world’s best teachers, and even some smaller colleges will just use those and focus their people on the study group instead of actually duplicating the lectures that their students can get through the Internet and get anytime, and so they can save that energy and do a better job at the laboratory or study parts, and the average quality is going up.

So much is still to be changed. If we think about healthcare, and the paperwork involved in that, and yet the need to have the data in a rich way, the Internet will play a big role there. Now, of course, when we talk about this digital lifestyle, we’re talking about all the empowerment that digital devices can provide. And the Windows PC fits in in an important way, but there are other devices that are also important. The mobile phone is really at the top of that list because it’s getting so powerful. And, of course, the kind of communications, and games, and social networking, and mapping, digital purchases you can do on that cell phone are getting better and better. And we’ll also have software running in the car, we’ll have software running in the TV set, and so we should think in terms of the user’s needs, and how we can make that as you move between these devices, if you want your calendar, if you want your alerts, if you want  if you’re interested in a certain sports team, how you only have to say that once and then which ever device you work with, even a new one you just bought, automatically your preferences are available on that device.

And so we use this term Digital Lifestyle to encompass all the different devices, knowing that there will be very rapid innovation in every one of those of things. For example, even though it hasn’t happened yet, I think that a lot of TV watching will move to be on the Internet. There’s issues with the content there, but the experience can be very superior because it can be more personalized and interactive, and even videos that not everybody wants to watch, your system by knowing your personal interests will go and find those, and make those available in your guide. And you could start to watch something in your living room, you could keep watching it on your portable Windows machine, you could watch the end of it on your mobile phone, and so that ought to be very simple to move back and forth. If you’re reading a news article, you might start reading it on the mobile phone, but if it’s long and complicated, you might mark it, and then when you get to the PC it would show up in a list, and so it would be very easy for you to go and do things there.

Most of the interesting scenarios involve moving back and forth. If you want to be notified of things, that’s great to be mobile, but the large screen that you have on the PC makes it play a unique role that’s complementary to all of the other devices. And so thinking about the mobile phone, and how that works with the PC is important. When I walk up to a PC, if I’m on the phone, I should be able to have the call, if it’s connected through the Internet, run on the PC, and then if the person on the other end has a large screen, we should be able to bring up documents and edit them together at the same time we’re talking with each other. And so even a phone call should be seamless moving onto the device that I want to work with. And so I think thinking through these scenarios, whether it’s TV, or reading, or digital curriculum, or healthcare records, e-government, every one of those we can make the PC even better as a tool for those scenarios. And through those joint investments make it clear what the innovation should be in these new types of PCs.

At the start of ten years ago, when we thought of the Windows PC, we mostly thought about creating documents. Microsoft Word, or spreadsheet in Excel, we didn’t really think about organizing your photos, we didn’t think about organizing your music. And yet now between the PC and the phone those are very mainstream things that people are doing. I think in the future this will expand. I think instead of just thinking of photos, we should think more broadly. We should think of memories. After all, when your kids are growing up, if they have various homework things, or messages they’ve sent you, or videos that you have, you would like to collect all of those things very easily in a way that it could never be lost, and that it’s easy to go back and find things in a very rich way. So instead of trying to have all those things physically, that they’re there in this digital memories capability.

That’s a great example where different software companies will do that in different ways. We need a lot of experimentation and competition, but I think eventually it will be common sense to say did you capture the memories of your children growing up, is it easy to go back and look at those through these digital services, and the answer will be, yes, of course, everybody does it that way.

The same way when we first said that music and photos would move to the PC, people thought, no, that could never be, it will always stay with the physical CD, or the physical film. Now we can say that even video on all these things about memories, and business information, are going to move into digital form. And having a large screen Windows device do that well is what’s going to enable it.

So that’s why we talk about the next 10 years as the second digital decade. And thinking broadly about how PC usage will change is an important thing for us to do together, because we need all the elements to come together. We need content, we need hardware and software, and we need that not only on the PC, but the other elements, as well. Even take software in the car, it should know what your favorite phone numbers are, who you call, so that it’s simple, it’s easy for you to just enunciate, and have voice recognition figure out who should be contacted.

One of the big changes in this second digital decade will be that instead of just using the keyboard and the mouse to interact, we’ll be interacting in a number of new ways. And I often call these, broadly, natural user interface. Now, many of you have been around the industry as we and others have been investing in speech recognition, and ink recognition, and touch screens and those things, and you probably see that now those are becoming really mature. The quality, the speed of the hardware is allowing those things to come to life.

A good example of this is that Microsoft took a Windows machine with a camera and created a table-like device we call Microsoft Surface. And today it’s still fairly expensive, but that will come down in price so that the desk in the office will be a surface, and you can touch documents, you can look at business data, expand on that. You’ve seen this in science fiction films, but in fact, it’s becoming a reality now.

In fact, the very first Microsoft Surface devices were rolled out in the last month in the United States in phone stores. And they proved to be very, very popular, where somebody would come in and put their current phone down and see the different plans, but they think could take another phone and see the comparison, and that ability that it was just a touch surface, a natural interface, made it far more natural. Yet, inside there it’s just a Windows PC with a little bit of extra hardware and software. Which of these interfaces will take off, which applications, that’s hard to predict, but we need to get out there, and try these new things out, to achieve the full potential of this new digital decade.

On the left here you see Surface, where somebody is looking at a map and planning a route, and you see two people working there together. One thing the PC has not been very good at is two people working together, because it’s been very focused on one person sitting at that keyboard. If you want to have your family looking at photos, or organizing those, picking the best one, if you want to sit and talk about organizing a trip or something like that, it hasn’t been that easy. As we get these new interfaces, and bigger screens, cheap screen-type things, then that will be very different.

One of the scenarios that we show is where somebody is  even in a kid’s bedroom the displays will be cheap enough that on their walls they can take the things that are interesting to them, and very personal to them, and easily change those. In fact, they can set it up so that when their parents are coming they just push a button and it changes very quickly. So it’s a lot easier than that it today.

These things like digital commerce, and mapping, getting those available, getting them to be high quality, getting traffic information available, those are valuable for all these different applications.

In the living room, we’ve had the set top box, and the video game, and the PC have been quite different. And today there’s reasons for that, but over time I see those as becoming more and more common. So the kind of rich gaming experience we need to make sure that the Windows environment, a lot of the innovative new gaming is taking place there, and we also have the TV and movie-type content.

I brought a little video that shows some of the examples of what I mean by connected experiences. It’s fairly short, but let’s go ahead and take a look at that.

(Video segment.)

BILL GATES: Throughout the history of the PC there’s always been skepticism about the new activities, and what things would take off, and it’s been amazing that, in fact, in every case, as the hardware got better and the software got better, that came together. I think there is an understanding of how the magic of the chip level, and the software level has been key to that. I think something that people miss is that the Windows ecosystem has always been based on a large number of partnerships, that by having standards, by working together on new things, we’re able to invest together in the market, and grow that market.

The market here in Japan is a great example where these kind of partnerships have made a big difference. In terms of the foundation we’re building on, I thought I’d give you an update that 140 million PCs have been shipped with Vista, so that within a year of its launch is actually the fastest we’ve ever had, in terms of a new version.

We’re hard at work, I would say, on the next version, which we call Windows 7. I’m very excited about the work being done there. The ability to be lower power, take less memory, be more efficient, and have lots more connections up to the mobile phone, so those scenarios connect up well to make it a great platform for the best gaming that can be done, to connect up to the thing being done out on the Internet, so that, for example, if you have two personal computers, that your files automatically are synchronized between them, and so you don’t have a lot of work to move that data back and forth.

Obviously we’d all love it if people had more PCs per average, and so making that simple is important. Also the effort to upgrade, I think that’s an area we got a lot of feedback in Vista, that we need to invest in that, and we’re going to make that very, very simple for people. So Vista is doing well, and we’re hard at work putting even more investment now in the version that comes after that.

There’s been some great work on form factors, both from the big leaders, people like NEC, Fujitsu, Sony, Toshiba, but also some of the smaller companies have done great things. This slide just shows you the variety of things that are out there, because more and more as people are putting these devices in their living room they think about the different design aspects. And in fact, this idea of really cool design, I think we’ve seen, including in some of the competition we have, that that’s an area where we need to differentiate, and the variety that the Windows ecosystem can provide is one of the great strengths that we have to draw on. So we all need to think about these design-type issues. I know Microsoft is hiring more designers, and trying to figure out how we make the software flexible, so any design uniqueness that you do can show through there.

We’re also building into Windows, of course, things that connect through the Internet. We broadly talk about those as Windows Live. This would include things like photo sharing, and social networking, electronic mail. There’s a variety of things available, and we’ll obviously give third parties a great way to plug in to Windows to do these things, but we’ll have some native services like this ability to synchronize your files, or like the free mail and things, and we’ll be making those dramatically better.

We have over 400 million people connected up to those things, and so that’s a very interesting large number and, in fact, an opportunity for us to talk to them about the new PCs, and the new software, to have a regular communication, so they know what the new opportunities are.

We’re also a participant in building software for the mobile phones, and our proposition is to build a great mobile operating system, but also to have it be the one that connects best to the Windows PCs. So we’re working hard on both of those things. This is an area where we’ve had a lot of growth in the last couple of years now, up to about 20 million. I was looking at some of the new phones in this market, and I’m very excited about what’s going on there.

For a customer there are going to be phones with larger screens, and PCs with smaller screens. In fact, there will be even an overlap, but I think the key for us is to drive all the applications, and let the user move easily back and forth. Our best customers are going to have a great mobile phone, and they’re going to have a great personal computer. And if we don’t make those scenarios work well together, that will hold back both of those markets.

This is a business where thinking for the long-term is very important. If we think about things like handwriting recognition, or speech, or Internet TV, Microsoft has been investing in those things for more than 10 years, and yet they’re not yet mainstream. Were able to make that kind of bet, make an investment. We have our research that is there to work closely with your research groups on those kinds of fundamental advances that will allow us to bring in things like natural user interface, that will allow us to take advantage of these multi-core architectures, will allow us to do security in a new and different way.

So it is a  there will be constant change. I see Windows, a major new version of Windows every two to three years. I see the services that Windows connects up to, like the social networking, or the file synchronization, I see those things being updated on an even more regular basis. So it’s a very dynamic environment, where getting the feedback from the customers is very important to that.

So this is how we think about this second digital decade, and this is how we say that the PC will change business more, be more pervasive, be in the desk, on the desk, in the meeting room, in the whiteboard, it will be in the home, in different form factors, and there will be this great connection between the PC and other devices. When you carry you phone up, if you want to use the full screen to display what’s there that should be very straightforward.

So these are new experiences, these are connected experiences, and I think one thing that this group can come together on is not just the innovation to make these experiences possible, but also how we get the word out to customers about these new opportunities. And that’s why I’m very excited at the response to this initiative. And let me just state that Microsoft has a huge commitment to it, and all of our key partners are here. That’s very pleasing to us, and I’m excited to see what we can do together.

Thank you. (Applause.)

END

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