Remarks by Bill Gates
"20/20 Vision -- A future for small business"
Sydney Star City Casino
Sydney, Australia, September 11, 2000

In some ways, it will eliminate a lot of the paperwork that we have right now. In some ways, it will eliminate a lot of the uncertainty we have about what our customers want and what’s happening in the supply chain. In some ways, it’ll spark our creativity because our ability to understand what’s going on will be so much better than it is today. In fact, if we think about these tools and the kind of productivity they can create, it’s very, very exciting and we’re absolutely just at the beginning of this.

The economy today, a lot of it really is about dealing with information, figuring out who to buy from, who to sell to, checking up on those orders, filling out information. This is what we often refer to as the knowledge worker part of the economy as distinct from the actual building of the products themselves. It is a very important part of the economy. It’s where all the matching of need to supply takes place.

Today it’s done through a variety of means: the Yellow Pages, informal contacts and other catalogues that are out there. There is lots and lots of paper that is generated as part of this. That’s one aspect that will be completely changed.

Now, a lot of this is about businesses working with each other. Often there’s this terminology about business to consumer versus business to business. The exact boundary there isn’t a black and white boundary but certainly the bulk of activity is on the business to business side. You’ve got your government very involved in promoting these directions because they’re a part of the equation as well. Think of all the interactions you have with government where you’re trying to find out if they have a program or whether they can help, or where you’re trying to make a payment or register something. That fits into this B2B arena where all of that will shift to avoid having to stand in line or deal with paper sent back and forth. Instead, this will proceed in a truly digital fashion.

In fact, if you think of the advice, the small business advice, all those brochures and pamphlets that governments put together, in many cases, the people who would benefit from that information don’t know that it’s been updated, they don’t know where they would go to get it.

Well, on the Internet, all they’re going to have to do is a fairly simply query, a search command, and they’ll find that information either from the government or perhaps from private consultants who can help them with their business. Even if those consultants aren’t necessarily nearby, the ability to collaborate and share things at a distance is a big part of this new world.

How significant can the impact here be? Well, we’ve seen the economy back in the United States growing at a level that economists have found hard to explain. An increase in employment and a lack of inflation over these last five or six years have finally forced economists to admit that there’s something coming in that’s actually changing the rules of the game, changing those typical trade-offs, and that change is the presence of technology.

So, even at this early stage when it’s about personal computers as a tool and we haven’t really gotten all the businesses online in a deep way, already the benefits are very, very dramatic. In fact, here in Australia the prediction has been made that the next decade will accelerate an additional era of growth into the economy by the proper use of these tools. And I certainly think, if anything, that’s a conservative view of what’s possible here.

So the profound effect on society as a whole, embracing technology and the efficiency it brings, is quite dramatic. However, bringing it down to individual businesses involves the opportunity for small business heads to take a leadership role to get ahead of competitors. The need to do this is also pretty dramatic.

I think the net effect of all these changes is actually to make jobs of all types far more interesting. After all, who doesn’t want to know more about their customer feedback? Who doesn’t want to know more about what’s going on in the economy and what opportunities they might be able to seize out there?

Part of this process involves changing the way we buy and sell. A good reference point is to go back to Adam Smith, one of the first people to write about capitalism and how it worked and why it was such a good thing. He talked about the matching of buyers and sellers as being the fundamental mechanism of capitalism.

Here we’re changing that mechanism. We’re making it easier to know about more sellers, to know more buyers and to really compare the different offers and negotiate. This is applicable not just for a one-time transaction, but on an ongoing basis.

So, all the things we think about today in terms of marketing or customer service are facilitated by this digital connection. When you order something online you share your electronic mail address with the company that you’re doing business with and then they can come back and notify you. To use the example of the online florist, Petals, it’s as simple as notifying you that you bought flowers a year ago and maybe you’d like to be reminded of that same event again the next year. It’s really about strengthening that customer relationship and the asset you have there.

Here in Australia we’re already seeing people building marketplaces, business to business focused marketplaces that really let everybody get online with what they want to buy and sell. Now, some of this has been initiated by the big companies. They’re the ones who are probably able to devote the most resources to ensure all of their clients are involved in these marketplaces." But the infrastructure that they create and the standards in terms of how things are expressed, can all be leveraged by businesses of all sizes in a very open way. And certainly for businesses who sell to those large businesses, the need to get online becomes absolutely imperative.

In the United States, it was the grocery stores and the car companies saying that they needed all of their suppliers to be part of the digital supply team. It was this that really forced people to say, "Okay, this is going to happen, and what is it all about." And then once they got into it, they started to realise that it could not only make their external relationships work better, but improve the flow of information inside their company. Whether it’s communication between different branches or being able to do better analysis, having these digital approaches is something that’s quite profound for any company as a whole.

What’s Microsoft’s role in all this? Our company now goes back 25 years. Just last week at our headquarters in Seattle we celebrated our 25^th anniversary. That photo that you see there is of the well dressed, 14 first employees of Microsoft - a bunch of engineers, people who really believed in writing software. Even back then though, we had this idea of building a tool that could be used not just by big companies. A tool not like the computers of the day which were so extensive that it would have been a joke to ever talk about small businesses jumping in and being part of it.

But it was our belief that we could get the power up and the pricing down so that not just businesses, but even individuals at home, would have this tool and use it in a profound way. The success of this to date has even surprised those of us who were part of making this happen.

Today there are over a 100 million personal computers sold. The price of those machines has come down pretty dramatically. For about US$1,000 you can buy a pretty powerful machine that gives you access to all the latest creativity software and also enables you to get connected to the Internet.

The belief in both software and standards were part of the founding vision 25 years ago. Those principles continue to be as important today as they were then. We’ve got to have standards for people buying and selling across the Internet. We’ve got to have devices that literally every business can afford. And we want to get to the point where it’s not just the small businesses that are saying that the large businesses are insisting everything be done digitally. Even consumers who start to get into this are going to demand working on a digital basis.

For example, once you’re buying and selling your stocks online and communicating with your friends online, you’ll want to organise even things like doctor’s appointments and trips online. For some purchases you make -- something like a second hand car, of course you’ll want to actually go and see the product. But before you do, you’ll go online to find out what the dealer paid for that car and be able to see the different comparisons. You will be able to judge what the used car is worth before sighting it.

So we’re talking about a profound change to the entire economy. If there’s one simple message we want to get across today, it’s that the Internet is not just about new start-up companies. That area is very exciting and very important and one that has received a lot of press coverage. However, the importance of the Internet is much more about existing businesses and how they take their skills and their customer base and move over to use these digital approaches to do things better. That is the most profound thing about this revolution.

In some cases, if you don’t do it and do it well, a new company might come in because you’ve left them that opportunity. People like Microsoft and the government are saying, "Here’s how you proceed, here’s the step-by-step approach using technology". But the fact that these new companies have started up with a technological focus should be far less important than the skills they possess and the customer base they have. They should be able to thrive even in comparison with those new companies.

And one thing to be clear about here is that the kind of breakthroughs that have allowed the PC to become such an incredible and inexpensive tool, are not slowing down. Consider the success the PC has brought to all different kinds of companies -- the people who build communications equipment, those who build screens, those who build chips -- they are all investing at unprecedented levels to drive new breakthroughs.

I won’t be able to describe all the wondrous things that we’ll get over the next 10 years, but I thought I’d touch on a few of them.

The speed of the communications connections out to the Internet will increase dramatically, moving up from dial-up connections, to multi-speed broadband connections. The networks that you will install inside your business will often be wireless networks. So, instead of having to wire up all your different offices, you will be able to install one small transmitter and all your offices will be connected.

Likewise, when you take your PC and you’re out visiting customers or travelling, you’ll be able to plug in and use the wireless network so you’re in touch with your messages and your transactions. You will be able to access all these Internet capabilities wherever you go. In some cases you’ll take the full PC or a portable device with a large screen. Other times you’ll just take your phone, which will have a screen on it and use that to stay in touch.

The PC itself will actually get smaller. It’ll be in a tablet form so that at a meeting like this one, five years from now, most of you would actually have a tablet PC and you’d be able to take notes on it. You would also be able to view your incoming messages on it. And, all the information that you gathered on the tablet could then be on-sent to your colleagues. For example if you came back to hear me speak again in the future, you could refer back to today’s notes and say, "Well, he made some predictions back then. Did they come true?" So, through the use of that device you’d have a rich experience.

The PC in this tablet form with the big screen will be complementary the way the phone will evolve with a nice colour screen. And when you’re calling somebody up and they want to share a schedule with you, or you want to share, say, a menu or a catalogue, as you talk you’ll be able to put that on the screen of their phone or their PC.

So, we won’t think of the world of screens and the world of voice as being two separate worlds. Those will have come together to create a simple interaction.

The video we’re about to play shows the way ahead for businesses wanting to promote a new product. In this case, we can see how a bicycle shop can very easily get news of its latest bicycle out to the world.

GATES:Okay. Now, that may have seemed like a little bit of science fiction there. There was a great screen phone, with people talking directly to it and sharing their schedules. The small company had come up with a new product and was able to list it on the marketplaces where they thought it would be of interest. And that was done with a few clicks on a very simple interface where they shared their new product specifications, photography and pricing.

I feel quite sure that within the next five years you won’t think of this as science fiction at all. In fact, the leading businesses will be operating exactly that way.

A small business today may think of personal computers as only relating to either their accounting or simply the tools they use to create documents inside the business. The good news here is that those same PCs are what you’ll use to reach out to the world in these new ways -- your interactions with governments, with suppliers and with customers.

It’s necessary to keep those PCs somewhat up to date. Every three years or so, the software and hardware on the PC will make significant advances, including things like the tablet form factor or having a built in microphone. Right now, when you buy a PC, it’s just the keyboard, you can’t send a voice message or annotate a document with a voice comment. By making the microphone a standard feature in the new hardware, the idea of being able to chat with somebody while you share a screen, or make those annotations, or give voice commands, will become a reality. Your software will become mainstream.

So it’s just one example where that hardware revolution every three years will really bring something that will change the way that you use the tool. So that same tool that you use internally to create brochures and to build customer lists, will have the Internet capabilities built into it. And you’ll be able to take any service that you want, and either house it on a server inside your business or use the high-speed connection to connect up to something like bCentral where those services will be done for you. For example take something like backing up your files for instance. You currently need to have somebody inside your business do that for you. However, if you have the right connection, we can simply guarantee that service will be carried out and none of your personnel need to be involved.

So, you need to strike a balance between what sort of computer related services you want carried out from your premises versus those that can be carried out via the Internet. A service like bCentral would ensure total flexibility there. All kinds of messaging and productivity software will be a big part of this.

Just to give you an idea of what it means to get your product out to electronic marketplaces, I'll ask Drew Sharp and Dave McNaughton to come up and step us through a demonstration of bCentral.

GATES:One point I think that comes through very clearly is that you want your systems that allow you to reach out to the Internet and list these products, to be very tightly integrated with all the software you have internally. So when you finalise that order, your accounting system should show immediately that you’ve got those sales. Your inventory system should show that those bikes, or whatever the product is, have been committed. So, you’re seeing almost a real time view of what your business looks like.

Part of the beauty of handling that internal information in an online format, is that whenever you want to get advice or help on that information, you don’t need to have somebody actually come to the business and look at your books. Your accountant, for example, could just use an Internet connection on a regular basis or when they get notified of some significant change or discrepancy. They can talk through the information they’re looking at by either emailing with you or actually conferencing with you while sharing the screen.

Now, the capabilities we’ve been talking about this morning will roll out over a several year period. The vision is quite comprehensive. All buying and selling and even customer relationship capabilities, will be trapped in a very rich way by this new software. The boundaries that have existed between productivity software, accounting software, and the way in which a company reaches out to the marketplace, will all be eliminated by this new approach.

We start with some very concrete elements, making it easy for people to present their advertising information and allow them to get listed in a catalogue with ease. It’s about making it easy for them to build what we call a dashboard -- one central location that traps all information pertaining to their business, ie key indicators, status information etc.

Then over time, we move to take all of this information and connect it up to the new devices -- the digital TVs that will be catching on, the screen phone capabilities that I talked about, and more and more of these digital marketplaces where the percentage of business will eventually shift to.

One thing that we’re very clear about in this vision is that there won’t just be a single marketplace or a particular type of product. Some people who thought about the Internet a little bit said, "Okay, let’s get everybody in that market together and create a single place that everybody goes to." But then there’s the potential problem that whoever owns that marketplace becomes a bottleneck for that kind of commerce.

And so now, people have sat back and said, "Okay, it’s good to have these marketplaces but let’s make sure the tools are designed so that a business doesn’t just have to pick one in a certain area with different overlaps and different approaches. We need to ensure we have competition in running those marketplaces." And so as you saw in our demonstration, a company is able to pick any number of those marketplaces and see, in an integrated view, all the different business that was coming out of the different marketplaces.

Some marketplaces may have a focus on selling to a certain customer type, some may have a geographic focus. And as that evolves, you want to make sure your business can easily participate in as many of those as you think might be relevant.

One thing I want to emphasise about where we’re going with this, is that we think about the usability, the simplicity of these systems as paramount in order for them to get broad adoption. We’d be the first to say that the number of things we have to learn in terms of setting up computers today and keeping that software up to date, is a lot more complex than it needs to be. Every time we’re developing versions of Windows we think about how we can simplify it and how we can incorporate less commands.

Having the software connected up to the network actually is a huge help there because we can make sure that the software updates come down automatically. If you do have any type of issue with your system, we can make sure that instead of just calling on the phone and trying to describe what’s happening, that you can use the Internet connection instead. The software expert could take your query over the screen, look at what’s going on, help configure things or update things so that you get past your problem in a very, very simple way.

So, the fact that we’re network connected is fundamental to the ease of use as well as a means of reaching out to all of the customers.

We are moving to the point where it won’t just be keyboarding. I talked about handwriting. We demonstrated some of the speech interaction over the phone. Those things will make it far more natural to use these tools. The devices will not just be limited to your place of business. You’ll be able to take that PC home or have a different PC at home, and everywhere you go these wireless networks will let you absolutely stay in touch.

We talked about all these different devices as smart clients because they’ll notify you about what’s important. One of the things we’re very aware of is that by making communication simpler, we also make it more possible for people to be interrupted when they might not choose to be. Your cell phone number is known to everybody. They can just call you up at any time. If your email box name is known, like mine is, you may get a lot of mail that could distract you from the work that’s most important.

Well, the fact is that we have an innovation where we can use the software so that you can determine what is of interest. If you’re focusing on something in particular, you will only get interrupted by those things that really deserve to grab your attention. So, for different times of the day, various messages which show up and certain junk mail that comes in, would simply be sent by your computer essentially to the garbage can - without you having to spend the time on it.

This means putting you back in control with the use of software. It’s actually better than things like the phone or the mail today where once you give out your phone number, people can just call it whenever they choose. Or once people know your mail address they can send you all those catalogues again and again and again, even if you don’t have an interest in them. So, that’s a good example where we need to think through what makes this practical. What makes this very, very attractive to people? What makes sure that any potential drawbacks can be mitigated?

And a lot of that comes down to really having rich software. A lot of it comes down to listening to customers, making sure that we refine these systems very aggressively.

We’re able to update the basic software that we’re using for small businesses on a very rapid basis, and that’s another reason why we’ve got to make it easier to get those updates, those improvements. We have to be able to access information from the system without having to do a lot of special work and without the involvement of any IT specialists.

A lot of big businesses have done more to exploit PCs and PC networks today because they do have an IT department and specialists to configure the machines and help out with any associated problems. In order to make sure that the larger part of the market, the small business market, really achieves its whole potential, its online approaches and software improvements will be critical.

So the tool will be improving while at the same time it’s importance to your business will expand dramatically. This is because it will become the way that you receive market demand and stay in touch with your customers.

So, overall I’d say that what we’ve got here, this next generation we call .Net, is a platform that creates a lot of opportunity. We’re encouraging you to get involved today, even though you might say, "Well, he said it’s going to be so great in three years, why don’t I just wait until then?" You know, coming down the learning curve, getting this direct link to customers, exciting your employees by showing that you’ll have these new approaches, that’s something that really is actionable for virtually all small businesses right now. It simply gets richer as time goes on. You don’t have to give up the work you’ve done because we’re upwardly compatible from the investments that we made.

We currently take on things like hosting storage or providing support across the network. This has greatly simplified the things that many people have to be conservative about - how to use technology in the small business environment.

We will be providing all the elements. We have a lot of partners who will provide the necessary components to achieve our vision. We’re also reaching out very aggressively now to these partners and saying, "One of the greatest things we can do is really come up with the right formula for the small business package."

So, I hope our excitement about this is clear. I hope we’ve given you a glimpse of the future that motivates you to get involved.

Thank you.