IE 5.0 LAUNCH KEYNOTE ADDRESS
Microsoft Chairman and CEO Bill Gates
March 18, 1999

MR. CHASE: Good morning. Welcome to Redmond, Washington, and also welcome to the folks joining us on the Web by satellite. Thanks for coming here to the launch of IE 5 technologies.

We're going to have a little fun today. We'll show you some very cool, high performance new technologies we have for Windows users on the Internet. My name is Brad Chase, and I'll be your host today for the event.

I'm going to start right off and take the pleasure of introducing our Chairman and CEO Bill Gates. Thank you very much.

(Applause.)

MR. GATES: Thanks, Brad.

Today is a big milestone for us. We released Internet Explorer 5.0 earlier this morning. Our goal here in improving this technology is speaking directly to the mission I see all of Microsoft focused on today, and that is taking the Internet, combining it with great software, and turning that into the most powerful tool of all time, the most empowering tool that people ever have had. The most revolutionary tool that will change how we do business, how we learn, how we entertain ourselves, and how we communicate.

In doing this, there's a lot of phrases we keep in mind, making it easy to connect, not just connect to the Internet itself, but connect to the information you care about. We want to make this work anytime, anywhere, and on any device, so that you don't have to think about moving your information around. If you pick up a device, you authenticate who you are. The information that you care about, whether it's your mail or your schedule, or the customized news that means something to you, that should immediately appear on that device.

And so, this vision of what the Internet plus great software can do is driving all of our activities, and it's really an extension of the original vision of the company, which was the empowerment of personal computing.

How far along are we in making the Internet plus great software something that everybody benefits from? Well, the term we have for people who do this at home is the Web lifestyle. The term we have for people doing this at work is the Web workstyle. And I'd say that today it's only a fairly small percentage of people who have adopted this approach. It's growing very, very rapidly. If we simply take the survey data about how many people are using the Internet over the last five years, it's gone up from 4 million to about 163 million today. That's a very, very dramatic increase.

But just because people are using the Internet doesn't mean that they've really adopted it as a very broad tool, and we see that in the statistics here. It looks like about 30 percent of these users have really embraced it in the full sense of the Web lifestyle, about 30 percent play online games, about 23 percent buy travel tickets, 13 percent listen to radio, and so a fair percentage here are still really just using the Internet for electronic mail. And we need to make it easier, cheaper, more compelling for them to really go the full distance and do all of these activities that they care about using the Web.

We think today's announcement will help push that forward in a significant way. So, I want to touch on a number of areas that we think are key elements in driving this forward. Making it easy to connect, making it simpler, improving the sites that are out there, giving them more value, how we Web-enable not just the PC by integrating these technologies into Windows, but how we do that to other devices as well, and finally I want to touch on some new scenarios, ways that people will be using the Internet that wouldn't have been possible in the past.

Now, I want to be very clear on this here: the whole PC vision was something that took many, many companies to come together to realize, Intel and others on the chip side, tens of thousands of companies in building the software applications, lots of people who got out and helped put together PC solutions for customers. With the Internet, it's an even broader set of companies that are involved here. And it's fantastic to see the rate of new start-ups, the investments being made there, because we need all of that energy to make this a reality.

It is happening even faster than the PC did. The PC really took most of a decade to go from a concept to something that over 100 million people were using. Here, we're going to make it happen even faster because of this broad effort that's going on.

Well, what about Internet Explorer 5.0? It really represents the things that get us excited here at Microsoft. Listening to the customers of the previous product, having them tell us what did they like, what did they use heavily, what did they find frustrating, how did they want us to improve the product. We're integrating this into Windows, and so we'll be bringing out in the fall time frame what we call Windows 98, Second Edition. This will appear both as a retail product, and it will be preinstalled on a significant number of the PCs that are out there that people buy through the channels.

With Internet Explorer 5.0, we are providing very broad availability of these technologies. We've got the version for Windows 3.1, we've got the version for Windows 95, Windows 98, we've got the version for Windows NT. Also, we have versions for UNIX.

Now, this is an interesting change in our development cycle. With Internet Explorer 3.0, we did not have UNIX versions. With Internet Explorer 4.0, we announced that we would be supporting UNIX, but there was a very large time lag in the availability. It took over six months for us to have the Solaris version, and even longer for us to have the HPUX version. Here with Internet Explorer 5.0, we actually have simultaneous availability of both of those UNIX versions. So, we've been able to take that gap and eliminate it based on a new engineering approach we used to do the UNIX versions this time.

On the Macintosh, we've just recently introduced Internet Explorer 4.5, but by the fall we'll have another update for the Macintosh which will be the full set of 5.0 features, and some unique things that are exploiting the Mac platform in a particular way.

Now, we also are making this available in a broad set of languages. In the months ahead, we'll get up to 26 different languages, but simultaneously with today's release, we have the seven most popular languages already done, out there, and available.

There's a broad range of things we've done with Internet Explorer 5.0. The one that I think people may appreciate the most of all is what we've done with the speed. People told us they didn't want to download as many bits, they wanted more responsiveness in terms of viewing pages, and so there's a lot of very impressive internal work that's gone on to make this the fastest modern browser.

Talking about the connections, there's a lot we've done in the past to address this area of making it easier to connect, building into Windows the Internet connection wizard, partnering with all the people who provide connections, the ISPs, and online services. We've got our access service through MSN. And in the last year, you've seen us do a wide variety of investments in communications companies all with a single aim, and that aim is to accelerate their investment in high bandwidth connections to allow them to take the risk to upgrade their cable structure or their telephony structure, so that people will have even better connections in the future. And, in every case, we do that as a minority passive partner through the communications companies, because the communications network is their business. We just want to help get it into place so that our software can bring it to life as this amazing tool.

We'll take a step forward in making it easier to connect with Windows 98 Second Edition. Our claim is that somebody who's got that product will take less than 15 minutes to go from the install to actually being online and having the full power of the Internet. So we've streamlined the registration, and we've put in extensibility now for the computer makers to take the standard registration and add the things that they're particularly interested in.

Another feature that we'll have here with the Windows 98 Second Edition is the ability to do Internet connection sharing. This is coming up more and more, and it's been very tough to configure, and you have to buy a lot of add-on software to do it. If you have multiple PCs in your house, or any devices you want to connect up to the Internet, how do you set it up so you don't have to buy two cable modems, or you don't have to buy multiple different accounts that connect out?

Well, the answer is that you should be able to work through a PC and have that be the gateway that shares the single connection, and then throughout your house, all those devices get the connection automatically. And so, we've put software into Windows 98 Second Edition that makes it very straightforward.

In the future, I think it's going to be very important for people to have a permanent Internet connection. There's a big difference in your use of the Internet when it's just always there, and you can just turn to that screen and type in a query, and immediately you get the results versus having to wait for the phone to dial up, be concerned about tying up that phone line, get the busy signals, and have the slow connection. But I think that of the drawbacks of telephony connection, the biggest is probably that delay. It means that for something casual, like looking up the movies, or seeing the latest news, you're probably going to turn to the traditional way of doing that instead of the Internet, whereas the way I'm set up, and more and more people are set up, where that connection is always there and very high speed, you find yourself using the Internet for more and more of those things.

There are many different options that are coming along. And Microsoft is backing all these different approaches. In the United States the numbers for cable modems are quite impressive. With DSL the technology is really excellent, but so far there hasn't been an aggressive push to get that to the same volume levels, and we think that will change over the next year or two. We see wireless connections as being very important. In fact, in the home itself, it's one of the ways that you'll be able to connect different devices together.

When we think about wireless, we need to think about two different cases. There's campus wireless, or home wireless, where you're covering just a specific area, maybe with 1000-feet or 2000-feet coverage with the network, and then there's the wide area wireless, which is taking things like the GSM wireless network that's been used primarily for voice telephony and has a very limited data rate for Internet connections, and expanding that to a third generation approach which would provide speeds more like 200 or 300k bits per second, which really gets you up there to the speeds you want when you're dealing with very rich video and audio.

We're involved with a lot of companies right now, looking at the different connection approaches, particularly in the home, because there's in a sense almost too many choices there, whether it's the power lines, whether it's RF, infrared, and we want to make sure that when you buy a machine, Windows immediately detects that that network is there, that it can find all the devices that are on that network, see what their capabilities are, and present that rich interface on the Windows screen. So that's why we have our Universal Plug-and-Play initiative and we're pleased that a lot of partners are joining us in putting that together.

Ease of use is a top initiative here at Microsoft. I've said in many presentations that I really see this as the highest priority for Microsoft right now. In no way does that take way from the other work we're doing in advancing our Internet support, advancing scalability, but really getting every product group to think about, do they need as many commands, do they need as many utilities? You know, what are the error messages for that product? How could you take the common scenarios, where people have problems, and really use the power of the computer to solve them automatically?

And that theme has been carried through very well in the recent product releases, SQL Server 7 with its automatic administration, Office 2000, that comes out very soon now, and also Internet Explorer 5.0.

We're using the same approach that we use in Office, which we call IntelliSense. Being able to predict what the user is trying to do. Can we help eliminate a number of steps by automating these common tasks, whether it's autocomplete, error correction, or automatically finding the code that you're missing? If you want to display something, why should you get all those error messages and have to manually go out and find the code to do that for you? We should just use the factors and Internet connection and find it automatically. And then a new feature that we've got, which I think you'll find very exciting is the Search Assistant.

The way to really appreciate what's been done here is to see it in action. So let me call up Yusuf Mehdi, who is the Windows client marketing manager, and ask him to give us a quick tour of some of the IntelliSense features that we've got.

MR. MEHDI: Hi, Bill. Okay. So, as you said, there are a lot of great things that we've done to really simplify the Web browsing experience for users. And I'm just going to go ahead and walk through a couple of things. We have really two areas.The first thing here as you look at Internet Explorer 5 is that we've really simplified the user interface. If you look, up at the top there is essentially just a few buttons, the address bar, and really that's about it. We've really streamlined it for users, based on a lot of usability testing. One of the interesting things that comes up as part of the testing is that when you get a new user, they get a browser, the first time they've ever seen a browser they type in a Web address and they say, well, what happened? You know, nothing happened.

And it's because they didn't realize that they actually have to hit enter. So we've got a little go button, something that the America Online users have sort of liked, and we've added that button for the novice users to basically be able to get off and running on the Web. Once you're out there on the Web, one of the things we've learned, as you were talking about with the IntelliSense technology, is that a lot of times typing in Web addresses, for example, typing in http, I'm going to spell it wrong here on purpose, as well as any of the syntax is a complicated thing. Not a lot of people know how that works. And so what we've done is we've put the smarts into the system, so that even if people type it incorrectly, and in this case put the wrong slashes, it will work fine.

And I'll pick a Web site here, since we're talking about the fast performance of Internet Explorer, and let's go with Indy 500, the speed theme. And as you can see, what happened is it actually autocorrected that http, and the slashes, and it got it right for me. So in the same way that Microsoft Word can correct punctuation or spelling, we can now do the same smarts for the Web. The other nice thing about it is that, as you start to use the system more and more, what you'll see here is that we have a new feature in Explorer called the drop down list here, for autocompleting Web addresses. We had introduced this feature in Internet Explorer 4, and people loved it, because it saved them a lot of time having to enter addresses on the Web. Now we've made it even better, so that you can just come in and choose from any number of sites that you might have been to. You could also do a search, and you could also do short cuts. So that autocomplete, that automating of repetitive tasks is something that's been a huge hit in the usability tests.

And what we've done is we've not just kept it as a browser, we've actually brought it out to the Web. So even on Web pages, we've brought this IntelliSense technology to make things better for consumers. For example, let's go to a site where I enter information, maybe I'm coming in to check stock quotes, and I have a lot of stocks that I keep track of that start with the letter M. Now, when I type the letter M, that page will remember some of the stock quotes I've had, and will have the stock quotes listed for me, so I can come in and pick any particular stock quote and get it.

And we've extended that for full forms. How many people have sort of gone to the Web site and had to fill out forms, and it's the same form over and over, name, address, et cetera, or if you use Hotmail, and you come into log in you have to always log in with your name. Now, you can actually come in, type your name, and when I hit enter it will autocomplete my password. And so this is a great feature, too. We designed it with privacy in mind, so that if you don't want to have that password come on, you can lock that thing down and not use it at all, but if you'd like to in this case, no problem. So there are some great things there for simplicity.

Now, let's talk about what we've done for search. As you said, Bill, the Search Assistant was really a big hit in Internet Explorer 4.0. A lot o people like the Search Assistant. We've done it tremendously better now in Explorer 5 in a couple of ways. Let's take a look.

One of them here is, let's look for a Web page. And again, I'll stick to the speed theme. So Jeff Gordon, winner of NASCAR, he knows a little bit about speed. We'll go ahead and pull up the search. And what you'll see here in the left pane is all the search queries for that search. But, often times one search engine is better than another at a set of requests. Normally I have to go back and reenter that search. Now we have a little next button here, and I can just click with one button and it will redo that search with my next search provider, so I can go to Infoseek, Goto.com, Alta Vista, and as you can see each of the search queries are different. So now it's really fast to find something on the Web, regardless of which search engine you'd like to use.

And, in fact, just to show you how far we've gone with search, even if all you want to do is come in and say, well, Jeff Gordon, we have a new feature called AutoSearch, which will actually do its best guess to try and find that page for you, and actually bring up the page, because that's eventually what people want. They don't want to get the search results, they say just get me the page. So we've done that, we've done it in an open way, so that any content provider or any corporation that wants to have their own key words for searching they can do that, as well. So that it makes searching quite fast.

The last thing I want to show you here is, not only have we made searching for Web pages easier, but we're really going to make the search bar a central place to find any piece of data on the Web. So that you can find a person's address, you can look up and find some information about a business, or in many cases you just want to get some information. So, for example, let's find out about the Indy 500. I don't know that much about Indy 500. I can come in now, and with the search through encyclopedia I get a list of encyclopedia articles, in this case from Encarta, and then I can come in and read about the Indianapolis 500. So it's very fast, it's very friendly. You don't have to know Web pages, you don't have to do too much complex searching. You can come in and click those.

And, in fact, if you wanted to find a map on how to get there, or better yet, let's find a map on the Bonneville Salt Flats, which I think is where they set the last 15 of the 17 land records for speed, we'll come in and look at that in Utah, and there's a map to it, an Expedia map, and there's a map on how to get to the Bonneville Speedway. That one's okay. Let's look at MapQuest, that's actually a little bit of a better map. So great choice, you can use any of the tools you want, you can find any piece of data. We're just going to continue to improve this as we go forward, and it gets better and better for searching.

So there's two small examples of the literally hundreds of features we've put in, based on customer requests, to make the web just simpler, and easier to use.

MR. GATES: Thanks.

Well, simplicity is a topic that we'll really never be done with. You know, if you go back 10 years ago people wanted us to make fonts simpler, they wanted us to make getting printer drivers simpler. A lot of those things are really taken for granted today. Now, tasks on the Internet, installing software, those are fairly complex. But, as we solve those things, people want it to be easy to do video-based collaboration, and there will always be new demands. One of the ways we'll deal with this is we'll use the Internet as a way of automatically distributing software. You saw this in its early stage at the Windows '98 update capability. And that's proven to be very popular, and we're constantly refining it, making it simpler for people to know which things they should download, making it easy for them to set that up, so it works actually in a silent way.

So this idea of self maintaining and self healing really blurs the boundary between what is a software product and what is a service. And we can give people the best of both worlds there, where they pick the software they want to use, but then based on the options they choose it's constantly being improved based on the latest work that we've done.

Another key step, we think, is continuing the path we've gone down of integration, making it so you don't have to think, is this information on my local system, or is this information on the Internet. When you give search commands, you know, why should they be different? When you're editing those documents and wanting to work with them, why should that be different. Well, to bring those together requires embracing HTML in a very, very fundamental way. And when we first looked at HTML, we said it's not adequate for the task, it's not rich enough, for example, for help text, it's not rich enough to display the rich folder views that we like to provide. So that's one of the reasons we got so involved and took leadership in driving HTML forward, so that we could really make it the forms package, so we could make it the display package, the display engine that all the applications and the operating system itself is driven through. And as we've gone down this path, we're really pleased that we took that direction. The results we've had in Windows '98, the reception to that integration has been very, very positive, and so we're moving even more rapidly in that direction.

What about better sites? How can you make sites better than what people have had in the past. Well, it's important to recognize that the Internet is always improving. The Internet today is much better than the Internet two years ago or a year ago. Some of the software building blocks that have helped that take place include our FrontPage product. It's overwhelmingly the most popular product people use in creating Web pages. And we've been updating that very rapidly to meet all the new needs, whether it's dynamic HTML, or building Web pages that are more transaction-oriented than just the static text that would have been the standard a few years ago.

We're also taking things like Dynamic HTML and saying, how can we use those so you really get the richness of interface that you used to think of only from local applications? Today there's still a bit of a gap. A local application can look better than Web interaction. And we're very committed to making sure that that gap goes away as we evolve HTML and how we embed it in the system.

Another exciting advance is allowing all sites to have English-language queries. So you can go up to a movie site and just type in a few things that you remember about a movie, or the attributes that you care about, and immediately get a response. In SQL Server version 7 we have the standard English query feature. And it's very easy to bind that feature to a specific vocabulary. And so we're starting to see hundreds of sites take that and create richer interaction. We also have a very specialized product called SiteServer, that's aimed at high-volume sites, and it lets people do personalization. When somebody comes in, it tracks if they've been there before, it tracks what might they be interested in, and helps you serve up efficiently these customized pages. It also gives people an easy way of looking at their web site and saying, what is the traffic like? What kind of users are visiting what pages? You know, if I put up a new sale item, are people going in, or are people buying that. And so you have immediate feedback on how that tool, which is your most important marketing tool, how is it working and what might you have to change.

MR. GATES: Here at Microsoft, tracking that Web traffic and really asking if we've made it appealing, who is going to the various locations, that's really driving the work we do, and we see that virtually in real time.

Our Web sites are a major investment for us. It's all under the MSN umbrella, an integrated network with many of the top destinations out there. Certainly Hotmail is dramatically the leader in free email, with over 35 million accounts. Today's Internet Explorer 5.0 announcement includes, I think, a breakthrough for Hotmail users where they'll be able to use Outlook Express against Hotmail, and we'll take a look at that a little bit later. But it really means that the compromise you had to have in terms of, well, I'll use Hotmail because of the broad accessibility, but the user interface I get there is a bit clunky, and so maybe I'd prefer to use another mail system. You won't have to make that tradeoff at all. You'll have the richness of the Outlook environment, but with the capabilities that you get in that Hotmail back-end. So, we're starting a beta of that, and we'll go to full deployment of that later this year.

We're top in a number of areas. This, of course, is a fast moving, very competitive area. And that's just great news for consumers because everybody is making their sites better and better all the time.

Now, we want everybody who works on the Internet to think of Internet Explorer technologies as a platform that they can build on, a platform that they can take advantage of. And so we've made it customizable by anybody. People can have their own branding, they can set the default home page, they can change any of the options relating to the Web accessories that we've got built in there. And we're actually announcing something very exciting today, which is that all of the leading portals, with the exception of Netcenter, have taken this product and created specialized versions that are available for download on their sites. So, you see listed here MSN, Altavista, Excite, the Go Network, Lycos, Snap and Yahoo.

Internet Explorer is the leader in driving HTML to be a fantastic way of presenting all kinds of information. Dynamic HTML, which we first brought forward with Internet Explorer 4.0, is increasing in popularity, and we've been able to speed up a lot of the dynamic HTML capabilities based on the people who used that in 4.0.

We're also showing for the first time with our 5.0 product something we think is very cool, and that is the ability to synchronize audio and video with HTML presentations. The standard is called HTML Plus Time. That's a proposed standard now, which as it goes through the standards process will get refined, and eventually emerge as a capability that is promoted by the W3C.

If we look at the official standards that are out there, and see how has Internet Explorer done versus other popular browsers, you know, across the board we have been the first in all the new areas. HTML 4.0, they still have not done a full implementation. CSS, still not a full implementation. If you look down at the bottom, things like XML 1.0 that we've got here in Version 5, that is super important. I don't think you'll see a Microsoft presentation anytime in the next five years without hearing about things we're doing around XML. We're really designing our database advances, our language advances, to take advantage of the fact that there are going to be XML standards for everything. When I say everything, I mean every kind of object you can imagine. Business transactions, consumer electronics products. The Universal Plug-and-Play protocol is partly about having XML descriptions of all the devices in your home, and being able to discover those and dynamically create the interface that lets you get access to those. You know, XML is a foundation piece for an incredible amount of work we're doing. And in every industry you see standards bodies growing up to take things like health records and define those in XML. And we're driving those efforts because we think that this is a very important trend.

The ultimate in interoperability comes through XML. It's not down at some bit level, it's not forcing people to rewrite their applications. It's taking the semantic information and expressing that as XML records, and allowing that to be interchanged. So, the support we have here in Internet Explorer 5.0 is a real milestone in driving XML to achieve this incredible potential that we're very excited about.

XSL is a way of taking XML and allowing you to express rich views, so you can customize views of information that come to the browser in XML. I probably don't have enough time to explain that one, but it is something that is an important and really driving XML. With VML, we're staring to get rich drawing, rich graphics on sites. That's something that people have talked about for a long time, and we think it's very important. And then finally WebDAP, which is a way of really getting the difference between file servers and Internet sites and bringing the richness of both together. That's another standard that we're backing very strongly.

One of the great collaborations inside Microsoft has been the work that the Office group and the Internet Explorer group have done together. We've supported HTML in our Office products going all the way back to 1994, when we shipped an add-on to Microsoft Word that let you convert the documents to HTML. But to be frank, the HTML conversion of these rich documents has always left something to be desired, because these rich documents, they have layering, they have tables, they have a lot of incredible formatting that HTML simply wasn't rich enough to provide. And so, as we designed IE 5 and Office 2000, we said, let's get these groups working together, and take all the problems that people have in using the browser as a viewer for Office documents and make sure those get solved.

And so, they worked together over the several years of development, and they've done a fantastic job so that people no longer have to think about having these special viewers for the documents in order to get that rich fidelity. And it's the type of collaboration that we think makes a big difference.

Well, let's go ahead and look at Internet Explorer in the way that different people can advantage of this customization.

MR. CHASE: Okay, Bill. So what we have here on the screen is a special version of Internet Explorer 5 that Altavista has developed for their customers. There's a couple of things that they've done that I'm just going to walk you through. First of all, they've provided their own customization. It's a little subtle, but you might make out the background color they changed on the tool bar to work with their logo. They have added favorites to the Favorites menu. In fact, they've got their AV branding right on the Favorites menu. The open nature of Internet Explorer also allows them to come in and add links, so they've prepotted their own quick links on the tool bar for things like photo media and shopping, et cetera. And so, they've been able to provide a great degree of customization. Even the icon in the upper right corner. We give them great freedom to basically build their own solutions.

The exciting thing about this is that companies like Altavista and the other top portal vendors are building on value-added software solutions for consumers. There's two exciting ones I want to show you. Some of you might be familiar with the translation capability that Altavista provides as part of their service. What we can do now is, we can actually go to a Web site, internationally, and let's go to El Paiz for example. And I'm not sure how many of you read Spanish. I could probably translate it for you and do a semi-decent job. Instead what I'm going to do is, I'm going to use the power here of Altavista, and with one button, I'm going to go ahead and click translate. And then I just get a very simple dialog that says, let's convert from Spanish to English. And now what you get is, you get the power of the translation engine just a single click, essentially, from the tool bar, and I've now converted that Web site from Spanish to English, and hopefully the translation is pretty good and I can read it in English.

MR. GATES: I think you can get a basic understanding.

MR. CHASE: You get a basic understanding. But it's an exciting thing to be so simple. So that's one thing that Altavista has done. Another thing they've done is, they've added the ability to have a Web accessory. So, when I click on AV Tracker, what you'll see, look at the bottom of the screen, I'll click on that, and that pops up a little window that's called a Web accessory. And now what Altavista does is, they're able to essentially stream in or display content from their Web site in that window. That window is a persistent window that will stay up as the user navigates the Web.

So, for example, let's go to a Web site. How about aol.com. So, we're off at the America Online site, and now I'm also looking for some information. Now, prior to Internet Explorer 5, Altavista missed out on the opportunity to keep that community, to keep that end-to-end experience with the consumer. Once someone clicks off their Web site, they were gone. But now, Internet Explorer 5 provide them a unique solution, which is the ability to have this persistent bar here with information, and at any given time, if I want to, I can actually come in and click on a link, click on one of the news, and I'm back at the Altavista site.

So, it's something that they've been missing, which is the ability to be competitive with America Online with their own clients, they can now start to develop some solutions that are sort of end-to-end. So, this is just one example. There are a bunch of others. They're all available on the Web today for download. And I think you're going to see many exciting things where people have done and added value like the translation feature, or a what's related feature to the browser.

MR. GATES: Super. The key point there is that Internet Explorer, like all of our Windows technologies, is a platform. And we let people take that and do things that even surprise us in terms of how far they can go with it. What will the great sites of tomorrow be? Well, a lot of them will focus on commerce, making it easy to find products, compare products and buy products. Everything you can buy will be there in this ultimate marketplace, the friction-free marketplace. Just two weeks ago, we announced our major initiative in electronic commerce, which had a simple goal, to take millions of businesses and get them on the Internet, to make sure the Internet is not just about a few new companies, or just big companies, but it's about everyone who has anything for sale, and make it as simple as filling out a few forms to get your Internet sites up and running, to get the advertising of that site going, get it connected up to your software, and use these XML standards to exchange information about what people are buying and selling.

So, that BizTalk initiative is something we're very excited about, because the breadth of products people will have access to will expand dramatically as we have success with that. We also think that there's no reason that, as you move from site to site, that you, the user, who has gone to the trouble of entering information, you're the one who should control that information. You're the one who should decide, do I just want to single-click shop on this site. And so, you shouldn't have to think of that as just a feature of individual Web sites, rather it's a feature of your browser that that information is collected, and then you decide who you want to give it out to. And it's not restricted in any way.

We think that the in the future the ability to have voice conversations will also be pretty exciting. Calling on the phone is a very personal experience, but getting lots of data is very inefficient, like looking at schedule or a list of choices. Whereas, on the Internet that list is fantastic, but if you want a little bit of last minute advice, there's no one there to discuss it with. As you get the voice connection built in, and we're starting to see this, then you get the best of both worlds. So, if you see your bank statement and you agree with it, fine, you move on to do the next thing. If you see something that concerns you, you can decide, okay, I want to send email, or if it's really urgent you can click and say, hey, get somebody online who sees exactly what I'm looking at and can help me out with this. And so the Web will become a much better communications tool, so you have self-service balanced with personal assistance.

One area that people are talking about a lot is other devices. Well, one thing to keep in mind is that the PC itself will change a lot. We've seen it come down in size a lot faster than anyone predicted. The new portable machines are really quite amazing. And we'll take a next step in the years ahead with a screen-based device without the keyboard, going back to this idea of annotating directly on the screen with appropriate handwriting recognition. That high-end device will run all PC applications. So, it will just be a very exciting form of the PC.

We'll also have subsets, devices that are phones, devices that are digital cameras, devices that fit in your pocket, the advanced set-top box, the auto computer, and Microsoft is involved with every one of those things making sure that browsing capability is built in. So, we take the most advanced Internet technologies we have, and take the appropriate parts of those technologies, and build them into these smaller devices.

For example, the XML support that you're seeing as a first in Internet Explorer 5.0, that will be in our TV browser, that will be in our phone browser, that will be in our auto PC browser. And so, although memory constraints don't allow us to take all the features of Internet Explorer 5.0 on the PC, we are able to take the key ones, like XML, and get those to be pervasive, so that anybody building a Web site can take advantage of those things, and have that richness work against these devices as well. And so, it's not just Windows CE that we're providing to these devices, it's also the Internet Explorer work as well.

Now, Web applications are a very hot area. This is the idea that when you go to a site, it can, in a fairly simple way, download code, and let you do new and interesting things. With the Game Zone, the most popular multi-player game site, it's kind of wild, we have 200,000 users per day, and a lot of that activity is during the day. So I wonder where these people are when they're playing all these games. But, it's something that people love to use.

With Hotmail, the offline piece through Outlook Express means that you can continue to use Hotmail functionality without even being connected up. Office 2000 is probably the ultimate in this respect in terms of how it lets you create shared Web sites, it lets you collaborate, and yet all of that annotating and editing function is there whether you're connected up or not.

Let's go ahead and take a look at some of those applications.

MR. CHASE: Okay, we'll go ahead and take a look, first of all, at the Hotmail and Outlook Express integration that you talked about, Bill.

We haven't spent a lot of time talking about Outlook Express. But we have continued to improve that feature, based on the feedback from users. We've been able to add a pane for contacts, we've been able to add personalization and identities, we've been able to add enhanced rules to filter out information. But, one of the great features we think is support for the ability to do Hotmail information. So, for example, here you can see that I have my in box for my regular mail account, and my Hotmail account all in one view. I'm going to go ahead and click on Hotmail, and what will happen is if I wanted to I could come in and actually synchronize, or I could come right to the inbox. And what I'm looking at is very subtle, so if you use Hotmail I think you'll get it, if you don't use Hotmail you're going to have to bear with me. So essentially what you're looking at now is information that's on the servers at Hotmail, and the great feature of Hotmail that 35 million users like is that they can roam from any computer and access their email. But, the problem with that is that you haven't been able to get really rich editing. And, as you said, Bill, if you're offline you can't view the mail.

Now, I can actually copy these mail messages to work offline. If I want to come in and compose an email message, I now have the full power of Outlook Express, which has been getting great reviews, to basically write and create rich email, all using the Hotmail back end. So we're really providing a great solution now, using the Web and software applications like the email client to have richer and richer scenarios.

The other scenario that we want to talk about is what companies can do to build rich Web based applications. So we've provided tools like the Internet Explorer administration kit, to customize and build Internet Web applications. And there's one company that's doing some exciting work, a company called Vencor, who is a leading healthcare provider. And they've done some really interesting stuff. They've taken Internet Explorer, with a SQL back end, and built a Web based application to help them better target and manage their caravans that go out to service people. And we have a little video that we thought we'd show, to show what their application has done. So I we can roll that video, let's take a look at it.

(Video shown.)

MR. GATES: Vencor is a good example of an application that would have been built without Web technology a few years ago. And today they're using Dynamic HTML, they're using that rich front end. Any code that has to come down comes down invisibly, and takes advantage of the device that you're running on. So I think it really does point the direction that we're taking the whole software industry. You can call this Web-enabling the future, making sure that on any screen you can call up these applications, any information that you put in gets replicated without your having to give explicit commands. You could almost think of your information as being out there on the Internet any time that you connect up. And so there won't really be a boundary between what's a Web application and what's not a Web application, based on the tools that we're providing.

A final area we want to talk about is new scenarios. Things that you just wouldn't have done with a personal computer a few years ago that now start to make sense. They make sense because the PC is more powerful, because the Internet is out there to give you the information, and because the browser is going to make these things easy. One of these advances is audio. The quality of audio is improving very rapidly. In that scenario Microsoft has been investing very significantly. The quality of video, even at low data rates, has also gotten dramatically better. And we're seeing it now as a fairly key feature of the top Web sites out there on the Internet. I talked about Internet telephony, using that to create a very personalized Web site, for e-commerce, but also for any two people who want to connect up. One of the features we've had in Windows that more and more people are discovering is this ability to share a screen across the Internet, the Net Meeting capability. This lets you take any Windows application, say Excel, and have any two people who are on the Internet sit there and collaborate, seeing each other's work, edit things together, without having to be in the same location.

And so that idea of coming together, and more and more having the voice connection be across the Internet as well, I think will be a very central scenario. People in the past really to get high quality voice had to have a separate voice connection. So they'd dial up their phone for talking to the other person, and then they'd use the PC to connect up the two screens. And that's just a little more effort than having all of that data run across the Internet.

A lot of the products that have been physical goods, and popular on the Internet, are exactly the products that will become pure bits, purely digital products, music, books, periodicals, things of that nature. And this requires us to really think hard about screen quality. Our ClearType advance is a key thing there. The collaboration we have with these screen makers is a very key thing there. Although today most people view e-books as inadequate, I think that's going to be a very mainstream scenario.

When you put all of this together, the connectivity, these new scenarios, we'll be able to talk about a digital home, a home where you can access any video source, any audio source, have all the control of those different devices available from every screen. And this is rapidly becoming a reality. In fact, as consumers see the flexibility of digital pictures and digital audio, they're the ones who are really pushing for us to bring all of these pieces together.

One of the scenarios that Internet Explorer 5.0 addresses is this idea of going out and finding radio audio, so let's take a look at that.

MR. CHASE: Okay, Bill. I figured we'd finish up with something sort of fun and exciting.

MR. GATES: So now, this -- the rumor mill didn't know about this feature?

MR. CHASE: No, this feature was -- we kind of kept this feature quiet. So almost the very end, and then it kind of got out.

MR. GATES: That's pretty tough to do.

MR. CHASE: It is, I'll tell you, tougher and tougher every day. All right, so one of the exciting things here with the Web radio tool bar is that today many people can stream audio and video on the Web. And there is software from Microsoft and others that do that. But the problem is that we just haven't made it simple and easy enough for people to do it naturally. For example, how often do you listen to radio streamed through the Internet while you're surfing Web sites? I mean, how many people do that here? Whenever I ask there's a few people who do it, but it's pretty small. Now, let's take a look at what we can do to really make this simple. Let me go ahead and pick a site.

This is a neat site, this is a local Bellevue High School here in the State of Washington, and they have a little radio station, and they've created this Windows radio tool bar extension that I can just go ahead and click, and what will happen is, as you see up here, a little tool bar popped out. And this is the radio tool bar. It's very seamless, very nicely integrated, has a couple of simple controls, stop, volume, and then the radio station, and then what you'll see is it will go ahead and stream the radio, and if we add some volume what you'll hear. This is the taste of the local high school. And one of the neat things though about this is not just that they were able to get here on the Internet, but actually when we were researching them we went to go hear their music, and we were in their parking lot, and they have just a little 10 watt transmitter, they don't have that much money, and it was pretty fuzzy. And we said, well, I don't know. We came back and then we listened to it on the Internet and it was actually clearer than in the parking lot where the transmitter is.

And imagine what happens if in the future we can get great investments in the software to make the audio even better. It will be quite amazing. So that's actually one neat feature of the radio tool bar, the simplicity to listen to music as you're browsing. And the second one is really improving the quality with which it's transmitted, because it's all digital through the Internet.

MR. CHASE: The other key feature is that some people might say, I can just come over here and listen to the radio as I'm surfing the Web. What's really better than that? Well, that's a good point, and one point about that is that now, because of the power of the Web, there's an ability to go out and listen to radio from any number of sites, anywhere across the country or the world. So for example, I could come in and we could take a look at -- let's take a look at some radio sites that are in San Francisco. What that will do is customize the set of stations that I can view on this page. This is the Microsoft Network Web Events page, that has a number of events that occur throughout the week. Let's try this again.

Okay. Here we go. And so for those of you who are from San Francisco, who came up this morning, you'll notice that we now have KFOG, so even though with a regular radio I can hear some stations, now I can listen to a favorite station from New York, or from San Francisco, and have that be here locally.

And then one last thing that we'll show you is that not only can I do that, but I have a wide variety of formats. So, sure, you can listen to a radio station, but can you come and select a type of music. So, for example, if I wanted to hear jazz I can click jazz and get a much broader selection than I could on my physical radio, or I can even go by country. So for example, maybe next time that you're going on the trip abroad you might say, let me tune into the Japanese stations, and find out what's going on in Japan. So we'll come down and we'll pick one. Let's say Amuri News.

I'm not sure, Bill, if you can speak Japanese, but you might be able to hear. In this case, the broadcast from that radio station in that country. They're playing music. Essentially what you're able to do is come in and pick a radio station from across the world and get that kind of access. So there's really some very interesting scenarios, not just to be able to listen to music, but the control and the power that software gives you to choose the stations.

MR. GATES: That's great. But, even radio will be easier to use in this environment, it will give people more flexibility.

So looking down the road, we have no doubt, we are betting our future on the Web lifestyle and the Web workstyle becoming mainstream. The work we're doing in our software tools across the board are aimed at the belief that that's a great thing, and one that we can help make happen. If you see what we're doing here with Internet Explorer, you know why we get excited about our work.

Many of the people here have been with us for many of the launches. Windows 95, which was the launch of Internet Explorer 1.0. Internet Explorer 3.0, which was the first time we really came out and said, hey, we think we've got a better idea, we're the underdog, in browsing traffic, but here's something that's very exciting. Internet Explorer 4.0, another major step forward, one that drove our popularity and enabled a whole new wave of applications. And here today the next step, Internet Explorer 5.0, not too long after 4.0, it shows the pace that we're moving at, and certainly in supporting standards, innovating in the user interface. You know, we are really leading the way. There's no doubt, though, that the best is yet to come. We've got a lot more we can do with our software tools to make these things all become a reality. And we couldn't be more enthused about pursuing that work.

Thank you.

MR. CHASE: I'd like to thank Yusuf and Bill, and thank all the people who've been joining us via satellite and the Web, and thank all of you, as well.

We appreciate the opportunity to show you some advances that we've made with Windows technology, to Internet Explorer 5, in particular. Thank you very much.

(Applause.)