Remarks by Bill Gates
Microsoft Corporation
Windows 98 Announcement in Japan
June 17,1998
Japan

MR. GATES: Good morning. It is a great pleasure to be here for the official Windows 98 announcement. The PC industry is the most exciting industry in the world. By connecting these PCs together, over the Internet, we are changing the way people do business, the way people learn, and over time, even the way that they entertain themselves.

It is a fast moving industry, faster than any other. Part of this is the incredible hardware improvements that take place every year. If we just look at this year, the microprocessor chips continue their exponential improvement. The so-called Moore's Law is moving faster than ever before as we find products like 400 Megahertz Pentium 2 chips from Intel. This extra speed is allowing us not only to tackle applications that would have required mainframe computers in the past. It is also allowing us to use the power to simplify the interface and make the computer more approachable for everyone.

We have major advantages in screen technology of all types, including low-cost, large LCD's. Over time, the screen quality will improve so that people are interested in reading documents, even long ones, right off the screen instead of printing them out. That will be a revolution in how information moves. Already, some print documents, like the encyclopedia, have moved to be primarily in electronic form. And all of the paper forms inside companies will be going away in the next few years, as smart companies use the Internet to make that more efficient.

The storage capacity has also gone up, even faster than processor speeds. This is allowing us to take things like high-quality, still images, music, and even motion video and have that as a standard data type that is available on the PC. So even sending photographs to your relatives will be something that the PC can make far better than ever before.

We are making it easier to connect up different devices. We are bridging the gap between the consumer electronics world and the PC world by having buses, like the USB and the IEEE 1394. It is a very important initiative that is bringing the PC industry and the consumer electronics world together to create something that will develop a new market.

Finally, the innovation in building very high-end servers by using multiple processors and by clustering these machines together is really quite amazing. It's not only giving us the scale to take on Internet problems that are far more demanding than anything a mainframe was asked to do in the past, it's also giving us the incredible reliability that these systems require by having the redundancy that means that no matter what kind of system failure you have, the rest of the system can keep on running.

So that's a huge investment that the entire industry is making, and it's part of the reason why you see Microsoft's R&D going up more than 25 percent every year for the last ten years. We see incredible opportunities here and we're investing in those things.

The last big event for Microsoft was certainly the introduction of Windows 95. It was very exciting, and the success of that product around the world and here in Japan was really quite incredible. It laid a foundation for a series of advances in hardware and application software. But really, Windows 95 was introduced before the Internet exploded, so while there was some Internet support in Windows 95, it wasn't our top priority and we've seen that change completely.

By 1996, Microsoft made the Internet the top priority, and that's reflected very deeply in the features you'll see in Windows 98. We're very proud of the impact that Windows 95 had on the PC market. If you look at the growth that took place in Japan, it was really quite amazing, and sales of PCs in Japan are starting to catch up to the U.S. level. They're about 35 percent behind those levels, and we're hopeful that with Windows 98 we'll be able to push that forward as well. Certainly, the use of the Internet will move forward, and the efficiency opportunities that that provides are really hard to exaggerate.

What are the principles that guide us in developing new versions of Windows? Windows has changed the computer industry forever. Before Windows, customers were locked into a certain type of hardware, and their applications choices were very, very limited. In fact, the software industry was very small, because the volume of one type of computer simply was inadequate to allow for investments in a great variety of software.

With Windows, customers have had choices of hardware and peripherals and applications like never before. So, as we drive the innovation on our own with our increased R&D and working with third parties, we always keep in mind that our partners in the software industry and the hardware industry and in the services business are absolutely key. We have to always be very creative in how we work with them, with certification programs, by helping them invest in having the people there to meet the incredible demands of the market. But I have no doubt that we've been able to deliver on these principles: rapid innovation and choices in software, hardware and services.

And Windows today is a family of products. The highest-end product by far is Windows 95 that will be completely replaced by Windows 98 quite rapidly. In fact, during the course of this year, all the new machines that get shipped will change to use Windows 98, which means the volume of Windows 98 will be very, very high, not only on new machines, but also people who upgrade to the product. Windows 98 fits in the middle of the Windows family.

The high-end product, Windows NT, is the focus of incredible investment. NT 4 is doing very, very well, and we expect to see that increase during the next year, and then we'll have a huge milestone next year with the introduction of Windows NT Version 5. We're very much looking forward to that, and actually we're getting beta feedback from those customers already. That's for the most demanding uses in the commercial part of the market.

At the low end, Windows CE has been made available on hand-held machines, and those hand-held machines keep improving, the volumes are going up, the wireless connections are improving, and also Windows CE will be part of the intelligent TV and the intelligent car of the future. So the unit volume of Windows CE someday will be even higher than the volume of PCs, but of course the PC will always be the mainstream. It'll be where you have the full-size screen, where you can edit documents and connect up to all the information across the Internet. The interface of Windows was designed around graphical interface.

Between 1987 and 1992, the big bet Microsoft made was on graphical interface. We bet the company on that approach. At first, people were very skeptical. But by 1992, it had succeeded and everyone took it as a given. Today our interface innovation is taking the Internet and integrating it in. We are making it so you do not have to think of different ways of finding the information. It is local and uses the information which is out there on the Internet.

Building the browser in, in a very rich way, we take a huge step on this with Windows 98. Now, out in the future, we see the interface continuing to change, as we are able to make the computer understand speech so you can simply talk to your machine or type in a natural sentence to ask it to find information either on your local machine or on the Internet. That is a big priority for us in our research activities -- handwriting, speech, even visual recognition where an inexpensive camera on the computer will be able to tell who is there, what they are paying attention to, and what sort of expression or gestures that they are making. The interface is going to constantly get easier and easier.

Lets look at Windows 98. This has been a huge project, and all of the priorities were driven by the feedback we got from that incredible base of Windows 95 users. There were many things that they asked us for: better performance, particularly boot time, application load time, and shut down. All of these have been improved fantastically to increase productivity.

They asked for better reliability, and we took every problem where users called us and really looked into those problems to make sure that we would ship the most reliable version of Windows ever. There are thousands and thousands of improvements in that area.

The most visible thing, of course, is how we brought the Internet in - how we are using the browser in the active desktop, and the rich navigation there, in a unified fashion. Finally, a big effort for us was to unlock a new generation of hardware, whether it is the graphics capabilities, or multiple monitors connected up to a machine, or so many of the neat new things that are going on with digital cameras. We are making it easier to use this new hardware. So Windows 98 fulfills every one of those areas.

Let me give you an example of how the Internet integration has proceeded, and what that means to users. In Windows 95, the way that you browsed your local drives and network drives was by using the shell. The way to navigate your help text was by a special set of commands, and a special format that was necessary there. This did not allow the information to be updated on the network. Finally, the browser, the Internet Explorer which was built into Windows 95 from the beginning, had its own unique set of commands.

What we have done now, is that we have taken the browser and we have made it rich enough to do all three of these things. So the old help file format and those special commands are gone. Nobody ever has to learn those again. The authoring of this text is simply using the Internet tools and we make it now so that we are linked out to the Microsoft web site, so that you can always find the most up-to-date information.

Another great example of Internet integration is the way that we have a command called "Windows Update." When you give that command, we immediately go out to the Microsoft web site and check to see what driver updates or fixes or new features you do not have on your systems. We give you advice about what you might want to do to update your system and have all the latest power. That feature is using the browser and the Internet to make our customers always have the latest software that we can provide.

On the hardware side, this universal serial bus is really catching on. I expect it to be a standard feature in the majority of PCs by the end of this year. The serial bus allows for an incredible variety of peripherals. You can take a scanner and just plug it in, and immediately you are ready to go. If you put that picture in, the right software runs and you do not have to give any commands. Identification readers, like finger print, digital speakers that are higher quality than any PC speakers in the past, or the video camera for video conferencing, which will certainly be a big application. I am sure that we are not even thinking of some of the inventions which people will come up with to take advantage of the serial bus and the easy way that people can plug in new hardware there and automatically have Windows recognize what is going on.

Now, Windows 98, particularly the Japanese version, is a huge project. Developing the code, going through all of the user input, going through all of the testing where we have had over 60,000 beta testers and 100,000 comments from those users. This is a huge undertaking. We had 42 interim releases, and the development team ate almost a thousand pizzas. They came close on that one, but only 984 were eaten.

One of the key goals was to get the Japanese version out about the same time as the US version. Our record on that point in the past has not been very good. With Windows it took a year to get it out. With Windows 95 it took three months. This time we are doing it in 30 days, and we are very proud of that. It is a huge step forward.

Today we are committing that this product will be out, in the channel, totally available throughout Japan on July 25, which is the official ship date. We have had incredible support from partners of all kinds, such as software developers and the peripheral companies. Here I am just listing over 20 of the system manufacturers. These companies are building hardware that takes advantage of what we have done in the product. They participated in the beta tests, and it really has been a very important element of getting this done. The PC industry is one that comes together for key activities to make sure that we are doing the right thing for users and to make sure that the upgrades are very, very simple.

That is a big difference between Windows 98 and Windows 95. The ease of upgrading is dramatically simpler. This is a very natural thing, because the underlying model is the same, so users will find it very, very simple. The response we have received from Windows 98 has been very pleasing to us. We have gone out and talked to users, and said "hey, what do you think of this upgrade?" They have said that it is so easy to do, and very quickly they can get the benefits.

This is a pretty natural thing, and really a new category of update from Microsoft. It is one in that so much has gone into making it simple. We have been pleased as we have looked out in the Japanese market, to get a real sense that there is a lot of demand out there. One of the surveys looked at over 50 percent of the home users are planning to get the latest and greatest system. A lot of those users also planned to take advantage of this new peripheral capability, whether it is the new digital camera, or the different monitors, or the advanced graphics cards that use the richer graphics that are built in here. That will drive not just software business, but overall hardware business.

We really think that there is a great opportunity here to really highlight what a great tool the PC has become. We look at the new form factors of the portable machines and we look at the aggressive pricing of some of the home targeted systems. The PC industry is really delivering a lot for its users. Windows 98 is a great chance to look at what a fantastic industry this is.

The PC is reshaping the world. The Internet connected to the PC -- that is something that you really cannot underestimate, what is going to come out of that. Not in two years, but in ten years. It is really releases like these, the feedback we get and the industry partnership that will allow all of us to reach out and seize that opportunity.

Certainly, our optimism should be very, very clear. The reason that we are increasing our R&D so much is that we have no doubt that we can solve the top problems of speech and handwriting recognition. We have no doubt that the form factors will continue to get better and better. The opportunities here, whether it is for new companies or for helping people out, are really quite amazing.

We don't get many chances to evaluate the role that this industry is playing, but particularly today, as we are announcing a major new product, I think that it is easy to really evaluate it and say that this is the most important set of changes taking place. It is truly the information age. The users are very involved in this by giving us their feedback, helping guide us forward, and sharing their enthusiasm. Between those users and the partners, the potential is really quite amazing. Microsoft's slogan is "Where do you want to go today?" and with Windows 98 we think we are enabling people to go new places and do new things. That is why today is so exciting for us. Thank you.