BILL GATES: Well, good morning. It’s very fitting that we’re here in Scotland, and we’re certainly appreciative of the incredible hospitality that we’ve had here. But I think it’s appropriate in many different ways. Of course, we have the example of [Andrew] Carnegie, who was not just a great philanthropist, but also believed in education and empowerment. His example of funding libraries has been a great example for Microsoft and my foundation as we’ve gone out to libraries around the world and gone from just having books to now having PCs that connect up to the Internet.

Carnegie was also incredible in terms of reforming education, both graduate education and undergraduate education, and realizing that it wasn’t just quantity, it was also quality.

Perhaps Carnegie is most famous for a rule of challenge for me, which is that he who dies rich dies disgraced. And so I’m working on avoiding that. (Laughter.) But it’s a high responsibility.

Also from Scotland, of course, we have Adam Smith, and even though he’s best known for his pronouncements about the benefits of trade and capitalism, he was also a great philosopher talking about philanthropy and caring for your fellow man.

In fact, just last year in June, when my good friend Warren Buffett made a commitment of most of his fortune to the foundation that my wife and I run, a rather unbelievable gift, actually the biggest ever in the world, I gave him a first edition of Adam Smith’s book that talked about our responsibility for caring for your fellow man. So he was a great thinker thinking ahead in many, many different ways.

Certainly the things going on here in Scotland today really fit the themes of our conference. I had a chance yesterday afternoon to go and tour the University of Edinburgh, and see some of the things they’re doing in what they call regenerative medicine. That’s taking stem-cell technology and using it in new ways to cure some of the toughest diseases. And the way they’re going about it, the level of investment, using the new tools, also working in close cooperation with small startup businesses or existing businesses to draw their skills in, I think it’s a great paradigm for how advances really will take place. And so there’s a lot of great reasons that we’re here.

I’m also very honored to share the podium with Chancellor [Gordon] Brown. He and I have had a chance to partner and work on a lot or things, because we have a lot of beliefs in common. In fact, everything the Chancellor said about education, really I want to second that. It is the key investment that governments make, it is the key thing that determines the future, and there’s a lot of reasons we ought to be optimistic about that.

Gordon and I were recently down at the World Economic Forum working on issues of government involvement in these global health activities. And certainly the last several years have been fantastic because of partnerships like the ones that we’ve had together, people like Bono coming in. We’ve managed to really not just tell the sad story of what’s not being done but also to get more resources and to start to really make a difference. And that’s why the story of the vaccine fund GAVI is a great one because governments have stepped up, and it’s provable that that’s making a difference.

So, having people understand that aid done well can really work is critical, because we want broad support for these things, and in many countries that’s missing because of the cynicism about the image that people have had of aid in the past.

And so there’s some exciting things that we are working on together, and we both bring a huge level of optimism to what can be achieved.

Of course, this week is a big week for Microsoft. We’ve been working many years on some new products that just got launched officially yesterday, worldwide availability in 39,000 outlets and online of what we call Windows Vista and Office 2007.

And I don’t want to focus on those, but they’re a great example of the pace of innovation that creates new opportunities. Windows Vista has a particular focus on things like safety so that parents can have their kids go out on the Internet and they can feel comfortable about that. The reason why is that you can determine what type of software your kid runs, you can determine when they use the machine, you can also go back and look at their activity log. Now, you have to decide up to what age that’s appropriate for your kids, and every family may have different policies, but I love the idea of being able to see where my daughter has been going and have a chance to discuss with her what sort of things she’s seen on the Internet, and make sure that I’m always aware of those activities.

An advance in the operating system also lets us do revolutionary things in terms of communications. And the impact of these communication advances are quite fundamental. I mean, after all, the traditional newspaper readership in rich countries is dropping quite rapidly, and in some ways we could see that as a scary thing, because after all, why are people informed voters, why do they understand the issues, participate in the debates in an intelligent way? Well, historically that’s the print media or media delivered on paper has been a key part of that. Now, more and more that same media, and new media that has emerged delivered in digital form is a key element.

And so the opportunity of people with a common interest to find each other, the opportunity that even if you don’t own a printing press that you can share your ideas – that is really changing the world.

And so every time the software moves forward, this idea of empowering people to create new things is quite amazing.

And once upon a time, if you looked at a typeset document you could say, oh, this must have come from a government or a big company. Well, today, we don’t think that anymore, because anyone with a PC can make a great looking document.

With Windows Vista now you have high-definition movie editing capability, so your kids at night can make the same sort of special effects and transitions that you would have thought that only a huge Hollywood budget would allow to be possible in the past.

And so these kinds of releases move up that next level, and certainly the young people are embracing these things in an incredible way.

Communications and collaboration is changing, and it’s changing for the better. Distance matters a lot less than ever before. That’s a statement that I’ve made in many speeches, but it was brought home to me in a pretty strong way; I was meeting with the leadership from Iceland yesterday, and we were talking about, well, distance used to be a big problem, but now I actually play bridge with people from Iceland as much as any country in the world, and I certainly couldn’t have done that before.

Also I was meeting with leaders from Armenia, and we were talking about their borders, and we were realizing that the Internet connection is the thing that allows them to reach out and really not have geographical issues or border issues be as limiting as they would have been in the past.

Today, when we think of communication, we think of the phone, but the phone is changing rapidly. It’s gone from being just a device of voice communication to now one where you have information on the screen, you can connect up to many people, and telephony is giving way to where on the screen we can look at documents together, edit those together. Even things like phone numbers will be laughable and obsolete the same way that a record is today, because we won’t need to work in that fashion.

The PBX that you buy today to do voice communications will completely go away as we use the Internet and the personal computer with the magic of software to do that in a better way. When you go back to your office, you’ll be able to look at your screen, see who called while you were gone. Depending on who it is, you can give them the right to look at your schedule and find a time when you will be there, and connect up.

And so communication that’s been so difficult won’t be that way at all. In fact, the promise that we can do meetings at a distance and share documents and work with each other in a better way, that videoconferencing dream has not been realized, but it will through the hardware and software advances that are just rolling out now.

The Scottish Parliament here is a good example of using these modern approaches. They take the debates, the committee meetings and they put those up on the Web, so you can watch them as they’re taking place, and go back and look at them later. As we apply advanced software to be able to take the voice and automatically build a transcript, you’ll be able to go and search those meetings and find exactly the part you’re interested in. In fact, accountability for politicians will be at a whole new level because you’ll be able to search and look at everything they’ve said on a topic, and so the ability to say one thing to one group and another thing to another group won’t be quite as effective in the future, and perhaps that’s a good thing.

One of the breakthroughs that we’ve been investing in for a long, long time is this speech capability, interacting with the computer through speech. And where the quality of that keeps going up, there are some groups and cases where it is starting to be used. For example, if you’re in your car and you want to navigate through music or who you want to talk to, or if you’re somebody who the keyboard doesn’t work because you have Repetitive Stress Injury or something like that, the software we’ve built in to Windows makes that very possible.

I do believe that as we improve the microphones and the software quality, even for things like dictation, that will be very, very important.

We also have a new level of collaboration where people with common interests can go up and find each other and share information. Gordon Brown talked about things like MySpace where that’s happening at a consumer level. But it’s also happening at a business level. Things like this Scottish Public Petitions Committee, where people can come in and say what their grievance is, and that finds its way to the people who are interested, that’s using a digital community to connect, to get feedback, to make things work in a better and more efficient way.

I want to be clear that the hardware enablement that allows us to move forward is moving at an incredible pace. It’s what we call exponential improvement. You’ve often heard about that as Moore’s Law, the doubling in transistors every couple of years. That’s happening in communications speed, the speed of data we can move over an optic fiber, the capacity of the disk. These things are not slowing down. And when we couple it with these high resolution screens whose price is coming down, and now the high-definition generation of TV, movies, games, but also business insight – that screen technology makes a big difference as well.

In the years ahead, what we call the Tablet computer that you’ll able to hold in your hands, that will be as thin and as light as a Tablet, although it’s not yet that good, it will be available, and it will be available for hundreds of dollars. It will be able to record audio, it will be able to let you take your notes on it, you can leave your notes in handwriting or have them be recognized, and that will become the common tool that people who go to meetings use, students when they go to classes use, and, in fact, as we move the curriculum online, they won’t need textbooks at all, they’ll make that transition.

We’re also building services up in the Internet, so that, for example, if you used to have files on your PC, and you were worried about losing them, we’ll automatically back them up on the Internet for a very, very low cost. And if you connect up to another PC, you can access that information. So, whether it’s photos or documents, they’ll be available to you everywhere. In fact, even if you don’t have your PC with you, if you pick one up in a waiting room or borrow someone’s, as soon as you authenticate and say who you are, your information will come down and be there. Even if you’re moving from your phone to your PC, your data will be there with you, and we call this user-centric, which is a very key advance to drive these things forward.

Now, TV itself is about to change. In many of the countries of Europe, these new high-speed networks are being built, and so instead of TV being over the air, it comes over the Internet. Well, why is that better? Well, it means that any information you want, whenever you want it, is accessible. So, if there’s a topic you care about, the lecture will show up in your TV guide because it knows your interests, or if you have a kid who’s in some sport or an interest in that, that will show up there as well. As you watch the news, any topic of interest, you can ask for more information or skip over something about a sport you’re not that interested in, and make good use of your time.

Interactivity is probably where this changes the most, where if you’re learning a topic you can test your knowledge, you can get more background information. And so interactive TV has long been discussed, we’re finally building the infrastructure, the very high-speed Internet that can carry these high-definition video signals that will make that possible, and there will be a flowering of creativity around that.

For companies as we think about this, the way we reach out to consumers and other businesses, the way we do training, the way we do meetings at a distance, all of these things can be radically changed.

Let me now focus in on education, and some of the things that are possible there. It’s important to be humble when we think about technology and education, because there were many pronouncements made when television came along that it would dramatically improve education or when we had videotapes or when we had the first software applied to education, computer-aided instruction, and it really didn’t make a huge difference. But I would claim that we are now on the verge of something where technology will make a difference.

You know, when you think about why does somebody go to a great university, when I signed up to go to Harvard, what was it that was attractive to me? Well, they had great lectures, incredible people, Nobel Prize winners, that a small group of us could go and listen to. Well, that’s no longer going to be exclusive to students of the top institutions. Those lectures, enough universities will put them out on the Internet for free that you will be able to get that without that exclusive tuition.

Then there’s the idea of accreditation that the university by giving you a diploma, testing your knowledge, that that has a certain reputation advantage. Well, there’s no reason now that that should be coupled together with the place that you go and take the courses. Accreditation can be done electronically online, and organizations can have a reputation for doing that in a strong way.

We also have things like the discussion groups where you sit with other students and talk, and that’s probably the most important part of education. It’s motivational, it gets you over the parts that you’re confused about. But even there, being able to connect up people at a distance and have technology play a role is interesting in that.

Many of the community colleges in the United States have now said we’ll just use those lectures that are online, and we’ll put our money and energy into the interactive, smaller study groups, and so that we can just be better at that, because that’s what we’re all about is mapping this knowledge into skills that help people in jobs.

And so the very way that education thinks of its different elements, technology allows for more specialization and improvement there.

We do think that a huge part of education, and many of you I have sat and talked to about education have highlight this, that the role of the teacher remains central and fundamental. And so how do we get them excited about education, how do we get them to renew their skill set, which after all when they went to college these tools weren’t there, and they have to have a concern that if the students are more adept at these tools than they are, that they won’t be able to maintain control or the authority that they need to have. And so a lot has to be invested in them and encouraging them to move forward on that.

Microsoft is very involved in education, things like our Partners in Learning programs, our Innovative Teachers Forums. We have student contests, like the Imagine Cup. An interesting focus we have now is on working with governments around the world on the design of new schools. This is not totally new to us. In Singapore, we’ve had an initiative there where they use tablets and do amazing things. Here in the United Kingdom, we’re partnered with a lot of these schools that are under the program called Building Schools of the Future Initiative, which we think is very exciting and four or five of those are really pushing the limit and doing new things. In the United States, we have partnerships like the one in Philadelphia where actually a whole new school was built around the ideas of if you take technology as a given, how can that work?

Well, what are some of the common elements of these things? Well, empowering the student with a PC, a Tablet type that will be very inexpensive, training the teachers, changing the curriculum – that’s a challenging one because you need to get to scale to do that really well – and involving not just the students but also the parents and the teachers by having Web sites so you can see your student’s progress, their assignments, their schedule, and so the community sees all these different things, and you can engage your child in a discussion about what’s going on at school.

I’m very lucky that my daughter goes to a school that’s been using laptop computers for over a decade now, and completely over that time they’ve gotten better year by year, and the engagement in learning is really quite phenomenal. The way math is done, the math achievements have gone up very substantially, and not just for the top 20 percent – this happens to be a girls-only school – for the entire class. The biggest change has actually been for that bottom 20 percent. So, there’s a lot that can be done there that makes a very big difference.

One of the things that I think has been underestimated is actually giving people tools to create curriculum. In the past we’ve thought of that as a very monolithic process. You have companies that write these textbooks, they go through an approval process, some things make it, some things don’t. Well, here we can take all of the material on the Internet, and use that as a starting point. We can take encyclopedias like Wikipedia or Encarta as a starting point. But we can also give teachers tools so they can take the information and craft it, organize it so it fits for their school.

The Gates Foundation and some of the high-school work we do in the United States, and one of the things that’s been very successful is having high schools that people can pick that have a theme, a theme of science, a theme of construction, a theme of art, and all of the topics are taken and motivated, you know, why should you learn math? Well, at a construction school they use it to teach you how to keep the building from falling down or how to not bid in a way that’s going to put you out of business. And so you can take what students have been unclear [about] – why should they learn these things – and bring them into real life examples in a very strong way.

Well, how can you make that even better? Well, if the teacher can take the material that’s out there, and add a little bit of their own ideas, and then put that back into a community, a digital community where it’s shared, we’re building on each other’s work. And so it’s not just the way textbooks have done to date, it’s a much different thing, and it involves pictures and animations and today’s news and it can be put into a context.

And so for the first time teachers will be learning from each other. In fact, we can actually take this idea of Webcasting and have the classes where things are done well, and have people look at that, comment on that, review it. And it takes the teacher’s job, which today is a fairly isolated job, and lets everyone benefit from best ideas.

In fact, if we said today the best math teacher ever was somebody 150 years ago, we probably couldn’t prove that was wrong. And that seems very strange with all these advances; how can we not have some objective way of saying that, yes, we’ve made progress? And so now we have the foundation that’s going to make that possible.

One of the things we want to do is scale up this idea of innovative schools. And so actually we’ve got a new initiative that we’ve got 12 countries that are joining in on to actually do innovative schools in each of those locations. And we’re not saying that these will be identical. In fact, part of the goal here is to experiment and try different things. After all, in the realm of government seeing what other people are doing and benefiting from that is one of the ways that improvements are made.

So, here we have many different countries – Germany, U.K., France, Finland, a number of others – all saying that they are willing to put an investment in, and we’ve put our top technology people in, who have been involved in these projects, and try and actually do different and new things that build on these technological advances.

I do think it’s important to remember that the kids coming into these schools, you know, when they go home at night they’re using Xbox Live and talking to their friends, playing with their friends, they’re editing high-definition movies. And so if all we do with them is they come back into the classroom and there’s a chalkboard there, that teacher has a hard time living up to the level of sort of drama and richness that they’re getting in that digital world.

And yet the teacher is fundamental; I’m in no way downplaying the importance of the role the teacher has. And so we have to back them and get behind them, particularly the teachers who embrace the new capabilities. The incentive systems to make that work will obviously be different around the world, but it’s time to really start the experimentation.

And so it’s exciting to be part of it. There are so many different things that come under this e-government label, but the first and foremost, as we heard from Gordon Brown, and certainly I want to second that, are the things we can do to improve the education system.

Thank you. (Applause.)