Bill Gates & You: Microsoft's Chairman Answers Your Questions

Given a chance, what would you ask the world's richest and most powerful figure in technology? A controversial question about something affecting your business? The next big thing in technology? Maybe something quirky or offbeat?

When VARBusiness polled readers on what they would ask Microsoft co-founder, chairman and chief software architect Bill Gates, they came up with scores of queries. On behalf of VARs, integrators, xSPs and consultants from coast to coast, VARBusiness took the best of readers' questions to Gates himself, who personally answered each one in an exclusive one-on-one interview and follow-up e-mail exchange.

Partners asked Gates about licensing, .NET, Linux, PC price wars, Microsoft's Explorer browser and other things. Specifically, partners asked what plans he has for Linux, how big he expects his services business unit to get, and what comes next after handheld PCs, among other questions. One reader wanted to know if Gates would fund a golf driving range for charity. Although he quickly passed on that question, he gave the others serious consideration.

In this exchange, we present what the world's most successful entrepreneur had to say about those, plus one from us. We also highlight several of the individuals who volunteered questions and get their takes on some of Gates' responses. It's something we call "Bill Gates & You."

VARBusiness: It's clear that partners are concerned about licensing. They are fearful that their customers are going to be confused--that they aren't going to be able to understand what's going on. They don't want to end up being between Microsoft and their customers and be put into an antagonistic position. What can you do to allay concerns about licensing changes?
Gates: If you want to interview someone at Microsoft about licensing, you probably picked the wrong person. We do believe software should be licensed. And software is getting more powerful and doing new things. There's always an evolution of the licensing models that takes place. One of the things partners can do is help our customers understand exactly what the right sort of licensing options are for them. And, so, at [Fusion and other partner events] it's one of the topics we go through. At the end of the day, software is a tool to help people do amazing things. We license it. Licensing has never been a big issue in terms of the success of our products, one way or another. We're a high-volume, low-cost provider of software.

VARBusiness: You guys are trying to extend all the way up to the enterprise, and you also have some interesting things going on in the small-business market. Some of the partners we have spoken to and some of the ones that sent us questions were concerned some of the smaller OEMs aren't getting the best treatment. Are you committed, as you move up the food chain to the enterprise, to remain close to the white-box makers and the other partners you have?
Gates: Understand that Microsoft's vision changed the hardware industry to allow lots of companies to participate. Before the Windows model--which was actually the MS-DOS model--came along, you couldn't even have a variety of people who configured systems, put systems together and branded them in their own way. So it's part of our heritage to allow anybody to build systems. And the more powerful and reliable the operating system is, the easier it is for vendors like that to compete with the very big guys-- people like IBM, etc. We have a lot of programs that reach out to those guys that make it easy for them to install the software, sell Microsoft Office, etc. I'd say we're doing increasingly better with those guys. It's been a good growth area for us.

VARBusiness: One reader wants to know what role the solution providers, which make up 96 percent of your revenue, will play in the .NET world and if that will change vis-a-vis from what they are doing today? Do you have a vision of how that will change?
Gates: .NET is the centerpiece of our strategy. So we are educating all the partners on what that's all about, where that creates new sales opportunities, etc. I don't know if you saw [a booklet we produced called] "Partnering With Microsoft To Create Value in the Web Services Ecosystem," but .NET is Microsoft's XML-centric strategy, and we have to do two things. We have to get the industry and customers to understand the benefits of XML and then to understand, in particular, how .NET is the best way to do XML-related things. A big milestone for that is the shipment of Visual Studio .NET. It's the first tool built from the ground up for the Web and XML development.

For the partners, they'll see that for Office, Windows and the server products, the strategy is one where you can have the same programming model on the PC, the server and against a service out on the Internet. That's a very powerful offering--one that allows them to go into customers and say, "Would you like to buy this service out on the Internet, from either Microsoft or one of its partners, or would you like to license a box of software and run it on a server yourself? And when you run applications, that same code runs against an offline PC, against that server and against that service so you don't have to switch your applications code as you move those back and forth."

It's kind of like when we drove the industry to graphics user interface. Some of the partners saw that opportunity and got out there early and benefited from it. The last big wave was sort of the HTML wave. Unlike the graphics wave--where Microsoft was the center of driving it--there were some other start-ups that got in there early and were driving it. We had to come in with a superior strategy where the standard was already in place. Here, with XML, we're clearly driving the standard.

VARBusiness: Scott Erickson of PC Support asks: "Please explain the differences between network computing, which you went to extremes to put out of business, and .NET, which you say you will do the exact opposite." I think he wants to know the different philosophies of why network computing failed and why .NET is different.
Gates: Well, I don't know what he means by network computing. If he means where you take away empowerment from knowledge workers, I think that was just wrong in terms of how knowledge workers do their jobs. The people who think that productivity tools and personal computers are a bad thing--and that means Sun--have got a tough job to convince people to give up their PCs...[They essentially are saying to customers] "Hey, you pay your employees lots of money, don't let them do collaboration and creativity and analysis. Just make them have a 3270 terminal..." And that's sort of the opposite of the way things are going. Most of those things where you just click and browse and fill out forms go away in the digital economy, and the knowledge work that's left has to do with analysis, customer service and very empowered things. I think the network computer and what happened with it is a great illustration of how pure centralization and disempowerment is not the direction things are headed. .NET is about letting people have the best of both worlds: the local power, offline use, centralized storage--either inside the corporation or out in the Internet--and using XML to make that possible.

VARBusiness: How can partners take advantage of the .NET philosophy today? The message seems to be "Wait until .NET; it's coming." But Oracle and Sun are offering partners some limited abilities to start selling .NET-like functionality today. Your message is still a little bit out there.
Gates: No. There's no equivalent to what we have in .NET. I mean, what's Oracle's authentication service? What's Oracle's equivalent of Visual Studio .NET? In terms of what we're doing with these schemas and driving the standards, Oracle's not even there. It's true they are putting XML capabilities into their databases, but that's the only thing of the .NET activities that we see them doing at all.

VARBusiness: Is there a Linux play at all for Microsoft?
Gates: We don't have any software that runs on Linux. We don't plan to have any software products [for Linux].

VARBusiness: But in the past, you guys have shown an ability to make the most out of competitive opportunities, for example, the profit you have made from Apple Macintosh applications for all these years. Can you figure out some way to tap into the enthusiasm and momentum of the Linux camp and determine a way to make a profit there?
Gates: Well, we don't presently have any products or plan to have products on Linux.

VARBusiness: Is this something you have thought about or looked at?
Gates: Well, we think about everything. But we don't have any plans for products on Linux. The whole General Public License (GPL) thing is something that sort of breaks the cycle of academic software, which is essentially government funded and made available for commercial people to start with. We've spoken about how that cycle, which exists with free software like BSD, has been a positive thing. I think that free software will probably shift away from GPL in many cases to the more traditional model.

VARBusiness: What do you see it becoming? You talk to everybody on the planet--the corporate guys out there. We don't see Ford making a strategic commitment to Linux, we don't see Chesebrough-Ponds making a strategic commitment. So what does Linux become? What does that free software movement in your mind become?
Gates: Separate GPL from free software. There's always been free software. And there's always been a virtuous cycle where commercial start-ups take free software and build enhanced versions of it. GPL breaks that cycle. Free software is an important element of the ecosystem we've always had.

VARBusiness: James Isabella from Computer Applications: "If your browser is such an integral part of your operating system and would severely limit functionality if it were removed, as you claimed in the past, how is it so easy to remove it now?"
Gates: We can remove anything. I think that person's confused. The lawsuit was not about removing anything; it was about hiding end-user access. The help system is built on the base technology. So, the word "remove"...you should look pretty carefully into what people mean when they say remove. Removing end-user access is different from removing the code. If you remove the code, of course, the operating system doesn't work. That doesn't mean we can't remove it; we can.

VARBusiness: But does that reduce, or diminish, some previous statements about how integral and important that is, though, to the company going forward?
Gates: I think you're confused. There's no removing of code in this case at all. The government switched its view to not ask for any removal of any code. Anyway, it's probably not worth spending too much time on the lawsuit. But be careful when people talk about "remove." The lawsuit shifted away from removal of code completely.

VARBusiness: Do you think there's a general misperception out there?
Gates: Lawsuits are very complex. Why should people understand them? I mean, how many lawsuits do you like to spend [time] understanding? This one only has about 4 million pages of documents. Yes, it's possible they don't fully understand.

VARBusiness: Fair enough. If PCs are to be replaced with smaller, handheld devices, what do you feel will replace these handheld devices? Wearable technology? Technology built into walls? How will we use these devices? Is there a risk of becoming too dependent on the information these ubiquitous devices will provide? This comes from David Thomas at Comark. He wants to hear about the tablet and some other things you have coming down the pike.
Gates: There are natural form factors, from wrist-sized to pocket-sized to tablet-sized to desk-sized to wall-sized [devices]. And every one of those form factors will be incredibly important. The tablet-sized is one that we are putting a huge amount of R&D in, working with partners. A year from now, people will understand [why]--when it comes to reading, annotation and note-taking--it's a revolutionary approach. In some ways, it's an evolution from a portable PC because the new scenarios are pretty revolutionary. So, there will be lots of different form factors. And like any tool, yes, you'll get a dependency on it. If the electricity fails, it's more of a pain today than 500 years ago.

VARBusiness: From a technology standpoint, what do you think is your crowning achievement--the one people will, in time, come to realize?

Gates: Well, take PowerPoint and what it's done for presentations. Nobody even thinks about it, but people don't come in anymore and say, "Oh, my slides fogged up, I couldn't change my slides at the last minute, I didn't understand--was it sideways or upside down?" or "How do I get those things in the carousel?" It's the dog that doesn't bark. It's gone. Five minutes before your presentation you delete a few slides; today--you don't even think about it. With a tablet PC, you'll go to meetings, sit there and take notes and send them off to people. You'll get the action items, you'll scribble on the presentation that the person has, you'll see people and you'll say, "Of course I can do this." I mean the fact that it took billions of dollars in software R&D to actually recognize your handwriting and do the security right and have wireless networking and miniaturization and the high-res LCD. People will just be empowered by being able to do everything in that digital realm and have the device, their notes and their annotations with them in their meetings, and they won't even look back. They'll forget that they used to have a bunch of scribbled notes that they forgot to send e-mail on cluttering up their offices.

VARBusiness: Several of your partners discussed the different types of business models the solution-provider community will have. .NET offers a lot of opportunities to create new businesses to deliver Microsoft stuff. Can you comment on some of the models you've seen and the models that might arise--given the fact that many of the ASP models didn't take off as planned and some of the MSP and xSP models are so new?
Gates: It's a pretty broad question. A lot of the business will continue to be that partners, either at an hourly rate or a fixed project cost, will create solutions for our customers. That business model--under which there's actually more revenue than there is under every other technology business model put together--is not going away. It's not our business, and that's partly why we have a small piece of that. But we're very dependent on partners. So they can simply say that the software is getting better.

The software, as a percentage of the customers' budgets, has always been small. As you get these new capabilities, the actual software licensing cost--when you think about communications, hardware, services, employees, and operational costs--the software piece will stay a fairly small piece. That the software piece is being done more on a membership, subscription [basis]...we already have that with our enterprise customers. I mean, overwhelmingly, we use enterprise agreements, which are a three-year, basically "use-everything-you-want, don't-spend-a-lot-of-overhead-measuring it" [model].

That model will move down to midsize customers, and, if we are truly successful, not only to small businesses but even to consumers where they'll think in terms of, "Well, I belong to Office for this multiyear period, I belong to Windows, etc." And whatever ongoing improvements are taking place, as part of the feedback loop we are creating, they will have access to. The things about, "Do you charge per processor? Per user? How much advertising revenue do you get?"--there's certainly a lot of IQ that goes into those things. But, at the end of the day, the typical services model will be the biggest [piece], and the annual licensing fees will be the next-biggest piece.

VARBusiness: Let me ask you about services. A number of the partners are concerned or interested in how big your own direct services arm is going to get. You've made statements through Bob McDowell [Microsoft's vice president of worldwide services] that you don't have aspirations to be the next IBM Global Services. Yet, if you want to be world-class in the enterprise, don't you really need something that's on a par, or at least commensurate with the revenue size, that can provide those kinds of functionalities and capabilities?
Gates: Yes, we need that with our partners. We cannot and have not chosen--not that it would have been easy--to have an equivalent of IBM Global Services or Oracle Global Services. We have chosen to have a modest percentage of services where we [provide] architectural guidance, and the incentive for our people is to transfer knowledge to the partners and the customers and move on to the next architectural activity. And that's just a business decision we've made. And it makes events, like Fusion, critical because that's where we get our services muscle.

VARBusiness: Another reader is concerned that right now all the companies in the PC space--Compaq, Dell, HP and IBM are struggling. There's a lot of commoditization and a lot of price-waring. Is it a concern of yours that a number of the products that you make, the solutions that you drive, go into environments where you're so integral that partners are not able to make a lot of money on the product itself?
Gates: Well, customers are getting a good deal on PCs. They have always gotten a good deal, and now they are getting a particularly good deal. The structure of the PC industry makes it incredibly competitive. And that's a revolution that Microsoft brought about by having an operating system that ran on hardware from any company. In the past, you would have gotten locked into an operating system, which people still do today at the high end when they get locked into Solaris--a single-vendor solution that doesn't run on anybody else's hardware.

With Windows, you buy the best from HP, IBM, one of a hundred start-ups or the guy around the corner who's put a system together for you. So the fact that it is so competitive is good for customers. I'd be the first to agree that makes it a challenge for the companies involved. And they have to make sure their cost structures, pricing and innovations match being in a very tough market. We've created an environment where the customer is the only sure winner. Look at what happened to hardware prices because of the PC model that we created. And now that model, because of the scale and reliability of the servers built on Windows, that same sort of great price is coming to the most powerful servers in the world.

VARBusiness: Let's talk about Solaris for a moment. Right now it's kind of out there--Sun, I mean--in its own space with its own [microprocessor.] It's really the only company that hasn't committed to the Intel platform. Do you think it will likely remain that way going forward, or do you think Compaq's recent move to ditch Alpha development at some point forces Sun's hand to say, "Listen, can we really continue to drive further into the enterprise if we're the only ones out there supporting Ultra SPARC?"
Gates: Only over [Sun CEO] Scott McNealy's dead body. Just go back and read his lectures. As well as saying people shouldn't have PCs and [should] get over the loss of privacy, he's said that he doesn't want to be somebody who's not building his own architecture and that people who buy from Intel have no future and that they are completely worthless. So, they are not serious about anything but their own hardware architecture. Now, they are having problems in terms of how they keep that competitive with the mainstream. IBM has actually done the best job with the gig of staying up at the very high end. But, over time, Intel has the R&D budget to [build] the most powerful microprocessors. There's just no doubting that.

VARBusiness: Even Scott has got to realize that at some point.
Gates: But it destroys his business model. Remember, he's not a software company. People get confused because they have had a lot of initiatives and activities around software that they don't think anybody should pay for software--and that software is not a good thing. They just think you ought to overpay for the hardware, basically, and buy all your boxes from Sun and use one language.

VARBusiness: How does Microsoft encourage and support new start-ups? How do you recognize leadership and entrepreneurialism?
Gates: One of the keys to Microsoft's success has been our long-standing commitment to creating technology the entire industry can rally around and building platforms and tools companies of all sizes can build on to be more successful. Close relationships with our customers and partners are key to our future success, so we're always in touch with new companies, listening to their needs and working with them to develop new, exciting ways they can use our technology to realize their dreams.

VARBusiness: Will you make the same mistake as some of the other tool makers like Oracle and come into the applications market? If not, then what's the acquisition of Great Plains all about?
Gates: Beyond Office, we've been growing in the business-applications market for many years. The acquisition of Great Plains is a natural next step toward offering on-site business solutions for small and midsize companies. As we talked with Great Plains about the next generation of software and services, we realized that we see the future of business applications for small and midsize companies in the same way. By joining forces, we can offer powerful business-application technology that partners can customize, and customers can use to run their businesses more efficiently. And we can do it in a way that is accessible, simple, based on Internet standards, and affordable enough for the small and midsize business to deploy and support.

VARBusiness: When do you envision Microsoft moving to the ASP model of renting operating systems and applications directly to end users? How will this affect the traditional channels of distribution?
Gates: The next generation of software applications--where a constellation of PCs, servers, smart devices and Internet-based services collaborate seamlessly--is creating great opportunities for channel partners, since customers need increasing access to resources, data and services at any time, any place and on any device. Our partners are already doing a great job delivering these products and services via the ASP model. Going forward, we'll move toward delivering more and more of our software as a service, creating even bigger opportunities for our partners to deliver the best possible solutions for their customers. For example, ISVs are developing XML-based hosted solutions and Web services around Microsoft .NET.

VARBusiness: Will Microsoft fund, partially or otherwise, any product offerings that a solutions integrator may want to create using Microsoft technology? How can partners tap into the vast financial resources of the company?
Gates: Microsoft has always been committed to delivering a platform that reduces time-to-market for third-party developers, reduces the costs associated with developing solutions, generates revenue for developers and increases their shareholder value. Aside from that, Microsoft's Partner Group works closely with ISVs and integrators worldwide to jointly promote solutions running on our platform. When it comes to financial investment in third parties, our primary goal is to form strategic relationships with companies that can help bring exceptional products, solutions and services to customers quickly.

VARBusiness: What does Bill Gates want to leave behind when his time on this earth is up?
Gates: I'm just happy to have worked in an industry that's challenging and constantly changing, and I'm amazed at the impact the PC has had on the world. Over the past two decades, the PC has transformed the way people work, play and communicate. But the best part is that it's not over yet--we won't run out of new things to do with the PC any time soon. [And I] also hope that the philanthropic work I've been active in will continue long into the future.

VARBusiness: On a lighter note, Gabe Francis of Data Solutions wants you to fund $2.5 million for a driving range complex? What do you think?
Gates: A driving range?

VARBusiness: Yes, and he promises to pledge 50 percent of the profits to charity for life if you'll fund his driving range.
Gates: Like golf?

VARBusiness: Yes.
Gates: I don't know him.

Tweet

   

More Channel Programs