Remarks by Bill Gates
WinHEC 2001
Anaheim, Calif., March 26, 2001

MR. GATES: (Applause.) I’d really like to thank the Academy! (Laughter.)

Great opportunity to be here and talk about where the PC is going. WinHEC has had a huge impact on the evolution of the PC. Last night I was putting together a list of some of the key things that have come out of the dialogue that takes place here. The PC today, people can really take for granted that we have Plug and Play busses, busses where you plug something in, the device is recognized and the right thing happens. USB has evolved a lot and the richness of the peripherals around it are really exciting to see; 1394, particularly for the digital video scenarios, is coming into its own. USB, you’ll see on the show floor, is moving to its second generation, the very high-bandwidth USB 2.0. And we’re excited about that and very committed to the new scenarios that enables.

Power Management -- a lot of things have been done at the BIOS level to enable long battery life. Still more to do in this area, but a significant success.

Legacy reduction -- we have finally gotten rid of some of the early IBM PC’s artifacts, by emulating those in software and no longer requiring the hardware element.

It’s been fantastic to see the high-resolution LCDs, particularly those with the new digital interfaces that are so high quality. High-resolution LCDs, as you’ll hear, I think are very key to some of the new form factors to allow for reading-type scenarios.

Wireless 802.11. To me, that’s something that when I talked about it last year, I thought would start to catch on, but take three or four years before it really rose to prominence. I’d say that it’s been an incredible surprise this year how quickly 802.11b has been rolled out in many, many different locations. Many companies today, you can carry your portable around with the 802.11 card and be connected wherever you go. And we see a lot of work going on to spread out 802.11, so that wherever you spend time -- When you spend time in an airport or a convention center, a hotel, that the connectivity will be there and it will be easy to get connected up. Having 802.11 pervasive with its high bandwidth, and with these networks, where you’re not paying expensive per-minute charges, this really unleashes the PC. We see 802.11 not only in the workplace, but also very key in the home. In fact, we’d say that the idea of the PC as a media center is really driven off of the idea that 802.11 will be inexpensive and easy to install, even in the home environment.

We’re seeing great progress in music and imaging peripherals; music devices that you can download your digital music to, using the latest formats, including our Windows Media. We’re seeing great digital cameras that are increasingly intelligent and make it easy to transfer not just the photos but also any kind of annotations in the information off of the camera and onto the PC.

And finally, Microsoft’s prioritization of the Embedded Windows product really came out of feedback from this conference, people who wanted some of the richness of Windows but didn’t want the full product, and wanted us to make it simple to pick modules and build special versions of Windows. And we’ve seen that market really explode. We’ve increased our investment there very dramatically, so another important result of WinHEC.

Now, if we step back and say, "Where is the PC?" -- the PC has a very rich history, going from 8-bit to 16-bit, going to 32-bit. The PC is clearly the most important tool to leverage mankind’s creativity that we’ve ever had. And from the beginning, it was about empowerment, it was about the individual.

I break the PC down into three different eras. The first era, that was about character-mode productivity, and that’s where Microsoft came in with MS-DOS. There was an industry standard that we created around the BIOS and the PC design that was completely open, but MS-DOS was a key product to get the software industry to really become a significant business.

Graphics interface -- a lot of years of promoting the graphical approach. A lot of rich, new things came along with that, including running multiple applications, sharing data between them, and, of course, our product, Windows, rose with that era and arrived at incredible volumes.

About 1995, the Internet era came along, and that’s where the browser and some of the new server programming models came in; Internet Explorer as part of Windows, Internet Information Server, but clearly lots of standards, particularly around HTML, that were important.

I believe that we’re entering into a new era, an era where a new approach to how applications are created is taking place, and a way of looking at the PC for a broader set of tasks. Every time we move from one era to the next, the kinds of things we did with the PC are expanding. The era that we’re entering now is one where the key protocol is XML, allowing the richness of the server and the richness of the client to be complementary. Previous protocols have either been entirely server-centric, like terminal protocols or HTML, or entirely client-centric, like file-sharing type protocols. Here, with XML, is the first time we can say we’ve got the right balance. And it’s amazing how quickly all of the standard elements are being filled in here, industry leading companies, defining things like SOAP and UDDI that are all the pieces to make XML achieve its promise.

This is an era where the PC will be connected with many different devices. The PC is the full screen device, the devices that are near to and the creativity work is primarily done on. But you want your information to show up on other devices; you want your communication scenarios to embrace those as well. It’s an interesting challenge where we have to use the Internet to provide services that connect to those devices.

A theme -- the experience theme for us is: Any time, anyplace. Taking your PC with you to a meeting -- we’ll talk about some breakthroughs that are going to make that commonplace, as commonplace as it is now to use the PC for a presentation, replacing the old approach of slides, having the PC wherever you go for note taking, that’s part of this era. Having the PC be high-quality enough that you read your documents off a screen, and so you can search them and share them in a rich way -- that’s absolutely a central scenario in this era.

And the software platform that Microsoft is building to enable this era -- we call it .NET, and that’s about not only taking Windows and putting new capabilities into it, not only taking the development tools, like Visual Studio and pushing those forward, but also having services -- authentication and storage and information services that run in the Internet that applications can depend on. And you’re going to see later today some demonstration of what our partners are starting to do with .NET and some incredible scenarios that only .NET have become possible.

So I have a lot of enthusiasm for this new era. You know, we’re starting off with a little bit of reality seeping into the marketplace, but I think people are going to come back to seeing that the real promise of how the PC is used is really only being unlocked in these next few years.

What is it we’ll be doing with the PC? Well, in the area of productivity, we’ve come a long way, but we’re not there in terms of brainstorming or group work; we’re not really there in collaboration. Productivity at home -- things like calendar management or home control or finances -- it's really not there in terms of people viewing that as a mainstream thing. In communications, we still have the separation between the phone and the screen. Well, in this era we’ll bring those together so that whenever you make a call to somebody, you have the screen to help you edit documents, share documents, look at those. In fact, every time you make the call, it will be possible to hook up that other person’s screen to your screen, no matter if the voice channel is going over the Internet or it’s going over a normal connection.

Thinking through every application to say, what does it mean if you have that kind of real-time connection, what does the customer service application do, what does the design application do, what does a marketing application do -- when you have that kind of connection there’s rich things that can be done with the application.

This era will be characterized by software developers building new rounds of applications, just like they did for graphics interface. Things related to the pen and wireless and this new communication require a round of applications that exploit that.

An area of leisure, we’re just tapping into scenarios around TV, interactive multi-player gaming, easy use of music capabilities. And so if we put this all together, I’d say that particularly at work we can make the PC more than twice as valuable as it is today. We can get rid of the boundaries between your digital world and your non-digital world and bring that to a new level with a round of applications.

So the PC is in a great position. If you look at this new world and you think, "Okay, I want to plan and organize a trip," you’re going to do that on your PC. If you want to describe your portfolio and when you’d like to be notified about price changes, you’ll do that on the PC.

Now, that doesn’t mean that you’ll only access the information from that one device. If that trip that you plan, something gets cancelled or changed, and you’re traveling only with your Pocket PC device, then you’d like to be notified. Likewise, if there’s a financial development that you have to be notified, it will come to that device. It will come to it without your having to customize anything. It will come to it just because it understands your preferences, and through Internet-based services, so-called Web Services using XML protocols, that become available.

So when we think of the PC as part of an overall experience, we see a lot of new things that really become possible.

Now, Microsoft’s key product here is Windows XP. Windows XP represents the realization of a dream that Microsoft has had for a long time, and that is to take the very rich and powerful code base that we’ve built around Windows NT and have that become the code base for the entire PC marketplace, for the consumer marketplace, for the business marketplace, for the server marketplace. And we achieve that with Windows XP.

The Windows engine we’ve got here -- the reliability, the performance -- is very important. It’s also important that we’re able to get the industry focused on this single code base. And so creating drivers, you’ll be able to just write for the new machine for Windows XP.

Windows XP also represents a new focus on experiences, building into the product things that make it very straightforward; for example, to get at the music type scenarios or some of these instant messaging and communications scenarios. We’ve put a lot of work into the user interface.

Today’s milestone is the availability of the beta 2 of Windows XP, and that means we’re getting very close with this product. We actually put it up on the Internet for download yesterday. And we’ve made a special effort to get a lot of the CDs with this data brought down to the conference. And so tomorrow afternoon we’ll have those here, and everybody who’s in attendance can pick up the CD with the Windows XP Beta 2.

I really encourage you to play with the product, see what you think about it. You know, we’re really coming a long way with Windows, and so this is a foundation product for us and one that we’re very proud of.

There’s a big opportunity in terms of what this means about hardware peripherals, new systems, you know, things like the quick boot -- that’s one of the great features -- the quick resume -- that’s one of the great features. That operates in connection with the new hardware work that many of you are doing.

Windows XP -- we do view it as both for new systems and an upgrade product. The upgrade’s very important because of the need to get the bootstrap going, as the sophisticated existing user is explaining, you know, that this is really a product people should be using in getting all the applications and drivers moved over.

There’s a big installed base out there -- in total, over 300 million users on some version of our Window 9X-type system, and we expect, over a several year period, to see a massive migration to Windows XP. As many of you who are using Windows 2000 know, once you move up to this code base, it’s really impossible to ask somebody to go back.

One of the key things that we’ve the top priority is improving the PC ecosystem, making it so the chance of people running into surprising error messages or problems with interoperability, between the hardware and the drivers, the applications, that we get that down very, very dramatically. And there’s a lot we need to do as an industry around this. It has to do with testing. It has to do with better architectures. It has to do with feedback loops, where we really see where things aren’t working right.

One of the key elements for us is Windows Update. We’ve decided that we’re going to have all defined drivers on the Windows Update site. And we’re making Windows Update something that’s invisibly easy for the user to go up and get the latest improvements. Whether those are patches, new drivers, whatever it is, that’s part of the PC experience.

That is so critical because what it means is that if any user has a problem, as soon as that problem is fixed, no other user has to ever run into that problem, because the bits to avoid it come on to their machine through Windows Update. And so that service is a key service, the key service, for the PC ecosystem. And that’s why we’re insisting, as part of the logo programs, to get those drivers and work with people to make sure that Windows Update can fulfill that dream.

We’re also monitoring now more and more systems -- we’ll get up into hundreds of thousands -- where we exactly what the user is doing and get feedback from them, if there was anything that was confusing or didn’t work they expect, and really tackle all the mismatches that take place.

Everyone here has a big role in this challenge. Part of it is that people are reluctant today to upgrade their hardware, because they know that some of those bundled applications never carry across or that, you know, some of the things they have may not work on the new systems. The complexity and confusion that we have there really holds things back. People are reluctant to buy more applications on their PC, they’re reluctant to move up. And this is all stuff that can be fixed with this new focus. For everyone here, it really has to do with the new tests, the redistribution capabilities, and a lot of things we’re going to do about the feedback loop, where if we see a driver that’s not working well, we’ll have that data and be able to come to you and ask for something on Windows Update that will avoid those problems.

Now, I’m focusing today primarily on the client PC, the desktop, the portable PC. But I did want to say a few words about the server. The server level -- this era is very demanding on the server. The volume of transactions that will go on to those servers will be hundreds of times greater than in any previous era. These Web services are performed by high-performance servers that need to run seven days a week, 24 hours a day. And the technique that the PC industry is using to achieve this is the same technique that the specialized part of the computer industry called fault-tolerant systems used historically. It was those systems, rather than mainframes, that were used when you needed 24-hour reliability. So stock exchanges, phone exchanges always ran on systems like tandem or strata type hardware because they had the ability that if any element failed, there was an automatic switch-over and the user didn’t notice any interruption whatsoever.

What does it take to build fault-tolerance in? It takes the basic focus on the reliability, designed for security, a thing called transactions that allows you to take any system when it has a problem and pass the work, at a clean point, off to another system. It requires management tools. When you have lots of these systems, you’re able to get a simple view of how you update and monitor what’s going on with those systems. And so we’re building fault-tolerance into Windows, we’re building it into the development tools.

And the beauty of fault-tolerance is it’s a solution not just for high reliability, but also for incredibly high-performance scaling. You’ve seen over the last year the PC move from not even being in the top rankings of high performance benchmarks to now dominating those benchmarks, things like TPC-c -- there’s incredible progress there because of these techniques. And so website front ends and back ends are moving more and more to use this approach because it’s the only approach that really works.

Another great milestone for us in the world of servers will be the 64-bit systems. We’re working closely with Intel on their Itanium and McKinley projects, and there’s a lot of great progress there, another one that’s going to require broad industry work.

One element of this that is particularly important is the high speed memory and I/O busses; things like what Unisys has done with their shipping x86-based systems. That kind of back plain is necessary to make individual servers that really become the -- most performance. And so, Infiniband will be a key element to bring that along.

So the goal here is quite simple: to take the PC servers and not only have price/performance leadership, but have leadership in scale and every dimension, and be the only solution that gives this no single point of failure high reliability capability. And all the pieces are now falling into place for this, and people will think about PC servers in a very different way.

Well let’s take a look at some demos. Let’s look at what it means to have a signed driver, let’s look at the latest development in fault tolerance. I’d like to ask David Williams to come back up, and Valerie See to help us see some of these ecosystem developments.

MR. WILLIAMS: Hi Bill.

MR. GATES: Morning.

MR. WILLIAMS: So what we’re going to talk about is -- well, we call this "good driver, bad driver." So we really want to talk about two things.

The first thing I want to talk about is, what is a good driver and what does that mean? I think about two things when I say good driver: one, the core stability and reliability that we, the industry, put into the drivers to make it. So both the vendor of the driver – say, a wireless card -- would promote a driver. Then Microsoft would like to be able to use this driver, get it into our test phase, get it into out test matrixes. And then, after it’s gone through all of that level testing, we’d put a signature on that driver. That signature says the vendor and Microsoft both say this driver for this device will meet the minimum standard bar for high quality and high reliability in this system -- so, signing stability and reliability.

The second is, what’s the user experience? So, think about the most complex scenario that you would like to give somebody. That would be to take a wireless card and add it to a laptop for the first time, and get on the network.

Now that’s a very complex scenario, and how hard should it be? Well, we’ve all just added the device to the system, so I’m going to take this PCMCIA Aeronet card and just add it to this laptop here and we’ll plug it in. And is my laptop on the screen? Yeah. So what you see here is the network connection. You’ll notice that the Intel LAN that’s built in is disconnected. I don’t have a connection on that.

So first we’ll just plug it in, and PCMCIA Plug and Play will recognize the card -- (beep). You got the little beep there. And what I’ll do -- you’ll see down in the lower right hand side you’ll get a hardware notification that the wireless network has been added. So the device has been added. You’ll notice though that right now it’s telling you that the wireless network is disconnected, but then it changed again and now I have a network connection.

So what you’ve just seen here is an in-the-box scenario where the driver’s available with Windows. It found the driver, didn’t pop up a dialogue box or anything to say how to configure it, but even went further. This driver went so far as to join the network and be authenticated. So this is like the best behaved driver you could have. It solves the stability and reliability with the signatures, and it also enables some features with 802.1X networking support to be authenticated.

Now, we could actually take this scenario a little bit farther. We could actually change networks again. It’s just like joining a network for the first time. If you’re roaming and you went from your corporate network to an airport network, it would automatically determine that you’re no longer in your existing network and join that without touching, without bringing up those big wireless dialogue boxes.

So this is how it should act. So, could you imagine in the audience trying to have your mom or your dad or your cousin try to do this? And under Windows 2000 you can get the Plug and Play experience and with Windows XP you can get the zero touch configuration, zero touch authentication.

So now let’s take a look at a bad driver. We didn’t want to hold anybody up as a bad example, because we don’t want to embarrass them, so what we’ve done is we’ve got a Microsoft mouse here. (Laughter.) And what we did is we took our quality, stable driver, and we hacked the signature out of it. So we took our driver and we unsigned it, the normal signed driver. So normally when you plug a mouse in, it should just work. In this case you’re going to see it fail. Let’s plug this guy in back here.

Now it says "found new hardware." Now, of course, it identifies the hardware because the name of the hardware is embedded in the USB device. It’s now looking for the driver.

Now, in the case of Windows XP we look for the driver locally. We’ll look for the, quote, "in-the-box" driver. We also can, if we have a network connection, we can go out to Windows Update and look for a driver. But in this case we didn’t have it locally. I don’t have an Internet connection so it’s not going to go out and look on Windows Update. So we get the "found new hardware" wizard.

Now, right now this model starts to break down for the end user, because they don’t know what to do. Their first reaction is to say, "install the software automatically," but in this case really what we’ve done is we’ve already scanned the system. We might want to be a CD back in the system and scan. In this case -- oh, I was about to use the mouse. That’s going to be helpful. (Laughter.) We’ll go to the other mouse, "install from a list or specific."

Now, in this case "search for the driver location," "don’t search," I’ll start from a list. This just starts to get very confusing for the user.

Now, I happen to know, because I’m a tech head, where I’ve hidden my unsigned driver, so it’s here on C:\Winhec and we’ve already set that up to be in there. So this is not necessarily what the user would see.

So it’s going to where I pointed it to my unsigned driver.

So here’s the experience the user will get. We will educate the user now about the quality of driver they get. What this dialogue reads is the software we’re installing for this hardware has not passed Windows logo testing to verify its compatibility with -- which will say Windows XP.

We also go on to warn the user that since we haven’t been able to test this, it may impair or destabilize the correct operations of the system. They can continue or they can stop the installation. And if they click on the help button there, it says, "Tell me why this testing is important," we’ll take them out to the Web site and explain to them where they can look for updated drivers.

So what we’re trying to do is communicate to the end user the importance of stability and reliability and give them options in the case, and a little bit more control over inadvertently just destabilizing their system when they install errant drivers.

MR. GATES: That looks great.

MR. WILLIAMS: Now, for the enterprise piece -- actually, we should probably step over here and I think Valerie’s standing over there to talk about the enterprise ecosystem. Oh, there she is.

MS. SEE: What we’ve got here is an example of some Windows fault tolerance, and let me get out of the way so I can explain what we’re going to see today. Basically we’re going to show you kind of the range of possibilities that together with the innovative hardware that you guys are building we can achieve with the Windows platform. We’ve got two servers here; both of them are running Windows 2000 Advanced Server. This big guy here is a Stratus SP server, and this is a fully physically redundant platform. Basically we’ve got a full doubly redundant IO system here, and then below it we’ve got two CPU and Memory subsystems that are running essentially in a lockstep configuration. And we’ve even got some status LEDs here. You’ll notice that both of them are green right now, and what that means is that the system is running fully redundant and it’s ready for any kind of disaster that we can wreak upon it, which of course this is WinHEC, we’re going to have a disaster. Now -- (laughter). Well, we have to.

Under here I’ve got an industry standard server and it’s a great stand-alone server. It’s got things like ECC memory, and N+1 power supplies. But we’re going to be really rude to it; we’re going to kill power to it and we’re going to say the datacenter doesn’t have any redundant backup power, which nowadays, you know, we’re all kind of worried about power. And then I’ve got a client platform.

Now, because it’s really to easy to tell when video goes away, the way we set this demo up is we’ve got two video streams in parallel running. These two are from the Stratus Server. And just to show that they’re real, let me turn them off and turn them back on, and you’ll see we’ll basically bring the clips back up as we re-synchronize. And we’ve got two from an industry standard server, and we’ll do the same thing over here. And then just to monitor the state of the system, we’re tracking performance on both of them.

Now, like I said, I’m going to be really mean to the server and we’re going to say we got no backup power, and we’re just going to kill power to the industry standard server. And we’ve got about five seconds worth of video buffered, but you’re going to notice that these are going to freeze very shortly. This one’s already frozen, and we’ll lose this guy really quickly. And they’re both gone now. With video it’s really easy to see when the data stops, but this could have just as easily had been financial transactions for e-commerce.

Well, okay, so let’s go do the same rude kind of thing to the fault-tolerant -- the fully physically fault-tolerant solution. So I’m going to go ahead and I’m going to kill power to half of the Stratus server. And if we stand here and we wait for about five seconds, well, the video is still streaming, and in fact, as we watch the Perf Mon, it’s still moving. And if I go over here again and get out of the light so you guys can see it, you’ll notice the LEDs have changed state; this one is now amber, which indicates we’re still running, everything’s okay, but we’re not redundant anymore, and this guy is just dead.

Now, something that’s kind of nice about redundant solutions is you can keep running while you service the machine. So let’s say somebody sent me a server hard out; I could just go ahead and pull the old customer-replaceable unit out, put the new one back in, and we can turn the power back on. And what’s going to happen, basically, is that we’ve got power -- that’s what the red LED means down here -- and we’re going to see some green activity. And if we came back in about five minutes, both those LEDs would be green on both these units, and we’d be back to where we were, full redundant and ready for the next WinHEC disaster.

This is pretty cool. The video never stopped, or my e-commerce transactions just never stopped. This is with Windows 2000, and with Windows Whistler Server, we’re making investments for the future, so that it will go even faster than re-synchronizing in that five minutes or so.

So great opportunity for our customers. They’ve had a range of solutions they could choose, different kinds of hardware, full power fault tolerant platforms. Pretty cool.

MR. GATES: Thanks.

MS. SEE: Thank you, Bill. (Applause.)

MR. GATES: Well, the PC itself continues to evolve in some very exciting ways, and I wanted to touch on some of the elements of what we think better PCs will have in the years ahead.

One key thing is voice-enabled. We think the microphone and automatic echo cancellation shouldn’t be something that a user has to buy later and install themselves. Because of where we’re going with real-time communications, including the instant messaging that will be included in Windows itself, voice annotation, voice communication and speech recognition are becoming mainstream capabilities. And so we believe that virtually all PCs should have that right out of the box.

Broadband, network enablement -- today it’s a little tough to configure some of those things. You’ve seen with 802.11 that we’ve taken a real strong step there to make that a lot easier. Some of the same elements now are being done around consumer DSL and consumer cable modem.

The higher speeds that are coming along are very important for the video-driven scenarios, and scenarios where your machine is constantly monitored and constantly backed up.

Memory -- you know, it seems like a lot of memory, but to allow applications to do their full capabilities and to run many at a time, systems are now moving up to 128 megabytes. Certainly in 64 megabytes things like Windows XP and Office work just fine, but when you want to run more and more applications and push the system, that extra memory turns out to be the best investment relative to performance gains that you can make.

High-performance graphics -- we’ve really held back the software industry from using 3D interfaces because large ranges of systems don’t have the graphics. And it’s a chicken and egg problem: If we don’t have the graphics we don’t use them; if we don’t use them, then it doesn’t look attractive.

The advances in these graphics chips have gotten to the point where we really can take advantage of that in the standard user interface itself. This is for both graphics and video, those new chips make a huge difference. And so the leading PCs will really start to push limits here.

High-quality audio -- standards like one called 5.1, you’ll be hearing more about this later as we focus in on the AV system. There’s a lot that can be done there.

Making the PC quiet, not having the noisy fan is a big deal.

Including making sure that the applications you bundle are applications that are easily upgraded. As we’ve been doing the testing of Windows XP against systems that have shipped over the last few years, it’s really a lot of these bundled mini-applications that have been causing some of the most problems. And we’re working with many of you on those, but the simplest thing would be right from the start to make sure those meet architectural guidelines so that they don’t become an issue for the user.

Finally, I mentioned boot time and resume time. We’re really getting these numbers way, way down. In fact, on many systems it is essentially spinning up the disk is all the time it takes to get back into operation. And even that, there are some things at the hardware level where the time can be brought down.

And so a wide range of things that can be done. The most dramatic thing for us is the evolution of the portable PC form factor to a new form factor, which is the Tablet PC. The tablet PC, you can think of it as revolutionary or evolutionary. It is evolutionary in the sense that it runs Windows XP and it runs all the applications. It’s evolutionary in that when you buy it, of course it will have either a wireless or a connected keyboard. But it’s revolutionary because of your ability to take it in your hands, sit there and read and annotate, take notes, things that were not possible before. So the scenarios, the breadth of use and the way that the software will take advantage of the pen and that direct manipulation, that is very profound. With the pen you can do things like editing marks and move things around in a way that even the mouse isn’t nearly as good at.

We think not only will we have tablet-like devices, we’ll have desktop PCs with high-resolution LCDs that are even bigger that you just leave on your desk, but you have a lot of surface area for your pen to work with.

We see this as a major milestone and one that we’re rallying partners around -- software developers, peripherals developers, and this is something that we see the products in the market next year, lots of exciting designs and exploited software coming together to make this really drive the portable market next year.

What we’re announcing today are a number of those key partnerships, and we asked a few of the partners to share their thoughts with us, and so let’s go ahead and look at a video where we’ll hear from many of these partners.

(Video presentation.)

MR. GATES: So you saw there we’ve got five leading system manufacturers committed to the tablet PC project, as well as a number of key companies like Intel itself that will be providing the elements that go into these new products. There will be a lot of creativity around the form factor coming from the different companies, but all the software will run on all these devices, and we’re making sure that the quality of all the devices in terms of battery life and the digitizer is extremely high.

Well, the best way to appreciate this product, of course, is to have one. Microsoft, we’re all fighting over the few prototypes that exist, but we don’t have enough to let everyone have one today. But I thought the second best thing would be to let you see it in operation. And so I’d like to ask Charlton Louis to come out and show us one of the prototypes, the kinds of things you can do uniquely with the tablet PC. Welcome.

MR. LOUIS: Thanks, Bill. It’s good to be here.

One of the coolest Microsoft innovations is in pursuit of what we call the Tablet PC. The tablet combines the simplicity of paper and the power of the PC, and I can’t wait to show you what I mean.

Now, this is the Tablet PC, Microsoft’s prototype hardware. This is for development purposes only, to make sure that we get the software right. Now, we’re looking forward to working with all our OEM partners to bring these to market.

Now, what I love about the Tablet PC is you notice how thin it is and light. It turns on almost instantly. It has a high-resolution screen, making it extremely comfortable to read. It’s easy to add peripherals. It has a USB port, a card slot for things like wireless capabilities. It’s ACPI compliant and legacy-free, which means it makes Plug and Play a snap.

Now, let me give you a more detailed look of the Tablet PC. Now, the Tablet PC is a fully functional PC. It really is an evolution of the laptop. It has Windows XP Professional, which means you can run all your thousands of applications that you do today. In fact, I have Autocad running on my tablet PC right now. Let me make a quick modification. I’ll just rotate it and now I’ll render it.

Now, you’re able to do this because all the smarts, all the computer is built in to the tablet PC. It means you can run all your thousands of applications and have full fidelity. This Tablet PC is your primary PC. There are no sacrifices.

Okay, I want to switch gears and show you a breakthrough application called MS Notebook. As you can see, handwritten ink is intuitive, expressive and personal. Watch how the handwritten ink flows out of the pen.

Now, there’s a lot of computer science going on here. When I lifted the pen, for one we’re actually sampling at 133 samples per second as opposed to the 30 or 40 samples per second for a typical mouse. In addition, we’re turning the poly-lines into bezier curves and providing anti-aliasing to make the ink even look better. So ultimately the tablet makes ink rock.

Well, let me show you how we go beyond paper. I have a body of notes here and I actually want to simplify it. So I can do that with MSN Notebook because we understand the format of ink. And notice I was able to select those handwritten words. I can cut it. Look at that. Ink is a first-class citizen. It works just like text. In fact, let me "undo" and you see the line below it? I can read you, and the ink wraps just like text. It’s a first-class citizen.

To further illustrate this reflow, I can write at a very comfortable size, yet I can scale it down and see two pages of ink. Notice how things that were on two lines are now on one? I can see two pages at once. And this is all user-settable.

Now, when I go back to my notes, many times I want to have the ability to actually highlight information, bring out points that are important to me. In fact, I can do that. I can bold, italicize and highlight my own writing. Isn’t that sweet?

Okay. So I want to add information to these and add ideas. Sometimes I might write between the lines, write in the margin point-ins. Well, I don’t have to do that anymore. I can use my "space" tool, simply by tapping "open up space." In fact, I can just add a word here. If I’m not sure how much information I want to add, or if I want to add a drawing, we also have the space tool that will open up space vertically. And I can add my drawing in here. Let’s see. And you’ll notice my little Picasso here, and obviously I should quit my day job.

So isn’t this cool? I mean you can just make as much paper as you want without killing trees. It’s kind of awesome, I think.

Okay, something that I think only the power of the PC can do that you can’t do with pen and paper is the ability to search through your handwritten notes. Now, there’s actually a diagram I’m interested in and I think the word tablet is right next to it. So I’m going to do a search. There it is. There it is again. And voila! Wouldn’t you like to be able to do this across all your handwritten notes that you’ve ever created? (Applause.) There’s real power here.

Okay, now what’s great about ink is everything is about direct manipulation. When I created this drawing, it’s all about writing directly on the screen. The same thing, I can duplicate it, make a duplication, make another one, so I can create my drawing of network tablets. There we go. There we go. In fact, now I’ll draw a box around it; something that you can’t do with paper is have the ability to convert that. Now I have my nice clean drawing and I can send this off and share with others.

Okay. Something that we find that users many times want is the ability to take their handwritten notes and be able to re-purpose them, like maybe create an email, maybe to create a presentation or even maybe create a contact. Well, we allow the user to do that. I can select this and simply copy it to the clipboard and anything that accepts text you can paste it in, and now I can create my e-mail message. (Applause.)

Okay. I’m going to switch gears here. Now, that kind of gave you a good taste of our showcase application, a little glimpse of it, but that’s only a piece of the puzzle. It’s very important to us that we work with all of our ISV partners, because we know they will make killer apps that will really promote this new tablet PC platform. It’s a new paradigm.

Now this actually combines -- it’s a collaborative environment to help visual thinking. In fact, I can use ink just to draw and modify this, to kind of test out the features. I’ll draw my little great chimney. You can tell I’m an artist. Now I’ll sign my name. There we go.

So you can see how you can model and add features to my home here. You kind of get a good idea before you actually take it to the next level. That’s the possibility of what we have for ink.

Now, we look forward to working with all our ISV partners to building great killer applications. I’m out of time and I’d love to spend more time with this, and we look forward to bringing you the tablet PC to market, to combining the simplicity of paper and the power of the PC, so you too can think with electronic ink.

Thank you very much.

(Applause.)

MR. GATES: Not only is the tablet a breakthrough product, but it really shows how the PC industry can get all of its elements coming together. To make that product achieve its potential we need the hardware manufacturers, the chip manufacturers, the peripheral manufacturers, the operating system and the software developers to all jump on board. And I think you’ll see over the next year a lot of milestones as we move down the path toward getting the Tablet PC into the marketplace.

So in summary, this era is a very promising era; promising for our users in terms of the neat new things they’ll be able to do, promising because although the PC will be very much at the center, they’ll have access to their communications and information on all the different devices because of Internet connections.

I want to emphasize the important role we see for Windows XP. This is the most important release of Windows since Windows 95. It’s the first time we’ve gone to the entire broad marketplace and said, "It’s a huge change, it’s an important change." We’re going to use this transition not only to introduce the neat new features, but also create in our ecosystem a focus on quality that will really help the market, grow the market, and I think be very appreciated.

A lot of this results in new user experiences. And that’s why I think this is the most interesting business in the world, because this tool continues to surprise people, it continues to move forward, and so we’re very excited to work on that with all of you.

Thank you.

(Applause.)