Remarks by Bill Gates
Microsoft Corporation
BaanWorld '98
April 21, 1998
Denver, Colorado

MR. GATES: Good morning. It's great to be here at BAAN World. What you're going to see this morning is some fantastic progress that BAAN and Microsoft have made working together to make our products very, very complementary, and to create what I think is the best example of what we call a digital nervous system.

There's a lot of very exciting things taking place. The advances in the technology are more rapid than ever before. The vision that Microsoft was started with is that the PC would become an incredible tool, a tool to help people communicate, to make better decisions, and run their business in the most competitive fashion. And it was over 23 years ago that we were founded, and had that vision. And I can say that, recently, we've really been achieving what we had in mind there. The combination of the Internet with the latest PC, with our platform technology and applications like those that BAAN has done, are really delivering incredible business value.

Let me first touch on the hardware advances. The speed of the chip more than doubling every two years has meant that during these last 20 years, the price of computing has come down by a factor of a million. And so, when we think of the computer as a tool for business, it's not just a large machine in the back room, it's the portable that the salesperson has with him. It's a desktop machine that lets every knowledge worker look at the patterns of sales, look at the project status, look at the customer service, and be empowered to make great decisions. Intel recently has moved up to 400 megahertz. They've got a road map that takes them up to a thousand megahertz and beyond.

One of the exciting projects is the Merced, which gives us a 64-bit address base, and we'll be able to take data that we used to access on the disk and move it up completely into memory, and do even more rich analysis than ever before. So, we're very excited to be working on Merced 64-bit Windows NT.

We've got better screen technology, and I think people underestimate the importance of that. We're slowly migrating from reading information off paper to moving it onto the screen. Today, I would say that every organization should get rid of their paper forms and move those up onto the screen where the information is easy to navigate. No longer should people print out sales reports, rather they should have it in a form where you can dive in and see the details of the data up on the screen.

The storage, the high-speed network connections, all of these things are enabling us to move toward this vision we call digital nervous system. The idea is that a company's nervous system is the whole way it coordinates its activities, the way information moves, including meetings, memos, phone calls, and now a substantial part of that is moving into digital form. And so that involves tracking basic operations, organizing planned events, retrieving knowledge from previous work that was done, making sure you know everything that's going on with a customer, reacting to the unplanned events that are taking place in today's economy, and gaining competitive advantage. All of that requires companies to step back and think about their total information flow.

The basic platform for this is straightforward. Most companies are buying up-to-date personal computers, and connecting them together on a network, but the value they get out of this system will vary dramatically depending on whether they pick the right applications, and use those in a way that lets their employees see the information they need. Productivity software is a part of the mix, a culture that encourages the use not only of simple electronic mail for messages, but also rich electronic mail sending around rich documents and objects. And then reaching out through the Internet so that not only do you have less paperwork and more data you can explore inside the company, but also in working with customers and partners.

I would say today that most companies fall very, very short of the ideal here of really having all the information easy to access. One of the roles that we see ourselves playing is getting the word out about companies that are doing this very well, and making ourselves a model, and trying to make sure that five years from now a majority of companies have these great digital nervous systems.

So, what is Microsoft's specific contribution? Well, we are a high-volume software company. We build platform technology. There's a lot of exciting opportunity in platform technology, and so that's where we've chosen to focus. Now, that technology primarily comes in three products: Windows including Windows CE on the low end, Windows 95 moving to Windows 98 very soon, and Windows NT in its various forms at the high end; Microsoft Office with all of its components; and Microsoft BackOffice. Those three product areas are the majority of our sales today, and even looking out five, ten years from now, those will be our primary products.

Now, we will revolutionize those products, bringing in things like speech recognition, visual recognition, a rich understanding of the user model, but having those as high-volume standards will be our primary contribution. We have had to step up what we do in our field organization, 24-hour support, a lot of services that go together with providing those products. We feel that the role of Windows, Office and Back Office, will continue to grow, and we've seen wonderful market share growth over the last few years. And it's through the innovative work that BAAN and others are doing on top of the platform that the full potential of that will come through.

Now, we have many initiatives that span all of our different products. You probably are aware that after we ship Windows 95, we looked around and we saw that the Internet had become a major, major phenomenon. And we realized that this was no small thing, that building these standards into our products in a very fundamental way needed to be our top priority. And so, over the last couple of years, we've made really immense progress getting those standards built in. There's a lot more that needs to be done. The Internet today doesn't have the security standards, the directory standards, standards for so-called "quality of service" that will allow audio and video to move across the Internet, and so we've been more involved with Internet standards committees than any other company. We're continuing to drive those capabilities into our products.

Another major focus for us, and one that I'd say is probably our top priority today, is simplicity. People came to us and talked about the costs that were being created by the complexity of our systems, the necessity to go visit a desktop to update the software, the variety of configurations people have that make it tough to know what will work on a desktop machine, the difficulty of moving somebody from one machine to another machine, even just upgrading the machine. We've made managing that state way too complex. We've made dealing with error conditions way to complex. So, this is our top priority. We've gone through all the calls we get, all the system error messages, and we feel that we can make dramatic advances in improving the simplicity.

One of the big breakthroughs in this comes with Windows NT, where we take all the state and we mirror it up to the server, and so you can easily switch PCs, you can log in on someone else's PC. That Intellimirror capability is a real milestone, but it's only one part of what we're doing with simplicity. In fact, our ambition with simplicity is that eventually, even people at home will want to use these systems. They'll want to buy products this way, access information this way, and when you think of that home user and how simple they'd like to have things, that's when you realize how far we have to go.

In fact, we put together a little video of what it's like right now for somebody who's trying to use this technology and keep it simple. Let's go ahead and take a look at that, and see where we stand.

MR. GATES:Well, there's plenty of work to do on simplicity. Sort of the ultimate goal is to have a system that for the end user is simple enough that you can think about somebody at home taking advantage of it. While, at the center of the system, the server management has reliability and scalability that goes even beyond the mainframe complexes that people have used for the most demanding problems, historically. And so another initiative for us is scalability, and that includes in all the administration utilities, and advances like clustering.

Clustering is the last big thing that comes from the mainframe world that architecturally has not been available in the PC-Windows environment. Clustering first came out with NT, late last year, and now we'll be moving that up to larger clusters, up from the two-nodes that we supported initially.

So the Internet really has raised expectations. You're going to have millions of users connected up to a system. Whether it's doing transactions, or electronic mail, it's all got to be more scalable than anything ever has been before.

With this type of environment, the applications, no matter where the code is running, whether it's coming down to the PC or running on the server, to the user it's got to be single click deployment. You get a mail message telling you about an application, if you want that application, you click, it comes down onto your machine. That's the only way we can get the management that we want out of these things. And we have to make the transition to this by using the interoperability capabilities that are built in.

Now, the platform we're building for this is the Windows DNA platform. COM, our Component Object Model, is very much at the center of this. And COM is a centerpiece technology for the work that BAAN and Microsoft are doing together. It allows you to partition applications, both logically and physically. And it lets you take advantage of the richer services that we are building down into the platform. This is a fairly complex slide, but it shows how we think of these rich services that are built into Windows. And COM is tying all these together.

At the presentation level, we've got advances taking place in the browser, the HTML, and rich forms are supported there. At the application service level, we have a lot of new things, like building in transaction management. When we sat down and talked with BAAN about some of the work they were having to do, that probably made sense to put into the platform, transaction management message cuing came up as two things we could do, and probably do an even better job by tying it tightly into the kernel. And so now those have been made standard features of NT, and all the applications can rely on those, both inside the application and for the interoperability scenarios.

Finally, at the bottom, we have the storage systems, the directory, the security, and the rich management that we're advancing very substantially, as well. So all of these things together are the Windows services that use COM to get access to. Now, COM, although it's native to Windows, it's got to be available on all the enterprise systems. We have COM up and running on UNIX and MDS. We're working hard on the AS400 version. That's one of the requirements that BAAN had for us, and that we're hard at work putting together. We've got a lot of partners, who are very involved with learning about COM and using it themselves, and the work they're doing. And we're making sure that the other object standard that's out there, CORBA, that we have excellent interoperability. In fact, IONA, who has been a leader in CORBA-based systems, is now building COM into all the products they ship. And that gives you transparent interoperability between the different systems. And so this will become a very key standard in the enterprise environment.

So let's look at this. What does this make it all look like? Well, COM becomes the connector, connecting BAAN ERP on different platforms, connecting to the ARM system, the CODA system, and to third-party applications. Working with BAAN, we've got this up and running, and I think we've got some amazing ways of showing off the power of this. In fact, what I want to show you, I'm quite certain is the best ERP demo that you've ever seen, certainly that I've ever seen. I want to ask Adries Bottema (sp) to come on out, and give us a look at some of the user benefits that come from using COM to connect all these things together.

MR. BOTTEMA:Hi, Bill. Thanks for the nice introduction there, too.

Talking about digital nervous system, we have a digital demo, and the guys probably are a little bit nervous. But, let's get air. I've got some folks lined up here, and these guys are going to show something that is BAAN ERP, and is basically using what you said, that COM in the middle. And this has been hard work, because we're releasing that this quarter with official basic applications, in the ERP space. When we started two years ago, after everyone was saying Visual Basic is  --(inaudible) -- you don't write applications with that. But, Eric, what do we see here on the screen there.

ERIC: Well, what we did here is we started from our BAAN ERP application. We entered the sales order line and we are just about to configure a new product, which is to be a car. We can fill up the options, according to the customer wishes. So we select Cabriolet. We can select some properties here. We select color, of course, the ABS system. We can see a preview here of the car we have been configuring. We can provide additional information here.

MR. BOTTEMA:So, Eric, what you're doing here is basically, from a sales environment, you make some configuration for a product that needs to go in manufacturing, and you're providing some information, you'll give some extra information.

ERIC:Yes, well, I can use -- I can drag and drop any COM component here. For example, I can drag an HTML Web page or it can be a Word document, or a PowerPoint slide or whatever. So we're just adding information here. I can send the confirmation here, using Microsoft Outlook. I want to show it right now. We can show it later on.

MR. BOTTEMA:Yes, that's good. So at this moment there is a sales order that is saying, okay, I have something that needs to be produced.

ERIC: Yes. So we can switch now to our user interface, that's the BAAN ERP configurator, and we switch to all the sales orders. Here on the right-hand side you see all the sales orders that are already there. And we can just drag the sales order, and drop it here on a business method called, "create assembly order." Well, what we're doing here is we're actually taking this one into production. So, what we did is, when integrating with Microsoft applications, you have to know that every application provides a COM model that allows easy integration. Well, what we did, we also generated a COM model of our BAAN ERP applications. So we just access all functionality -- or we can access all functionality of BAAN ERP using COM and DCOM technology. Well, we see here that an assembly order has been created successfully.

MR. BOTTEMA:So the sales order now became a production order?

ERIC: Yes.

MR. BOTTEMA:And now this production order is there. It contains routing, what do people have to do with it? There are some parts that you have to put together, and finally something comes out?

ERIC: I can show it here. I just double-click on this icon here and I'm back in the normal BAAN session. And I see the production order, you can see all those information. But, I have a nice way to demonstrate what's really in this production order. So what we do is we, again, drag the production order onto the assembly schedule.

MR. BOTTEMA:But, that drag and drop, that was implementing using COM, every time?

ERIC: Again, we are communicating with the BAAN application through COM and DCOM technology. So we are creating the scheduling information from the BAAN ERP system. And we are now building the assembly schedule. Well, what you see there is that this -- the assembly --

MR. BOTTEMA:This looks familiar to you?

ERIC: Yes.

MR. BOTTEMA:Is it Project 98?

ERIC: Yes, it's Project 98. And because we use this functionality, we're just talking to the COM object model of this application, we again can make use of the rich functionality of this application. So, of course, you have calendar fields, you have critical paths, you have -- you can make resource uses. So everything is available here.

MR. BOTTEMA:Now, the opportunity for us, Bill, when people started to write this Visual Basic application, was to rethink how do we want to operate through our BAAN ERP now? People used to call that backbone, but the component's there. And opening up that architecture, that was something that Lawrence worked very long upon, to make sure that every developer of Visual Basic could kind of access this application very easily.

Now, Eric, we have this production order. We've scheduled that. But, presume that someone else is going to make this one, someone that is in another company, it's a multi-site environment, and you want to kind of send this over to someone else. How do we do that?

ERIC: Yes, well, what I just did, I clicked on a specific menu and said, send this to a mail recipient. So now I'm using Microsoft Outlook again. So I have, again, the complete functionality of Outlook available here.

MR. BOTTEMA:So you're using Outlook as the carrier, all the workload, to get it to an outside subcontractor?

ERIC: Exactly. And what I do here is I send this to my neighbor, who will actually take this production order into production. And there it is. Go on.

MR. BOTTEMA: And the incredible thing is, they're hooked up with, I think, an Exchange Server in the Netherlands. That was fast.

MR. GATES:That's great.

MR. BOTTEMA:So what do we see here now? He's the outside guy sitting somewhere. You don't know where it is. It's far away. And you see, I objectized this production order. So what does it do then?

ERIC: I just received some mail from Eric. And there's the production order in it. So I double click on it. And then what we see is that it starts the BAAN b-shell. And this -- there it is. And we see here. I received a production order from Eric to build a car.

MR. BOTTEMA:Okay. But, now you're looking again into the ERP system that was started up from production. And because you're an outsider you can only see your own order. But, how do you know what you have to do with it?

ERIC: Well, let's cue our work instructions for this assembly part. Then I know what to do with it.

MR. BOTTEMA:And what's going to happen then?

ERIC: I just start my Word document. And with that I retrieve the data from BAAN. There I have my template.

MR. BOTTEMA:And that means this system is now opening your word processor here, Word, and it's going to look to the DLLs at BAAN, in order to get this data that was related to this production order, using the COM object again?

ERIC: Yes. So now I see here exactly what I have to do, all my operations and the  --(inaudible) -- and the run times and so on.

MR. BOTTEMA:And this is not a fake PowerPoint presentation?

Okay. Now, looking at data, we said, okay, the users, they want to have easy access to data. And they want to combine data more easily, and we saw here some person that is outside of that company who wants to see data of the other company. What we have here, Bill, is Shy, and Shy is -- has done some nice stuff with the OLEF Server that you ship with SQL 7. So, Shy, what do we see here?

ERIC: Well, we're actually having the new decision support framework from BAAN and Top Tier that is built on top of the new Microsoft OLEF server. If you're familiar with BAAN Data Navigator, we have a bunch of components that are the equivalent of the streams or sessions in BAAN. What we also have now is a new thing that is called a view, and the view actually goes out and looks at information from the Microsoft OLEF server, which is going to be part of the Microsoft SQL Server in version 7. We're going out to a new sales cube, which was actually created by the configurable screen, that allows us to create any cube from the system, coming with this decision support framework.

And, even though we're running in a browser, in Internet Explorer, we actually  have a full-blown OLEF client that allows us to do everything your familiar with in OLEF. So drilling in, picking up top clients. We also have, as you can see -- I don't know if you can read the numbers out there. But, the graphs are actually dynamic. So we allow you to do selection and actually show you comparative analysis, or build up, for example, of sales of those products in Belgium.

MR. BOTTEMA:But, Eric, people always say, we want to have interactive graphs, and four years ago we also had -- BAAN had the interactive graphs.

ERIC: That was your interactive graph, right, you could swivel it, you can go up and down. But we said interactive is really going beyond that, and we talked to your hyper relational technology, we actually created graphs that are fully interactive. So, not only can I see the graph, but I can pick a bar, for example, from sales in Belgium, and drop it on my sales history and see the sales that contributed to create that bar on the graph. And the user doesn't see it, but we've simply crossed the boundary between analytical information and transactional information. We went to a full BAAN BackOffice application, brought in sales information for that bar in Belgium, and we see there are a lot of sales forces, they're an item I can actually keep on the navigation to go on to other transactional information. This is BAAN in the navigator again. Here are my items that I'm selling. And I can --

MR. BOTTEMA:But, Eric, does this mean you start from an analytical environment? You just bring it back to a transactional environment?

ERIC: Exactly.

MR. BOTTEMA:And you combined it with, on the left side, different database, C Borum (sp) and all that stuff.

ERIC: Yes.

MR. BOTTEMA:Can you now simply go back, again, on the left side, to your OLEF.

ERIC: It's a full closed loop. It's the first time, actually, that anybody is showing the ability to go back and forth between analytical and transactional completely seamless. I dragged an item back into analytical, and I'm seeing sales of this item over time. I can keep on doing my navigation, again, in Explorer. Here are my sales reps, who are selling it. I can actually go in and pick my department. If I'm a VP of sales, I want to see a certain department. So, I'll go down and pick my department 999, which has been doing pretty good on this item. I can go into my specific salespeople, so here you see the sales guys. If you want to see the top guys, so I'll go in and say, give me my top ten sales guys.

MR. BOTTEMA:The chart, yes, you probably can drill. But what I would like to ask, can you, for instance, combine this data together with two live transactional systems?

ERIC: Yes.

MR. BOTTEMA:At the same moment?

ERIC: Actually, this is a product we're announcing today at the show. It's called BAAN Series Data Navigator. And again, from BAAN and Top Tier, this is an extension on the BAAN Data Navigator Suite, and you can see that all the BAAN Web products we see in BAAN Series are not only are represented in the back end, but also now represented in the front end with components that go all the way to the end user.

So, here I've got just two components, because we don't have a lot of time. Here's BAAN ERP and Aurum sales force automation, and I can pick up, for example, my list of customers from the ERP system, and ask for all of my customers, get a list of customers that come up from the ERP system. Again, this is a live ERP system. And I can pick a customer and say, show me if I have any leads for that customer. And I just navigate it across from one application to another application.

This isAurum, and I can come in and navigate inAurum. So, show me my contact person for that company. And, again, I'm looking at a contact, and I'm saying, well, did he do -- did he buy anything from us, and I'm navigating back into BAAN, again, completely seamless integration, navigation, and simplification of the whole data access layer.

MR. BOTTEMA:So this is reducing a lot of the complexity that we just saw in this video. Now, last question for you, when we have, for instance, a big monolithic system made in Germany, can you also tie that Legacy system into this one?

(Laughter)

ERIC: We, actually, if you take BAAN Series Data Navigator with the BAAN components that come with it, and you take the Top Tier hyper relational suite, you can combine any Legacy application, whether it's from Germany or any other country, to the BAAN Series. This provides you integration across the BAAN components, but also to other Legacy applications and package applications that you got in your environment.

MR. BOTTEMA:I like this a lot. And now, we've been looking at Aurum here, and it happens to be that Dave from Aurum is sitting here.

Dave, what are you doing here?

DAVE: I'm sorry. I was just kind of browsing the Web while I was waiting for you.

(Laughter)

DAVE: Actually, the Web is a wonderful tool for the sales rep to go out and get information that took a lot of legwork prior to this. So, it's just a wonderful tool for that. And we've taken the Aurum Front Office and integrated it entirely into the browser. So things like going to my back button to go back into the application that we're expecting to use, the Aurum Front Office, you'll see that that runs entirely in the browser.

MR. BOTTEMA:But not only that, Dave, it also looks like a little bit of Outlook.

DAVE: Sure, yes. We took the Outlook look and feel, but we did much more than just the Outlook look and feel. We modeled the Outlook object model as well. And, more than that, we've taken the application and we've integrated it very tightly into Outlook. So, you'll see here, I've got the order that came from Eric.

MR. BOTTEMA:Oh, this is the one that came from Eric, product shipped. So, we're now in the after market.

DAVE: The back end sent me a message saying that the product has shipped, and I'm the sales rep out here, sitting out there, and so I see that's a task that has been done. It was done on the 20th, and now I've got the 24th an installation meeting scheduled for Chris Jones.

Now, these tasks, appointments and contacts are all fully integrated into Outlook. In fact, I'm going to switch over to Outlook really quickly here, and you can see the task over here that was scheduled, and we've clicked this off as having been completed. And here's our installation meeting.

Now, to really drive home what this means, because not all of the users in the enterprise are going to be using Aurum Front Office, it's mostly just the sales and marketing people, I'm going to go to another appointment here. And this is the way you're used to seeing appointments in Outlook.

MR. BOTTEMA:Yes. This is like I use it.

DAVE: Sure. Now, if I go over to the appointment that was created in Aurum Front Office, I'll be able to not only see the standard appointment information, like the time it starts and ends, but also I've brought with it information that is important to those users who are not part of the Aurum Front Office.

MR. BOTTEMA:All right. But hey, now the tricky question, Outlook. I'm using Outlook as well, we're working in a browser mode, but still a lot of salespeople use this for a stand-alone. So the tricky question will be for application.

DAVE: Oh, yes. Database synchronization is typically the most difficult thing to do when you're talking about sales force automation. But, you know, we just did some benchmarking recently where we beat the pants off of our competitors, quite frankly, and we were able to do 3,000 transactions in an hour.

MR. BOTTEMA:Yes.

DAVE: And, actually, last week we did another benchmark using NT and SQL Server, and we upped that to 10,000 transactions -- 10,000 users synchronizing in the course of an hour.

MR. BOTTEMA:What system was used for the 3,000?

(Applause)

DAVE: It was the same one that BAAN chose in '84 to start building on.

MR. BOTTEMA:It was UNIX, so this looks like real life, if NT is beating UNIX time and time and time again.

DAVE: I'm going to go over -- back to our home screen. This is a full sales force automation package, we have companies and opportunities, worksheets, we integrate with sales configuration, and all those types of things.

MR. BOTTEMA:Oh, here, I see something that's good for your guys, a sales funnel, what is that?

DAVE: The sales funnel is what provides a level of process for the sales reps, so they can see, for a particular type of opportunity, for example, in this case direct opportunities, we can see that there's a process that the sales person goes through. We can also see a sense of predictability for the sales management team. So, I can look and see the things -- the deals for which we are selected, the amount of value for which we're selected, and then the individual opportunities. So, it gives management a good view onto the sales force automation -- the sales and what they're doing.

MR. BOTTEMA:Yes.

DAVE: I've also got opportunities, worksheets, forecasts, a lot of things to show you.

MR. BOTteMA:Yes. But I think we have to kind of take care of the time. I like this a lot. And, in general, Bill, what we have seen during the last years, the thing for enterprise application always was a thing like scalability. And that was why three years ago we said, no, no, no, no Microsoft because that runs only on the desktop. And now you see what we are trying to do with your guys at this moment, and that is basically because also scalability is starting to outperform what we used to do on the UNIX world, and so on.

So, I hope you liked it.

MR. GATES:That's fantastic. I mean, a lot of user empowerment. That's exactly what we want to see.

(Applause)

MR. GATES:I think a really key point there is that access to information does require a deep integration with the normal productivity tools, and that's by far the best example I've seen of that as well as the best use of the underlying COM technology. COM allows those pieces to work together in a way that wouldn't have been possible otherwise. We mentioned scalability. Scalability is a necessary element. We want to do more than just match the scalability of previous systems, and we have been making good progress. You can see at the bottom of this chart the cost for a transaction, and how that's been coming down. And then you can see on the graph how the transactions per minute using TPCC benchmarks have been going up very substantially.

Now, as we move up to not only eight processor systems, but 16, 32, and 64, and as we bring clustering in, we'll have more improvements than just the processor speed or the software optimization can provide, because all of these things multiply together. And so, we're getting well past most people's requirements, but we're still pushing ahead to get to much bigger numbers.

A big milestone for us will be the shipment of the next big version of SQL, which is SQL Version 7, coming out later this year. BAAN has a lot of their top performance people up at Microsoft, resident there, working with us to make sure that all the BAAN applications work super well with the improvements that we've made in SQL 7.

Scalability has a lot of aspects, mail performance, Web performance, database size, transaction speed, and we're pushing forward on all of those. Certainly, today, PC technology, Windows systems, are the leaders in terms of high-performance mail, high-performance Web environment. It's in database environments that you really see us pull ahead in the next year. So that is a very big focus for us.

Our strategy is one where partnerships are absolutely critical. We have focused on what we do well, which is the platform software, and so when it comes to great chips, we rely on Intel. Great applications, we rely on BAAN. Systems, consulting, there are many, many people out there who do that very well.

And so, we have a lot of ways that we work with these partners. The themes are complementary competencies, people who want to innovate all the time, and people who want to talk about the common customers and what their needs are.

The partnership with BAAN is actually one that started not too long ago, and we've seen more rapid progress in getting our engineering teams working together than we've had in any other case. A few years ago, BAAN was moving ahead, doing some BackOffice logo work, they were the first to do that. But the biggest milestone was signing a memorandum of understanding to deal with integration, and we went public with that at our Developer's Conference, where Paul Maritz announced the BAAN focus on COM.

In parallel, we've been working with Aurum and other companies that are not part of BAAN, and you see now that it's all really come together. Today is a big milestone in our relationship, not only showing the progress but also talking about some of the things we're going to do as we move forward. COM and DCOM are at the center of all these things. The Aurum Front Office really is sitting on the Internet Explorer advances, the Office advances, and BackOffice advances. I mean, we saw the modeling product, we saw the latest version of Outlook. We saw virtually every  Microsoft product used in the scenarios we just looked at. And so, having that decision support piece in there, that really is a big pioneering effort.

We're expanding the co-development we do, putting more dedicated people into the work, and this focuses on all our key initiatives. We have enhancements to COM we're doing that we call COM+. We have advances in our key development tool, Visual Studio, where we want to make it easy for customers who customize and add a little bit of code on top of their BAAN applications. We're talking about the next generation user interface, and using distributed approaches to get up there in terms of the high scale.

So, there's a lot of opportunities that we think come out of this for all of you. I want to make it clear that Microsoft is very dedicated to enterprise requirements. We're learning a lot about those requirements year-by-year, both working directly with you and understanding from BAAN what they'd like to see us do with the platform. The platform focus we've got we call Windows DNA. It's got a lot of capability, a lot of richness there that's driven by helping these types of applications.

I think the companies that do well in the information age will be the ones that think about the digital nervous system, and they think about the products from our companies as simply building blocks that allow you to get to the best digital nervous system.

And last, but not least, our partnership with BAAN is going very, very well, and we thought you'd want to hear about that. So, it's great to be here. Thank you very much.

(Applause)

ERIC: Thanks, Bill. We've got a few moments for questions and answers. You provide the questions, and Bill might provide the answers. There are mikes here. I think he's fairly open to most everything, except maybe when his house is going to be completed. I thought I'd start by asking, three or four years ago the critique as it related to NT was that it was very hard to sell it through the indirect channel. That it was a more complex product, that it was a very different distribution model than what you all had pioneered, and you all took some steps to have some success with NT. As we look at these kinds of products, we're moving up a level again in terms of the complexity. And I'd be interested in your perspective on how we work together with our channel partners to improve the ability for customers to get the benefit of this technology?

MR. GATES:I think one of the key things is building the skills in our mutual channel partners. I think if there's anything that can hold back getting this out into the marketplace, it's not having enough expertise out there. And so, some of the joint things that we're looking at, not only on the marketing side, but on the training side I think will be very important there. People respond very well to showcasing the pioneers, the people who are taking this stuff and actually getting business advantage out of that. And so, one of the ways that will get the channel excited about this and drive it forward is really telling those success stories, both on the Internet and just getting out there and demonstrating what can be done.

MODERATOR: Questions? Here we go. There's a mike right there.

QUESTION:First, I was wondering if you still intend to deliver Windows 98 on the June due date?

MR. GATES:Are you a press reporter?

(Laughter)

QUESTION:Actually, yes, I am.

MR. GATES:Yes. There's nothing changed with Windows 98 for a long time. Windows 98 is in its final testing process. We don't actually name a specific date, but within a few months, Windows 98 will be out in the marketplace.

QUESTION:I was given a date of June 25th at 11.

(Laughter)

MR. GATES:We don't give exact dates --

(Laughter)

MR. GATES:-- or which hour --

MODERATOR: He might be more conversant on whether --

MR. GATES:There's really a lot of speculation in the press about specific dates, but we are very close on Windows 98. The key thing on all these products, the key thing for us to get everybody who's been involved in the beta to give us their feedback, and let us know, is this product ready to go. So, rather than a particular date, we use that as our ship criteria, and that's what we're going through right now, making sure that everybody who is doing the drivers, who is doing the early deployment, that they're enthusiastic about the thing. And it looks like we're very, very close.

MODERATOR:Okay.

QUESTION:I have plenty of questions, if no one else does.

MODERATOR: Other questions? Yes.

QUESTION:When the Justice Department attacked IBM several years ago, they became a very conservative company in their approach. You don't seem to take that same tack. Could you expand on that?

MR. GATES:Well, Microsoft is driven by a vision of what software can do. And we have a lot  of work to do on that. And what I've always said to the engineers is, you know, the rules of the game encourage innovation. And so, the engineers should be full-speed ahead doing what they do best, listening to customers, taking our advanced research and building that into the products. And, you know, it's our belief that absolutely nothing should hold them back or slow them down. In the meantime, there is the distraction in the press of having the government looking at everything we're doing. We've had that for about eight years now. You could say, aren't you used to it after eight years, but you never really get too enthusiastic about it.

In the case of IBM, I think the government lawsuit was not really the fundamental thing that held IBM back. I think they missed the importance of software and the importance of the personal computer, and the standards that would grow up around that. And so, I think it's a mistake to analyze history and say that their legal problems were what held them back. We worked very closely with IBM during all of those years, and the executives who thought about software and saw software as important, just weren't the people who were promoted and brought into driving the strategy that they had there.

And so, the key thing for us is to stay on top of the changes in the market. In the world of technology, that requires reinventing yourself all the time. The Internet certainly rose to importance much faster than we expected. The issues around cost of ownership, there were a lot more important things to be done there than I think we recognized a few years ago. Those are two that we have seen, and so we're responding to them very well. And so, I think that's the way to measure us rather than let yourself be distracted by what's going on in the government arena.

QUESTION:Another quick question for you. How does Microsoft plan to counter the impression in the media from your competitors, and even from the government, that Microsoft is a monopoly using strong-arm tactics to push its product on PC makers?

MR. GATES:Well, the benefit to having a standard platform for the software industry has been pretty phenomenal. Before the standard platform came along, the economics of software just didn't work very well. The kind of R&D investments that people like Baan made just wouldn't have been practical, because you wouldn't have had the volume out there. There's only one way to sell software at a good price and have it be fantastic software. And that is volume.

And so, what the Windows platform has done for software investment, software innovation, is unprecedented. The software industry today is 10 times greater than it was when Windows came around. And so, by renewing that platform, listening to the developers, seeing what they want to do, we have made and will continue to make more of a contribution to software competition than any other company. Now, if we should ever slow down and not do the right things in Windows, believe me there are a lot of people out there ready to take our place. This is a very competitive business, no one has guaranteed leadership. We wish that those competitors would focus their efforts on their products instead of the political arena, but with the changes taking place the only question is who obsoletes our products, is it us or is it the other guys?

MODERATOR: There's the question that we started the meeting with, where I talked about the fact that the vision that these guys have had, really for a long time, is the commoditization and the volume orientation, and I think that the strategy that you see us pursuing is really predicated on this being, as I said earlier, a 60 million seat market. And that's where we see their leadership as being very significant.

Next question over here on the left.

QUESTION:What was it about Baan that Microsoft decided to partnership with us?

MR. GATES:Well, you know, Microsoft is very much an engineering-oriented culture. And I think the success we've had working with Baan, and the fact that has come together very quickly, is that Baan took a lot of their key engineers, had them come up to Microsoft, be very frank about what the holes they saw in our strategy, things we weren't doing, and get us focused in on filling those in. And I think both companies took a substantial risk. You know, Baan bet its strategy, many, many parts of it, on the fact that we'd get our platform pieces in place. And we put a lot of resources into working with those developers and prioritizing the things that they were asking for.

And so, at the heart of all these relationships, it's whether, do the engineers have a common view, do they get along. And that's where we've started on this one. This relationship, a lot of what you'll see us add to it in the future will move out into the marketplace, where we'll get our services, and training, much more in line. But we've laid the foundation and we saw with those demos, the pieces are there that the Baan software shows off what we do, and our software shows off what Baan does.

And so, I think that's what's made this move so quickly and really surprised me with how far we've come.

MODERATOR: It's also helpful that it's just as cold and rainy in Seattle as it is in Holland, so our folks get along fairly well together.

(Laughter)

QUESTION:A lot of people who champion what they call open systems seem to feel that technologies like CORBA and Java may be incompatible with the direction that Microsoft is going. I was wondering if you see any sort of emerging splits between those sorts of technologies and what Microsoft is doing?

MR. GATES:Well, Microsoft's view is, there's always going to be a variety of systems out there. Even though Windows systems are clearly dominant in terms of percentage of volume, we want to reach out to all the other systems, whether it's interacting with DB2 or CIPS, or any of the new trends that come along. Our strategy is to support all languages. We don't think people are going to go back and rewrite all their software in a new language, whether it's the neat new language of 1998, or the neat new language of 2000, or the neat new language of 2002. And so whether it's C or Visual Basic, or Baan for GL, or COBOL, we created a system platform that is language agnostic.

Now, Java is one of those languages that we're supporting. We think Java has a lot of neat things. We think there will be a significant amount of development that's done there. Probably not as much as is done in COBOL or in Visual Basic, but still enough to make it very much a first tier language. And so we've got rich interoperability, with Java Beans. We've got the most popular tool, that we're offering ourselves.

And you've seen the concrete steps we've taken to reach out to CORBA, with people like IONA. And there's a very solid commitment here that we're going to allow CORBA systems to work together with our systems. So in no way are we holding back in having rich interoperability with those systems. It's a heterogenous world, and Microsoft thrives in that type of environment.

MODERATOR: Question here in the middle?

QUESTION:Yes, when we look at a demo like that and see the strength of COM technologies, I'm glad to see that Microsoft recognizes that to make this a true success in the ERP space, you also have to be cross-platform. So I'm glad to see that there is activities going on, and making that available. Now, on the other hand, you also have browser technologies, where we clearly see a distinction between JFC-based browsers, and AFC and WSC-based browser technologies. To what extent does Microsoft recognize the importance of making sure that an AFC or a WSC standard also has the same cross-platform capabilities?

MR. GATES:Well, it's very important not to drive the world to least common denominator. If you drive the world strictly to least common denominator, then you have no use for interface standards, you have no ability to exchange data between different systems. For example, let's take the graphics capability that's there in Windows. We have spent literally thousands of man years working on that device driver model, working with the chip vendors to make sure the graphics performance is incredibly good. And so it's not our view that people sitting on Windows ought to have a slow system just so that it can go through a least common denominator type interface.

And so we've got a strategy that supports things like HTML, which is broad, runs on older 16-bit systems, runs on every system you can. That's a product technology that is actually very stable, and very, very pervasive. Then we have a set of technologies that let people take advantage of what's rich about a platform, the drag and drop, the object standards, the directory, the security. Now, those things will never be identical across all systems. You've got a capitalistic incentive that has us investing over a billion dollars a year to make Windows a richer and better platform. And we are going to allow people to take advantage, both end users and developers, of what's unique in that platform.

The things that are least common denominator are very important. We've done more to drive the HTML standards forward than any other company. In fact, it's kind of embarrassing that other companies haven't been more involved in participating in those W3C standards. And I'd say the same about all the standards across the Internet. There's a lot more that needs to be done, and those things will be pervasive. But, it's appropriate in a strategy to have an opportunity to take advantage of what's in a system, as well as having pervasive technology. And so you'll never have a situation where MDS is identical to Solaris, is identical to HQX, is identical to, you know, all the dozens and dozens of other systems. You will have to consciously decide, do you have enough users on a particular system that you want to exploit that system, or do you want to just be least common denominator.

MODERATOR: Question here?

QUESTION:Yes, thank you for your presentation today, I think we all enjoyed it very much. I have a question, I want to drill down on the Java question for just a second. And that is, specifically there is some concern about Microsoft's embracing of all of the standards within Java. And earlier in the presentation today we heard that Java was cool, so to speak, within Baan. And it's clear that Baan has some direction there. A lot of the enterprise application developers are going to be using Java as they go forward. So I think there is perhaps some concern about how the lack of standard embracing, if you will, or exactly how far that goes, will impact the enterprise application developer's ability to deploy across a variety of systems. And I'm just wondering if you can comment on that?

MR. GATES:Well, Java today is not under the control of a neutral standards body, where any company can propose changes, and you've got sort of a one-company, one-vote way of managing Java. Microsoft on its own can't make that happen. But, we're very pleased to see people like Hewlett Packard stepping forward and saying, look, Java should be like all other languages, out there in a neutral standards body. And so it will be interesting to see what progress is made there.

Today, if you go out and look at any analysis of who's doing a good job putting Java support into their browser, running those test cases, who did the best performance, who did the best debugging API, who did the best tools, Microsoft has come out ahead on every one of those things. Now, because Java is still proprietary, that is it's controlled by Sun, and Sun is saying that they're -- they have sued us, and they'll sue anybody else who tries to go off on their own, like HP is, it's a tricky problem. It's not like the Internet standards, where you can stand up here and say, yes, the W3C has everybody's interests in mind, as they do those extensions. And so a lot of the things that are very broad in the browser are the Internet standards. HTML is very, very pervasive.

What portion of Java gets into a true standards committee, versus how much it becomes an attempt by Sun to sort of create their own world, that's unknown. But, everything they've done in the language, we support. And everything in the virtual machine that allows applications to run across these systems, we have done very, very well on. And so, if customers want it in the standards, a true standards body, then I'm sure it will get there.

MODERATOR: Let's take one last question over here.

QUESTION:This is more on a personal note. You've probably reached your financial goal, in life. What continues to drive you? I mean, you're here with us, and how much longer do you plan on being really involved here?

MR. GATES:Well, the nice thing about my goal was that it wasn't a financial goal. It was a goal of seeing this tool be on every desk and in every home. That's what Paul Allen and I wrote down when we founded Microsoft, now 23 years ago. And I can say, in 23 years, we're about halfway toward achieving that goal. We've got over 200 million devices out there, running software. That's certainly more than anybody predicted that we'd have at this point. But, there's 5 billion people, the devices are still too expensive, they're way too complicated. And it's only through things like the natural interface, speech, vision, handwriting, that's the only way that we'll get them out there into very big numbers.

And so I can definitely see several more decades of fun, exciting work, for me. I think I have the best job in the world. I get to work with smart people. I work in an environment that's changing all the time. It's hyper competitive, nobody's got a guaranteed spot. I get to go out and see how these technologies are being used in business, in schools, and homes, and really be inspired by how far we've come, and yet see again and again how far we have to go.

So, you know, my life's work is being at Microsoft and pursuing that dream of a personal computer on every desk and in every home. And I think the next 20 years will be even more fun than the last 20.

(Applause)

MODERATOR: I'd like to invite Jan Baan on stage before Bill has to leave.

MR. BAAN: Bill, I thank you very much for coming down. I'm sorry, Bill, that Tom was a little rough to you, and blaming you that you're not finishing your college, but he's always doing that to me. But last time, when I met you, it was just when you became a doctor in The Netherlands, and I know that our friends, our German friends in Waldorf are now calling your Herr Doctor, but he's still maybe a little too rough. But thanks for coming. I think what we demonstrated for you was quite important. It may be one of the most mission-critical softwares ever integrated on your and our platforms so far. And I think that is the promise for the future, a promise killing complexity, I'm aligned with you, looking for mass productization, mass customerization, and I think our relationship with Microsoft will be super. Thanks for coming.

MR. GATES:Thank you. It's been a pleasure.

(Applause)