Remarks by Bill Gates
Microsoft Corporation
Small Business Server Crossings
Tuesday, October 28, 1997
Redmond, WA

MR. GATES:

I’m pleased to have a chance to be part of the Crossings event. Microsoft is very excited about working in partnership with the U.S. Chamber and the Small Business Administration to get the message out to small businesses about the great opportunities they have to use technology. You’ve heard a lot about how important small business is.

Already there are more personal computers being used in small business than in any other business segment. And yet there are many small businesses that are not using technology today in ways that they could.

The last few years have brought a lot of big changes in the ability to tie computers together and use them as a great tool for business. Now, I think personal computers and communications around computers are even more important for small businesses than large businesses. The requirement that people perform multiple functions -- keeping track of and servicing customers, reaching out to partners and suppliers who may be in a distant location, understanding where the profitability is, where the inventory is, being able to do scheduling -- all of these things require small business people to have such an incredible range of skills and to track different kinds of information. And this is where the PC can be very helpful.

When I started Microsoft over 20 years ago, computers were big machines. They cost over a million dollars. They were really just a tool for large businesses. In fact, by being able to use big computers, large businesses had an advantage over small businesses. Well, the last 20 years have brought a reduction in the cost of computing by a factor of a million. Now, the machine that you can buy on the desktop for a few thousand dollars is far more powerful than the most expensive machine at the time when Microsoft was started. These machines can perform a wide variety of tasks -- not just financial tracking, but also customer management, direct marketing, creation of brochures, and facilitating the sharing of ideas with other people that you’re working with.

Why does the PC keep improving so rapidly? Well, there’s kind of a miracle technology behind it, which is the ability to put transistors onto a chip. And every two years they’re able to make these transistors smaller and smaller so they can get twice as much power onto the chip without increasing the price. And that’s an exponential improvement that you don’t find anywhere else. That’s meant that we could move the computer to do things like the graphical interface, to include the ability to prepare things on the screen and be able to print them out very easily.

Today, even the machine that you store your shared data on -- the so-called server -- can be as inexpensive as $3000. And there are many many companies competing to provide these hardware products. The personal computer industry is characterized by very tough competition, new products coming out all the time, and all of these products being able to work together. One of the great things is that when you pick your hardware, you can pick another supplier for your additional machines without changing the software that you’ve put on there.

Many of the people who participate in this market, including Microsoft and system manufacturers like HP, Compaq, Dell and many others, have recognized that the small business market is an important opportunity. They’re now doing offerings that are tailored to the particular needs of small businesses. In the case of Microsoft it means products like the Small Business Server or a version of our Office products that is tailored to your particular needs. This is part of a learning process. By going out and meeting with you, talking about what we’re doing, and then getting your feedback, we can make our products even more appropriate to the particular needs that you have.

I had mentioned that part of the benefit is when all these machines get connected together, using the Internet. The Internet is an unbelievable phenomenon. It started out in college campuses. The federal government funded the connection of these college campuses with each other. And as more and more students got connected up and started sharing information and sending electronic mail, they realized what a huge benefit that was. So more and more it spread out into the commercial world. Now the Internet is becoming mainstream. We have over 20 million people in the United States using the Internet on a daily basis. And over the next decade, the majority of Americans, I believe, will be using the Internet many times a day. They’ll be using it for electronic mail. They’ll be using it for finding products that they want to buy. And they’ll be using it to coordinate their activities -- scheduling an appointment with their doctor or sending some questions to an accountant, that doesn’t require a face-to-face meeting. This idea of connecting the machines together makes them far more important and powerful than they ever were before.

There are some great examples of how small businesses are using the Internet. I know a fly-fishing company where the people who work there -- they like to spend most of their time out with the customers. So in order to let people who want to call in and see what’s available have the ability to do that all the time, they’ve created a Web site so that you can go and see what’s available and put in your request, to schedule something very easily.

There is another example where several businesses that provide services for weddings got together and created a virtual business. They have a Web site that you can go into and set up everything you need from these different businesses, simply by connecting in.

So, it’s not just a question of managing the information that you have in your small business; the Internet is a new way of reaching out to customers. I’d say that the Internet is a very urgent thing for you to think about in terms of how it can change your business, how it can make it better. It’s also a competitive threat in some ways because of your competitors, whether they’re large or small -- looking at the Internet, they may get there first. So the bar is being raised. The need to think about technology is far more important today than ever before. One of the great things about the Internet is that the same personal computer that you use for creating documents or tracking your customer database is also the machine that lets you put your information out on the Internet and lets you coordinate with partners and customers.

I think that in this era of business, customers are going to expect more. We talk about this being the Information Age. That means that the personal computer is a tool to allow businesses to have all the information they need at their fingertips. Customers expect, when they call in, for you to immediately be able to see your history of working with that customer and understand what they’re in doing. In many cases, the customer wanted to be able to call up any time of day, any day of the week, and be connected in and see what the status of their order is, or see any messages that you might have. Having an Internet site gives you that total capability. When you’re a small business you need to work with many other people. For example, working with your accountants. One nice way to do that is to let them simply dial in, using the Internet, and see what transactions you’ve been doing and what money you’ve been spending, and review those figures without having to come to your site. Because it’s all electronic, they can easily send you a mail message and notify you that you might want to classify something differently, or let you know that certain orders you’re taking are particularly profitable and others aren’t, and they can give you advice to help you tune your business strategy to the particular opportunities that are out there.

Large businesses are moving to use the Internet. In fact, over the last year, over a million new businesses got onto the Internet. And they are starting to do more than simply put up their marketing information. The idea of closing transactions through the Internet in very important.

Now, I’m not saying that this technology applies only when the customers come in that way. One good example of using technology is a small business where customers are calling in to order pizzas and they use the caller ID function, where it’s just a normal phone call, to immediately call up the record of where that customer lives and what their normal order is. It creates a sense of customer loyalty, this idea of having all the records there and being able to offer special things to customers who are very loyal. I think that’s a very big trend. And no matter how the customer is coming into contact with you, they’ll expect you to use technology to foster that kind of loyalty.

People are talking about how this is a time of great competition. It means you have to take your resources and schedule them very very well. For example, what should your people work on? Are they spending their time on the right things? Do they have tools to get something done very effectively? Twenty years ago, to create a brochure that looked good, you had to go to a graphics design house and go to a typesetter. It was not only expensive, it was incredibly time-consuming. Today, with the right tools running on the personal computer, you can create a brochure that’s just a good as the one that a very large business has and yet do it at a very low cost and do it very quickly. You can keep your information up to date. If you have to do a daily special or adjust your prices on a regular basis, the ability to have that price list printed out in a professional way and available electronically, as well, is now very very straightforward.

One of the great opportunities here is to take organizations that are working with small businesses, like the Small Business Administration or the Chamber, and find out from them examples of small businesses like yourself that have done very innovative things. The pioneers are already out there doing some amazing things. And so throughout the country we need to highlight those best practices, put that information up on Web sites, including the Microsoft Web site, and document exactly what steps those people took. What are the pitfalls to avoid? What are some of the examples of the great benefits that come out of this?

The total cost of the investment -- buying technology -- has come down quite a bit. But it is one of the most important investments that will be made. And so it’s very worthwhile to learn from people all the different things you can do with the system. One of the mistakes that’s often made is that people invest in technology just to do one thing -- just to create documents or to look at the customer database. They don’t recognize that their technology investment can be used for other things as well. It can be used to do the accounting more effectively. It can be used to start to work with electronic mail as a way of organizing activities.

I can’t say enough about the importance of electronic mail. It’s one of those things that before you get into doing it on a regular basis, it seems very foreign. But once you adopt it, you wonder how you could have ever gotten along without it. Certainly the way I do my job involves a lot of electronic mail. Whenever I’m traveling or I’m out with a customer, I can get the latest information, I can send messages to people that way. It’s very, very effective, and yet it’s using the same computer technology that runs all the other applications, so it doesn’t require a particularly special investment.

Now, Microsoft and our partners recognize that for a small business there are obstacles. You don’t have full-time experts who are involved in looking at all these different acronyms and understanding all the things that are changing out there. And so you need somebody who can come in and help you put the building blocks together. The building blocks are wonderful. And yet, they need to be tailored to your particular requirements. You need to have somebody locally that is available to come in and help you out, whether it’s to plan for some new things you want to do with the system, or whether it’s simply dealing with the problem you’re having. You need incredible responsiveness there. So building up the local service capacity, finding people who can help you out _ that’s an important part of what needs to be put together. In many cases, there aren’t the right software applications that are particular to a business. So finding where those have been done or describing what you want and making sure those get done, that’s a very important thing.

A final point is to provide you with a way of getting trained in what you need to know, without taking so much time away from your business that you can’t be getting done the things that are important to you. Training courses that really focus in on the solutions needs is something that we need to make sure there’s more of out there in the marketplace.

Microsoft’s commitment here is to take what we do well -- which is building the operating system and productivity applications -- and making sure those are tailored to your needs. A big part of what we’re doing now is making these products simpler to work with, taking all the feedback we get from the phone calls and thinking -- how could we avoid the software from being confusing? There’s a lot that we can do here to make the software simpler and to lower the cost of ownership. And it’s the new versions of Windows and the new versions of the Server and the new versions of Office that represent these improvements.

We are engaged now in our largest ever recruitment of finding training partners out in the market that will be the kind of people who have the expertise to work with you. We’re making sure that more and more applications are put together and bringing together seminars like this one. It’s been wonderful to do this in partnership with the U.S. Chamber and the SBA because they know a lot about small businesses. And by working together we’ve really been able to put together what I think is a very exciting program.

So, what’s the call to action? Well, I think finding the right partner locally, who understands these systems, is very important -- taking some time to understand what’s now possible. The computer of two years ago is not the computer of today. And the Internet is a big part of the reason of why that’s changed. The opportunity to do new things is really greatly underutilized. And one thing that I think that would be interesting is to talk to your customers about how they think technology might facilitate the things you do with them -- certainly, partners like the accounting firms, people like Microsoft, who are very interested in getting involved. I think the opportunity here is really a fantastic one. I appreciate your coming today and we look forward to working with you. Thank you.