Remarks by Bill Gates
COMDEX/Fall 2000
Las Vegas, Nev., Nov. 12, 2000

MR. GATES: Welcome. I'm certainly excited to be here at Comdex and have a chance to see all the latest technology. As Fred mentioned, this latest election was not the best demonstration of use of technology; in fact, some people are wondering why that happened when the U.S. is such a leader.

I thought it was interesting, though, to get to see what those news anchors look like when they've stayed up all night. Tom Brokaw looked a little different than he normally does.

It is kind of fascinating that the election really could turn on the idea of whether those little punch cards; those tabs in the punch cards punch out or not. I remember back in 1965 staying up all night going through card decks making sure all those little punches punched out. So, it's very nostalgic for those of us here who go back to those punch card days.

(Applause.)

MR. GATES: Well, many of you were probably here last year when I had a chance to talk about where the industry was going, and I would say it was a year of very impressive progress, a lot of important new things came into play. Certainly, from our point of view, the availability of Windows 2000 and the strong reaction it's had from the market, both on the PC clients and the PC server, they're a key foundation. The richness, the reliability that we've built in there is key to all the things we're doing going forward. And we're really pleased to see both the hardware and software industry embracing that and building on top of it.

I also think we'll look back on this past year as a big year for wireless. Wireless not only in the wide area, but also office wireless with things like 802.11, and the rise of standards that will make wireless inexpensive enough that distributing information in your home, including video, music, information, all of that will become typical in the average home. And so there's a huge opportunity that comes for all of us around the rise of wireless.

Bandwidth for most users will continue to go up. Business connectivity costs have plummeted as expected, and even now DSL is joining cable modems as an alternative for consumers to get hooked up. If there is one thing that I thought was key in this last year, it was the rise of XML. I'll talk a lot tonight about how I believe both Microsoft and the industry should really bet their future around XML, the standards around XML are key to where we need to go. And so to have milestones like the SOAP standard being submitted, and IBM and others joining us in that; discovery protocols using XML called UDDI submitted once again; IBM and others joining in this, and that; those are the foundation pieces that are the equivalent to what TCP/IP was many years ago, or HTML was many years ago. So, getting onboard those early, and getting tools designed around that, the progress of this year is very, very gratifying to see.

This last year also brought a certain sobriety to our business. Some of the valuations, some of the more hyped up elements got second consideration as people stepped back and said, at the end of the day, these businesses have to do something unique that is profitable, that is making a contribution. And I hope it doesn't go so far that you don't have these high level of investments, because I think there are wonderful things still going on, and important things yet to be funded. But still to have a little bit of sanity about which of those things are most critical was probably a positive step.

For me, personally, it was a great year because I got to take on the new role. Being chief software architect allowed me to spend the vast majority of my time thinking about where software needs to go. What is the next evolution that takes place? And a lot of the big success, the big advance in this industry are being seen with something like that, whether it's the graphical interface, the PC itself, and really betting not only Microsoft resources, but getting other partners involved in those things. So, my goal is to make sure that we're headed in the right direction.

One question I get constantly is, you know, how do you spend your time? I mean, you know, am I sitting there with little blueprints, am I working hard? What am I doing? And so I allowed a camera crew to come in and capture both the serious and lighter moments of what I've been up to this last year, and I'd like to go ahead and have you take a look at that.

(Video shown.)

MR. GATES: Actually, that dummy is most useful when I want to use the carpool lane; it seems to do the trick there. Well, I have had fun this year, as you can see, but a lot of it has been really seriously thinking about what kind of model we need for computers to get together to get to this next level, the next level of flexibility, of user interface, of people being able to combine information from different sources, and yet not being overwhelmed by information that they don't care about, not having their mailbox full of things that actually distract them more than it saves them time.

And getting that is going to require an architectural approach that's different from what we've got today. There's no doubt that this year for the first time you could say that the browser model, which has been the focus for the last five years, and some neat things have come out of that, but it really is showing its age. So we need development tools and standards that take off at a different level.

I think there is an answer here in our midst, and I'm very excited about it. Let's look back at how these models have evolved. Where did it start? What was the model of how machines worked together in different eras? Well, before the PC you had mainframe software talking to terminals. The terminals were very limited, they couldn't run much software, because this protocol said exactly where the information should be placed, it was a display protocol, and so all the innovation was on the mainframe. And some great things happened in transactions, high-level languages, that the industry benefited immensely as we moved forward.

The next stage was really kind of reversed, you might say. The rich software, the advances were very much down on the PC. And the PC because of the DOS and Windows standards became a focal point for the software industry to grow dramatically, and provide all the different applications. During this era we treated the servers in a very low level, hardware oriented way, just like the mainframe terminal protocol was a mass display protocol, the file sharing protocol was the same way. The servers did not understand the information in the files, they didn't understand the structure of those files, and so it couldn't add value by having rich software at that layer. But, we had so much to do, taking advantage of the PC and evolving that, that during this era that was very appropriate.

Well, then you could say we moved back. It's almost like the pendulum swung from the centralized view, to the client-peer view, now back to a view that was very clearly centralized. And there are proponents in this industry that have a very big arm view. In fact, Sun has said, this is great, get rid of the PCs, if you lose your privacy, just get over it. That's one of the things you're going to have with this peer-centralized approach. It's also an approach that doesn't let you do rich things on the client. You can't do speech, you can't do video, you can't really even have a variety of devices, because if you use a presentation protocol, then you've pre-laid out things according to what the size of the display is, and what kind of keyboard interaction capability is there. You're also limiting yourself to seeing one thing at a time.

So that's why we've had this notion that you have to pick one portal site and do everything against that site. That really doesn't speak to how people work, for medical information they'll want to go to one site, for travel to another site, and they'd like the information, the notification from all those different sites to be brought together by having an intelligent client. In fact, in this model it's hard to understand why we're shipping trillions of MIPS, why people like Intel are building new processors when all it's going to do is be HTML layouts. So certainly to get the richness and variety, to deal with offline, to give people responsiveness, we need to move to something different than what we have here.

Now, recently a lot of people have talked about peer to peer, and that would be taking the pendulum and swinging it back the other way, and saying, okay, we don't need those servers to do rich things for us, let's not talk to them at all. If you take the extreme, something like Gnutella, you're typing in a TCP/IP address to actually locate those other clients. And I think there's a lot of neat things coming out of this peer-to-peer model. Thinking of instant messaging, as we get rich collaboration around that, that's fantastic. Some of the things that Napster has shown people can be done here, that's really great. We have new companies like Ariba coming along with applications that work this way. But, they can't just be purely client-oriented.

If two people want to work asynchronously, you need a server to get involved. If you want authentication for trust, you need the server to get involved. If you want huge repositories of information that you can find and rely on, you want that server to be involved. Sometimes you client device will be very limited, and it won't have enough power, and so you want the server to do the conversion and provide the richness to let that device perform something rich on your behalf. And so for all of those reasons we can't just swing back and be totally oriented toward the client, and skipping around what the servers can offer.

So it's really a dilemma. We're going to need a way that these devices can talk to each other, that's not a mass display protocol, that isn't built around a very narrow hardware model for one end or the other. So it can't be a terminal model, for the client, it can't just be a file-sharing model for the server. It has to be something where information, not just homogenous information, but rich information can be expressed, and exchanged in both ways. The servers need to work with servers, servers with clients, and even clients with each other. When I walk into a meeting room and I've got a client and other people in there have the same thing, I ought to be able to see what's available there and exchange information. If I go into a stadium and there's somebody I know there, that ought to be able to operate in a very simple fashion. So client-to-client, client-to-server, server-to-server, but built around one standard, and using the rich intelligence that's built into these devices.

And so what is this model? It's a model where we don't take the hardware design and design that into the protocol. It's a model where it's really software-to-software. And the protocol that let's us do this is XML, and the family of things that are going up around that. So, yes, this embraces what can be done in a peer-to-peer basis, but it includes those servers. It includes the idea that the servers will work for you without preventing user interface. That's what we often call Web servers, the idea you go out and ask, even sometimes the user doesn't have to be aware of it, you're going out and asking if something has changed, what's new, and you're gathering information. And so the screen that they see can be the result of many different Web sites. And they can do more than just click to browse to another location. The future of knowledge workers is about creativity, not just following links. And yet, those knowledge workers want information from those multiple Web sites.

So what will characterize the industry moving to this software-to-software model? Why is this such an exciting approach to things? Well, the information can be customized. The information can move around behind the scenes, according to how you've authorized it to, so that it shows up on the client that you want to use. If you use a client that you've never touched before, as soon as you authenticate it goes up and finds the Web service that you've picked to have your information, and brings down the appropriate things. You don't find yourself trying to replicate the right applications and Web pages, and files, and mail, all as separate, manual operations.

You also in this model can have a Web service that intercepts people's attempts to get your attention, and that service, which we talk about as an information agent, can have the rules about what you'd like to be notified of. In fact, it can even be polling things like price changes or new opportunities, and bring those to your attention. And so here you can create, through XML, server-to-server exchange in your information agent on each of these clients, the ability to control the information you share, and how your time gets used.

This is a model that allows the interface to be independent of what goes on that Web server. If you want to write a Web server that deals with 20 different screen phones, all with different resolutions, different keyboard layouts, that application generates the XML, and the mapping onto the individual screen phone can then be a very simple piece of logic that executes either on the server, or down on the client depending on how rich that is.

Third, it's a set of features that lets you think of this device as a real time communication device, with all the applications there available to share things. So when you instant message it's not just text, you can take your music, your images, any of the tools that you'd like to collaborate in. For example, if somebody is going through an order entry process, why not have the customer service person come on and work with you during that exchange. Why not take the idea that there's a screen on these phones and let people exchange information, even during something that would have in the past been a pure voice call.

We will need a new generation of office tools that go with this. And tonight we'll be showing you the next iteration of that, where XML has come into the office tools to support these services, and reach out to servers in a way that has never been possible before. So basically this model, because it's a very high level protocol, allows unconstrained innovation in both the client and server, both in the hardware and in the software. And that's what we've got to have. We can't have one be bottlenecked by the other, because we need major advances in both ends of that activity.

Let's talk about the server piece. This is a key piece. Many times today on the Internet we're still finding servers that are too slow, we're finding servers that pass error messages, because they failed and they haven't have some redundant approach that's there behind them. Absolutely, servers can't stand still. We need a lot more here. Now, Windows 2000 was our first level of operating system that had the idea of taking multiple servers and seeing them as one logical server. That's what we call software scale. And it is the fundamental advance, both for scalability and reliability. One of the milestones here was one that we've been waiting for a long time, and that is passing by the more expensive, non-standardized server platforms, the ones that Sun or IBM or others have, passing by their performance capability in the key benchmarks, the Web benchmarks, and things like TPC-C, where now it's the mainframe platform that's way ahead on that. And it's for a simple reason; we've used software scalability to get at that level of performance.

There is still some work to be done here in terms of making it simple to manage these systems, and a huge focus by the IT industry on that. These service solutions do have the promise of not only being dramatically lower cost, but because of the tools, because of the easy expansion, people will be able to put up new Web applications dramatically faster. And so the business agility, the responsiveness would be dramatically better working at this level.

Next year we'll start to see the roll out of some things that are important milestones. We'll see the IA64, 64-bit roll out. We think that's key. We'll start to see systems based on Infiniband. This year we moved up to systems with up to 32 processors, people like Unisys have those systems out in customers hands, running Windows 2000 with 32 processors. And then next year we expect to get that up to 64 processors.

This whole agility theme has had us reach out to some of the more innovative Web sites, some of the very high volume people like Lycos, and get them to switch over from their older infrastructure, often based on competitive equipment, and move that into the Windows realm. And so if you look at the top -- the high volume Web sites, by traffic, by e-commerce, now in virtually every way of looking at it, we've got the majority now working on a Windows platform.

As we're going about this we're finding some partners that are doing some very innovative work. And I decided it would be great to have one of them come out and talk about a new approach that they're taking. The company here is Ralph Lauren, and we have David Lauren who is the son of Ralph, who is their chief creative officer, and has been very involved in building their Web site, and has been partnering with us to pull this together. And so it's just come up recently. And I'd like to ask David to come on out and tell us about what they're doing.

(Applause.)

MR. GATES: Welcome, David.

MR. LAUREN: Thank you very much.

Thank you very much. This is really exciting. And for those of you who are just finding out, we are just launching this weekend. And it is really a big undertaking. And with thousands of items for sale, and thousands of pages deep, we want to thank you very much for Windows 2000, for making it so scalable, and so efficient. It really allowed us to get up on seven months. And this is a major site, so we're very excited.

This is a company that's all about quality, and all about ways of living. And when we look at it, it's much more than a tie or a sweater, or a jacket, or an oxford shirt, it's about the world that those images conjure up. And what my father has created over the last several years, over 30 years really, has been images that conjure up the American West, conjure up great estates in England, or great farms up in Vermont. These items allow people entrée into the world that we dream of. And what we try to do online is try to translate the brand to try to take Polo into the next generation literally. And what we've done is try to make it interactive.

Imagine that beautiful Polo ad that you've seen, a beautiful, sexy model standing in front of a beautiful old antique car, perhaps a beautiful old stone house there, and a beautiful beach. And now imagine if you could actually talk to the model, you could buy the clothes, you could take a virtual tour through that home, and perhaps even book a trip to go to that beach. And that's what we've tried to do online. We've tried to make it fully interactive to allow our customers to literally jump into the ad. And a lot of people said, you know, those ads are so beautiful, if only I could be there and be a part of that dream.

So, what we've tried to do online is to create something that we're calling "merchantainment," which is the merging of merchandising and entertainment. And I'm going to show you a little bit about what we've done. What you see up there on the screens really is an example. The navigation bar follows you no matter where you are; it's always persistent. And if you were to shop, say, in women's, you could shop two ways. And one way might be by category, which is the way a lot of Web sites are doing it, and that would be that you want just a pair of shorts, or just a shirt, or just a sweater. But if you were to shop by lifestyle, this is something that we think really differentiates us from every brand that's out there. So, if you went, say, to women's resort, if you were going to take your wife on a trip, well, what you'd do here -- this is an example of merchantainment. What we're doing is, we're selling clothes, but we're also selling you a sense of what my father was thinking when he created the line. The line really, what it's about, it inspired by watercolors; it was inspired by Palm Beach society. One of the models that he had in mind was Penelope Cruz, who he is using in his advertisements, who is a hot actress right now.

And what we're doing is allowing people to not only buy the clothes, but also to learn about the designer's inspirations, and to sort of say, hey, look at this; I can actually read a story about a watercolor spa. I can see photographs taken of '40s and '50s Palm Beach culture, or I can download an interview and watch Penelope Cruz talk about culture and the things she's interested in, or literally book a trip to go on a spa vacation. So if you want to take a trip soon, you might need a vacation. But for you, for instance, and the folks at Microsoft, you might be interested in something like a "dress casual" wardrobe, and maybe you want another sweater. So what you would do is, you would go up to Men’s, and you'd go to work, and you'd click there. And, again, it's another example of merchantainment. On one side of the board what we're trying to do is to explain the casual lifestyle business world, you might see an interview with a great business leader such as Bill, and those kind of things are things that we'll be bringing in the future. But if you just wanted to shop, and say you wanted another sweater, you'd go down there and click on that right there, and there is the industries that we feel really are kind of cool in the business community, and you might be interested in shopping in something like technology, the way we think you guys should dress.

And if you were to shop there for that sweater, you'd click on that and say you wanted it in blue, you'd get it in blue. But if you wanted more information, and you wanted to know how to wear it, you're saying, hey, I'm going to Comdex, should I wear that sweater with a pair of jeans, should I wear it out to a hot club, what if I was going to wear it with chinos, what's the best way to put it together. You'd go to something that we've created which is called, Ask Ralph. And Ask Ralph is the definitive guide to style and fashion on the Internet. It is literally my father explaining how to style clothing, for men or for women, in different atmospheres, and it's also complete with video, so you can see real models and actual Polo employees demonstrating the clothing. You can see them moving around, see how the clothes should drape, see how it should feel, and it really brings it alive.

But, most importantly, what we're trying to do here is create a sense of customer service, a sense that you are actually communicating, and you're getting a face and a personality behind the brand. It's no longer just a flat screen, which is one of the big issues that a lot of companies are faced with. They know the brands, but they want to get a little closer to the product, they want to know what it's all about, they want personality. And when that comes alive, it's something that no one else can do.

So, you can also contact an 800 number on every page, or you can go to a live operator chat, and that's something that we also think is cool. But we're really making breakthroughs. And this is just the beginning of what Ralph Lauren Media is all about. What we're planning to do is to turn this merchantainment concept into future things. For instance, we see Ask Ralph as a book or a movie, maybe not a movie, but parts of this become movies. We see television, we see all kinds of magazines, we really see the Ralph Lauren lifestyle leaping from the pages of a magazine, or from a beautiful store, and really coming to life.

But another thing that really differentiates us is our customer service, and that blue sweater that we just clicked on, well, it's actually already arrived. So we're pretty impressive, and you guys should try this at home if you want. So we have here a navy blue cashmere sweater.

MR. GATES: Wow, it's a new look for me.

MR. LAUREN: Thank you very much.

MR. GATES: Thanks. It's fantastic to see what you've done. Been great working with you.

(Applause.)

MR. GATES: Well, that's very creative. Technology meets style.

Well, now let's talk about innovation at the client software level. Here is where this digital world, this world where all the different things you do, whether it's recording things for meetings, to learning in a new interactive way, to collaborating in new ways, it's client software that will bring that to life. When people talk about speech recognition, that's client software. Windows 2000 is very important here because that's where the foundation for multimedia and other new APIs have been built.

The Whistler release of Windows, which will come out in the second half of next year, will be the next step forward. We're very pleased with some of the things we've been able to do. In fact, things like coming out of standby in only a few seconds. That alone to me would be a big advance in how I use the PC. Being able to think about it as something that's really there, and not have to wait through that kind of group process for things to come alive.

It's been interesting to see these online client software packages, how they've evolved. They're not just HTML. With MSN, they recently released something code-named Mars, which is the browser that integrates a lot of things, and I think that really shows the direction that the user interface around XML will take, because you can take what we call Digital Dashboard pieces and bring them into that kind of interface and create what you want. And it's using the power of the client to create that synthesis.

Over time, you'll have things like: what are all my receipts, what are all the things that I've been shopping for, you know, show me those, or search things that I've done, not just browsing, but things that I've done either locally or remotely, and bring those back up for me, so the power of the client driving those new scenarios.

New form factors are going to be part of this. And we'll talk about that, but it's the client software that brings it through. The most popular client software application in a very strong way continues to be Microsoft Office. It's sort of a fundamental tool for knowledge workers. And we're investing in that and driving it into a lot of new scenarios. In fact, we're going to show you the next major version and some of the breakthrough things that we've never shown publicly before, and so I'm thrilled to have a chance to ask Tom Bailey to come out and show us what's going on with Microsoft Office.

(Applause.)

MR. BAILEY: Thank you very much.

It's an incredibly exciting time for Office right now. We just released the second beta, and we have a product that you're going to see tonight that will significantly improve how people get their jobs done, and the way they work with others. I've pulled together a number of significant innovations that are in the next version and I'm going to show them to you now. So, I'm going to go ahead and get started.

Okay. The first part of the presentation, I want to feature two innovations designed to really point toward a key customer theme that we keep hearing, and that is that people want to use much closer to 80 percent of the product, rather than the 20 percent they feel like they do today because if they can do that, they're going to feel more competent, successful, and be able to get their jobs done a lot more effectively.

And we've introduced two innovations, one called Smart Tags, and another called Task Panes, that really will take things to the next level with the way people can take advantage of the product and get their jobs done.

So, let's go ahead and take a look. I'm going to go ahead and open up the next version of word. And on the right-hand side you're going to see a task pane. Task panes take advantage of the larger screen real estate that's standard on most PCs today, and it bubbles up collection of important features and presents them in ways that are much easier to find and use.

So, for example, I can open up the file open dialogue box. I can access quickly Word's templates, and of course I can open up a document from here as well. Now, some of these task panes are shared across all of Office, others are unique to individual applications, such as Word's format task pane. Here I can highlight a particular piece of text, I can see what formatting is applied. I can select all similar pieces of formatting, and I can just try out some different ones to see what type of formatting I want to have for this particular heading.

I can also select a paragraph, and when I make changes, you'll notice that a new format style gets picked up here for use later in the document, very visual, very easy to find and to use. Task panes have also enabled us to improve on the clipboard, which we introduced in Office 2000. We have a lot more room here, we have support for images; you can really see what you're going to copy before you do that.

Since this one is shared across all of Office, I'll go over to Excel, and you can see I've got the same clipboard available to me here.

Now, before I copy some Excel information onto the clipboard, I'm going to make some changes to it. And here is where you're going to see the first instance of Smart Tags. Now, Smart Tags are little icons that appear on the screen. They recognize the way you're working and present options of new and existing features, again, within the context of the way you're working so that you can apply them much more easily, and get things done more quickly.

So, for example, if I want to insert a row, you'll notice here that the formatting may not be exactly what you expected, and this little icon pops up, little Smart Tag, and gives you options. In this case, I'll format same as below. Much easier than having to go out and figure out how to do that on your own. I'll highlight some text and likewise drag it down, and I'm presented with some fill options as well. And, in this case, I just want the formatting, not the numbers. I'll type in some text, I'll add a function, and when I do that, let me select a few cells and hit return, Excel is smart enough, and I get an auto-correct Smart Tag that recognizes, you know what, it looks like maybe you forgot a cell here, and I can update the formula on the fly.

And then, just to finish this off, I'll fill this across again; fill options, and this time I want to fill without formatting so I get the dollar sign. Again, it's a number of Smart Tags, all very smart, put right within the way that I want to work, and give me options to get things done more quickly.

So, let me copy that information, and I want to return to Word. We also know that people generally have different things that they want to do, and they paste information into their document. And as a result, we've presented options here as well. Let me copy this information into Word, and you'll notice when I do that I get a little paste option Smart Tag, which gives me a variety of options. I can keep the source formatting, source and destination table style. In this case, I want to link this table back to Excel so that when anything is updated, I can go ahead and automatically have it updated in Word. And, sure enough, I'll go to Excel, update with the different format, different color, and pop back here, and that's automatically updated.

Now, some of you I hear -- there's a little clapping over here. Some of you may think, well, that feature was in the product already. Well, that's actually kind of the point, right. This was in the product a couple of versions ago, but we also know that virtually no one used it because it required a deep drill down into a dialogue box. And so it's these kinds of things that we're bringing more to the surface.

Now, using information between applications like Word and Excel when they're open is all well and good. We also hear from customers that finding information, going out and grabbing it for reuse in their documents is often hard because it's stored in a variety of different places. So, we've included now, or added new search technology to each of the Office applications, and it allows me to go off and find information and let Office do the work for me. It will go out and search for the information.

So, for example here, I want to find an email from president Ballmer, and I'm going to go out, and this will automatically go to search my hard drive, Outlook, file and Web servers, and you can see here it quickly returns some email messages that we've been working on, and I can simply open up that email message from here.

A couple of interesting things I want to point out, in this email message, the first is another Smart Tag here, names, dates, these kinds of things are enabled so that I can do things like send mail, schedule meetings, open contacts, and those kinds of things. It really takes integration to another level.

You'll also notice up here that we have now integrated fully Instant Messenger into Outlook, so you can use the collaboration tool that makes the most sense for that particular time. So here, instead of sending email I notice that Steve is online, and actually he's here in the audience tonight, so it's I guess this means that he's always online. So, I'll go ahead and open this Instant Messenger up, and I can pane up, and I can go ahead and type in a message, and communicate with him that way. So, a much improved version there for Outlook and Instant Messenger.

So, what we've seen so far is Smart Tags and Task Panes that improve the way that you can get at existing and new features in the product. But one of the existing things about Smart Tags that I want to talk about tonight is its extensibility. It makes use of XML and will enable third parties to now go out, and essentially verticalize or tailor Office to meet the specific needs of organizations, or entire industries. And I'm pleased to announce tonight a partnership that we have entered into with West Group, the largest provider of information to the legal industry in the U.S., and they have already put together some prototype Smart Tags, which really tie Office nicely to Web sites to be able to get information as effectively and easily as possible.

So, for example here, if I hover over a case citation in a legal document, I'm given options. I can go out to West's Web site and find that particular citation just that easily. I can go back to the document and I have a couple of other options as well. I can go out and identify any references to this particular case. And then, finally, West has also taken Black's Legal Dictionary, and enabled it for Smart Tags, so I can go out and find legal definitions on their Web site as well. The possibilities really are endless. The medical community, financial community, you can really go out and create some fantastic solutions for particular industries.

Okay. So everything so far has really been about helping improve how individuals work, largely working independent of others, with the exception of the example with Instant Messenger. We've also done a variety of things that really take communication and collaboration to the next level as well. And there are two things I want to show tonight. The first has to do with the document review process. This process is often quite difficult. Getting documents out to get people to review is pretty easy. You just attach it to email and send it out, but the process of now incorporating all these changes is often pretty time consuming and cumbersome. You have one person who prints the document out and highlights it in red, and hands it off in your office. Somebody else who types in an email and hands it back to you referencing paragraphs and things in your document, and ten you're left there sitting saying, how am I going to copy and paste all this stuff back together again? Right, we've all experienced this.

Now we've introduced a process for improving this that allows you to do it entirely electronically. So, I will sit here, I'm back in this Word document. I could either attach it to email, or I could kick off the process by sending to mail recipient for review. And when I do that, I'll type in a couple of names here, you'll notice the new auto-complete feature in Outlook. Some of you have probably been looking for that for a while, David Jaffe, there we go, and I'll send this off to these three people.

Now, I'm going to change hats for a minute. Let's pretend that I just received the document to review from somebody else. So, I'll go ahead and open it up. And when I do that, the reviewing tool bar in Word is automatically exposed, it's brought up here, and I can begin typing. And I do that, you'll notice that we now mimic paper, we've updated our markup to pull everything out to the right-hand side, makes it much cleaner, you can see what you're doing much more easily, it's less cluttered. I can also take advantage of the new find all feature in Word, if I can select all the same words that are in the document, and then I'll make a couple of changes to this, and you'll notice that it will automatically update that formatting here on the right side of the document.

Now, once I'm done, I want to reply with these changes. I'll just click reply. And it will automatically pull up the sender in the "to" line, and I can send this message off to somebody. So that's pretty good, right, that's a pretty good improvement. Okay. So the next step then is to incorporate all these changes. Let's go back to Outlook, and I've got a couple of documents now that I've gotten back with review comments, and I can open them up, and this is where we've made some significant strides to be able to merge all the content together, so you can accept and reject changes. So I will open this up, and you can see that I've got a number of changes in here that have been brought in. I can go back to the other document, and it will ask me if I want to merge those changes in as well. And you can see how it has incorporated all of the changes here in the document, and you can now scroll through. You can use the reviewing tools to see who has reviewed the document. You can also scroll through and see -- it got to the end of the document there. I can scroll through and see, I can hover over the top, I can see who has made any changes, and then when I'm done with the review, I can just hit end review, and we're done with that process, so significant improvements in being able to work with others on documents.

And the last thing for improving team collaboration that I get a chance to show tonight is a new application called Microsoft SharePoint. That application is going to ship at the same time that Office ships, in the later first half of next year, and it really enables teams to communicate and collaborate more effectively using the Web. So, let me go ahead and open up an example of SharePoint here on the screen. It's a pre-built Web site, it comes with a number of standard features, such as the ability to add announcements, and events, and links. We're just here in the browser. I can also go out and have discussions and chats with people. I can store documents up here for easy collaboration with others. So, for example, if I want to upload a document, I can do that. And I'll go out and grab that legal contract. I've added a field here that asks me for a description, so it's easier for people to see what this information is going to look like, and it will automatically update that on the Web.

Now, if I were in Word, I could automatically save the document into this Web site from Word's file open/save as well, and there are a number of other integration points with Office. I can open up the document here, naturally, I can go back I can take a look, I can upload, I can use new templates here, I can import contact information from Outlook, I can import/export from Excel, and you can also create little applications. There's one last thing. I can create a little survey application, and I've added a few questions up here about the demo tonight. And you can see I've added how do people think of the presentation overall? What do they think of some of the new functionality like Smart Tags and Task Panes? I can select some different options here, and I'll save and close it. And this will record all the information, and I can even see a graphical summary of the results of this survey.

So that shows you in a nutshell some of the core innovations, Smart Tags and Task Panes, the documents in for review process, as well as SharePoint that really take advantage of the rich client, and the rich server to significantly improve the way that people get their jobs done and work with others. And that's it.

(Applause.)

MR. GATES: Tom and I had a hard time deciding which features to show, the new robustness, some of the speech-related things, there's a lot there that we didn't get a chance to talk about. A lot of it is taking this overall strategy, for example, using XML in the Smart Tags to let information retain its richness and giving us that third party sensibility.

Next, let's touch on what's going on with client hardware. Now, there's many categories, the PC is the most important, it's the largest today, in fact, if you take the growth of PC sales in the last year, which should be around 10 million units or so, it's actually greater than the combined volume of all the other client types put together. Now, we expect these other client types to climb. In fact, Microsoft probably has more investments in different kinds of software adopted to different client hardware than any company out there.

The PC itself, the laptop evolved very rapidly, prices came down. We're starting to see the microphone be built in, cheap cameras, a lot of peripherals taking advantage of USB and 1394. We've gotten people to bring the screen resolution up, and use LCDs that will match with the ClearType technology that we're putting into Windows. The PC itself is moving quite rapidly.

A few other categories that are out there today, and moving pretty quickly, include the PDA, and our entry in that, of course, is this pocket PC device. The demand for these things has been phenomenal. In fact, people like Compaq and HP had to double and double again their manufacturing rate, and they still haven't been able to keep up with the demand, the color screen that we've got. We've got streaming media now. The richness of these devices is quite phenomenal. The only limiting factor is that, you know, you have that screen size that you can do a lot here. One of the announcements you'll see out on the floor is Ricochet offering a plug in module for these that provides 128K connectivity speed. So pretty phenomenal considering what's in this device.

Of course, these devices have a lot more power than the PC did 10 years ago. We also see these, the Pocket PC category, and the phone category somewhat becoming a family of products. You'll still have a low-end phone that's voice only. You'll have one notch up from that, you'll have a phone with a pretty small screen, one, two, three-line display that just gives you notification. At the high end of the phone family, you'll have something like this. This is what we have code-named our Stinger phone. You'll start to see this from phone manufacturers in the next year or so. And what it is, it's the full power of the Pocket PC capability, but now it's integrated in. So things like recording your calls, or using GSM to exchange information, that's all built in here. This is a pretty nice little screen. It's quite neat what you can do there. You wouldn't edit documents, but in terms of traveling around, this is the kind of form factor we see that would be very popular there.

Another form factor that we're investing heavily in is an entertainment device optimized for the TV in the living room called the Xbox. And we've been making a lot of progress with that. The key focus right now is working with the software developers and so about a year from now we'll actually have those out in the marketplace.

Every one of those devices is building on the capability to understand XML, and work together with the PCs and the servers in these rich ways.

There will be some new categories that will be very strong, as well. These digital set top boxes that build on the huge investment we've made in WebTV, and UltimateTV, those are finally starting to roll out. It's good to see that the persistence that we and the cable industry have put behind that kind of new set top box will start to pay off in the next year. We've also got the Auto PC, where we've got design wins where the car manufacturers are actually including it in a number of new models. So it will be coming out over the next couple of years. Then finally there's the e-book, Microsoft working on open format standards, display standards, and software that's going to enable that. So client hardware, there is going to be a lot of different client hardware. Within the phone category, quite a bit of variety there alone. The full screen device, the one that really lets you edit and create, there's no doubt in my mind that the PC will have that position and that all of these things have complimentary roles with each other.

Now, I mentioned that the PC portables have been moving along, getting into new form factors. There's a radical step that can be taken, we believe, when you get to a form factor that's truly tablet sized, and has the ergonomics of a tablet, something that you would take with you into a meeting. We've got some incredible people at Microsoft working on this. It's one of the most amazing projects we've ever done. And I'd like to ask Bert Keely to come out and show us a little bit of what they're up to, including the first public glimpse of the actual prototypes of the tablet PC.

(Applause.)

MR. GATES: Take it away, Bert.

MR. KEELY: All right. Thanks, Bill.

Welcome to my roomy new office. So we think that some of the coolest innovations are in pursuit of what we call Tablet PC. And this is kind of the ultimate .NET client, because not only is it a great window on .NET services and the Web, it's got all of the heritage of the functionality of the PC, and then finally it's useful in lots of additional situations.

This unit is a prototype of the kind of thing that we're getting started with our OEM partners, and other partners, looking at how we can bring these things to market. This prototype is running the next generation Whistler operating system; this is the next generation of Windows. You can see I'm using Microsoft Visio on this device. And it's got a USB keyboard, and mouse, and it's got audio and all. It's a full-fledged PC. In fact, I think it's got about 10 gigabytes of disk space in it, et cetera.

So it's everything that you expect in a PC. But, it also has some great new features that are useful in lots of other ways. So first of those, I like to be able to sit back when I work, and so I just pick up the display and sure enough, it's still working, and that's because the entire system is built in right here. So you can imagine this makes a great reading device. In fact, it's got Microsoft Reader installed on it. It's super for e-books. But, e-books aren't all I want to read. I want to be able to access all of my documents this way. And I can do that with a tablet PC. In fact, these documents are the original documents created, I can use the original software used to create them, and that's because it's a full PC.

So I have a meeting over at the new Starbucks in a couple of minutes, and I've got to take some documents with me, so why not take the tablet. So the tablet PC is a PC that's optimized for people that spend a part of their day away from their desk. Isn't that just about everybody? I think there's probably a few people here who could use a tablet.

Hey, Charlton, how are you doing?

MR. : Hey. Bert, how's it going? Good to see you.

MR. KEELY: It's going great.

MR. : So what's up?

MR. KEELY: Actually, I'm late for a meeting over at Starbucks, and I don't know where it is.

MR. : The new Starbucks.

MR. KEELY: Yes.

MR. : I could draw you a map if I had some paper and a pen.

MR. KEELY: Well, I've got a tablet, just grab a piece of paper and sketch it for me.

MR. : Sweet, nice. Okay. Let's see, I guess I just use it like pen and paper, I suppose. Okay. The easiest way to get there, I think what you need to do is just go ahead and walk around the front of the stage, show this off to the audience over there of course, the people in the front row would be great, make a right turn and you can't miss it. Starbucks will be right there.

MR. KEELY: Thanks, man.

MR. : Okay. Cool. Hey, you want to have some coffee some time?

MR. KEELY: Yes, let's do. You always bail me out.

MR. : Okay. See you later.

MR. KEELY: All right.

So this device really is perfect for people on the go, thin, it's lightweight. As I mentioned, it's got gigabytes, it's got 128 Megs of ram, et cetera, et cetera, probably a 500-600 megahertz processor. It's got wireless networking. It's got a very simple user interface, as you saw. Some of the best innovations you're going to see are associated with changes in the hardware different from this. For example, ultra thin laptops, whose displays fold all the way back around, and you can hold them as easily open as you can closed, hold them in one hand, use them with the other. But, this kind of device, pure tablet is really comfortable to hold. I like this version myself.

So here's Starbucks. And speaking of wireless networking, we've started to use 802.11 in the home, in the office, in meeting rooms, et cetera. I'm really looking forward to a time when we can use wireless networking to access the Internet in some of my other favorite places, like a Starbucks Cafe. So it looks like my appointment hasn't arrived yet. It does give me a chance to show you probably my very favorite feature of the tablet. Remember we talked about making it useful in lots of settings.

Well, we've got this ability to support handwritten ink. And handwritten ink is expressive, it's intuitive to use, it's very personal. There would seem to be some great benefits if we could bring that into the electronic world. Of course, the very first step is to make sure that the ink flows from the pen just as quickly and smoothly as it does on paper. Now, we've been doing a lot of work on this, and I think we've really achieved it, and I want to zoom way in, so you can see the quality of these strokes. Now, it looks simple, but there's a lot of computer science going on here.

First of all, we're capturing the ink at 133 samples a second, versus the 30 or 40 samples a second you get with the mouse. Second, we immediately convert the strokes to Bezier splines, which smoothes them. And then we anti-alias the edges, which make them look even better. I think my doctor's handwriting could use some of this technology. Of course, that's how we match paper. But, with the power of the PC, we can also go way beyond paper. So I want to show you the notes that I've taken in preparation for my meeting, and maybe show you how we can work with the handwritten ink. Okay.

So here's a sentence that I think is just a little bit too long, and I'd like to be able to shorten it. So I just want to select some ink and cut it, and I'd like to have the document reflow just like it would in a word processor. Well, we can do that, because the software is recognizing the format of the ink as being either words, or drawings, or even mark up, so it will do the right thing. And if it recognizes it as words, then it will treat it like a word processor would. In fact, we can format our ink just like we would text. So I can add bold, italics, highlighting, whatever.

(Applause.)

MR. KEELY: So let's talk about some other things that you can't really do with paper, but you'd love to if you were dreaming, right. One thing is, if you want to add a new idea to some existing notes, what do you do? Well, you maybe write tiny, in between the lines, or write in the margin. But, with a tablet PC you just open up some space and write there. In fact, you can make as much space as you want.

(Applause.)

MR. KEELY: So one other thing that we'd like to be able to do with out handwritten notes, but really demands the power of the PC is to be able to search through them. And because we can recognize the ink, and keep that recognition handy in the background, we can use it to search. So, for example, I want to find a diagram that I was working on, I was sketching up some networked tablets. I want to find that diagram now, and just write the word network, choose find, it finds the next instance, there's my diagram. Wouldn't it be nice if you could search through all of your handwritten notebooks that way? Start taking notes on a tablet and you can.

(Applause.)

MR. KEELY: So now that we've found the diagram, how easy is it to turn this into a network of tablets? I already created this first tablet, I'll just duplicate it, dupe it again, three is a crowd, so that's a network. I select them; shrink them a bit to clean up. In fact, if I want to tidy up a bit more, I could even draw a box around these tablets, and then use shape recognition to clean up the box.

(Applause.)

MR. KEELY: So these are the kinds of things that we want to bring to your PC in terms of your ability to think in ink.

Now, I want to show you something that's a little bit further out into the future, and that is basically we want to be able to have the benefits of handwritten ink on all of your documents. And so, here's a document that Charleton has been working on, and I want to give him feedback. I'd like to be able to mark some words, do some little bits of expression without really changing his document. So, I see a phrase here that this is really what we want to bring to the PC. And I see some keys here. It's going to have to be interactive paper, and this is a slightly different experience, but we want it to be as good as paper. So, that's the key. I've associated these ideas.

Now, what's going to happen when I send this back to Charleton and he starts editing the text? Hopefully my annotations aren't going to fall apart, right? Well, if he starts typing, if we'd been smart and recognized that that circle was intended to mark those words, the circle can change its shape in order to continue to have its meaning, right. And the same thing goes for these connecting lines. They should be able to stretch, continue to connect the ideas as they were originally intended.

Okay, I wish we had Bill's whole hour to tell you about what we're doing with the Tablet PC, but suffice it to say that we and our partners are really looking forward to bringing products like this to market in the future so that you, too, can think with electronic ink.

(Applause.)

MR. GATES: We just finished some of the prototypes of that device, and I have to say there's been more fighting over who gets to use those prototypes than any new thing that we've ever done. I think that's a good sign. Actually, it's also interesting to think how that project shows the PC industry at its best, working with the processor manufacturers, the disk manufacturers, the people who do the pen recognition, getting those things up to a new level so that the tactile feel is really great. Then getting Windows itself to change, Office to change, and going out to the ISVs and talking about this idea of direct manipulation. Direct manipulation really is a breakthrough, the fact you can point to something and move it, point to something and choose it. And it won't just be that tablet form factor where we'll have that direct manipulation. You will have a larger CE device that you'll have on your desk that will be a PC of the future. And so, as you scale up from tablet to desktop to wallboard, direct manipulation along with speech are going to be new elements that the Windows platform is going to provide to all of the next generation of applications that come along.

Well, now, let's talk about how we can take the software-to-software model, and really bring it together. When somebody writes an application, what do they have to do? Do they have to recreate all the ideas about authentication? Do they have to try and understand about how they do replication and these things? Or can we give them a platform that is analogous to what the Windows platform was, a thing that they can build on? Well, that's the mission that Microsoft has embarked on. That's what we've bet the company on. We call that the .NET platform. Part of the idea here is that all the software involved is organic. It doesn't update itself because you have to go out and buy a new CD. If you're connected to the net, you get the latest version that's appropriate. If you ever have an issue about, you're not sure how to use the software, you use the network to be able to get advice, see if anybody else has been in a similar situation. If necessary, connect up to a human person. And so a lot of that software, ours and others, will be a monthly subscription where the guarantee of support, and someone to help at all times comes as part of that relationship.

This platform takes XML and all the standards around it, as a given. And that is very profound because, when we go back to object oriented databases, for all the approaches where people said, let's have a platform that deals with rich data, it's never happened yet. We've never had self-describing data. This is a tough but critical software problem. The common services that these new .NET applications are going to need will be available for many people in the Internet. We sometimes say in the clouds, and so Microsoft through Passport, through radical extensions to our communities offerings that we have today in storage, through the information agent I talked about and notification, we'll provide those services that can connect all these different things together. So somebody who wants to do a service in this environment, they won't have to invent that collaboration, and security, and all the elements that go with that.

In this case, we also want to give them development tools that make this a lot simpler. We remember very well that when we brought out the graphical interface that it took a long time before the applications got developed, and that's because we didn't have a breakthrough tool, and people found it hard to learn about the message loop, to go down and have to deal at a very low level. Well, now we see a way that we can make these things very high level, and so probably the centerpiece product for us in kicking off this framework, the .NET platform, is what we call Visual Studio.NET. It's an evolutionary path for C developers, for Visual Basic developers, for Java developers, whatever you develop in, we give you an evolutionary step that fits in with the framework that we're building here. But it is a really radical advance in the language. The advance brought by the idea of XML and Web services.

We're actually taking the work we're doing in these languages, the C# work, and this JScript, Direct Script work, and we're submitting that to standards bodies. So the entire language spec, the rich run time, we are completely giving up control of that. The standards committees can take it, innovate with it, and let there be a lot of rich innovation from many different companies, including our competitors. That kind of offering out to a standards committee has never been done with this technology. It literally represents over $100 million of development that we are putting up in this standards approach.

We think that's important because we want to make it clear that C#, and the runtime foundation we have here is for every device, and for every operating system. That is something like XML that can bridge the world together, and then allow the different platforms; whether it's Windows or whatever else it is, to compete on their implementations of services that go beyond that.

This is a major milestone for us, the Visual Studio.NET, because last Friday we shipped the beta of that product out to over 10,000 developers. And so next year, based on the feedback that we get from those developers, this will be a product out in the marketplace. And so that really is the starting line, getting the beta, doing the early work, and then having that final version that comes out next year.

I want to show you what it means to build a Web service, and to help me with that, I'd like to ask Dave Mendlen to come out and give us a glimpse of Visual Studio.NET, and what it means for this software to software world.

Hi, Dave.

(Applause.)

MR. MENDLEN: Hi, Bill.

I've got great news for you. Just now, just a few moments ago, we put the Visual Studio.NET beta one on Microsoft Developer Network, available for download immediately.

Let's take a look at how Visual Studio.NET enables the software-to-software programming model that you were just talking about.

So the biggest challenge, as you know, today with Web sites is that they're like islands of information, and for developers it becomes very difficult to bring together this information that's all over the Internet, to provide the best possible customer experience. So in this scenario, this fictitious scenario, we're going to be building and application, an event planning application. Now, think about putting on an event like COMDEX. It's got to be a logistical nightmare. You've got to find conference space, and hotel rooms, and transportation, and probably dozens of other services. Now, imagine trying to do this on the Web. You'd have to travel to dozens and dozens of different Web sites, and you would have the manual task of having to choreograph the interaction across those individual Web sites.

So what we're going show today with Visual Studio.NET is how developers can go beyond service aggregation to create solutions that let their customers go beyond browsing to a fundamentally more powerful Web experience. So let's take a look, we're inside of Visual Studio.NET and we're building what's called a Web Form. This application, a Web Form, will run on any browser, on any platform, and on any device. So I must warn you in advance that you're going to have to see some developer stuff, I'll have to show some code. I'll try to keep it to a minimum, and make it as painless as possible.

We'll scroll down to the inside of this Web application, of this Web form, and I'll just double click to bring up the code behind this button. And what you're seeing is C#, the language that Bill was just talking about. It's our new language in the C and C++ family, that's really the first component-oriented language in that family, with first class properties, and methods and events.

So I'm going to go out within Visual Studio and browse the Web. I'm going to go ahead and bring up a dialogue, and I'll select to browse through the Dollar Rent-A-Car Web site. And what you're seeing here is a fundamentally new paradigm. I as a developer can see both the customer experience on the left hand side, and on the right hand side of this dialogue I see all of the business objects, the logic that's available to me on that Web site. These are the Web services that Bill mentioned earlier.

Now, in order for me to use that as part of my solution I simply add a reference. And when I click on this button Visual Studio.NET is actually making a bridge, or a link, or a pointer to the Dollar Rent-A-Car Web site. And when my application is run I'll actually go out over HTTP, passing a request in XML to the Dollar Rent-A-Car Web site. It's going to process some logic, in this case the logic of renting a car. And when it's done it will return back to me the results over HTTP in the form of XML. Now, in order for me to link this into my application I'll drag a snippet of code from my toolbox. And for you developers in the audience, you'll find that this is very interesting.

I also have Intellisense, so if I type a dot here, I can actually look at the exposed functions on the Web server on the Dollar Rent-A-Car Web server, and it even tells me the parameters that I need to call that object. So this is great, but what's even more powerful is when you start integrating more and more services. So let's go back out and bring another Web service into our application.

So I'm going to browse to the Galileo Web site. Now, you may not be familiar with Galileo International, but likely in the last couple of weeks you've interacted with them. Likely when you booked you plane ticket, or your hotel, the back end processing probably happened with Galileo. And they've got a Web service that's exposed, that lets you plan a trip. So I'll simply add a reference and again, I've created a pointer, and a bridge to the Galileo Web site. I'll drag and drop another snippet of code and now we're ready to run the application. So I'll just run it. And what you'll see is that Visual Studio will launch an instance of Internet Explorer, and take me to the home page.

Now, I'm going to switch hats for a minute, and now instead of being the developer for Margie's Travel, now I'm going to work for Fabricam, and I'm going to plan a company meeting using our newly developed application. So I'll log in, and you'll see the page that we just developed. Now, I'll go ahead and fill in the form. And I'll be the host. And because I'm using a rich client I can take full advantage of Office. So in this case I'm going to click on the address book, and bring up my contacts from Outlook, and I'll add them to the list of people that I want to attend my company meeting.

Now, when I click on this button down here that I wrote the code behind, we'll actually be going out over the Internet, and making those Web service calls. And it's going to find a venue, a location for my company meeting to occur, going out to the Galileo Web site, going out to the Dollar Web site. And here you can see that we found a venue in Denver, Colorado, for my date. It's got a meeting room, it's got a convention center that's available; it's got airlines available, hotels available. This is the power of Web services. I'm very happy, because I as a customer -- 

(Applause.)

MR. MENDLEN: Because I, as a customer, didn't have to travel out to lots of different sites and choreograph the interaction. Margie's Travel is happy because I never had to leave her site. She's developing a customer brand loyalty. Dollar Rent-a-Car and Galileo International, well, they're happy because they just got business from this interaction. This is what I talked about earlier when I mentioned the fact that we're going to enable developers to go beyond service aggregation, to enable their customers to go beyond browsing to create a fundamentally new, more powerful Web experience.

Lets go ahead and book this meeting, and you'll see that we'll get a confirmation page. And so everybody that I wanted to attend my meeting does now have a mail in their in-box inviting them to the meeting. And what Margie's Travel has done is created a dynamic Web page where you can go to sign up for the meeting. So, I'll click on that now. And, again, I'm going to switch hats.

Now, I'm a person that's going to attend the meeting. I was invited to the meeting. So, now I'm logging in, and this time I'm logging in with Passport. Now Passport is a foundational service, a Web service that Microsoft provides, that provides not only user authentication, but preferences. So now, it will actually synchronize the venue that we've picked, my user preferences, and basically create the entire itinerary for me automatically. It's found that I like to sit in the front of the plane in the aisle. My frequent flyer miles have been associated with all of my activities. And my Dollar Rent-a-Car is all set up.

So, as you can see, it was very simple to build applications that use existing Web services out on the Internet to build these applications. And you're probably thinking to yourself, if you've got a Web site out there today, you're going to want to do this too, right? It's going to be hard, you think, but I'm here to tell you that with Visual Studio.NET, the creation of Web services is really very easy.

So, let's go back to Margie's Travel, and we're going to go browse for another Web site. Now, I'm going to go out to the Dave's Cell Phones Web site, and now you can see that today I've got a customer Web site, but I don't have any exposed Web services available to me. Let's show you how simple it is to take this existing Web application and make it a Web service.

So, I'm going to switch over to another instance of Visual Studio, and here is that same application that we're designing. So, I'm going to go actually switch over to code, and here is the code for renting a cell phone, the function that Dave's Cell Phones provides. And really just by typing in one word, I'm inside of Visual Basic now, I'll type in Web method, and I can actually pick it from a list. I'll build the application, and I've just created a Web service. It actually just created the XML that I need to make my Web application that logic, exposed over the Internet. And this is the XML that we're talking about, the SOAP XML that Bill was talking about earlier, got created automatically. And the key here is that you, as a developer, didn't have to know anything about XML or SOAP. It just happens automatically.

So, let's switch back to Visual Studio, I'm going to go back to the Margie's Travel site, and I'll refresh the page, and now you can see the exposed Web service that we've just created. Again, I'll add a reference to it. And, again, I'll drag the last snippet of code, completing my application.

Speaking of cell phones, .NET and devices, what about it? Well, Bill mentioned earlier that XML was a key part of .NET, and when you're building solutions that use XML, when you're building with .NET, you can build applications that run on any device. A developer can write just a couple of lines of code, take advantage of the XML that's available, and we can render an application that will run on a cell phone like this one.

Now, this application, this device only has a couple of lines of screen real estate, or two lines of text. So the application will adapt to the device, and present the two most critical lines of the application in this form factor. Now, of course, if you're working with a richer device, like a Pocket PC, can you all see that, you get a much more rich experience. In this case, you get the graphics and you get more interactivity. And so, I'm going to, again, log into this Web site, and we'll test our application out.

It's going to go out and make those same Web service calls, and now not only do I have all the information that you've seen before, but we've also integrated Dave's Cell Phones into the application.

(Applause.)

MR. MENDLEN: But we know the best possible user experience is going to occur on a rich client. So let's step over here and take a look at working within a rich client. Now, what do I mean by that? I can take the XML and render it intelligently on a cell phone, on a Pocket PC, but I can take that same XML and I can interact with it in a richer way on a rich client. So here I'll actually click on this button, and you'll see that I'm able to take the XML from the Web services that are out on the Internet for Margie's Travel, bring them together, interact with them, and in this case work with Excel to analyze my data, to chart my data, or in this case I'm populating my corporate expense reporting application directly with XML.

And, Bill, this is really what you were talking about earlier about taking the Web to the next level. For developers, it enables them to create Web services very easily. For corporations, they can take their existing skills and resources, and expose that over the Internet. And for end users, they have the freedom to use this information anywhere, anytime, on any device.

Thanks, Bill.

MR. GATES: Thanks, Dave.

(Applause.)

MR. GATES: So, we're at a very key transition point. People look back and say that the browsing era was fantastic, a lot came out of it. But they'll recognize we're moving into this new era, an era with lots of different devices, but a new model for how these devices work together, a software-to-software model built around XML. I'm thrilled that the industry is coming together to make this happen. And I'm sure we're all excited to see what comes out of it.

Thank you.

(Applause and end of event.)