(Applause.)

BILL GATES: Thank you. Well, first I want to set some ground rules. I love text slides. (Laughter.) The only thing I really don't like are slides with maps on them. (Cheers, applause.) So you won't see any of those in this presentation. Maybe you've had your full quota. (Laughter.)

One thing I think it's important to point out is that well before Microsoft and Great Plains got together, as I was putting together my personal foundation, knowing that this was going to be a pretty significant enterprise, we had a decision to make about what software to use and we picked Great Plains software. And so I've been a dedicated customer of Great Plains well before the partnership.

And, you know, you want to think about scale, that foundation, now the world's largest, is spending about a billion dollars a year and a very happy customer with everything we've gotten.

(Applause.)

Coming together with Great Plains is a key part of Microsoft's vision. As we think about this next era, which we talk about as the digital decade, what really counts is how we're going to connect things together. We're going to build the platform that lets data be shared between software packages, between people and software and people and people in ways that have never been possible before.

And we knew that it was very important to us to have an application built on the new platform, the new .NET platform that would really push it to the limit, and that was the thing that really said to us that teaming up with Great Plains would make a big difference, that that would allow us to know was our platform good enough for this next generation of applications.

And so it's a big commitment for us. It's a new thing. We think in this space there are a lot of fascinating things that are going to happen. First of all, a lot of the software you'll see coming up from Great Plains will be platform software and so we'll have an increasing number of partners who bring geographic expertise, vertical expertise as we go even further in platform-izing this software as a very high level that people can build on top of.

We think that this software will usher in the business revolution that's been talked about for many years. Now, to some degree that dream of efficient business a little bit is discredited because people associated with the extremes of the dot-com bubble, the hype and all those things that were talked about, and so now people are saying, "Was any of that real?" And the great opportunity our industry has is to show that although that wasn't going to happen overnight, that requires a lot of big R&D, a lot of creation of standards, particularly around XML, and a lot of training and support to get this out into the business infrastructure, that this idea of business being more efficient, that dream was real and it will be realized in these years ahead. And the work that we're doing in the Great Plains R&D that we've increased very, very substantially in the last year will be at the vanguard of that new type of application.

Microsoft as a whole is very R&D oriented and my job as chief software architect, I love having $5 billion that I get to spend -- (laughter) -- every year and that lets me go after quite a variety of things, whether it's breakthroughs in languages, computer programming languages or breakthroughs in security or speech understanding, breakthroughs in graphics, handwriting, many, many things that take a long-term approach, a patient approach for those really to pull together.

And having Great Plains as part of the family of products we're putting together and applying that R&D in that direction is something that we're very excited about.

So for those of you who have been partnering with Great Plains well before we got together with Great Plains, I want to thank you for your support and indicate that you've picked a company that now, particularly together with Microsoft resources, is going to be moving at an even faster pace than ever before. We're taking a long-term approach and we have some very exciting things coming.

Well, how is the business environment changing? The theme of interconnectedness is one that goes with that whole dot-com vision, those promises. And, of course, the theme of a lot of Great Plains get-togethers has been this idea of interconnectedness. That vision is a great one. The inefficiencies that exist out there today, where buyers don't know about sellers, where different knowledge workers inside an organization don't have visibility of what each other is doing, where different back-end systems don't understand about special relationships with customers and the back-end systems in one company have different information than the back-end systems in another company, those inefficiencies mean that all the knowledge workers get to spend a lot less time on things like customer service, product innovation, really understanding where the marketplace wants their company to go.

And the Internet so far has merely scratched the surface in terms of what's possible here. Yes, today we can take e-mail for granted. We can take browsing for granted. And those things have been wonderful in that they've bootstrapped the connectivity that's a necessary but not a sufficient element for this connected world to really come together.

At a technical level, the key thing that really allowed the Internet to thrive was the HTML standard. That's the way that the information that you get from a Web site comes down and gets displayed in the browser. But HTML as we look forward has a key limitation that means that it won't be the central standard for this next stage. And the central standard for the next stage will be XML.

Well, why is that? It's because HTML only lets you get the information from one site, and that information immediately goes right onto the screen. It's almost like the 3270 protocol: It's a presentation level protocol. If you want to look at information from many different sites, for example, if you're a buyer or if you're trying to do a forecast or you're trying to compare different partnership opportunities, you want the different Web sites to all be brought together in a very rich view that you get to choose how you look at that information. And HTML simply won't suffice for that; it's got to be a more data-driven format that allows you to use intelligence at your end as well as the intelligence in those other machines as well.

Now, the answer here, XML, actually got started about six years ago. It was Microsoft and some other small companies saying let's take a document standard, which was SGML, and morph it to be far more general purpose for arbitrary data.

There had always been this big debate in the world of computer science about whether you could represent very flexible data. The relational world is one where everything is forced into tables and there are some real benefits to that, but it's too rigid of a representation. The XML representation lets you have things that are very rich and very heterogeneous like documents but even things like a price list or a purchase order can be directly represented and self-described in XML.

And so Microsoft decided to bet its company, bet the future on XML. This idea of betting the company was not new to us. It's something that we had done several times. The original bet on the personal computer, subsequently the bet of the company on the graphics interface with our Windows product, which in the early years was tough slugging -- people thought graphics interface was too slow and too hard to program to and today it's hard to remember why was that such a tough thing; today we take it for granted. Of course, the screen is rich. Of course, there are a lot of things we can point to and interact with. If we had to go back to a pure character mode interface, where there's only one point of interaction, immediately we'd feel like we had lost a lot of the power that exists in these systems.

So that was a bet and it was a bet that definitely paid off.

This bet, the XML bet, we really made it fundamentally about three and a half years ago. It's the centerpiece of how we see solving this problem of really connecting all the pieces -- the knowledge workers, the back-end systems and across all the different companies.

And this was the first time in the history of the company that we actually changed our vision statement. The original vision statement that goes back to the founding of the company now about 26 years ago was a personal computer on every desk and in every home. Internally we always added running Microsoft software. (Laughter.) And at the time we came out with that, it was like the wildest statement of all time, you know, a computer in a home, a computer on every desk. Industry leaders, like the CEO of Digital Equipment, said, "Hey, that's pretty funny." (Laughter.) And subsequently Digital Equipment was bought by Compaq, who might be bought by HP, so missing that turn in the road turned out to be a mistake. But the vision of personal computing really required thinking through personal empowerment in a way that had never been done before.

And the reason that we decided to change the vision statement though was because the magic of software that was really unlocking that personal computer, people were thinking of it just running on that one system and they weren't thinking about the way that software could let data move between personal computers and between personal computers and, say, an advanced cell phone or a TV set or a computer in the car and all these different form factors that are being invented.

And we wanted to make it clear that as important and as central as the personal computer was, our software vision was about empowerment across all the devices, including services that would be built up into the Internet itself. Some people call them "cloud-based services" or Web services where you can go and fetch your mail, knowing that it's being stored reliably and you don't even have to take a device with you; if you pick up a device and you authenticate who you are, you have access to those capabilities.

So .NET at its core, which we announced to the world almost three years ago, is a bet on XML. It's a bet that we will change all of our software from Windows to SQL Server to Office to the Great Plains software to really take full advantage of XML.

There are many stages of this but the first stage we do things like we've done with our SQL Server, where you put a layer on top that intercepts and understands all the XML protocols and does the right conversion, although deep inside the product itself it's still storing things in a relational manner.

That's gone very well and that kind of layering approach works very well for companies' existing applications.

We had a case where the UK government wanted to build a portal where all the different applications came together in one place, and many people went to them and said it would take years to do that. Well, in fact, by putting an XML layer on top of their tax application and their health application, their education application, we created that portal in a few months' time.

And so XML is revolutionary for an evolutionary approach, although over time you want to take things, including things like SQL Server itself or the various applications, including Microsoft Office and re-plumb them even to the core to be based around XML.

And so that's a big bet. It's something we're pretty far along on. We had a big milestone in terms of the industry really coming together around this quite recently and this is the idea that all these different systems that support XML need to work together.

Broad industry support is so necessary because you don't want to be able to interoperate only with companies that have chosen the same software stack. And for Microsoft the fact that these software stacks can work together, whether it's the IBM or the Oracle or the different ones, that's fine with us because it means whenever somebody starts a new application we have an opportunity for them to look and see that from a performance point of view, from a productivity point of view, from a price performance point of view that because we're a pure software company focusing on these broad things, we provide the best solution there, and the fact is it can interoperate with whatever they've chosen in the past.

So having this be a standard has been very, very important to us and a lot of that dialogue was with IBM saying, you know, can our two companies, which in a certain sense is a quorum in the industry -- (laughter) -- can our two companies come together and say that even the toughest things like authentication and the messaging, that those are going to be done the same way. And we got agreement on that last year. IBM had to take a lot of their good ideas, sit down with some Microsoft people who had good ideas and make sure that we were going to make the right compromises either bringing the good ideas together or in some cases accepting theirs, in some cases accepting ours, so that all this XML stuff really would work together.

And we needed to announce an organization around this because we needed a set of test cases that really articulated to business decision-makers what it meant to really support XML. And so that's what this WSI, Web Services Interop group is all about.

We've been joined. It's not just IBM and Microsoft. It's virtually everybody in the industry has come into this because they see the customer demand, they see the rich scenarios and so we're getting great support both in terms of saying this is the right direction and in terms of the technical work that's going on here.

So XML has arrived. It is the way that things will be done and although it's not important for businesspeople to see XML itself, they do need to understand this is the glue that allows that dream of interoperability, the dream of e-commerce to really come together in an effective way.

And although many people have thought about the benefits of this in applications across the corporate boundary, the benefits are actually very profound in terms of information sharing and exchange within a company, both between applications and between knowledge workers, and that's the part that I think we're still going to surprise people in a pretty dramatic fashion with how that happens.

So .NET is our implementation of XML. A good analogy to think of is that in the same way that Windows was our implementation of graphics interface and the whole industry went to graphics interface but in that case the Windows implementation captured a significant share of that new activity; here XML the whole industry is going that way and we hope, we expect that .NET as the XML solution, with by far the most software R&D behind it, something like five times whatever the second most R&D investment behind one of these platforms is, that .NET is able to lead because of that dedication and scale of investment. So this has a profound effect on all our products.

The Great Plains products are a great example of this because instead of just thinking about the products moving to only being a Web site or being only something that runs on a server or only something that runs on a client, .NET talks about how you want all of those things. You want to be able to take your portable offline and be able to work with your data, but when you connect up you want to be able to share inside the company and not have that data necessarily flow across the network or be dependent on that network reliability.

And yet if you have multiple branches, you want to collaborate with other people, including, say, your accountants coming in to look at that information, the idea that with the right security there's that Web service access to the information, that's a very powerful thing.

And so Great Plains, as I said, will be a vanguard of showing how these Web services work in the commercial space, which is where they'll really catch on in a big way.

There's been a lot of talk about what this means for consumers, and there are some neat things there -- shared scheduling, alerts to consumers about things they might want to know about, the ability to filter those things according to their priorities -- but just like everything related to the Internet, it's the existing businesses that will be the first and the most dramatic beneficiaries of these new approaches, helping them do things in a new way.

Now, one of the first products we've got out that's built from scratch around XML is this Visual Studio .NET that a month ago came out. Now, this is a product that was a huge development effort for us. It's the most we've ever put into a tool. Tools have been very key to usher in new eras of computing. For graphics interface it was really tough to write the applications until Visual Basic and some other tools came along. In terms of the Web everybody was trying to build Web sites but the early tools were very limited until things like Visual Interdev, the rich scripting tools came along there.

Here very early in this era we've got a rich tool so people can build applications in a structured way and focus on the code that they really care about and not have to worry about the plumbing and all the details of these XML protocols that if you have to get down to that layer are very complex.

So tools have driven the phenomenon in the past and we saw that even before we shipped Visual Studio where six months before it came out we had thousands of people asking if they could release sites built on the technology even though we were still working with the code to make it final. And that's unprecedented for us to have so much demand even before the product is final, and so with an agreement to update to the final bits we let lots of people go ahead and we have a lot of neat sites that really illustrate why XML is the way to do these things.

So a good application example of this is some of the new work we're doing in this Customer Relationship Management area. I know that's been highlighted as a new thing at this conference. It's the first time that we've really shown that off broadly. I'm very excited about what's going on here because in a sense you could say if you have Great Plains and Microsoft Office what are some of the things in the middle that really can tie those together and really let people work in a better fashion. Some of the software in the middle doesn't really have the category names but Customer Relationship Management in its broadest sense. Looking at the sales processes and the schedules and the coordination and the orders and things of that nature is clearly a very central piece there and we wanted to show how that works not only with the new tools but works connecting up to Great Plains and shows off why we think the world is moving in this Web services direction.

So to take a quick look at that let me ask Holly Holt to come out and give us a little look at the CRM in the Web services context.

HOLLY HOLT: Hi, Bill.

BILL GATES: Welcome, Holly.

HOLLY HOLT: Bill, this is incredibly exciting. We've spent the last four days with our customers visiting with all of you both about the solutions we have available today as well as what we're bringing forward in the future.

But I've had one recurring question from our customers, and it is, "Is .NET something that I can use in my business today or is it really something three or four years away?"

Well, today I'm going to show you that any business can take advantage of Microsoft .NET technologies to integrate Microsoft CRM to different Web services to create huge efficiencies in their business that automate critical business processes.

Let me start first by pointing out I have some Web sites up: First of all, Adventure Work, the travel company that really caters to team and individuals with extreme travel needs.

The United States Postal Service: Buried deep within the United States Postal Service is an incredible address verification service available to customers free or charge.

And Acme Credit: Just like perhaps you'd find from Equifax or Experian or TRW, Acme provides credit rating services to customers. Now, in the old world of credit rating services you'd perhaps submit information over the Web and get a credit status back like this or you might have faxed it in. Let me show you later how we can automate that process.

So I'm going to go back out and for just a moment I'm going to be a prospect. I've been surfing the Web. It's been a tough year. I'm looking for some adventure.

So the prospect, Alex, out on the Web site has read about everything that's available through Adventure Works and I've decided that I really want to take a Himalayan trip. I can enter some information and since we're in a little bit of a hurry I'm going to make sure that I just get the very minimum information that we need from the system, but later I'm going to show you how we have the ability to clean this information up and make sure that we can use it for further marketing. Let me submit that information.

Okay, I'm going to step back for a moment. This is really cool. In the background, Adventure Works Web site is now doing a SOAP call to a Microsoft CRM application that's being run inside the four walls of Adventure Works.

So now, stepping into the role of a salesperson at Adventure Works, I can go into my Microsoft CRM application and take a look at any of my activities. I can go into the sales application and new lead off of the Web site.

We've also done one additional thing. Any time a lead comes in to Adventure Works it's very important that we have a touch with the customer, so the system automatically also creates an activity for me to do a follow-up contact with that person.

Also I should mention that with this system I can easily convert this into contacts and I'm going to find out, there is some cool address information here and available. Let me create that contact, close it away and I mentioned that we have this U.S. Postal Service Web service that's free. We're integrated with it. If I go out to my contacts, click on Alex, look at his address information, remember there was some information I hadn't finished up the address, the state wasn't out there; now we have a zip plus four.

What does this really mean in your business today? It means more effective marketing campaigns. It means you don't have somebody duplicating information into a system, their prospect is already entered in and the cost savings overall.

I'm going to save that information and as I visit through the course of the day with Alex, he looks at a couple of trips, he's very interested in what he's seeing but he really does want to go on that Himalayan trip. So at this point he really is qualified to become an opportunity in my system.

As I mentioned, we're going to associate that with Alex as a contact. And the name of the opportunity, of course, is the Himalayan trip, and that trip, as I mentioned to Alex on the phone, is a $10,000 trip. It's one of our more expensive tours.

I'm going to save this information away and workflow has just kicked into gear a second time. Behind the scenes I have workflow running for any time I create a new opportunity the system goes in and it checks the expected revenue against opportunity. Anytime the revenue is $10,000 or more the system is automatically going to go to Acme Credit and check the customer's credit.

What does that mean? When I go back in and I check Alex's credit I can see that he has a credit score of 264 out of a possible 300; in other words, he's very well qualified to take this trip. I can qualify that information and get him on his way.

Now, one last thing I want to show you before I leave the stage is that all of the information you've been seeing today is in the Web browser. I also want to show you that all of that information is captured as well in the Outlook client of Microsoft CRM. I'm going to go into the same contact information, select Alex, and his credit information is right there and available. I'm all set to close the deal.

So what I've just shown is the ability to automate key business processes using the integration and the technology of .NET between Microsoft CRM and some Web-based services, the ability to access customer information both through a Web browser as well as Outlook, and the concrete value that Microsoft .NET can bring to our customers today.

What does this mean to our customers? It means sales efficiency, agile business decisions and an ability for you to create an interconnected community that's appropriate for you to be very successful, whatever your business size, whatever industries you're in.

BILL GATES: Thank you.

HOLLY HOLT: Thank you.

(Applause.)

BILL GATES: It's a great example of Web services because the idea of connecting up to different pieces, like that postal Web site, Acme Web site, in a sense it means an application can think of all the different software things running on the Internet as subroutines that they can call, and depending on their business relationship those can either be free services or services that they're paying a fee to have access to in whatever form makes sense.

So them idea of XML connectivity, it has benefits at many different levels. We want to take a knowledge worker's job and make sure they have better access to information so they can be more effective, so they're not re-entering data or dealing with out-of-date data. We want to make customers feel that the company they're working with is more responsive because they can give online feedback, that feedback is being analyzed and data mined in a much better way than ever before, and for the company itself they can put together an offering that actually draws on partner work and yet present that in a simple fashion so the customer doesn't actually have to know how they're getting that work done behind the scenes. That's because the partners can be connected into that Web site using XML services as well; and so a lot of benefits that are coming out of this.

Now, with XML it's a generic standard and there have to be specific efforts to take XML, for example, and map it into a healthcare record. That's what the HIPAA standards are all about, and those are catching on very rapidly; work, say, in the securities industry to map it into a portfolio description, and there again there's been very good progress on that; the supply chain management people taking the EDI based work and mapping it onto XML, which is far more flexible and far more real time oriented than the original batch EDI protocols were so we can benefit from that earlier work and yet do it in a richer way.

Another good example of a specific XML schema is this XBRL, eXtensible Business Reporting Language; a lot of acronyms starting in X in this world. This one is pretty exciting in that companies that in the past would have posted financial data, say, as just a Web page you could go read, now we'll put it in a structured XML form. And so if you want to look at multiple companies, make comparisons, you want to have your accountants come in and check things, make sure that everything makes sense, a partner wants to come in and know more about your finances, there's a standard XML representation. And it's really the accounting firms and the people like NASDAQ that have said that this is a very necessary standard. Companies of all sizes will be adopting this to present their financial data. Microsoft has made itself a leader by doing that right away, and we have support for this XBRL standard being built into the reporting capabilities of all the Great Plains products through the use of the FRX capabilities that are used by Great Plains and other products as well.

Now, one thing I want to paint a little bit a picture of is how working with computing will change over the next two years. This is another area where people are really underestimating some of the long-term investments that we and other people have made to make big advances. The work on speech recognition has made great progress, the work on miniaturization and wireless networks.

The reason for that progress goes back to the miracle that got personal computing started in the first place, the miracle of the microprocessor, the fact that it doubles in performance every couple of years. And there's no slowing down in that. Perhaps in ten to 15 years some physical limits will be reached but you're talking about a machine that's hundreds of times faster than what we have today is clearly in sight. Disk capacity doubles even faster. Optic fiber speed is doubling even faster. Very large panel LCDs with high resolution will be coming down to very low cost in the years ahead; so many elements to now take the magic of software and bring these things together.

One of the things we've always wanted is for people to have the richness of a digital document everywhere they go so that instead of just printing out sales data, where if you look at it and something surprises you, you say, "Hey, I'd better call somebody; this is very surprising; that number looks too big," well you call them up, bother them and they say, "Oh no, that was just some account got deferred for one month or it's something about how we're accounting for something special or it's something about currency;" anyway, it's not a very fruitful exchange; whereas if you have the data there on the screen and you can simply point to that number and expand it by product, geography, sales person, you can get in and understand what's going on. If it's nothing of importance, fine, but if it's a best practice or something that people need to be aware of, you ought to be able to take the information you're looking at, at the right level of detail, put a little note on it, send it around and getting people working on that, and so all those people immediately know what you were looking at.

So a live digital document is far more effective than getting it onto paper at a certain level of summarization that other people are looking at and it's very hard to send around.

So that's just one glimpse of how by getting the PC into a new form factor and particularly into a very small tablet form factor we can change the way this device is used and how people get value out of it.

When you think of PCs today, when you go to meetings, most meetings, you don't take your PC because having that keyboard there and that screen is sort of a barrier that's inappropriate for many meeting formats. You do take a tablet and paper though and work with it.

Well, what if the PC was like a tablet and you could take your notes and keep it as ink, have it recognized, and the whole time you're there you have the ability to call up information, take notes on the PowerPoint slides that are being presented and that the readability is just as good as paper?

Well, that dream is becoming a reality with the tablet PC that comes out later this year. You know, as we're thinking about the knowledge worker's day we want to make the PC a better tool throughout the entire day.

Another example is when you're on the phone typically you're not using the PC because you can't share the screen of your PC with the person at the other end of the conversation. If you could, you could look at the budget or the contract or the list and work on that together, edit it together.

Well, building that in so it's a standard feature of the PC that whenever you make a call if that person has a screen your screen and their screen are connected together, that kind of real time communication over the next few years we'll make the standard call where it's just voice to voice for a complex business discussion seem very antiquated.

So there are a lot of breakthrough scenarios that bring great value but really it's today's PC connected to the Internet and the magic of a little bit better form factor, a little bit better software that pulls this together.

The tablet form factor in some ways you've got to say it's revolutionary because for reading even something like a weekly magazine, that idea of taking notes, sharing it with friends or being able to go back and look at anything you've read, have that as a search scope when you want to go find things that you wanted before, it's just so much better, the information is so up to date. If you want to dive into something and see the source material for it, you just follow the link to do that.

So it's reading, it's note taking, it's collaborating in meetings; all of these things become possible. And yet in some ways it's purely evolutionary. All we're doing is taking a Windows XP device and using the magic of miniaturization and a very powerful digitizer on the surface that lets you do the inking and building those together. So it's just a portable PC where the keyboard can either be folded underneath or detached.

This has been a big, big project for us for many years. The handwriting work started about 14 years ago. In the early ‘90s you may remember there was a wave of so-called pen computers that were in retrospect premature in terms of their capabilities because the hardware and software maturity, the wireless network, battery life, all those things really weren't there.

Late this year we'll have people like Compaq and Acer and all the big portable makers coming out with these things and it really opens up a lot of new scenarios.

I'd like to ask Darren Laybourn to come out and give us an example of how he's been thinking about where the tablet might make a difference.

Welcome, Darren.

(Applause.)

DARREN LAYBOURN: Hey, Bill. Good to see you. Thanks.

I've got a new prototype from Acer here actually and this version actually looks a lot like just a regular PC but it's got a nice little twist to it here. If you just take it and spin it on the top it turns into a tablet. I can click on the edge here and it will change it into portrait mode and it can be just like I'm reading a book, so it's pretty nice.

Now, what we thought about when we were trying to think about how we were going to use this in really a business context, I was shopping with one of our customers, Crossroads Appliance in Bellevue, and I was looking for some appliances. And I met one of their sales guys and the guy was just incredibly smart; I couldn't believe all he knew about what was going on with all these appliances.

But I started thinking about, well they're actually using our system. They've got a bunch of data. Couldn't we allow them to use some of that data on the shop floor and improve the buying experience?

So our scenario today you're going to be buying a refrigerator, a side-by-side refrigerator and we've got the different ones that are there. So you're standing in there, you're looking at the Amana refrigerator, really like it, so I'll click on the Amana refrigerator and I've got all the information about the Amana. But now I've got a little bit of a portal and I've got some back office data as well: Whether it's available, how fast I can get it shipped to you, product reviews from people that have been there before. I can click down on product sales, see how it's been selling; it's been blowing out the doors, we've been selling a lot of them, crushing the competition with this one.

So you're really excited about it and you want to buy it, but it's a black one so I think you'd really rather have the almond, so we can change that. And this is a prototype and this happened exactly the last time too, didn't it, Bill? (Laughter, applause.)

So at this point I could be going to the backup, but we'll try this a little bit and see if it comes back like it did last time. What the heck, we're here. (Laughter.)

BILL GATES: It doesn't like the almond color, I don't think. (Laughter.)

DARREN LAYBOURN: It doesn't like the almond color. Both times it did that; when we click on almond it was gone. There we go. But now we've got the almond one; we're right back where we were, so it's beautiful. (Cheers, applause.)

So let's go buy it now. Let's see if we can get this thing bought. You've already been a customer of ours so we've got your information, verified that the location is correct. Is that correct? Are you still at One Microsoft Way?

BILL GATES: Yes, it looks good. (Laughter.)

DARREN LAYBOURN: We've got all the information. Notice you've also got things that we can do that people who have bought in the past, a lot of people buy the wine rack so I can bring that up. As a sales person, I've got the information that that's happened.

I can also go select an installer at this point in time so we can get that all done right here in the store. And because you've taken advantage of .NET My Services and given us access to your calendar for a little while, we can check and see that you've got the ability to actually link up with Matt, one of our installers, and install this tomorrow. Is that going to work out?

BILL GATES: Yeah, I'd love to have Matt come out. (Laughter.)

DARREN LAYBOURN: All right. So we go down to the payment here now. We'll go ahead and go with a credit card. We've already go that information because you were a customer before, and then we just need to have you sign down here. We're able to capture the ink -- (Laughter, applause.)

The interesting thing, you'd think that Matt after so many years of being in front of an audience that he'd actually know what his cue was and he'd come out a little bit later when it was time to come out. (Laughter, applause.)

BILL GATES: I didn't think it was my signature that was funny. (Laughter.)

DARREN LAYBOURN: Well, what we did do is we went to a preview of a customer portal that we also built. It allows you to have a list of everything you've bought. So you bought a barbecue from us. We've got all the documentation, the manuals. Everybody loses their manual. Now, it's very clear you can come back. We've kept a record of everything there. The refrigerator has been added. You can see the refrigerator; it's right there.

And now Matt's going to come out and he's going to get that installed for you right away. (Laughter, applause.)

MATT G.: Now, Bill, as you can see here, I've got a service order to come and install a fridge at the home office. And that's because I am Matt G, Master Refrigerator Installator. (Laughter.)

And we could take this service order, get that going here -- what has Darren done to this thing? Click, there we go to service order.

Now, you can see on this service order that we've got the Amana super refrigerator. We know what we've got. We've got the installation instructions, where you're at in case of any special things we need to bring along.

Now, as part of our recycling program here at Crossroads we've got a $35 rebate if you'd like us to take that old fridge back there away and we can recycle that for you, so we'll just accept that then as a recycle and then move on to the warranty.

I notice when you were in the store you didn't get the warranty, and I know how that is sometimes. I'm going to get the warranty here next. Now, for that $35 rebate we gave you, we could give you a two-year warranty for free, so we'll just --

BILL GATES: Recycle the warranty.

MATT G.: And we'll recycle that into the work effort, so that's amazing how that worked out, $35 each. (Laughter.)

So there you see the signature; that was part of this trustworthy thing we want to make sure that we get a signature so that's all valid. And once I get back to the office we can synch this up and all of this information, the warranty, all of the rebate information and the whole service order will show up on our customer service center.

So, Bill, it's been fun doing business with you; thanks for purchasing from Crossroads Appliance.

BILL GATES: Hey, good job.

DARREN LAYBOURN: Thanks, everybody.

(Applause.)

BILL GATES: So I think Matt will be far more effective with that tablet capability. (Laughter.)

The range of things that the tablet is going to open up I think is quite phenomenal. As we've shown it to healthcare firms, to people who do planning work, people who do IT work, they've had a lot of creativity about things we hadn't even thought of, that the fact that you have constant access and that easy way of sharing, working on something together makes possible.

Another key topic I think that's important to mention is what we call trustworthy computing. In this vision of the future people will be using computing in the same sort of fundamental way they're using electricity or the phone network today. And that means the industry and all the key participants really need to step up to all the elements of trustworthiness that that implies, like extreme levels of reliability.

One of the key techniques here is what's called fault tolerant. This is taking a technique that was used by specialized vendors like Tandem and Stratus historically where they had redundant systems and if any one of those failed the work was automatically transferred invisibly to those other systems, that capability, which used to be a niche capability and very premium price, has got to be built into every Windows Server. It's got to be easy in the applications to use the transaction approach that makes that fail over transparent.

Other key advances include actually really scouring all the key code to make sure that there are no security vulnerabilities. This is of great importance and was highlighted particularly last year as people thought through how they'd be using these new systems.

There are a lot of advances in terms of automatically verifying code to deal with these things, being able to have verification, theoretic verification of what the different elements are, and then whenever a vulnerability is discovered making sure that the Internet itself is used to get those updates out there on a very rapid basis. And so by making sure you propagate very rapidly even in the worst case only a few systems would be affected.

For those systems, making sure that there's a few simple steps to have immediate recovery so you're not going back and trying to figure out how to restore things, you simply have that recovery capability guaranteed, that you pick the point in time and everything is set up automatically.

So this is a big issue for us. It touches on things like smart cards instead of passwords. It touches on changing some of the Internet protocols like the mail protocol so that you can't have fake e-mail.

Imagine if somebody sent fake e-mail in your organization that appeared to come from the IT department and said, "Please install this patch or please don't install this patch" and they sent like three or four of those that contradicted each other. By the time the real IT department sent mail, nobody would know what was what and who was who, and yet that vulnerability exists in the basic protocol itself, and so all that kind of e-mail has to be verified in terms of how sent it and that it hasn't been changed in any way.

This will take many years of work. I think ever year you'll see substantial progress on all of the elements that come together here.

Scalability is the one where the progress has been the most dramatic. You know, we can say today that even the toughest problems can be solved through this scale-out approach of using these multiple systems, and the other problems we're making very significant progress on.

So I hope you get a sense of the commitment we've got, a commitment to these business solutions products and it's been very exciting to get the best Great Plains and Microsoft people together and see the things that are coming out of that. The direction we're taking is this interconnectedness approach that really depends on the foundation that we call .NET, a bet on industry standards that's definitely coming into focus, a bet on XML and tools around that, and the investments to make sure that the trustworthiness that's really implicit in all of this is really there.

So I think these years ahead really will be the most interesting in the computer industry. The kind of productivity and advances we can deliver to customers have never been more clear and we're very excited about the opportunity to work with all of you to make that a reality.

Thank you.

(Applause.)