The personal computer is an amazing technology. Every year it gets faster, somewhat cheaper, and over 80 million of these personal computers were sold worldwide in the last 12 months. At the heart of this is really a miracle technology, the microprocessor. Every two years, the microprocessor doubles in performance. And this kind of exponential improvement really isn't seen anywhere else. What it means is that although 20 years ago computers were only for large organizations and governments, today they are a million times less expensive, and so, they are for individuals. They're really a tool like any other tool that can magnify our capability. In the next 20 years, the same rate of improvement will continue. And so computing will cost, again, a million times less than it does today. And we'll use that increase in power to make this device much easier to work with, to make it pervasive, to make it understand what our interests are. And it will become the ultimate communications tool. And that's why we talk about this as the information age.

As the volume of the personal computer has risen, it's been possible for more and more new companies to come in and develop software applications. And once you get the applications, that further reinforces the volume. And so we have a positive feedback loop that I call the PC success loop. The more machines there are, the more software; the more software, the more machines.

Now, today we talk about these machines as being connected together. Throughout the history of Microsoft, which is over 20 years, we've waited for a time where these machines would all tie in through a common network. It was only three years ago when that vision really came into being, and it was all fostered by a set of work done on university campuses called the Internet. The Internet standards let us take computers of all types and let them work together. And so whether it's electronic mail, or browsing information, or sending files around, we now have clear standards. And this makes a very big difference. The Internet has achieved critical mass. And so every year, we're simply going to get richer and richer content.

Now, the building of that content is something we want everyone to be able to participate in, not just programmers and developers or commercial companies, but we need to have authoring tools that make it easy enough that students and teachers will be major contributors here as well. Many people look at the Internet and they see its limitations. They talk about the fact that it is fairly slow. They talk about the fact that there is no security today. They talk about the fact that it's hard to find what you want because a lot of the information out there is not very good. But for every one of these limitations, and any additional ones that people come up with, there are dozens of entrepreneurial companies, including Microsoft, that are working to resolve these problems.

And so I can say with great confidence, the Internet will evolve year by year, and it will be the central standard that ties all of these machines together. In fact, over time, it won't just be the personal computer as we think of it today. It will be intelligent TV sets, or wallet-type devices that we can carry around in our pockets that connect up in a wireless fashion. We'll have tablet- sized computers where we can simply use our handwriting on the computer, and that's recognized to create a digital message. And so the Internet is a phenomenon. The closest thing to it I can think of is the Gold Rush where everybody went off to find their fortune. And people were fairly surprised at how it all turned out. It did a great job of developing the economy in California, and it was really the people providing the infrastructure who were most successful.

So that's a very positive picture. Technology moving forward at a great rate, and enabling all kinds of collaboration. The first use of all this technology will be in business. Business can afford to buy products that create productivity, that allow them to move ahead and make decisions better. And that's wonderful because it fuels the phenomenon. It fuels the volume that's necessary. It fuels the research to make the product easier to use. But in the long-run, the greatest impact of this technology will be in education. And that's why all of us should strive to see how we can make this a reality as soon as possible.

Certainly there are some challenges here. The rate of change is very, very fast. In businesses it's typical to replace computers every three years. What you find is that after about three years, the new applications that are being written often don't work well on those older machines. And so businesses just do the depreciation, and they're able to buy those machines. That's certainly doesn't work for schools. The limited budgets, the difficulty of not only wiring up the school but connecting it out. The challenge of getting this all incorporated into the curriculum for common access, and even the expectations that people have that all of a sudden this will just magically make such a big difference. That is something that we have to deal with, and really day-by-day, step-by-step, solve these problems.

The reason that I'm so optimistic about this is that I think interactivity, where you have access to all the world's knowledge, really is something quite fundamental. The ability to reach out and not only find information, but also find other people who have the same interests, no matter where they are, all over the world. This is an advance that can take people's curiosity and preserve it, and encourage it. What does a class look like as kids go out and explore and come back into the class and talk about what they found that was interesting or confusing, how do they share that? How does it fit in with text books? These are the types of things that we need to be experimenting with today.

Technology does have a role in student learning. This is despite the fact that historically technology, whether it was the TV set or computers that did drilling sessions, they really didn't deliver much. The TV set was there, was worthwhile, but not a breakthrough of any kind. Having the computers do these drills, again, was not really a breakthrough.

One of the key elements here is to prepare students for the future. The rate of change in the economy is much higher today than it ever has been before. Previous advances like the telephone and the TV set took several generations before they went from being a curiosity to becoming something so mainstream that you had to be comfortable with it. You had to take it for granted. In the course of a single generation, we will go from very, very few jobs involving computers to the vast majority of jobs, certainly the most attractive jobs, involving using the computer as part of the daily activity. And people who are very comfortable with that, in fact even enthusiastic about it, will be the ones best prepared not only for those jobs, but for the continuing change that will take place in the economy.

This rate of change is fairly scary, but it's not something that we're going to vote to stop. It really is happening, and countries, individuals, companies, are all having to ask themselves, where do they fit in, how do they get out in front of this? It's amazing when I meet with political leaders around the world, they generally assume that they're very, very far behind the United States, and they want to know, how do we catch up? Well, in fact, the United States hasn't solved some of the challenges that come with these advances. And so it's a case where, even on a global basis, we can look at the experiments that other countries are doing and learn from each other.

I really believe that making information available quite broadly not only transforms the work place, but also transforms education. It gives people an opportunity for greater involvement. When I talk about communication, it's not just student to student within the classroom or across schools, it's also between the student and the teacher, and perhaps of great importance is teacher to teacher collaboration. How do teachers who work on a common subject and have new ideas find each other and share their best ideas? How do they build on each other's work? In the electronic world, there's a significant opportunity to do that. I think that the students who graduate during this decade will be best equipped if they use these tools and, as they move into the work place, they'll be innovators, they'll be driving the companies they work for to take best advantage of what's possible here.

So, the vision here is of a connected learning community. The connection between the school and the home is very valuable. Giving parents an opportunity to look in and see what the class is learning, to understand what the homework assignments might be, to work with their students to go out and explore whatever information that is out on the Internet that might be relevant, and then be able to mail that in, or print it out, so it can be shared broadly with other students. It's wonderful how universities, who have been at the vanguard of the Internet, building a body of material up on their Web sites that can be accessible to all levels of education. This is a perfect example of schools working with colleges. We have libraries getting into the act, contributing and building information, and lots and lots of content out there on the Internet. The vast majority of content on the Internet is absolutely free. And even the content where people are hoping to charge a subscription for it, as we're able to verify which users come from the commercial world, and which users are students, we'll be able to have a substantial part of that commercial material be available free or at extremely low cost to students. And so the ability to make the marginal cost of access to information effectively zero is here now. Of course we have to get -- at the beginning -- we have to get the computer, the connections, the training, the curriculum, all of those pieces, before we get the foundation that allows us to access all of this new knowledge. In doing that on we can really fulfill the vision of schools providing equal opportunity. So, it's not just in some schools, but over a period of time in all schools, we think that's very, very important.

The idea is that each student feels in control of what they're doing, that they don't have to stand in line to wait to use the resource. Eventually, portable computers will be inexpensive enough that each student might have their own, and they can take it home with them, connect it up, and continue their exploration process whenever they want. In the experiments that have been done along these lines, the impact has been quite dramatic, and so we can hope that as the prices fall, and the options increase here, that this is something that a lot of students will have available. Trying different things out is of critical importance, and once there are experiments that work well, it's very important to spread the word about what's been learned -- so that everybody can benefit from that. We've done that by sponsoring a number of Web sites that have curriculum and have case studies of what schools have done. I thought it would be useful to take three cases we think are very exciting, and show you a little video clip of some things going on in different places around the United States where schools are already actively building these learning communities. So let's go ahead and look at that.
(Video clip.)

MR. GATES: The last example there talked about senior citizens getting involved, and it's kind of interesting if I look at all the electronic mail I get, and I do get quite a bit as my e-mail address is published in magazines from time to time, a lot of it comes from kids. And, you know, it's fun. They're asking questions about what should they learn. But a surprisingly high percentage also comes from senior citizens, people who have taken the time to get knowledgeable about the technology, and they're really out there contributing to chat sessions, trying to find things that can really engage them. And so there are so many resources out there in the world, once we get people connected up.

In this world of computing with the fast change and the different requirements and different resources that schools have, there's not a one-size-fits-all solution. There are many ways to go about this. Now, fortunately, the technology business is providing building blocks that do stick together. The prices are going down, the ability to use different things, and connect them up is getting better all the time, and manageability, which has been a very key issue is improving quite a bit.

Some things are known now. As you go through networks, clearly the TCP/IP networking standard is what everything should do, and all of the software should connect in it that way. But, beyond that, there will be quite a range of solutions and prices. You need to have platforms that really are able to grow as you put new demands on them. And so drawing on the high volume technology that's being used by the business and home markets is very, very important. Many schools are finding now that they've got to set up network servers that serve the entire school, not just file sharing within the lab, but the mail server that people can dial in to and that connects them out to the outside world. And if we're not careful, the expense of managing that and the complexity of managing that will use up money that should be used to keep the machines up to date.

I mentioned earlier that schools shouldn't just be consumers of information on the Internet, they should be contributors as well. And that's where these tools for Web publishing come in. Now, taking a digital photo, putting it onto a Web page, making that Web page somewhat interactive, is dramatically easier than it was a few years ago. And the competition in that space will ensure that it gets even easier.

You really want all of your content products, the software products you buy, to have the ability to look out to the Internet. So, for example, if you buy some curriculum software, it should have links out to the Internet to show where further material is, to show where there's been a community built around students doing that work, to connect you up to a community to teachers who are using the same course material, and can provide helpful ideas about how they've worked with it. And so there isn't going to be a dividing line between the software you buy in the classroom and the Internet. Those two things will really go together. And the best software will provide its updates across the Internet.

For example, these online encyclopedias today, although the CD itself is only updated on a yearly basis, on a much more regular basis, the information is updated on the Internet, and if you're connected to the Internet, if you read an article, it will even highlight for you the fact that there is more information out there, as well as take you to the sites that might provide additional information about that article. In that sense, an encyclopedia becomes simply a window on to the world of information, not just what it has itself, but in the way it guides you out to everything that's out there.

Standard computing around the PC spans an incredible range today. At the very high-end, we have businesses buying so-called "clustered" multiprocessing machines that can literally handle a billion transactions a day. Even things like airline reservation systems, credit card systems, phone networks, will all be using this standard building block technology. The same type of server technology will be needed by large schools and school districts, and we see universities putting many of those in today. The desktop PC will be the most typical thing in the lab environment. And there's a lot we've learned about, how do we set up the software to deal with the situation that it's not just a single user in front of that machine, that there's a parade of users, some of whom come back again and want to get the same configuration that they had the last time they used the system.

We haven't thought enough about that scenario. But now, with feedback particularly from schools and libraries, we're building in features that relate much more to that shared device type of scenario. Portable computing is very important. Portable computers continue to be premium priced above desktop machines. So they won't work out for everyone. Also, you've got the challenge of making sure the machine stays where it should, and -- (laughter) -- and it's used in the right way, but you have to deal with that. But I do think portable machines have an important role in education. If you cut off the time that a student has to use the computer, it's a fairly scary thing. It doesn't really encourage this notion of taking their curiosity and going wherever it leads them. And if they need to go back and review some material because they're confused about it, giving them lots and lots of time to be able to do that. And so it's great to see experimentation where portables are coming into play. The pricing for those machines will be coming down, and so that will be more and more possible.

At the very low-end, we have devices that connect up to a server, and use the power of the server to run the applications instead of the device itself. That's something like a Windows Terminal. And in some cases, that will make sense for school environments, although you have to be careful to add not only the very low cost for Windows Terminal, but also the money you're spending to make sure the server is powerful enough that everybody can run their applications.

We also have very small hand-held devices that are starting to be used in lots of applications. Now, in some cases, these are simply a complement to a desktop machine, where you can walk around, have your messages, your schedule, and the latest data you care about. Today most of them are not connected up to a digital wireless network. But that is the vision for what we call the wallet PC. As these hand-held devices are getting more powerful, there will be some cases where they are used in the classroom. The typical price of these machines is five or six hundred dollars, which makes them about half the price of even a very state-of-the-art desktop PC.

Finally, the lowest cost device is one that we call Web TV, where you use the TV screen, and that's the display. And then there's a box, it's about $250 that connects up to the television. It doesn't let you run the full range of applications, but it does give you the Internet and electronic mail access. And so it opens up a part of the market that was not there before. I expect particularly in homes that are connected with cable, that over the next five years this will become a standard offering, and it can be used in the classroom as well because of the low cost.

Now, a challenge with all of this is not just the hardware but the connections. If you buy a low-cost Web TV, the hardware it’s inexpensive, but you're still having to pay somewhere between $10 and $20 a month to have that connection. We've got to deal with that part as well. Fortunately, there is a lot of focus here by companies wanting to come in and fund the communications cost. Recently there was this government program that was approved where the grants will start in January of next year where you can get a significant portion of your communications cost paid for. The fund will be administered by the Federal Communications Commission. The percentage of subsidy there varies quite a bit. It's partly based on the percentage of students who are on the school lunch program, but that's a good contribution as well.

Microsoft is working with both cable and phone companies to make sure they're putting in these new high speed infrastructures at schools and libraries so they're the first to benefit from that. There is a big benefit to having a connection that's higher speed. Today, most people are dialing up using the phone network where a state-of-the- art modem is 28k baud. And that works fairly well. If the pages you're bringing up are mostly text, and still images, the responsiveness is acceptable. But as you move up to ISDN, which is five times faster, the newer technologies, PC cable modems or ADSL which are both about 20 times faster, not only do the pages come up on the screen a lot faster, but you can start to incorporate audio and video elements. And so you start to combine not only the interactivity, but the richness that kids are used to as they watch TV so many hours a day. And so higher speed connections will be very, very important.

About five years ago, people were overly optimistic about how quickly these high speed connections would become available. There's a lot of talk about interactive TV, but the technology is too immature. The costs to put in those networks and those devices simply wasn't justified by the extra revenue that would be available in the houses. Today, the price of that technology has come down quite a bit. And so there's a sense of renewal as the cable companies and phone companies are looking out now and saying, yes, it really does make sense to roll these out. And there's a lot of great trials of both the cable modems and ADSL modems. And schools should see if there's activity like that in their areas, and make sure that they're able to get hooked up. The higher speed just makes it a lot easier to involve the entire community and get a wealth of material available.

I mentioned PC manageability, the difficulty of keeping the software up-to-date, or knowing if a machine has been messed up, what happened, how do you restore it and get it going again. I think it's fair to say that the software industry as a whole, and Microsoft in particular, didn't put enough priority on this issue. And that's why this year we've made it really our top priority, a major push to get very innovative about how do you make a machine effectively self-healing, how do you make the help a lot better, and how do you avoid all the cryptic registry entries and things that tend to make the machine hard to work with. There's been an outcry from the corporate market on this, but as we've gone around and talked to users of all kinds, including schools and libraries, it's the same issue, although it's given a different label. It is of critical importance.

What we want to do here is take the network and let the network manage the machine, and let the network bring down the latest up-to-date drivers. Also, you want to be able to use the server so that if the machine's configuration has been messed up, you can just go to the server and say, refresh everything on that machine and change it so it's all in good shape, and immediately all the machines are made exactly the same. And so the idea here is that you never have to touch the individual machines. It can all be done by the people who have the expertise, who are sitting there looking at that server. If you have a high speed connection, the server doesn't even have to be in the same school. It can be at the school district level or even at the state level that somebody is looking out, making sure the machine is running, having a visibility of any error messages or problems that are going on with those machines. And can provide their expertise on a shared basis to make sure all of this works very, very well.

There are some big steps in this direction with what's called Windows-NT, which is the Microsoft server operating system. We put some add-ons out, like a zero administration kit that's on the web today. But, the big step forward here comes with the version 5.0 of Windows NT, that goes into beta test later this year and will be released next year. There's also a lot of work going on at the hardware level, where we, in partnership with the people who build Windows type machines, are working to make these machines automatically go and get the operating system across the network. And so they can auto check all the devices that are there, so once again there is no work that has to go on at the PC itself.

There is a particular flavor of PC that we've generated here, that never has to be opened up. And it's actually nice and small and fairly inexpensive. And it's called the Net PC. And although, initially those are being targeted for the corporate market, I think they're an excellent choice for schools that are networked together. It's probably the best thing for putting into the lab type environment.

The computers we're talking about still are fairly limited. If you use a computer, the first day you use it, it doesn't know much about you. But, unlike a human that you work with, who learns what you're interested in and becomes adapted to working with you well over time, a year later the computer is the same. It has no idea what you're interested in and it requires extremely precise instruction to get things done. And this is certainly something we have to change.

We need computers that can see where a student is having problems. Computers that know what you care about. So you get notified if there is some new work in a particular subject area. When a teacher sits down at their machine in the morning they should see a home page that is tailored to notify them of some interesting links that they might want to go out there and pursue. You shouldn't have to go out and try and find things all the time. That information should come to you.

And so this idea of customized computers that learn is very, very important across an incredible range of applications. And one of these, of course, is the idea of customizing the learning experience and responding with targeted instruction. This is an area that many, many companies are working on, including Microsoft. And I thought I'd show you an example of some of the work going on here. The best way to do that, I thought, was to have a teacher who is really helping us out explore what this can mean, come and show you what she is doing and how it's working for her.

So I'd like to ask Colleen Dixon, who is a teacher and technology coordinator at Endeavor Elementary School to come out and show me what she is doing with this technology. Hi, Colleen.

MS. DIXON: Hi. Would you care to join me?

MR. GATES: Nice furniture.

MS. DIXON: Yes, it's pretty typical. At Endeavor Elementary we've been testing this new technology with our kindergarten and first graders. So what you just described, the idea that a personal computer can act as a personal tutor for a child, has been happening with our kids. If you consider what good tutors do, they track a child's progress, they know when the child is stuck and then provide help at the right moment. Well, tutor assist technology emulates this same process on a personal computer.

Tutor assist is able to track a child's progress. It recognizes when the child needs help with a concept and then it offers a multimedia tutorial to help the child understand the concept. I'd like to show you how tutor assist might help a child who's working on single digit subtraction facts. The child might play this bingo like game that helps with math practice. The problems will appear in the lower right corner of the screen, under the hotel sign.

Now, if the child was solving the problems correctly, tutor assist would know that and the child would just keep playing. But, if the child was making errors as they played -- as you can see I am, tutor assist has recognized that the child is stuck and has selected a relevant tip on single digit subtraction to help the child understand the concept. Now, the tip will show it another way.

The professor acting as the child's personal tutor has just given a short explanation of the idea behind subtraction. The tutorial was shown both as a manipulative exercise and a number line example to help different learners. And now the child is offered the opportunity to practice. Once the child understands the concept they can go right back to the game and keep playing. Unlike most learning software my kids have worked with, tutor assist responds to the child. This is a very exciting concept and I'm looking forward to the learning tools this new technology will bring to our kids.

MR. GATES: Thank you, that looks great. This idea of more intelligent computers and a natural interface is really the holy grail of computer science. And I'm convinced that within the next 10 to 20 years we will be able to teach computers to see, to listen and to learn. The idea of using a low cost camera on the computer to recognize who is sitting in front of the machine and see what they are doing, even to see how they're reacting -- is the student sort of grimacing as they answer the questions, are they enjoying themselves -- that should all be very, very possible.

Understanding voice not only helps people with disabilities, but helps everyone get in and use the computer in a very, very simple way. And so you can have conversations where the computer is helping you out.

Microsoft is investing over $2 billion a year in Research and development in this area. Many of these problems people expected to solve a long time ago. But they turned out to be very, very difficult. The kind of ambiguity you get in recognizing speech was not well understood, because the amazing way that humans are able to do it is all done subconsciously. If you take a phrase like recognize speech, it sounds a lot like "wreck a nice beach." In fact, our speech group calls themselves the wreck-a-nice- beach group. And they can actually show that the wave forms that the computer sees make those two things virtually identical.

And the only reason that humans are so good at knowing which is it is because they have the context of the conversation. And so it almost seems funny if the computer says that, you look at it and you say, well, that's not even similar at all. Whereas, at the low level it is extremely similar. And so for a computer to conquer these tough areas, it will have to almost have common sense. It will have to understand discourse and what it's about and how it works. I've got a short video clip from some of the researchers at Microsoft talking about how they're doing this work and what it will mean.
(Video clip.)

MR. GATES: Actually the first computer program I wrote, when I was 13, played tic-tac-toe, but it didn't use visual recognition. One question you might ask is, when will this kind of advanced capabilities really make a difference in the educational environment? And there's actually a lot of concrete work going on in this area right now. Some of the most advanced research is going on at Carnegie Mellon. So let's look at how they're using speech recognition to help kids learn how to read.
(Video clip.)

MR. GATES: There's a lot of great work going on and the potential can be realized by having technologists and educators working together. Certainly at Microsoft we're very enthusiastic about this. I wrote in The Road Ahead that the best opportunity for technology having an impact is in the world of education. We need feedback about where our products work, where our technologies work, and perhaps even more importantly, where they don't work and we need to be more creative.

We're involved in a number of things, like many private companies are. The spirit of private companies in jumping into this has been better and better as the years have gone on. Five years ago it really wasn't an accepted thing and today it's almost becoming something that every company is expected to do, particularly in the communities where they are very, very present. The access through libraries is one aspect of this. And I believe that over the next five years, with the way that the librarians are embracing this and some of the money that's become available, the majority of libraries will have a PC and a connection up to the Internet.

Another major effort is teacher training, making sure there is access to great courses here. And this is a case where partnerships are very important. We're working with community colleges and colleges of education to try and do this and building a web site called Global Schoolhouse to share best practices. The most important thing, I think, is helping schools get connected up. And that's making the software that can run on these machines available and configuring it in a way that recognizes the unique elements of the education environment, the variety of machines that are there, the fact that many of those machines are older machines and the need to have a simple administrative interface for setting those things up.

One of the most interesting things we've done recently is put together some templates that make it easy for a school to put up a web site. And not just a web site with some photos of the school, but also something that describes the class schedules and gives the curriculum, so people who are coming in can see when things are being done, making it very easy for an administrator who doesn't know much about computing to be able to keep the web site up to date and engaging, so people will come back on a very regular basis.

One thing I can't emphasize enough is that great teachers are at the center of all of this. All we're doing is giving them more tools. The personal computer is a tool that some people use in a fantastic way -- and that's all we can hope for. This is a case where we need to get many elements of the community working together. Government, primarily at the local level, needs to pitch in. It's been great to see there have been lobbies that have had a technology focus and many of those have been successful. I'd be the first to say that the products we have today are not the ultimate solution, but I can say that the pace and improvement in these technologies, and our effort to really listen and hear what you need, will be the very, very best it can be.

I see all these pieces coming together and there is nothing more exciting than seeing a student sit down and enjoy learning something and getting the positive feedback that comes with that. So I look forward to working with all of you to make this a reality. Thank you.