Remarks by Bill Gates
Windows Media 9 Series Launch
Los Angeles, California
September 4, 2002

(Applause.)

BILL GATES: Hey, Jim, you never called.

JAMES CAMERON: I liked take 92 better.

BILL GATES: All right.

JAMES CAMERON: Maybe you want to stick to your day job as a software genius.

BILL GATES: All right, we'll keep working on the software. Actually, we're very excited to be partnering with you to give you the great digital tools to let you exercise your full creativity.

JAMES CAMERON: Pretty impressive stuff.

BILL GATES: Thanks.

JAMES CAMERON: All right. Thank you.

(Cheers, applause.)

BILL GATES: First I want to make sure that all of you who came here for American Idol know that you're in the wrong theater. (Laughter.) There will no singing, at least by me, here tonight.

Well, this is a big milestone for us. We've worked the last year on a set of new software technologies. And like many new software technologies we had some very specific ideas in mind when we did the work, but we also know that when you create something as powerful as this that people are going to use it in new ways that you don't expect.

All of this fits into an overall vision that we have of the next decade. We think that the decade that we're in today will be thought of as the digital decade. What do I mean by that? I mean that at the start of this decade the role of digital experiences was quite modest. The way that you would pay bills or listen to music or see movies, share photos with friends; all of that was done in a fairly non-digital type approach. There were a few pioneers trying out some of those things but it was quite modest in terms of the broad population.

I believe that by the end of this decade virtually all of those experiences will be done digitally and I mean by most of the population. Photos will be digital. Finding music, organizing it, telling friends about the music that you like or the movies that you like, that will be done on a digital basis, and the PC with its magic software will play the central role.

In order to do that there's a lot of improvements we have to make -- quality, ease of use. We're going to be very busy every year this decade listening to customer feedback and giving them things that they don't even expect, things like speech recognition or handwriting recognition that go into this overall experience.

One factor we have that's very much on our side is the very rapid advances that take place in the chip technology. Chips improve according to what's sometimes called Moore's Law, which predicts a doubling in power every 18 months. And that same type of doubling takes place in terms of the capacity of storage of the disk capacity and in the speed of these optic fibers that are sending information around between different points on the globe at lower and lower cost.

So armed with those kinds of improvements, combined with the magic of software, things that are really impractical today and seem very farfetched will be commonplace in the years ahead.

Now, around this there will be a lot of empowerment, choices for users, a lot of ways of staying in touch and knowing the things that you're interested in that's not possible today.

Well, where are we in this digital decade progression? Well, the PC has just achieved an install base of about a billion systems. That took about 25 years to take place. In just a quarter of that time, the next six years, the second billion PCs will be sold. In the United States over 60 percent of households have a PC and over a third of those are actually in the living room or the family room, right there able to connect up to the large TV display where people gather and watch all the shows or videos that they're interested in.

So that kind of lays the foundation. There are some trends that are quite funny. Take cameras. More digital cameras will be sold this year than film-based cameras. And there the progression in terms of quality and bringing the price down is nothing short of phenomenal, because again it benefits from that chip magic. The chips inside those cameras are doubling in their capabilities at a very rapid rate.

So we want to take this power and make it available for different kinds of experiences. The PC is kind of a magic device because it improves so rapidly. It's an important difference between the PC and, say, things like standard media devices including the TV itself. Once NTSC was picked as a standard for transmitting TV broadcasts that couldn't be changed because all the devices were expecting that format. With a PC because it has a powerful processor and the ability to download new software you can move up, you can move up to much better formats without having to go out and replace all those receiving devices. And so it's a very, very flexible device.

People more and more are engaged with the PC, things like instant messaging, the fact that the PC will be mobile in a tablet form factor or even that with a standard PC you'll be able to carry the display around. You'll be able to control it with a simple remote control.

There are many things that go into this year-by-year process of moving the PC into the mainstream.

The Internet has been a big part of this. The fact that you can reach out and get material of so many types across the Internet has driven PC usage and it's driven broadband connections. Broadband connections are the one part of this picture that's not happening very rapidly. There's no Moore's Law that will bring those prices down by a factor of two every 18 months. But year by year there is progress. Seventeen million homes connected today and over 35 million homes doubling connected over the next three years, and so that's a very significant number of households and certainly it will explode in the latter half of the decade.

So we have a number of the pieces that really make sense here that will move this into the mainstream.

Well, what's it going to look like? Well, in the home you'll have lots of different devices. You'll have devices that fit in your pockets and those will be the successor to the phone or PDA or the media storage device that some people carry around today. It will even have capabilities like being a camera or a digital wallet. It will have GPS location capability in a very beautiful color screen and connected up to this wireless network that then is connected to the Internet.

So we'll have pocket-sized devices, you'll have tablet sized devices that you can carry out that literally are like a tablet, you can take notes on them and send those around. You can read off of that screen and send that information around. You'll have desktop-sized displays, TV-sized displays in many different sizes, including full wall size displays; all of those connected together.

And one thing we need to do in the software is make it so your information is available on all those devices. If you put your photos on one machine they immediately show up on all the other things without your having to go through a lot of machinations to get them there, which is certainly the case today.

So inside the home there will be a network, in many cases a wireless network. Those wireless networks are different than the wide area wireless network in that you don't pay per minute charges. Once you install a several hundred-dollar device it gives you that networking capability in your home to send around video and audio with no additional charges whatsoever.

So the phones in the home, the remote controls, all the different PCs or any displays you have, all of them will let you call up your music list, your photos, your family schedule, look at different videos so the home will feel like one connected environment.

Even your car will be part of this. So if you spot a new tune that you're interested in buying and click on that, we'll use the wireless network to send it out, download it into your car and so as you drive away you'll have that choice to listen to as well. If you're half way through listening to a radio show we'll download the audio automatically into your car so you have the rest of that available as you drive away.

So all the different rooms connected together and being used in this digital environment.

So I'm painting what I think of as a very exciting picture here. It won't happen overnight. It takes time. The younger generation is really where you'll see this at the almost 100 percent level. They've grown up with videogames, they've grown up with the Internet, they're very adept at using these things and we'll push them very much to their limit.

So if we look at where we are today and compare it to that vision all of you can say I'm sure from your own PC experience, "Wow, there's a long ways to go before that's as simple or as high quality as it needs to be."

And media is a good example of that. Media makes a good demo. You know, you sit down, see this thing working, you go, "Wow, it looks like a TV set," but then you'd probably start to notice the screen is a little small, it's a little jerky. Getting to it probably was very cumbersome. And so it's more of a novelty than we'd like it to be. It's moving out of that step but some bigger improvements are required.

Three years ago I sat down with our digital media team and I talked to them about what were we going to do in this next new version. This new version is a huge investment for us; about $500 million of software R&D has gone into the work to go from Windows Media 8 to Windows Media 9. So with that kind of investment we wanted to make sure we were aiming at the right thing.

So, for example, this frustration of waiting for that buffering data, that was clearly something that all of us had experienced and we wanted to get rid of. In fact I'm such an avid user of this technology when I monitor my young children at home I use Windows Media, but, of course when I push the button it says "buffering, buffering, buffering" so I don't know what's going on in those rooms. I want to know right away. So buffering is a frustrating thing.

The images have to not just match what you have on TV. TV is full screen. It's not that jerky, but you've got to move up, we've got to move up to match and exceed DVD-type quality. We have to take low bandwidth connections and even do a TV level job on those and then on the broadband is where we go beyond DVD.

Working on all devices: I mentioned that you'll have pocket-sized devices, tablet-sized, wall-sized, and these things need to relate to each other. You don't want to have a format that only works on one or the other. You don't want your digital rights to say, okay, you can use it here but you can't use it here. You want to go smoothly between each of these things because after all there's a reason why you have multiple devices and yet the content should be there when you want it.

And so this is a huge set of challenges. The quality issues around audio being better than the CD, the video challenges, this is what the teams went off to solve.

We knew that we needed to be in a dialogue with a lot of the people in the industry about were these the right goals and we really appreciate the engagement we've had of people telling us that we needed to have more and more goals and we took those on.

Of course, one thing that came up again and again was the concern people had about our licensing: Will this digital Internet-based PC client media market be one that's characterized simply by piracy? And many people I think appropriately see this issue in some ways as being at a crossroads, because you have many people, particularly young people who have almost gotten used to not paying for the content.

It reminds me of the early days of the PC industry, the hobbyist clubs would get together and swap the software and I wrote an open letter -- this was back in 1975 -- saying that, "Gee, come on, you guys, license some of this stuff. It would sure help in terms of invention and new software coming along."

Well, I didn't write that letter in the most politic form -- (laughter) -- but I think the basic point is the one that we're facing today, and the software industry faces it in a very large way with over 12 billion of piracy worldwide. The media industry faces it with numbers I've seen of over 3.6 billion. You know, it's a very big deal.

As we think about this, and we've put a lot of time into that, we're engaged in a lot of dialogue about this, we see four pillars to changing this situation. And I really rank them in the order of importance that I think they have.

The first is that we've got to make this content available in extremely flexible digital forms in a way that you can pay for it. That sounds like common sense. I mean, after all, people who want flexibility and they're honest shouldn't have to choose between those two things. And yet if you look in the music world this effort is just now being put into place. A number of our partners are building good sites and starting to get to the point where consumers will find those attractive and I think everyone can say that that was unfortunate that that's taken so long to come together to really get a site that's got all the songs that you're interested in and gives you quite a bit of flexibility on your devices without violating the idea that somebody else wants it on their devices that they ought to pay the licensing fee.

So both in the audio market and the video market, working with people to get really deep, really easy to use, honest markets I think that's the top priority. There is progress taking place and I hope in the next year we can say that for all the types of media that this was clearly achieved.

A second element is education, really having a dialogue with younger people or anyone who doesn't understand what the mores should be around appropriately paying to use content. And I definitely see a cross-industry effort that could be put together that would get some information out about this and really driving it home that there is a value that should be respected in terms of the value of content.

Third is policy issues, you know, are there laws that could be improved to let people go out onto peer-to-peer networks and see who's offering up all these songs and see if that can be done in a way that doesn't take away rights that users should have. There are policy issues here and they're part of this four-part program that in some ways is less important than those first two points.

And finally the point that we can do the most on is having technology, technology that makes it clear to somebody when they're taking something in digital rights and makes it very difficult for that to happen. That's this DRM capability where we put essentially an envelope around the content that describes what the person is allowed to do. Are they allowed to listen to it for a year, are they allowed to listen to it in multiple locations, are they limited in terms of the quality of the playback they're allowed; all of those rights embodied in the envelope and then the player sees those rights and honors those and only decrypts the payload when the player is authenticated to be a legitimate player and it's following the policies that are expressed in that envelope.

So there's a lot of work still to be done here but something that's very, very important to us, important to us not only in the software realm but also to make sure that new created content is really built and that the great power of the PC are there to let it be a delivery platform.

Now, there's more to this whole digital media advance than simply the final delivery to the viewer. There are profound implications of this in terms of how the production is done. James Cameron talked a bit about that and he's certainly been a pioneer showing people the way to take these things and let yourself focus on the creativity and even bring down the cost, get the timeframe for doing the work to be shorter and shorter.

Distribution: Getting information out, eventually getting them out to the cinemas in a very protected digital format and saving costs there, having more flexibility there.

The promotional side: It should be super easy for somebody who writes a movie to notify a friend and let them see that trailer and understand what that enthusiasm is about and go from there to understand that's the most convenient way for them to go to the movie theater. So it's not just promoting use on the digital device itself; it's also the whole awareness and letting Hollywood marketing spend be far more efficient, far more targeted, far deeper in terms of the experience somebody gets to find out what it is that they'd like to go and buy tickets for.

We do think that in addition there are new experiences that come out of this. The world of videogames that are very interactive and the world of media today, there will be things that are created that are in between those two spaces, things relating to game shows, things relating to education, things related to discovery and adventure and context. And really the foundation we have here is just a kick-off point to let people take that and go in very new directions.

So today is a big milestone not just for Microsoft but for all the companies involved in the world of media, particularly those that are helping push forward the use of digital media.

In particular, what's happened today is that at the start of the event we had here we put out onto the Internet the beta of the Windows Media 9 Player, so it's out there at Microsoft.com/WindowsMedia. We encourage people to go out and take a look at it, play it out. You're going to get a glimpse of that tonight and I think that will motivate you to really want to have a hands-on capability.

There's a lot more here than just a player. There's a lot of different pieces. When I tell you that we spent a half billion on this you can imagine that's a large group of very talented software people putting these pieces together and another large group of people testing that and another group working with partners to make sure that it's in the form that they can utilize in the best way.

So it includes a new server, a server whose reliability and cost characteristics are dramatically improved from what we had before.

It includes the new format that you'll see are quite magical just by themselves: the player with its rich new options, the encoder that's down to the media companies needing to be able to do the creation very easily, the Digital Rights Management I talked about, a very key piece of this.

And the same Digital Rights Management that we're talking about using here for music and videos, that's the Digital Rights Management that we're going to use for business documents. And so if somebody wants to restrict, say, an e-mail to only to certain people the same infrastructure that understands this envelope and the encryption will be used for that, so it's a very important technology to us across all types of content.

And finally a Software Developers Kit that takes all this technology and simply makes it a foundation so that people instead of duplicating what we've done with that investment, they can start using all of that as a foundation for what they build on. We've got a lot of people here today who've done exactly that and really surprised us with some of their neat things.

Well, since this is about great media experiences the best way to understand this is to actually see it at work and so I'm excited to ask Will Poole, who's the Vice President who runs our new Media Platforms Division, to come on out and give us a little quick tour of some of the cooler things we've got in Windows Media 9 series.

(Applause.)

WILL POOLE: Thank you, Bill.

BILL GATES: Take it away.

WILL POOLE: All right. Well, we've got about a dozen pretty interesting things to show you here tonight and so I'm going to start going through them. And I hope that you're going to find some of these things to really frankly just amaze you in terms of what we've managed to accomplish with this technology over the past three years of development.

As you might have guessed, as you heard Bill's list of things that we've got to get right, one of the top items on his list was this thing called buffering. That's streaming-geek talk for loading the data down there and getting ready so you can play back the video, play back the audio and make it sound good. And as any of you know who have used streaming before, you know that this thing called buffering is probably one of the reasons why it hasn't made its way to mainstream entertainment because buffering isn't entertaining.

So here we just saw a little bit of buffering going on here, in fact the whole time I was talking we were buffering and we are loading, this is running off a server somewhere in the back there and it's got a really fast network connected up to this client but it still had to buffer and it took a long time. And frankly if you get a DSL connection or a cable connection and you still have to buffer it's kind of a drag.

So we said let's fix that and we did. By the way, this audio is turned off so you don't have to listen to this guy; I don't know what he's saying. But let's go over here and take a look at what happens with the Windows Media 9 series. This is a new player connected up to the new server, which is part of the Windows .NET Server.

When I click it starts right off. (Applause.) That's really what it should do. This gives you a TV-like experience. When you turn the knob on your TV it doesn't buffer. When you turn the knob on your player it ought to not buffer; it ought to just play.

Now, we can't do this for every user; I wish we could. We can do it for people that have DSL or cable. And over time that will be an increasingly large percentage of people connected in the world.

Now let's see what happens when we put this technology to work in a real world example.

Here is a mockup that we created for NBC to show how they could make use of this new technology to give Web surfers a channel surfing preview of their fall lineup. And this is something that they really would not have even tried to do before because the experience, if I had to buffer in between each one of these things, would just not be that great. But let's see what it looks like now.

(Video clip.)

That looks interesting. Let's try the next one. (Video clip.) Maybe another one. (Video clip.) Well, maybe Hidden Hills is better; let's go back to that one. (Video clip.) Ah well, maybe Good Morning, Miami; we'll go to that one. (Video clip.) So you get the idea. (Applause.)

So we're pretty excited about what we can do to help make streaming a better entertainment technology, a better technology for the Web.

Well, now let's change gears a little bit and talk about how we can apply this same set of technology base not to entertainment in this case but to a very hard problem in the enterprise, which is how do you serve the financial services industry and help them overcome a significant problem. And that problem is how do you get information from a company that's doing let's say an earnings announcement or from an analyst doing a morning call, how do you get that information to the people that you want to have accessing that information and only those people, how do you get it in an incredibly high quality format and how do you get it to them efficiently and live or on demand or whatever form the content comes in.

So what we've done here is worked with a partner called Roth and what they have done is to put together a financial broadband portal. And what we can do here is to go and take a look at what content is available to me as a target, one of their customers, what content is available to me and I simply click on it. You see there's a key there, which is telling me something like it must be secure. So when I come in here I now need to authenticate and I'll put in my name and a password and submit and play. (Video clip.)

So what we have here is connected up to a live Web cast from Allied Domecq and not only do we see very high quality video streaming over here, but we also see PowerPoint slides coming up as they talk.

And what we've done here is we've enabled live multicast streaming of a DRM protected file. This is a first in the industry and it's one that we think is going to really add a tremendous amount of value to enterprises who want to have higher quality, more secure and cost effective corporate communications.

(Applause.)

Now I'm going to come back and we talked about broadband a moment ago. There is a very large number of users out there who are still narrowband and there are some of them that are on broadband that kind of behaves like narrowband when a lot of people start using it on Friday night. And what that means is they have to deal with lower bit-rate content.

So what we have now is a new technology that is aimed to take advantage of the power of the PC to take advantage of the ability to innovate in the client software on the PC and take the same stream of content and play it in a much better form, a much better experience for the user.

So what this means is that a lot of content that comes out there today is in a low frame rate, maybe 10 or 15 frames per second and that experience of seeing that content is not great, particularly if you're used to high quality entertainment content.

So what we do is we use the power of a new Pentium processor and interpolate or create new frames in between the ones that we get and what we get is a much, much smoother and better experience. So let's take a look at what this does to the video.

You see on the left side there ten frames per second content. This is about VHS quality, 320 by 240, and you see on the right in the new player the exact same content playing but with video smoothing enabled. And I hope as you look at that you can see that is just incredible; simply loading a new player on your PC is going to give you that improvement in image quality, that improvement in the experience.

(Applause.)

So that's video smoothing. Now that can be applied to talking head content from a news broadcast, that can be applied to movie trailers, to music videos, anything that makes use of reasonably small resolution content, and not only can it make the experience better but it can also enable the content provider to send the content out with less bits because they send it out at less frames per second and still get the same experience and that means they reduce their costs.

All right, now we're going to look at another innovation in the area of low bit-rate technology.

Many of you I'm sure have listened to Internet radio and when you hear Internet talk radio you hear simply voice coming over Internet radio, it sounds pretty darn good. And, in fact the very similar technology that's used for voice on Internet radio is used on your mobile cell phone. And the data rate for that tends to be around 8 kilobits per second, very slow data rate, but that's what's required to be able to efficiently go over cellular networks and also to be able to run Internet radio and not go out of business.

There's a problem though. The codecs that can deliver down to that data rate only do voice and there's a lot of mixed content out there that's a combination of voice and music. The music could be used for audio branding like at the beginning of NPR's All Things Considered, or it could be used for just simply enriching the programming combined with the voice.

Now, what I'm going to show you is a clip using what we call yesterday's technology, which is an NPR clip, and I want you to listen to the quality of the music and the quality of the audio. You'll hear a rather distinct difference. (Audio clip.)

Now, those of you who have listened to NPR a little bit you listen to that and you cringe, and those of you that worry about what's going to happen here is I'm going to ask the audio guys to turn this up a little bit so you cringe even more. Let's listen to it again. (Audio clip.) Not so good, huh? The voice is great; the music is really pretty bad.

Now let's see what happens when we look at Windows Media 9 series WMA voice. What we've done here is at the same data rate to have an adaptive codec that can handle intelligently both music and voice and give you a great experience at that incredibly low data rate for Internet radio or modem-delivered content. (Audio clip.) A pretty big difference, huh?

(Applause.)

Okay, so now I'm going to change the bandwidth yet again, jumping around, and what I want to do now is talk about moving up into the standards world. And Bill talked a little bit about how on the PC we have the ability to innovate rapidly and we can create de facto standards and we can take advantage of increasing processor power like the new Intel 2.8 gigahertz machine that they announced just last week and that we're showing of here in the pavilion and has just got amazing capabilities in the client, we can take advantage of advances in encoding technologies and algorithmic work. And what that means is that while we still find a tremendous amount of value in standards such as MPEG 2 and MPEG 4 and we're going to continue to support them and make use of them, they will create a tremendous amount of revenue for people in this room, particularly looking at the success of DVD, it couldn't happen without the standard, we also recognize there's an opportunity to innovate and move forward, and we need to do that at Internet speeds and really to take advantage of that to enable our content provider customers to address new consumers over lower bandwidth connections or to get better experiences over conventional media like DVD.

So what I'd like to do now is to roll a tape, and this tape is going to compare the standard def in coding and it's going to look at Windows Media video 9 and MPEG 4. Now, a certain executive recently said that their implementation of MPEG 4 was better than Windows Media and, you know, they threw down the gauntlet, we picked it up and said it's time to take the challenge.

So if you look at the split screen with Windows Media on the left and MPEG 4 on the right, which has the QuickTime 6 implementation of MPEG 4, I think most of you would agree that the image quality is pretty similar. Some of you might argue one is a little better than the other. I'm not really that concerned about which one is a little bit better. What I am concerned about is the data rate difference. Take a look at that. You've got 750 kilobits Windows Media 9 versus 1.5 megabits MPEG 4. So what we're seeing there is that we're delivering about the same quality at one half the data rate of MPEG 4.

Now, this is not a cooked test. We have this available for you on a CD or a digibeta tape. We'll give you the source material. We'll give you the encoding parameters. We'll give you absolutely everything you need to go and recreate this in your lab with this content or some other content and see just how well we can do comparing at approximately one-half the data rate of MPEG 4.

(Applause.)

Of course, the gold standard in content right now in digital content compression has been MPEG 2. And here we're going to show you the same thing, the same concept but we're running at one-third the data rate of MPEG 2. And what you'll see here is 6 megabits, which is about standard for the encoding rate on a DVD, and you'll see Windows Media version 9 running at 2 megabits.

And again we've shown this to many influentials in this industry and I can say pretty conclusively that we believe that at standard def rates here we're running at one-third of MPEG 2 and delivering the same quality.

The really exciting thing is that if you think about moving this up to high def data rates it means that we can now take an entire high def movie, 720p, potentially all the way up to 1080p and put that on a current red laser standard DVD media. And that means we can take advantage of all of the infrastructure that's been built to build and print and stamp DVDs in high volume and put a completely new and high quality experience on that DVD using our new generation video Codec.

(Applause.)

All right. So I hope you've now seen that we've got some technology that applies to low bit rate for audio and music combined, at the very high bit rate to get up to high def and we'll see some more of that a little later one, but what I'd like to do now is to invite Dave Fester, who's the general manager for the Digital Media Division, and Dave is going to come up an show you about how the new player, Windows Media 9 player can really pull all these technologies together, as well as some other interesting experiences and give you a real upgrade of the digital media experience on Windows XP. So, Dave? (Applause.)

DAVE FESTER: So we're excited to show you tonight our new Windows Media 9 Series Player. We really wanted to do four things. We wanted to make an amazingly fast player, make it amazingly flexible for the consumer, make it smart, put intelligence inside it so it can do your work for you and offer a way that consumers can now discover the premium content out on the Web one click away.

So let's take a look. Here I've got a song here on my desktop. It's a popular song out there right now. Let's go ahead and double click on it. (Audio clip.) Here I've loaded Bruce Springsteen's song, but I did mention fast. Did you see how fast that was when I launched it? Let's do it again and make sure you see it. (Audio clip.) Look at how fast that launched the player and got it going. That's one of the core tenets, get it going really fast. (Applause.)

Now, as you can see the player looks a little bit different. In fact, we've got this nice, rich view now that shows you more information about Bruce Springsteen. Customers told us, "Hey, give us more metadata, give us more information." So now we have this info center view that gives you everything about the artist or the track of the CD that you're looking at. Here I see some headlines about Bruce Springsteen. I can take a look at artist information for Bruce. I could take a look at album information all about the album I'm currently listening to. I can even put lyrics in here if I'd like to have lyrics when I listen to it. I can look at related music, so if I want to find some additional music that's recommended similar to Bruce I could go ahead and click that and buy the CD and play it right there. So that's very interesting that we can immediately get that content; it's a rich view.

Well, for those that still love the visualizations it's not far away. You'll see here that we can quickly go to my visualizations, go up to a nice classical look of the player and it's still there.

Well, we said we wanted to do some things that were fast and flexible. What you'll notice off the top here in the Now Playing I can now with one click get access to all of the content on my media library or in my computer so I can get access to the albums, the artists, the genre, the play list, one-click access to all my content right where I'm playing.

Well, if that isn't enough we actually respond a little bit more with one of the number one features that people told us as we talked to consumers all over the globe, and the number one feature that they told us was how do you create this ability to cue up the music so that you can quickly cue it up. So I've got an album here that's one of my favorites, and it's Eric Clapton and I'm just going to click on it and say cue it up. You're going to notice when I click cue it up it automatically adds to my automatic play list here and it's now got me the ability to play that right at my fingertips. And, of course if you want to adjust those at any point you can drag and drop those for your listening pleasure and enjoy them in the order that you like. So we think that's pretty cool.

Let's keep going. One of the other add-ons that we've done is we've made this player amazingly extensible. You can build plug-ins for it. In fact, we've got a couple of plug-ins directly that are built into the player and one of those is one that we call cross fading. Cross fading is the ability for you to quickly cross fade between a couple of tracks. So I'm going to go ahead and start off this Before You Accuse Me, which is a popular Eric Clapton song, bring it up a little bit -- (audio clip) -- and I'm going to fast forward. Now you're going to see how we cross fade over. (Audio clip.)

So there you saw the effect. You can easily be your own DJ, smoothly bring in the next song that you want, there you go.

(Applause.)

Well, one last thing that we wanted to do with the player is lots of people like the look of the player, they like the ability to play in it, they want to do more. So we gave them the ability to size it and that's fine, that's a pretty good feature that we've had for a while, but we did the number one thing that consumers want and that was get the Media Player out of your way, dock it down to the task bar, put all the controls right at your fingertips, there they are, right convenient location. (Applause.) Of course, not to be outdone, one click away of all the content again, so that's pretty cool.

Well, let's bring it back up. That was a little bit of the music part. Now let's switch to video. I've got a CEO of broadcast that some of you might watch internally in an organization or you might have seen some broadcast that's out on the Web. (Video clip.) Well, here's a typical CEO of broadcast; pretty interesting that we see this CEO, we've got to watch his talk. But you know what, it's too slow. In fact, I just can't sit here and watch this video while I'm on my corporate intranet. I wonder if we could do some things to speed up that video.

Well, out of Microsoft Research we've worked on a technique that can speed up that video yet preserve the pitch of the audio. So let me stop that and I'm going to go up to my play menu and let's simply say turn on the play speed and let's speed up Frank, who's the CEO here.

(Video clip speeded up.) (Laughter, applause.)

Well, if you think that's good, in the afternoon you don't have time for this. You don't have time to watch Frank any longer. So we can bring open a play setting and we're going to boost it up quite a bit. Let's go ahead and go kind of to the extreme about 1.9 times the normal speed and stop it and go ahead and play it. (Video clip speeded up.) So you get the idea. And, of course you can also slow it down. (Video clip slowed down.) (Laughter.) So there are some that talk too fast. Maybe I am one of them; maybe I'm not, but you can speed it up, you can slow it down to your desire. That's fast and that's flexible.

We added one last feature that we're really excited about and this is the ability to give consumers access to premium content, and, in fact, we did so in such a way that we put a new tab right on the Windows Media Player that's called Services. It's one-click access to the most popular premium services that are out on the market and, in fact, tonight we're announcing four. We're announcing that Press Play is in the services tab, Full Audio, Entertainer and Cinema Now. We think it's totally integrated and totally cool and, in fact, to that end I'd like to have what I would call the master of cool come on out and show you how cool this is and how integrated it is and simple. So I'd like to welcome LL Cool J. Come on out and show us. (Cheers, applause.)

LL COOL J: Thanks, man. (Applause.) How's everybody doing? Welcome to the future. (Laughter.) It's a wonderful thing, the future, that it is. So we start by typing in my name and my little secret password, which I won't tell anyone. We sign in. Okay, now we're ready to roll.

What do we want to search for? What do you think? Garth Brooks? Nah. LL Cool J. (Laughter.) "LL Cool J" yeah. Let me see if I can spell his name. Yeah. Let's search for this guy.

Oh, see all these wonderful songs here. These are all by LL Cool J.

DAVE FESTER: Right. (Laughter.)

LL COOL J: Okay. Let's start with my new track, Love You Better, and let's see if we can stream it. (Audio clip.) Instantaneously, ladies and gentlemen. Instant streaming; how do you like that? Let's have a round of applause for Microsoft. (Cheers, applause.)

I just think that this is really, really amazing and it's user friendly, because me, I'm only a step away from brain dead so this is amazing to me. (Laughter.) I am far from a computer geek, ladies and gentlemen, so if I can do this the whole planet can do this. (Laughter.)

Okay, now we go on back to Cali, classic, Momma Said Knock You Out, let's say we wanted to download these and maybe move on to something else. We click on, oh, downloading, pending, all right. Okay, now once we do this we complete it, we could close that up and let's see what's next. Let's see what happens there?

AUDIENCE MEMBER: Did you pay for that?

LL COOL J: Absolutely not. (Laughter.) Yes, that is one of the amazing things and that's one of the main reasons I'm here is, you know, you have an opportunity here to not only satisfy the public and satisfy the fans in terms of them being able to download music and enjoy the music but the artist actually gets compensated for all of their hard work, and I think that's a wonderful thing. (Cheers, applause.) And I think that Microsoft is to be applauded and I think that we should all be proud because, you know, artists, musicians, actors, all of us we work really hard to make this content and to entertain the planet and it's nice to be able to get a cheeseburger at the end of the day. (Laughter.) So this is a wonderful, wonderful thing, a wonderful thing.

DAVE FESTER: You know, we've got this cool new player, in fact a couple of them that allow you take your music with you.

LL COOL J: We have here a Nomad Jukebox by Creative. This is an amazing new piece of equipment; 20 gigs, that's amazing, and I think I'll actually download a little LL Cool J and see what's going on with this.

DAVE FESTER: I think we've got to just turn it on here. There you go.

LL COOL J: Yeah, yeah, and I'll click that on. So should we bring this back up, turn it back on.

DAVE FESTER: So this is new. This is instant auto play with all your devices, bring it in and make it easy.

LL COOL J: It's incredible. It goes right down, you download it immediately, you can walk around town, you can have a great time, you can do what you want to do. Of course, you need your friendly set of headphones to make sure that the mission is complete after you download it and click okay and it looks like things are going well. We'll go to media library. Let's look for LL Cool J.

DAVE FESTER: Let's go back to that.

LL COOL J: You want to go back?

DAVE FESTER: Yeah, go to the copy PC, you downloaded them, there in that little track, a little pull down right there.

LL COOL J: Oh, oh, oh, LL Cool J first track.

DAVE FESTER: There you go. That's where you downloaded it to.

LL COOL J: There it is, Momma Said Knock You Out, we click over it. Let's click one of these off just to move on and copy, copy. Come on, come on, come on, come on!

DAVE FESTER: Let's do one more. We've got to pick the new device, just do a pull down right there, right over here and hit cancel.

LL COOL J: Uh-oh. See, ladies and gentlemen, that's brain dead. (Laughter.)

DAVE FESTER: Hit the down arrow right there.

LL COOL J: Down arrow.

DAVE FESTER: Pick the Rio Sport, the cool new Sport.

LL COOL J: Okay, okay. And copy.

DAVE FESTER: And copy. There we go.

LL COOL J: There we go. It's copying.

DAVE FESTER: It's copying right now.

LL COOL J: Let's have a round of applause, ladies and gentlemen. (Applause.) So this is true that a layman can do it. And like I said, if a layman can do it, anybody can do it. So all of you geniuses out there in the audience and in the media, come on down and give it a shot. It's a great thing. It's a great product. I'm glad to be a part of it. I support it 100 percent and I think that artists around the planet will be very happy about this situation.

And now I'm going for more --

DAVE FESTER: Here's your cool new tracks.

LL COOL J: -- and see what we're doing. Let me see if I have some LL Cool J coming out October 15th on here. (Laughter, applause.) Yeah, that's LL Cool J, that new album, October 15th. That's very good.

DAVE FESTER: All right.

LL COOL J: Similar to Ludwig Van Beethoven, thank you very much. I love you. Thank you. (Applause.) Welcome to the future! (Cheers, applause.)

DAVE FESTER: So that's great. We've seen a good look at our new player, just a little bit of it. There's lots more. Now, Will showed a lot about fast streaming. He talked a lot about the dial-up experience. He talked a lot about the playback experience. Well, now let's go to a Web site that's bringing it all together. And here's an example of a Web site that is XPN. XPN, EXPN is doing their X Games 8. And imagine going to a Web site where you can really bring the media experience together.

So here you see a link that says Get Xtreme Media. Well, what does Get Xtreme Media mean? Well, it means that you're going to get Flash ads for the first time in our new Windows Media Player 9 Series. It means that you can deliver good business models to pay for that content.

So here we go. We'll go ahead and click on Get Xtreme Media. It brings up the player. Here's a Flash ad, very popular on the Web. You can panel that data type right inside the player, gets the ad going, pays for the content and we keep going.

Once it's done it automatically switches to an HTML view inside of the player where you can get this Xtreme Media view. I could buy the official X Games 8 CD if I want to or DVD, or if I want to I can sample the content on this Web site very immersively. So here I could just channel switch between the different channels that they've got on X Games, so here we are seeing some wakeboarding, my favorite sport, and if I want to I can even go to BMX and click on that channel and get the full Xtreme experience.

But you'll notice that before I went to the particular app with BMX a popular television ad that is now dynamically inserted into the content and repurposed streaming on the Web is able to appear directly in the experience.

So we now support Flash ads, we support full channel switching on a Web site and you can see this tight integration directly into the Media Player. This is a good example where we can just get extreme media and we think Windows Media 9 Series makes it possible.

WILL POOLE: Awesome. Dave, thank you very much.

DAVE FESTER: Thanks, Will

WILL POOLE: All right. (Applause.)

So next we're going to talk about home theater, 5.1 high-def. And I think rather though than hearing a technologist from Redmond that maybe you might prefer to hear thoughts about the future from maybe a producer who would be rather well known from the UK, from London, in fact, and this is the founder and chairman of a major studio. They've produced some amazing soundtracks for the likes of Gladiator and Harry Potter and The Fellowship of the Ring. But the founder here is probably a little better known for his work as the producer for the Beatles and, in fact, what I'd like to do right now is to ask you all to welcome the Fifth Beatle, Sir George Martin.

SIR GEORGE MARTIN: Thank you, Will.

WILL POOLE: Thank you for joining us tonight.

SIR GEORGE MARTIN: I thought I might add work to the argument that music in particular and innovation and creativity in audio production has always been one of my passions. And I've always been fascinated by new technology as it comes along. And it's been coming along for a long time, as far as I'm concerned, because way back in the dark ages of Sgt. Pepper we used to have to make it up as we went along. We had no wonderful things that we have today. We created our own sounds. Synthesizers didn't exist, computers didn't exist.

And as each development came it was like opening a toy box and finding a wonderful new toy that you could work with and make the audio better and better. And it's been wonderful for me to see these developments as they've come along.

And now we're in the real of DVDs with 5.1 surround sound and those of you whose wives are talented enough to put a few extra speakers in their room will know what I'm talking about. (Laughter.)

Well, I love surround sound. I love 5.1. I think it's great. And, of course it's not new but what is new is these new codecs that you all are now producing are so efficient that they can actually deal with high quality surround sound, 5.1 audio, even down from the wind, and that's a very significant advance. It means that the quality of sound is not going to be impaired any more if you're downloading. It means that we are getting better and better value for our money, and the people who actually pay our salaries, the guys who buy records and buy music, will be enjoying music of higher quality than they've had before. I think it's very exciting.

WILL POOLE: Great. (Applause.)

SIR GEORGE MARTIN: Thank you very much.

WILL POOLE: I've got to say that we're excited that you're excited and we've been really working pretty hard to make this a reality on the PC, to make it a reality for the millions of Internet users who are such enthusiasts about music.

So what I'm going to do is show you a little bit about what's happening here. And we're going to start with music. What we've done here is to create a Latin mix and what we're doing here is getting the idea of being inside an orchestra. (Audio clip.) So we're able to give with 5.1 surround a pretty nice musical experience. And again, as you said, this isn't new, right, it's been coming along with DVD audio and SAPD but what is new here is that we've got the data rates down so that this can actually be distributed and downloaded reasonably over a modem or distributed real time over DSL or cable.

So that's the first thing we've done is with music. Now let's see where we go next. (Applause.)

Radio is not a place that's an experience that you value with 5.1 and, in fact, when you think about radio you think about an AM car radio, you think about generally low fidelity.

Well, our friends at NPR are incredibly creative and they've really pushed the envelope of adding soundscapes and music and sound production to a radio journey that they take you on.

So here's an example where NPR has created through their expedition series a use of 5.1 that I think is just phenomenal.

(Audio clip.)

So here's a case where we're taking a technology that's been around for obviously from film and applying it not just to music but also to a very creative radio production.

Now, obviously your studio makes soundtracks; you've made some great ones. And we think that as you look into soundtracks for the next generation of home theater or obviously for digital cinema, which we'll see some more about in a few minutes, you need to actually get up to 7.1, 8 channel discrete sound, in fact, going up to 8 channel discrete at 24 bit, 96 kilohertz sound. So let's take a look at what that sounds like.

(Audio clip.) (Cheers, applause.)

Now, my guess is you have a slightly more sophisticated view of what a surround sound track should sound like but that really does show off what the possibilities of the technology are and gives you an idea of all the different applications of where we're taking 5.1 in the future of home entertainment.

SIR GEORGE MARTIN: Well, it's marvelous. I think that when it comes to dealing with orchestral sounds I think as I speak the second Lord of the Rings film is being scored in my studio in London with Howard Shawn and a hundred-piece orchestra, and there's nothing more thrilling than to hear the great sounds of an orchestra like that. And when I hear it in this version too I know I won't be disappointed.

WILL POOLE: That's great. All right. Sir George, thank you again for joining us tonight.

SIR GEORGE MARTIN: Thank you, Will. (Applause.)

WILL POOLE: All right, so we know it sounds good, it looks pretty good. Let's now see what happens when we go and scale the codec all the way up and apply the best encoding technology we have to some really great high-def content.

What we have here is a clip from the Fellowship of the Ring. (Video clip.) (Applause.)

BILL GATES: So, Will --

WILL POOLE: I think that's pretty amazing. Yes, Bill?

BILL GATES: It looks good but will that just be in home theaters or will it be in the cinema as well?

WILL POOLE: Well, I certainly hope it will be in my home theater. I'm pretty sure you can do it, but I'm aspiring to it myself. (Laughter.) But you bring up an interesting point and getting into the digital cinema and actually rolling them out is something that many people in the industry are working hard at. And the things that are going to help digital cinemas happen are reducing the cost of equipment to run in the cinemas and having security wrapped around high-definition video that can run on that off-the-shelf affordable equipment. The projectors still have a ways to come down in price but we think this is actually starting to make a lot of sense.

And, in fact we've partnered with BMW and you may be familiar with the rather innovative marketing work they did with BMW Films last year and what they've done is to get some great directors together and they created a Web film short and it was a tremendous success. They had over 13 million of these short films were viewed over the last year, and that's basically 13 million people decided to watch what's effectively an advertisement for BMW. And they passed them around to their friends and they traded them and this is just a fabulous success story for them. They showed the way to deliver advertising in a new form, which is this combination of entertainment with soft advertising connected together to deliver it cost-effectively over the Web. This year they want to take it to the next level.

So what we've done in working with BMW Films is to have a digital cinema series where they're going to roll out their next three films, as well as screenings from eight independent films in a fully digital cinema environment across the United States, over 25 theaters will be installed over the next year and this will be rolled out. And it's something that I think is going to be really powerful and a big win for BMW as well as for the theaters. So let's take a look at what that looks like.

(Video clip.) (Applause.)

So that's a high-def encoding of a film that you might have streamed or downloaded over the Internet last year. You're now going to see all of their new films coming out in this high-def form and we think it's incredibly powerful material and a great combination of advertising entertainment. So that's where we're going.

BILL GATES: That's super. That's looking good, Will.

WILL POOLE: Thank you.

BILL GATES: Thanks. (Applause.)

Well, there's lots more to show but we picked those highlights and we hope you'll download it and try it yourself.

A simple summary: It's the ultimate playback experience, lots of data, easy navigation, rich experience. The audio and video we're very proud of and it's a broad platform, lots of things that are being built on it.

The key to this is the partnership and we have partners, software partners, hardware partners, media partners and service providers, over 60 different companies, many of whom have been working for us for a long time and are already showing off in that partner pavilion the work that they've done building on the platform. And so this is where a lot of the action is, thinking through different scenarios, music creation, TV studios, new forms of content that the third parties will be driving that forward and we're thrilled to see where they're going to take that.

So the next wave starts today. This is the milestone. We hope you will take time to go over to the partner pavilion. We hope you will stick around and join us. We've got a little bit of a celebration with the Funk Brothers coming in to cap off what is this big day.

So thanks very much for coming and thanks for your support for Windows Media.

(Applause.)