[Due to the varying sound quality and subject matter of tapes, the information in this transcript may contain inaccuracies.]

MR. GATES: Welcome to PDC. It's great to have you all here, and to talk about what lies ahead. I thought it was super to have Todd kick things off, it really set a professional tone for the whole conference.

(Laughter.)

MR. GATES: I'll try to continue in that vein. I'm calling my remarks today, "Building Windows-based Applications for the Internet Age," because I think for all of us that's something where we're going to see incredible demand, really even beyond what the industry has seen so far.

The PC industry is continuing to grow at a very, very rapid pace. The fundamental structure, where you have lots of companies specializing on their pieces, and you have standards that allow these to come together and create customer solutions, that has been the successful business model. And there's no going back. Users have a choice of hardware that's independent of their choice of software. They've got a high-volume world that allows far more applications to be developed, far more peripherals, better chips than any previous structure in the computer industry.

In fact, if we just look in the last two years, the shift toward the PC part of this industry has been very, very dramatic. The key proponents of the PC approach, people like Compaq and Dell, have been growing fantastically. Compaq has picked up the expertise from Digital and Tandem and brought that into their total focus. We have lots of players, people like NCR, or Unisys, or Siemens, or the Japanese companies, that historically were far more focused on mainframe or UNIX activities, who are now making the PC the centerpiece of what they're doing. Even HP has made a dramatic shift to focus on PC activities.

And so, not only are we the fast grower, the high-volume, low-price part of the industry, we are by far the part of the industry that's doing the most R&D, over double what's going on in the rest of the business.

We can look at this on the hardware dimension or the software dimension, and see fantastic progress. Of course, Moore’s Law continues at its really unbelievable pace, giving us faster individual processors. But that's not our only performance win. We're also taking now more of those processors and putting them together. We're moving away from buses for sharing memory to point-to-point connections to switches, and this will allow us to get up not only to 16 and 32 processors, but with our uniform memory architecture will allow us to get up even to 64 and 128.

Next, we take those systems, and next year will be a big advance in this with NT 5, and we cluster them together. Not only for incredible scalability, but for reliability as well. In addition, of course, we're making the investments now to move up to the 64-bit world. And it's interesting to contrast how the PC industry addressed the 32-bit world versus the 64-bit world.

In the 32-bit world, of course, UNIX was there first. It had been there for five or six years. And we came in very late. Even coming in late, we took over the vast majority of all 32-bit clients and servers. Well, at 64 bits, there is no gap. In fact, we've had a 64-bit file system for a long, long time that UNIX doesn't have today. And as these 64-bit processors are coming out, we'll be there on day one. Actually with a simpler migration path for applications than in any other environment.

So, along with software dimension, the improvements in scalability, the focus on the very high reliability, the focus on distributed computing, those complement the hardware improvements and explain why we've seen such incredible growth.

Now, there's a couple of new opportunities being created that will affect how we design our applications. And that's certainly equally affecting the design work we do in Windows itself. That's the reliable, pervasive, always connected communications, very high bandwidth, and the traditional form factors, tablet-type devices, or TV-type devices. Microsoft has gotten very involved in these with Windows CE, with Web TV, and a lot of design work we're doing now around electronic books, and the PC that will be something you carry with you, even taking them to a meeting like this, and being able to take notes and review things very, very easily.

So, these new technologies are going to open up the information age. They're going to make it so that people's expectations on software are dramatically higher than they are today. In fact, when I sit down with businesspeople, they're constantly now talking about how their web sites, their sharing of information internally, the way they structure around these tools is going to make the difference in how competitive they are in the future. I think it's very, very exciting how companies are seeing their information infrastructure as a key thing for their future. And I think it's software in the same way it appeared to be the key element at the founding of this business 25 years ago. I think, once again, software will emerge as the most important element. And that's why all of us here have so many opportunities.

There's a certain irony in this, that at the same time we have 20,000 new software companies being created over the last five years, that at the same time we have this innovation where our industry is directly generating 25 percent of the country's economic growth, we have an activity of increased government involvement in this industry. And I will just touch on this very briefly, and get on to more interesting things.

I think it's fascinating that somebody could say there's a lack of innovation. There is no lack of innovation. There is no lack of investment. There is no lack of competition. Today,, at this time of economic uncertainty, it certainly would be unfortunate if government involvement with companies like Microsoft, Intel, Autodesk, and Cisco were to stall the remarkable explosion of these new jobs, the steam of the economic engine.

For all of you who work at the engineering level, imagine the government coming in and saying that we shouldn't put HTML support into our operating system. We'd be doing a disservice to people if we didn't build HTML into the operating system. If we didn't use that as an opportunity to unify the way we present the shell, the way that we do forms, the way that we do help. Also imagine us not being able to go and talk to partners about technical activities.

For example, we went down to Apple to talk about taking Quicktime, and taking the work that we had done in our media player, and putting those together in something that we thought would be better for Apple, better for us and better for customers. Certainly there was some great work on both sides to be brought together. That kind of discussion makes sense, and the fact that Apple chose not to do that is fine. But, to find the government twisting that into a kind of discussion that should never take place, that's very scary to me.

So we are an industry that is doing a great job for the world, and in particular for this country. So I really want to thank all of you for your constant focus on new products and innovation. It's coming together like we do at this developers conference, to talk about these new horizons and then going back and making the investments, that have gotten the industry to this stage.

Well, the last year for Windows has been a year of great progress. Windows 98 is out, actually outselling Windows 95. Now it's over 2-1/2 million units sold. NT Workstation is gaining in the mix -- over 20 percent of business PCs are now coming with Windows NT Workstation. The browser, we've seen good usage gains there, with Internet Explorer now at a very respectable level, even here in the U.S., which is where we've always had the biggest challenge in growing that position. And finally, and probably most important, is the success we've had at the server level. Our shipments now exceed all UNIX, all the different flavors brought together, and NetWare, which is actually bigger than all of those brought together. And so now the vast majority of intranets, over 70 percent, are based around Windows NT.

I'd say if there's one thing that we really need to prioritize, and this became our top initiative just about a year and a half ago, it is simplicity. If there's anything that stands in the way of people getting at the incredible power that all these new devices have, it's the vast number of commands and the vast layers that people are exposed to in the software. And certainly Microsoft is the one that has the most work to do here. When I go back and look at things like our different error messages, this is the now famous DHCP error message, you know, this is not simple.

The DHCP client could not obtain an IP address. What a wonderful thing. Then you get to know, if you want to see these messages in the future, choose yes, otherwise choose no. Well, you really get a sense you're working together with the operating system. It's helping you know what yes and no mean there, but you have no clue what might have gone wrong.

And scenario by scenario, we really need to make the system vastly more transparent, vastly more helpful, even in the case where things go wrong. In the same way that for several years we had incorporating Internet standards as a top priority, now we've given simplicity that same position. And so everything we look at, in terms of designing the new products, comes down to getting the people from product support in, getting the people who thought through the scenarios in, and seeing what progress we make.

This is one of the toughest challenges we've ever taken on. But, it's one that I think is very, very exciting. We've got a little video we put together that kind of highlights what in the home environment people are facing with all these devices. So let's go ahead and take a look at that.

(Video shown.)

MR. GATES: So there's a lot of work to be done there, and that's why it makes sense to have this as a key focus. The products that were designed with this focus in mind will be shipping in the next year. We’ve got SQL 7 coming out with things like auto-administration, we've got Office 2000 coming out early next year with a lot of major simplicity improvements there. But, of course, the most important product is the one that's the focus of the PDC, and that is Windows NT 5.

We've really looked at what's great about the web, what's been great about Windows applications, and said can we bring together the best of both worlds, whether it's the single click deployment, the client richness, where you have very fast applications that let you do a lot, taking advantage of the local intelligence, and of course disconnected use. And before NT 5 it was really a dilemma to know which world to live in. There were some combinations taking place, but you just couldn't have the best of both. And so that's really a centerpiece of what we've done with NT 5.

You'll really be hearing, again and again, two key themes in this conference. How we're taking NT 5 and reducing application deployment management costs, and how we're making it easier to build these distributed NT end tier applications. That's where we see the biggest opportunities, and that's where NT 5 really comes into play.

In deployment management, of course, active directory is very key. It allows you to use the directory for your application information. The installer capabilities are also very key, because they now let you do the self healing, and just in time installation. I'd also say intellimirror, that mirrors state back and forth between the client and server is key, because that means that for the first time you can have all the benefits of things being central, the common administration, constantly backed up, available from any device, but still have the benefits of local execution, the low latency and the portability, and not getting into a time sharing mode, where you're overloading the server infrastructure.

Everything here requires you as developers to take advantage of these features. And so we hope to make it very clear how we've made that reasonably straightforward. In fact, we'd like to show you an example of how File Net and SAP are doing that, and so I'll ask Todd Nielsen to come back out and give us a look.

MR. NIELSEN: Okay, Bill.

One of the focuses of the PC this year is to focus on making it easier and to lower the cost of managing and deploying applications. And there's a lot of things involved with that. How do we get applications to all the user's desktops, and then once they're there, how do you make it so that they don't break and they're more resilient? And so we're going to take a look here at the Windows installer service, and the active directory and how they make that possible.

So what I've done on this screen is I'm the IT manager, and I'm using the Microsoft management console, and I want to deploy some software to the executive group at Microsoft. So I'll go ahead and say, I want to manage the group policies, and I already have a policy set up, so I'll go ahead and edit that. And now we'll go ahead and look at the user settings, and from this interface, I can go ahead and specify security settings, and our log-on scripts and the like, but what I want to do is I want to look at application deployment. So I'll go ahead and say, I want to go ahead and install software, and we'll go to a server that has some software that we have licenses to. I notice that Baan's on the list and today in Germany Baan is actually announcing support for NT 5, so we're going to optimize all their applications to take advantage of NT 5 features.

We've got Office 2000, what I'll do first is I'll go ahead and install SAP, double click on it. And I have three choices, I can go ahead and publish it, which means that the user runs across a document or a file type it will bring down the application, or I can go ahead and just say, install it. So we'll install that. And now I'll do the same thing one more time, and I'll do it with -- let's install File Net. So I click here, push it down to the desktop, and we're done. So as an administrator I've been able to deploy my applications to all of the executive group at Microsoft.

So let's go ahead and be a user. So let's log onto your machine here, your password? Let's go ahead and hit enter, and -- it was such a perfect chance, I could have said anything there. Okay. And you can see that now on your desktop we've got two icons for File Net and SAP. And let's go ahead and launch the File Net application. So you as a user just simply double click on it, and then the application is brought down to my desktop and installed. And what we're going to see is the File Net IBM product, which is a document management system that takes full advantage of NT 5. So here we are. And now, we talked about deploying software, but how can you make it more resilient.

When you talked about simplicity, one of the things that I've always wondered as a user is, you know, there's a lot of files on my system that I don't really use, and I don't know what they're there for. And so here's a directory of the File Net system, and I've never used DLL files, I don't create them, I don't know what they're there for. And as far as I know I'm going to go ahead and say, delete *.DLL. And when I do that, those DLLs are gone, and I have more disk space. Well, today what would happen is the application's life would be bad. You wouldn't be able to run the application, you'd get an error message and all that kind of stuff. But, one of the benefits of the Windows installer service is I can now double click on the File Net icon, and the user experience is still the same, the application will go ahead and bring down the files that it needs. It self heals itself and the application can run. Pretty cool.

Everyone here --

(Applause.)

MR. NIELSEN: And the great thing about this service is everyone here can take advantage of this. So all the applications that these developers create can now be deployed more easily and be more resilient.

Now, another thing I want to do, let's go over to this machine, and let's take a look at the SAP application. SAP has done some integration with the active directory. And what I'll do is I'll double click and start SAP. And one of the problems that developers face today is they have a lot of system state application code that's stored on each of the individual PCs. And so if a server changes, or goes down, or something like that, the administrators have to go and touch all the individual PCs. Well, now with the active directory, what SAP does is I simply go ahead and look whether there are servers that I can bind to. And here's one. There could be a list here, but I've got one in this case, and I'll go ahead and log on. And so now SAP doesn't have to go out and touch and maintain that state information on each of the individual workstations, but global system information can be stored where it's meant to be, globally.

One more thing I'll show is in the Microsoft Management Console. In the past, we've talked in previous PDCs about integration with the MMC. But, one of the great things that you can do now with the active directory is you can feed active directory information into your MMC. And SAP has now done that, so that administrators can now look at alerts and all types of system information that's populated from the active directory. What this means for administrators is I'm no longer tied to my desk or my machine, but I could be in Denver, for example, and if there was a problem I can go ahead and log onto any machine, and I can see all the global state information because it's populated by the active directory. So the bottom line, what we've seen is how the Windows installer service and the active directory makes it easy for everyone here to benefit and have their applications installed more easily, and be more resilient.

MR. GATES: Super.

MR. NIELSEN: Thanks, Bill.

MR. GATES: Thanks. NT 5 is going to have more applications than any other operating system has ever had. And that's because of the commitment to backwards compatibility. In fact, 60,000 applications is a world's record. And we'll also have a lot more applications optimized for NT 5 than we've had for any other Windows launch, even including Windows 95. We'll be three times ahead of that. So we're very pleased at the reception we've had from the development community, and they're moving to use the things that have been built in there.

Now, when we think about NT 5, it's important to remember that it's a very broad product. It advances scenarios on the desktop and the server in very substantial ways. Because we've been putting so much into it, it's easy for people to just think about the top two or three features. But, the product has an incredible amount of depth. Now, we've designed it so that customers can move either all at once, so they'll roll it out to all their desktops and servers, or they can move a desktop at a time or a server at a time. And that's why we want to make sure people understand why it's worth it for every one of those machines.

It will be an advance in the Windows user interface, things like personalized menus, the way that we integrate in the Internet Explorer. We're taking even further steps than we did in Windows 98. The power of Windows NT, fewer reboots, higher speed, the better security, it is a superset of Windows 98. That's the first time we can say that about an NT release, compared to the high-volume release. And there's lower cost of ownership. And that will be very concrete with the fact that you don't visit desktops, the fact that you get the mirroring, those are directly addressing what customers said would change the TCO picture for them.

Moving up to the server level, again, there are specialized servers in the world. If you're just using NT for file and print, it is a big advance. The performance, the use of the directory make it the best choice there. As a work server, it's a huge advance. It takes the latest IS, the latest component technology, and integrates those things together. Likewise as an application server, communication server, or infrastructure server. So the role in some cases would be incremental adoption, but that would be fueled by the fact that in each one of those areas we've done things that make it compelling.

Let's go ahead and hear from a few of our lead NT customers, and how they're seeing the system fitting into their organizations.

(Video shown.)

MR. GATES: The distributed world is really redefining what we mean by application. In 1990, an application was something used by employees. If it was used remotely, it was a class lease line, mostly character-based. Development was done, a big version at the time. And having it run all the time was an unusual thing.

Today, applications are an incredible spectrum that has to incorporate support for the entire customer base across the web. The connection paths could be any Internet connection, including virtual private networks. The user interface is not only graphical, but multimedia.

It's got to be part of the application, because that's the competitive edge, to get your application to be more attractive than anyone else's. Development has got to be very rapid. New updates have to automatically flow across the network without a lot of effort. And being up all the time is simply an expected feature of the application.

Now, a key approach that allows this to happen is to build applications using end-tier approach. When we say "end-tier" we don't mean that all these tiers always run on separate systems. In fact, we think a very key scenario is the offline case, where you have a portable machine, and all the tiers are running on a single system. And so, the uniformity of the programming model from that portable machine up to super high-end servers is a very key part of our strategy.

The world has been moving to this NT model year-by-year. First, the step towards client server. That certainly is on the path, because it talked about separating out the presentation piece from the rest of the application. Now, we're going the full way of separating out the data access and making these applications fully web-aware. All the new electronic commerce applications will use this architecture.

Well, Windows is the applications platform. It shouldn't be necessary for software developers to go out and get an expensive runtime and get their customers to buy that for all these applications. There should be an integrated approach that ties in very directly to the security, the directory, the user interface, all of the administrative tools that are in the operating system itself.

Particularly if you look at the very broad market, for people who are developing applications, they don't just want to sell at the enterprise level. They want to sell to organizations of all sizes, organizations that simply want to put in a Windows system and have that be the foundation without other pieces.

Windows NT was designed when client server was becoming important. And so a lot of the features, the remote procedure calls, the security approach, really were designed around the needs of client server. With Windows NT 4 and fully with NT 5, we built into the operating system itself support for end-tier applications. And many of the areas, like the integrated transaction capability, we've certainly been the leader in saying that should be there for all elements of the system.

Transaction support is really only valuable when all the subsystems participate, because when you want coherent state, when you want to use that transaction capability to make the application run across a cluster, it's got to work with all the different systems. And so, building it in is really the only approach.

If you look at the distributed application technology in NT 5, we've been investing in these pieces for many years, starting with the web server itself, IIS 1.0. We've had very rapid updates to that, most recently with IIS 4.0. But the version that goes into NT 5 goes even further building on the feedback we had from 4.0.

Likewise, COM itself has evolved very rapidly. The support for distribution, integration of the transaction capability and queuing, all of those come together with what we call COM+ in NT 5.

Database access, making that a separate thing so that you can be independent of what kind of data you're going after, that's a big very important trend. And it's not just relational data. It's data that's structured many different ways, hierarchical data as well. That's why we moved up to OLE dB, and we're now enhancing OLE dB with an understanding of schema using XML standards to allow for rich semantic level connections.

The base services have also had to improve for all of these capabilities, whether it's moving the security now to a public key infrastructure, or making all the capabilities of the system fully scriptable, so you have the kind of customization capability that high-end systems have always had in the past.

Now, this diagram represents the end-tier model. You see the databases and legacy systems being separated out from the business logic. This has been amazingly popular with our corporate development customers. They see, for the first time, that they can move their development from the mainframes onto the Windows NT system, and still leave the database or at least major portions of the database up on the mainframe. And so the time frame for migrating the data can be different from the time frame for moving over and using the modern tools in the NT environment that let you build these applications rapidly, give you the simple Internet-type interfaces. That can happen now.

So the leading-edge customers, people like Merrill Lynch, a number of the big banks, have been pioneers there, and this is a model that will spread, I think, very, very rapidly.

The presentation level is one where you've got to have incredible flexibility. People talk about a thin client. Well, there's been a lot of claims and talk about how you create a thin client. If you want a client to be thin, it can't have the browser running in the client, because the browser is a very large-size application, larger than any productivity application, and requires the full-blown PC hardware. So the myth that you could somehow run a browser on something cheaper than a PC, that was exposed.

The way you get a thin client is to actually take that work and offload it to the server, and for a class of users that have worked with terminals in the past, this is fantastic. The Windows Terminal Server is a key part of our strategy, and it's proving to be very important to customers because they can decide for any users whether to give them a Windows terminal or a Windows PC without any impact on their application development. The APIs are the same, the user interface is the same, the productivity tools are the same. And if that user is making heavy use of the system, they can move up from the Windows terminal to a full-blown PC with all of the rich peripherals and portability without changing any of the learning that they've done. They just get lower latencies, more power at their fingertips without any software adjustments whatsoever. And so that flexibility at the client level is unique to what we've put together.

We took all the work we're doing here and put it under this Windows DNA umbrella, and at every tier there's got to be integration and innovation. These tiers, you move code back and forth between these tiers, and you sometimes run all the tiers on a single machine. So, you've got to have the same object model on all the tiers. You have to have rich tools. And it's our belief that you've got to have a language neutral approach. There will be many new languages that come along, particularly in areas like world-based programming, rich data binding with the object stores that will be standard in the future. And there's a lot of code out there and a lot of expertise in languages like C that let you develop very, very efficiently. We're going to support all those languages, including Visual Basic, Java, and anything that comes along with the powerful DNA platform.

At the presentation level, we have many levels that you can connect into the system, from HTML to DHTML to scripting, all the way up to writing your own components, or calling the Windows APIs directly. We give you those choices because different applications have different requirements.

Now, one of our drawbacks was that if you use the component or Windows layer that your installation was very difficult. And so that made it unattractive despite the benefits that were there, and that's what we're changing with the Windows installer capability. So, whether it's .exe-based or page-based, you get that simple installation.

We also believe very firmly in rich programmability, letting the business world to the presentation be easily customized, and we've had over 100 developers who put the hooks in for Visual Basic connections for the Visual Basic for Applications, or VBA. That was thought to have been fantastic, and it has become a kind of standard. In fact, every month, we've got new people signing up for that. Just in the last week, Corel, who of course have been focused on a different language customization approach, decided that their customers wanted VBA and made a commitment to include that in the future versions of their product, which is a great thing, and we're very pleased to be working with them.

At the business logic level, there are a lot of rich capabilities that should prevent you from having to write complex systems code. In our dialogue with the enterprise planning application vendors, we're amazed how much of their code related to things that were really systems level that we ought to do for them. And so, with their help, we're making sure that the way we build these capabilities really does simplify their life, starting with the rich Internet servers, the queuing, and now the COM+ services that ship with NT 5, they're also available back on previous versions as add-on capabilities. So that's queuing, directory, security, all of those things done in a holistic way, so you don't see a different programming model for them individually. You don't see a different performance model. You don't see a different security model.

The data server services, those are evolving very rapidly. This XML work that we'll incorporate into OLE dB, I'm very enthused about that. The idea here is to give you a programming layer with ADO, and a data server connection level with OLE dB itself that connect up to all the different data sources.

Electronic mail is a good example. It's organized hierarchically. But we need to bring the electronic mail systems and database systems together. There are applications that do collaboration that need to talk to both of those. And, instead of forcing the mail store to do everything, a common API for the applications gives you a way of storing things the way you want to, and yet bringing together a user interface that pulls in information from both areas.

COM has been evolving in a upwards compatible way. COM, we've been at this over five years now. There's a thriving industry of people who offer these components. The transaction server was a great step in this. But COM+ brings it all together, and that's really the model that we're promoting to people today, and that you'll see as a continuing evolution.

Let's go ahead and take a look at some of these capabilities that come to applications that use COM+. So, I'll ask Todd to come back out and give us a look at that.

MR. NIELSEN: Okay, Bill. Well, you've got to have COM+ in making distributed computing easier. And what I want to do is, I want to talk about two new features in COM+ that have to do with making distributed computing easier. We're going to look at queued components, as well as dynamic load balancing.

Now, the first thing we're going to do is, one of the issues that face developers today is, how do you work this, how do you build an application that works connected as well as disconnected?

Well, 40 percent of the PCs that were sold last year were laptop computers. So you can't ignore the disconnected case, because people are on the road and traveling. So what we're going to see is an order entry application that allows the user to be connected, and at work taking orders, as well as then go offline and have the application still work.

So I'll go ahead and say, prepare to go offline. And what's happening now is the data, the pages, and the components necessary to run this application are coming down to this laptop. Now, these components are special components, they're cued components, thanks to COM+. And what these cued components do is they allow the application to work asynchronously offline. Now, the whole reason this is even possible is because we have the same object model on all three tiers. In other words, you don't have to write the one object model on the middle tier, and a completely different one on the client. It's the same object model on all the tiers.

So go ahead, we're now offline. I'm now going to disconnect this, just to show that we are indeed disconnected. And I'm a sales guy on this order entry app. So let me put on my sales coat. At Microsoft when you buy a sport coat, you find every opportunity you can to wear it. So here's my sports coat.

And we're going to go ahead and take an order. So I'll go ahead and say, order entry, I'm at the customer's site, and I'll enter a customer number. So I enter customer number 99, and you'll see the customer is not found. So all the local data validation still works in the application. I'll go ahead and say, customer number 1, we want to make a new order. We'll go ahead and find the product. It'll find the product information, I can go ahead and enter a quantity, and you'll see it calculates it out, and the application works just like I as a user expect it to work online, but here I am offline.

So we'll go ahead and now submit that order. Now, by submitting that order, what's happened is from the user's perspective, the order is committed. But, what's happened is these cued components now are taking the transaction and they're cued up, and ready to upload them when we connect again.

Now, in order to demonstrate some of the future things I want to show in a second, I've got another button here called, "enter lots of orders." And so "enter lots of orders" will then say I've done a lot of orders, and that would be a nice button to have in real life so I could do all my orders. So, now what I want to do is I've taken the orders and I've played my golf, I've done my sales kind of things, and I'm going to upload the orders. I'm back in my hotel room. So I say, upload orders, and I'm going to go ahead and connect. And so by connecting, here I am now connecting back to the network, and those orders, or those cued components are now being uploaded to the system. So let's take a look at the order cue, and you can see, so now we have 28 or so orders that are now in the particular cue.

So let's summarize what we've done. We've been able to look at this application. It can work online, in a connected state, and because of cued components it can also work offline, and you'll see that the connection was made, and the cue went down, and my orders have been entered into the system.

MR. GATES: Excellent.

MR. NIELSEN: Now, there's one other thing I want to show, one cool new feature of COM+, and that is dynamic load balancing. But, I'm no longer a sales guy, I'm now the IT manager. And so as the IT manager here, you can see in our system we've got two computers. We've got computer number one here that's got some heavy load on it. And nothing's happening on computer number two. And one of the things is, let's say our company grows, or we take orders, you know, on the Internet, or we get more load on our system. Wouldn't it be great if you could just say, let's throw hardware at it, put more hardware and the application will work?

So one of the things the dynamic load balancing does, a new feature of COM+, is it allows us to do just that. So you'll see that we've got the spinning MTS balls, or the spinning COM+ balls and there's nothing happening down here. If we go over to the screen on the left, so if I can have -- I have a screen that's not there. I have a little UI here, so I can go to video 13. I'll just explain it. So -- it looks great.

MR. GATES: It's great.

MR. NIELSEN: Wow, there we are. So what I'm going to do is I'm going to add server. And by hitting add server I just have, for demonstration purposes, a button that's going to add hardware to the load.

MR. GATES: Do you want to put the numbers up here?

MR. NIELSEN: No, actually I want the spinning globe, and show you that. So we'll go ahead and do add server, and I've now added a server to this system. Now, this can be done with this button, or it could also be done automatically by the system, by some parameter that was set or what you want. And you'll see now that the load that we had in our cue has been distributed to the other computer. And what this means for application developers is there's good news and bad news. The good news is, every application developer here gets this feature for free. They can now dynamically load balance their applications. The bad news is, if they've recently printed data sheets or packages, they have to reprint them to say, now it supports dynamic load balancing.

The other thing that I wanted just to summarize the overall talk here, Bill, is we've seen how cued components and dynamic load balancing really help building distributed applications, and what Windows DNA is all about is making distributed applications easier.

MR. GATES: Super. Thanks, Todd.

(Applause.)

MR. GATES: There's an exciting future ahead. The role of software, the ability to really surprise people by using software advances to build in simplicity; the ability to surprise the world by showing them how scalable the PC model is going to become, going far beyond what even the expensive systems have been able to do in the past; the ability to surprise people by creating new natural interfaces, like speech and handwriting, that will make the PC far more pervasive. All of these things are ahead of us, but they build on the Windows foundation, and the really incredible level of R&D that not only Microsoft but the industry to put together.

So Windows today is the strongest Internet platform, ubiquitous, and a distributed application platform. And looking forward our commitment is to make sure that simplicity is there, and to take your feedback to make it even better, taking advantage of the new communications and the new form factors. So there's a lot of opportunities for all of us, and it's a very exciting time.

Thank you.

(Applause and end of presentation.)