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

MR. GATES: Good afternoon. It's a great pleasure to have this opportunity to talk to you about the opportunities for lifelong learning in the digital age. We're really at a very important milestone. The personal computer has emerged not just as a tool of the organization, but a tool of the individual. By connecting those machines together, we're creating a really incredible phenomena of a tool that empowers people to learn in very new ways.

I sometimes talk about this as the web lifestyle. That is, as you take the PC and Internet for granted, and you're using them many times a day, you'll expect to be able to do an incredible number of things. You'll be able to stay in touch on a trip. You'll be able to find out about all the things going on in your community, whether it's park events, restaurants, movies, traffic, anything that's going on that you want up-to-date specific information on, the web will be there, and you'll just take it for granted. The same way that the phone or the car are part of our lifestyles today.

People who are used to using the Internet will expect it to be useful for all their different functions, filing their tax returns, paying their bills, staying in touch with friends. And so, every kind of activity, whether it's buying or selling, or simply chatting about something that's of interest, it will be taking place out on the web. And so, this is really a new communications medium, one that allows millions of people to all see the same things, and that allows people who have very specialized interests to find each other and to collaborate as well.

Now, the investments in this technology are really unbelievable. The number of new companies is at a record high. Those companies are increasing their R&D at a rate never seen before. And so, there's a phenomena around this that's driving the innovation faster than anyone would have expected. There are many miracle technologies involved. The chip improving, doubling its power every two years. The speed of the optic fiber connections, and the magic software that takes all that power and brings it to life. We can expect in the next decade that there will be more change than there has been in the last 50 years.

The speed of adoption, when we compare it to previous dramatic advances that changed our lifestyles, is really quite different. Radio took 38 years to have 50 million users. TV took 13 years. Yet with the Internet, because of that broad-base of personal computers that were out there, it took only four years. We've gone from having 3 million Internet users in 1994 to over 100 million today. And those users are making more profound and heavier use than ever before. The total amount of traffic on the Internet is doubling every 100 days. And the amount of business that will be transacted there is going up even faster.

In fact, it certainly will be the easiest way to organize a trip, or find an unusual gift, or find an obscure book. Just sit down, if you're comfortable using the tools, if it's easy for you to connect up, then you'll have many, many choices out there on the Internet to find out what your friends think, find out what the reviews say. And actually do those transactions.

In every way, this thing is really exploding, and amazingly even as the demand goes up, the prices for all of the different pieces, whether it's the hardware, the communications software, the volume is allowing those prices to come down to be available to a broader and broader set of people.

So, here we have the phenomena of our age, the phenomena of the Internet information age. And it's a question of how do community colleges fit in here. My answer is, they are absolutely critical to seizing this opportunity. Community colleges have always been in very close touch with employers in the community in exactly what's needed. Where are the new opportunities, where are the skills that need to be enhanced.

The community colleges provide access to lifelong learning really for everyone. The more I've learned about the community college system throughout the United States, the more I've been impressed. Impressed at the variety, impressed at the dedication, impressed at the pervasiveness, more than 90 percent of people in the United States live within an hour's drive of a community college. And by being in close touch with their communities, they adapt in a very rapid way to the new things that are going on. So, as we look at the way that jobs are changing, and requiring these skills, as we look at the need for the information technology industry to have many more workers in high paying jobs, it's really the community colleges that can help fill the gap.

The gap is pretty dramatic. Today, there's over 350,000 jobs that are not filled. And over the next seven years, that will grow substantially. There will be over a million new jobs there. So, there are many things going on in partnership between industry and yourself to look at how can this development take place. What kind of certification would play the right role here in getting the community college to be the place where everyone can get up to date and get comfortable with this incredible capability.

And when we look at who's involved in the community colleges, you already know that the answer is, it's basically everyone. High school graduates, a very substantial number go directly on to community college. Lifelong learners, which is a very important category when you have rapid change like this where people want to come back and renew their skills through continuing education, has been the fastest growing category, and it's already over 30 million adults.

People who have a hard time getting to the community college, who can only get there irregularly, and want to be able to have access to materials that they can use in the workplace or at their homes, that's also a very key category. And the majority of colleges have programs that serve over a million people in that area.

Another important category is people with disabilities. There is so much that can be done now with these tools to promote broad accessibility and really have a very important job that people with a variety of disabilities are very, very qualified to do.

Finally, career development, people who already have a degree, but want to come back and learn something in particular. I think that will also be a very fast growing category.

The community colleges are looking at an increase in demand, and a demand that requires them to be involved in technology. This is a tough challenge. Technology requires a plan, a plan for a network, a plan for electronic mail, a plan to deal with the fact that the hardware does get out of date every three or four years, and so there's an ongoing need in terms of hardware updates. There's an ongoing need in terms of keeping that network running, and having it be a key infrastructure tool that connects everyone else together. And so, people are having to rise to the challenge.

It's fascinating to look at what the pioneers have been able to achieve here. There are, today, in every category, I'd say dozens of community colleges that are really showing the way to what can be done. For example, Ricks college is able to reach out to class resources at Brigham Young University by using the Internet. And so the breadth of their courses, the depth of their courses is substantially enhanced through that relationship. Cerro Coso, in California, has been talked about quite a bit, because they were early in getting students on line, allowing people to see the courses, letting them sign up, submitting their homework, being involved in discussion sessions about key topics, even if their only way of getting in touch is through the Internet. Valencia, down in Florida, I visited there, and I was very impressed with some special things they've done to take technology and use it with people who have disabilities where they've been able to place over 90 percent of those students in excellent jobs.

Another new initiative that I think will become increasingly important is the idea of laptop computers. Clayton and Floyd colleges in Georgia have the idea of providing those to all the students, faculty and staff. And that really creates a dramatic change, when the student owns the machine, the student feels responsibility to be familiar with it. And they get as much time as they want to connect up to the Internet, to use the tools. It's not just waiting in line in a lab, it's something that they've got all the time. That allows you to do very different things with the curriculum and despite the challenge of getting the equipment, I expect to see that more and more, because it does have huge benefits.

Finally, we're seeing in some colleges and community colleges, the idea of using new devices, things like Web TV, to let people who can't get a PC, but want to be able to connect up to all those things out on the Internet, using that as a way to get in at a lower cost, in this case, aimed at the migrant student population in the Miami-Dade area.

So lots of leaders are pioneering what needs to be done. This of course has to be done in partnership. Industry wants to see this happen, it's very important to us, in terms of getting the skills out there. It's very important to us in terms of making sure that our country has leadership in the strong way that it's had so far, in using technology for industries of all types. So it's not just the IT area where these skills are important. Virtually every industry now is thinking about how they manage information. And every job that's a knowledge worker job will require the use of technology.

So Microsoft sees its role as working very closely with you. Our expertise is building software, and software can be a very important tool. We're constantly improving that software by increasing our R&D investment, and the feedback we get from you is very important so that we set priorities about what should we do to make this software better and better. We have special pricing and licensing programs, to help you get the software in and have the very latest all the time. And there's a grant program called Working Connections, that has helped out in many cases.

We do think that getting involved with the faculty is probably the most important element here. And so we have an authorized academic training program, where we have alliances, where faculty can not only teach the technology, but also certify students with the particular qualifications that are expected for the jobs that are out there. And so we're doing quite a bit in this area, but we see it as something we're going to continue to expand, as the demands are going up, and as we're having great results working with you on the things that we're already doing.

Now, software -- our software products are quite varied. The key ones, of course, are Windows, Office and BackOffice. We also have a number of products that make it easy to set up an Internet site for the school. An Internet site that's more than just information about the school, more than just static pages, like you might find in a brochure. Going beyond that you want to be able to do transactions. Let a student say who they are, be able to see their grades, be able to make requests, be able to send electronic mail discussing things with the people in the administration that are necessary there. And the building blocks now make that kind of website a reasonably straightforward thing.

The authoring tools, the browsing tools, are getting richer and richer, and I think every community college needs to really invest in their website, and in electronic mail. Electronic mail is a challenge, because you have to set up the directory of users, you've got to make sure it's running very reliably, because it is a key communications infrastructure piece that you have to be able to rely on. But, I think that's a very important step. Once you get people using electronic mail, then they immediately understand how paperwork really isn't necessary anymore, and how instead of publishing things, you get it out there on the Internet, it's easier to find, it's less expensive, and anyone has access to it. And so a lot of key products there that we're constantly working on to meet the key scenarios that you have.

Across all these products we've got some key initiatives. Very deep support for the Internet. The Internet keeps getting better. Things like carrying on a voice conversation over the Internet, it's fairly difficult today, but that will be commonplace in just a few years. Having security so that nobody can break in any records, that will be increasingly important, as so much crucial information is stored on the Internet. And so we're working away on those standards, pushing them forward.

We also think scalability is very important, being able to do with PC technology the things that would have required a very expensive computer in the past. It's no longer necessary for people to buy expensive mainframes, or expensive UNIX systems, because they can take the high volume building blocks and do things that are really quite amazing, in terms of databases, websites, electronic mail, and even running all the administrative software that's required in a community college.

These systems have to work together with other systems, so interoperability is very key. And finally, our most important initiative is simplicity. As the computer gets more powerful, we can't force people to learn more commands. We have to take that power and use it to simplify what's going on in the software, and let the user simply describe what they want to do, without knowing a lot. And that's a big challenge. That's a big frontier for us. There's a lot that can be done. Whether it's dealing with error conditions better, dealing with upgrades better, making it easier to find things, just reducing all those commands and utilities, that alone will be a huge contribution.

As we're making progress along these lines, I often remind the people here at Microsoft how far we have to go. We have a lot of data that's helpful there, the feedback you give us, all the support calls we've gotten that we take and make that information available to the developers. And we can just think for ourselves, you know, how many times have we run into things that were a little more complicated than they should be.

One place where technology will be very important, and transform things is in the house. You'll have high speed connections, you'll have different devices that manage your information, and yet today it's far too difficult to put that together. In fact, we did a little video that captures some of this complexity of how technology really is quite complex.

Let's go ahead and see where we stand, in terms of putting this into a typical household.

(Video shown.)

MR. GATES: As you can see, we've got a long ways to go before it's all simple.

(Applause.)

MR. GATES: One of the great breakthroughs that's coming is allowing people to interact with their computer with more than just the keyboard and the mouse. This is what we call natural interface, and it's a big reason why our R&D spending has been going up so much. Teaching computers so that they can see, listen and learn.

Already in Japan, where it's very difficult to use the keyboard because of the large alphabet, we use handwriting recognition, and that's been very well received. In some of the products, we have added typing in sentences. For example, in Office we have an answer wizard whenever you get confused, that you can use that to find help. We have grammar understanding in the word processor that shows we're getting the technology to parse those sentences and know what they mean.

In a database product, our SQL Server which we will ship in a month, we'll have the ability to type questions in English, so you don't have to use complex reporting tools. You just type in whatever you want.

And so, we are beginning to see this in the products. But in a few years, it will be a standard thing, so you can dictate documents, or you can navigate the Internet using speech. The computer itself will be doing speech output. We see that today in our encyclopedia product and several others. And vision is tougher, but the cheap cameras that we're going to have in these computers can be used to recognize who's there, maybe even figure out if they're confused or how they're responding to what's going on in the computer, and try to be more helpful. And so, computers will become far more natural than they've been.

They'll also come in different form factors. Today, you think of the PC as fairly large, always with a keyboard. Well, as these screens are improving in resolution, it will be reasonable to even read a book-sized document off of the screen. We're making breakthroughs there that will bring those tablets out as important products, even in the next year. You'll also have pocket-sized devices that connect up through a wireless network, and have your messages, and your appointments, so you're always easily in touch. Your TV set will have a digital set-top box that will connect up and allow you to get at the Internet, have ads where you can get more information in-depth, and all the power here, even through the TV set. So, all these things will be connected up to a common network, and letting you share your information in a very simple fashion.

Now, all those advances means that the pervasiveness of this technology in business, and even in homes, will be increasing quite substantially. In the next two years, we'll see a doubling of the number of adults that are using the Internet regularly. And certainly in the next 10, the majority of adults in this country will have that as a very important part of their job and other daily activities.

So, for all of you, it means an opportunity and a challenge. The convergence of this technology can be used to educate in better ways. The workforce is going to be reaching out for this new capability, and you're going to have the opportunity to rise to that challenge.

Now, learning has many different aspects, the part where the students just gather information, a lot of that can be done through distance learning technology. You'll be able to find the things of interest. You'll be able to prove out your skills in a competency-based fashion. There's a lot to learn here, but certainly the technology will be part of the educational process.

So, what's the road map here? Well, we want to work with you to increase access to technology, and that's not only students, but I think faculty and staff as well are very important there. We want to work with you to pioneer the reach of your learning through online technology. And there's already some great things going on there. We want to make sure that you're able to reach out to your local companies and understand where their unmet needs are, and you'll be able to show that the software standards that they're using -- that you're able to create skills and have the latest software that's very, very important to them.

And so, I'd say, the bottom line here is very, very exciting. The community colleges will, even more than in the past, be the conduit for the key training to equip this country for the future. And we're very excited about being able to work with you on that important mission.

Thank you.

(Applause.)

MODERATOR: Thank you so much, Mr. Gates, for those comments. And what you don't know is that Bill Gates has agreed to take some questions that we have prepared in advance that have been assembled from educators across the country.

And we'd like to begin with one that's very important to us. We have many educators on our campuses and at other segments of higher education who are debating the value of technology literacy. What is your perspective on technology savvy as a basic skill for the 21st Century, and what would be the bottom line technology basics that a person would need to be an active participant in education and society in the years to come?

MR. GATES: Well, I think there's a basic level that you can almost refer to as technology literacy, which will involve being able to find things on the Internet, being able to use electronic mail, and being able to use the standard productivity tools, things like a spreadsheet, or a database, or the word processor. Virtually every knowledge type job will require you to have those skills. Now, many jobs will require you to go beyond that, to be able to understand the rich applications in a particular field, like design software, or marketing analysis software, or software that's helping in customer service. So, I'd say that base level will be the thing that every student should have.

And, in fact, in a sense, they should acquire that because they're going to be able to use those skills during the learning process. And so it's not like a new subject to add in, it becomes the platform for learning of all types. You know, students, in a sense, are the ultimate knowledge workers. Their whole activity has to do with gathering knowledge, and communicating about the things that they're learning. So, as we get that into place as a platform, in some ways it will just come naturally.

We do have some certification programs on things like the office productivity software that are already there as a clear proof for people who have these key basic skills.

MODERATOR: Great. Now, we've heard a great deal in recent months about the IT workforce shortage. In fact, you talked about it in your comments, about 350,000 jobs being open right now, and over a million in the next seven years. What is your take on this issue and what are the programs community colleges should be offering now and planning on offering in the future to address this shortage?

MR. GATES: Well, I'm actually surprised that the shortage continues to increase. You know, these are very interesting jobs. They're jobs that pay very well. They're jobs that involve a variety of things that really, I think, should make them quite attractive. And yet, the demand still is going on and exceeding supply in this area. It's a real challenge for us. When we sit down and meet with the partners we have that are out there installing computer solutions, we say, how could we help you? And the top thing on their list is always, what can we do to find qualified employees?

And now, working with those partners, we do have some programs with community colleges that involve certification. This is our authorized academic training program, where the faculty gets certified, and then they can have students that come out with the particular qualifications that are being demanded in the job market there.

I think we're going to have to be even more creative, though, because the numbers are very large. We're going to have to work with a broader set of colleges, we're going to have to have a broader set of courses there, and we'll start to have to really push for this online learning, to see if that can draw in a greater number of students than we're already getting in these areas.

MODERATOR: When you look to the future, and you think about the different things that are happening, there's a lot of discussion today about the quality of that education you're talking about online. And as compared to traditional classroom instruction, what are your thoughts about the difference between the old-style traditional classroom instruction you might have received at Harvard, and this new innovative online learning that are our community college educators are really trying to explore here at this conference?

MR. GATES: Well, I don't think I'm personally a very good example, because I was always reluctant to attend my classes. I liked reading books a little bit more than attending. I do think this whole area of online learning really is forcing us to think about student motivation, and whatallows some students to be very successful, whereas others just don't seem to get the involvement that is necessary to really learn the skills. Having online learning provides incredible flexibility. And it certainly can be part of the educational program when you've got the student with the right motivation to learn, somebody who knows they want a job, it can fit in very, very well.

Now, you still want to have the ability for students to sit around in a group and talk about what they don't understand, or talk about interesting aspects that they found during the learning process. And so we're not going to go to a situation where we don't have groups getting together as part of the learning process. I think what we might have is more specialization, where there are really good lectures about a topic, there's a lot of competition in terms of who has those, and those are available, and certain organizations provide those widely. And then there's an incredible emphasis on, okay, then let's get the group discussions that compliment that, and maybe that's a different set of people who come in and are very specialized, and do that in a very strong way. So by taking the different aspects, breaking it down, I think you can do a better job in each of them. Here online learning can work in some cases, a very motivated student, a certain type of course activity. And so you have to think of that spectrum of students, and the spectrum of activities, and use technology where it can count.

There's no doubt in my mind that the demand for great faculty is going to continue to go up in all of this, because getting people interested and really facilitating the type of group activity that is such a key part of learning, you know, we need a lot more of that than is out there today.

MODERATOR: You made some comments in your presentation about going paperless, about the need to kind of remove paper from that. Technology is moving us towards a paperless society, and in what ways are you doing that at Microsoft and how might community colleges think about the way they can apply the paperless model of doing business?

MR. GATES: Well, Microsoft has made itself a leader in getting rid of paperwork. Today anything you want to do inside Microsoft, your medical plan, your 401K plan, when you move your office, all those things are done easily online. You just call up a form, it's got in-depth information. If the form is at all confusing it says at the bottom who you can send mail to, to get them to make it even better. So it's very streamlined. Even things like our United Way giving program, you get a simple piece of email, it's on your screen. If you want to give your fair share, you just click and you’re done. If you want to navigate and find out about all the different non-profit organizations, or how you might volunteer, or designate your gift, you can dive in and do that. Some people can spend as much as an hour learning about those key things.

So the online applications are so much better. Not only do you avoid ever entering the same information twice, things are always up to date. We can survey people, understand how different groups are feeling about our product plans, what's the morale in that group, what can we do differently. And so getting rid of paper is fantastically empowering. It's cost -- the cost is better, the accuracy is better, the ability to improve things rapidly is far better. And so I think community colleges ought to also think about why do they have paperwork? Where could that be eliminated, and wouldn't there be some substantial benefits that come from that? And we've shown that it's not that expensive to do these applications online, and we'd sure like to help a few community colleges really show that this is very possible to do.

MODERATOR: When we're looking at things like online learning, and we're looking at things like technology literacy and going paperless. There's a lot of speed of change happening here. In fact, in an upcoming back from the League For Innovation there's a chapter entitled, Keeping Up To Speed When You're Moving Too Fast Already. What are your thoughts on the rate of the change in technology, and how it's affecting education?

MR. GATES: I think the speed of innovation is not going to slow down. You know, very radical improvements, like the tablet computer device, or the speech recognition I talked about, or the very high speed connections, these things are coming. And so you'll continue to see, for the next decade, every three or four years a need to refresh your technology base. And that's a real challenge in terms of the budgets there. But, if you want to seize these new opportunities, that will be necessary. I'm not saying that the older equipment will break down. In fact, it continues to operate much longer than that. And so you'll have a choice to make about, you know, are you able budget-wise to get out there and have the latest tools that are available. It's one of the areas where partnerships with local industry and with key leaders may make that easier to do.

MODERATOR: One of the things, as we try to embrace this kind of change, is that we're dealing with collaboration, we're thinking about collaboration between students and faculty in our campuses, but many of us are on very different platforms, and have very different kinds of technology that don't necessarily communicate with each other. What's being done in the technology industry that will maybe help educate it in the future, with the standards and cross-platform communication, being able -- so our technology can actually talk to each other, so our HR and financials and student services, and our online learning can link together in some kind of way?

MR. GATES: Well, what you'll see is more and more the software packages that let you run the college will be on the standard mainstream platform. That is the PC, Windows NT platform. And the beauty of that is that you only learn one interface, it's the same machine that you have on the desktop, and so you manage the security and you know how to deal with it in one simple way. And so there is a reduction of the variety. Now, in order to let people still get value out of the older systems they have there is a lot of interoperability being done. Standards around things like XML will allow you to keep some of those old systems, even as you upgrade most of them to the PC platform.

The PC platform is where you have intense competition between many hardware manufacturers, and you can mix and match hardware from the different suppliers. That was never true in the other spaces, and so that's why you didn't have the same kind of intense competition. So the power of that platform has come up, so it can absolutely meet all the needs of any community college today, that allows you to get in and take advantage of that.

On the desktop, the variety really will come down to a device that's just got a browser and a device that can actually run Windows applications. Microsoft also continues to support Macintosh, we've done things like our browser, and our Office software there. But, on the desktop or portable level, things are fairly simple today. It's more in your administrative server area that you've got the older varieties. But, even that will get substantially better, both through the interoperability standards, and the coalescence around the mainstream PC platform.

MODERATOR: I hope we're moving to a place where technology can talk to each other to help us talk to each other in a good way.

Now, you wrote a book in 1995 called The Road Ahead, and you talked about what the future might look like. Now, as we sit here in 1998 and our students enter our doors, what advice would you give to an entering community college student about what they should be thinking about on the road ahead?

MR. GATES: Well, I think that a student that's looking at a long career ahead of them, the basic kind of competence and willingness to use these new tools is probably the most important thing. You know, I start in terms of literacy backed with reading, a desire to read, a competence, you know, a sense of curiosity about that the student can learn. And there's a lot of fascinating things that are out there. That's got to be the most important thing. Once you have that in terms of books, then moving on to the Internet and electronic mail really is a very logical next stage.

Anyone entering the workforce today is probably going to have to renew their skills many different times, and I think most of that will be done online, where they're reaching out and finding new things. And so, it's important that they not get an image of themselves as not having competence with the technology, thinking that other people are ahead. And so anything that can draw them in, get them to be comfortable, take a subject they care about, and show them that this tool is going to help them explore that subject, that is very, very important.

MODERATOR: It's almost like technology across the curriculum, isn't it, all of us can have a piece.

We'd like to close with one question that I think is near and dear to the hearts of the people in this room, because we're all community college educators. One of the challenges community college educators are wrestling with is closing the gap between the technology haves and the technology have-nots, in terms of hardware, software and training. Those who have got the money or the means have the access to the best hardware and software and training, while those on tighter budgets in poorer neighborhoods are falling further behind in this information revolution. What's your view on this issue, and what role do you see that community college educators, like ourselves, should be playing in connection with corporations like yourself to address this have and have not situation?

MR. GATES: That's a critically important question. Anybody who has the enthusiasm that I have about how important this tool is has to feel like we should get it out to everyone that we possibly can, because it is such an aid in the learning process. And historically that kind of providing things broadly has always been done, primarily through schools, but also through libraries. And so we have to look at all levels of education, and at the libraries, and try to make sure that this -- in the same way that everybody gets books, everybody can be literate, that having access to a PC connected up to the Internet -- that's there for everyone. I've been very involved in working with libraries. And over the next several years, a foundation I have will ensure that all 16,000 libraries in this country are able to have a PC connected up to the Internet.

So that's a step. It's a step where you'll often find community college students going to their nearest library and using that as a tool to get up on the Internet. It's also very important to get the technology in other places as well, at the community college, in some of the community centers, and certainly we'd like to have kids, even before they come to community college, have that broad exposure. One thing that helps is that the price of the technology has come down quite a bit. There are very reasonable computers today, desktop computers for under $1000 dollars. And even the portable computers over the next several years will drop below that price.

But, of course, everybody who has gotten into this knows that the computers themselves are only one piece. Buying the communications links, getting the classrooms so you can have the project up, navigating through the Internet, and finding different things. That's an additional expense that really if you don't -- if you don't invest it, it's almost not worth going ahead with the computer technology at all. And then also having the email servers, the website servers, so there are many pieces here that are going to force people to be very resourceful in trying to get that early on. I do think that communities understand the importance of technology, when there's been fundraising around technology in schools, in most cases, that's been approved. And I am glad to see businesses thinking about this as something that's more important. So it's a huge challenge. But, it's one that we've got to just do better on, every day.

MODERATOR: Mr. Gates, thank you for your comments today. This has been wonderful.

Thank you.

MR. GATES: Thank you.

(Applause and end of presentation.)