Remarks by Bill Gates
MSN 8 Launch
New York
October 24, 2002

ANNOUNCER: Ladies and gentlemen, please welcome Microsoft's Chairman and Chief Software Architect, Bill Gates!

(Applause.)

BILL GATES: Good morning. Thank you. Well, it's great to see you all here to help us launch MSN 8. MSN 8 has been many years in the making, as we've sat down and learned about what users wanted in an online experience. It's really a breakthrough product for us. I hope you've had a chance to see some of the reviews where MSN 8 has been coming out on top again and again. And it's really about the magic of software, taking software and applying it to the things people care about to make the online experience better.

We have a lot of ways that we're showing people how serious we are about this release. We've got over US$300 million in marketing behind it, we've got a lot of new partnerships that are behind it, very important for us.

But many people have said to me, "Well, Bill, are you serious about this, what are you and Steve going to do to help MSN 8 be a success?" And I thought it would be important to get that question out of the way right at the beginning, so let me run a video to show you how serious we are about this product.

(Video segment.)

(Cheers, applause.)

BILL GATES: So we'll do whatever it takes. We're very competitive. (Laughter.)

Online services, on a serious note, are increasingly important. Not only are more people signing up to online services, people are doing more things online. A few years ago something like bill paying was a novelty. Well, today a third of the people online are doing bill paying. And we think we can make that far easier, save people a lot of time, save the cost of that and make it so that almost everyone does that.

Instant messaging is an explosive capability, and yet we're just at the beginning of what's possible there. Things like browsing the Internet together when you have an instant messaging connection, that's one of the new things we bring with MSN 8.

We think that over time that all real time communication, whether it's phone, video, sharing things on the screen, will get hooked up to online instant messaging; so a big area of innovation.

We see people also moving from narrowband to broadband and as you move up to broadband, the possibilities of what you can do online are even greater than before.

And so, year by year, people are being drawn online. The people who made predictions three or four years ago, in some ways they made two mistakes. One is they thought a lot of things would happen overnight that were going to take time, and the second was that they underestimated that as you had this year-by-year increase in activity and number of people online, how important that would be, how mainstream this activity would become. And so our commitment is to keep investing in this year after year as it moves into the mainstream during the course of this next decade.

Well, what is MSN 8? It's pretty simple to describe. There are three different ways to get MSN 8 on your PC. The first is the classic dialup access connection. We charge $21.95 a month for that. That's where we have most of our users today, all over the U.S.: a simple connection.

The second way to get MSN 8 is you can sign up for a Microsoft broadband offering. We have a lot of key partners here, people like Verizon and Qwest who will allow us to offer broadband across the U.S. and the price, depending on where you're located, will range from $39.95 up to $49.95.

We're introducing for the first time a third way of getting MSN 8. This is called "a la carte" or "bring your own access," and here you get the full power of MSN 8 as a peer software offering. And so, no matter what ISP you've selected, narrowband or broadband, and often it will be broadband with a DSL or your local cable company, you pay us $79 for a year or $9.95 a month and you get all the capabilities that all MSN 8 users have. And, of course, if that's on broadband, it will be optimized for broadband.

The MSN online concept expands to all devices, though. Microsoft, through its early work at WebTV, has been a leader in allowing online browsing through the TV as well. In fact, we have an offering where you can have a WebTV, an MSN-TV TV connection and a PC connection all for the same monthly fee. And so we have over a half million people actively using the Internet that way. They're also MSN members.

And then other new devices as they come along: the smart phone and the PDAs that are connected up. As you use MSN to customize the information you care about, that's shared and so the MSN mobile feature has lots of synergy so you get the things you care about no matter which device you're on, the PC or the telephone.

The strategy around MSN is very simple: Microsoft believes in the power of software. We believe that software can do an increasingly good job of bringing the information to you that you care about and not having to force you to go through a lot of steps to get at that information.

The Web has come a long way since 1995. The content has improved, but the software that lets us work out on the Web has also improved very dramatically. Things like collaboration that wouldn't have been possible in the past -- setting up your schedules, organizing a group of people to take a trip where you need to coordinate the different schedules -- these are things that we now basically take for granted because the software has gotten so much better. But from 1995 to 1998, that was a very early primitive generation. From '98 until earlier this year that was kind of a second generation. And so MSN 8 in similar efforts represents sort of a third wave of making online services very, very capable, finally bringing into the mainstream things like parental control in a way that's actually practical, that will end up being used instead of just being a feature that people talk about but has limitations that mean that when it really comes to practice it doesn't meet what people need.

So we're building better and better software here. We'll have a lot of partnerships with leaders in the content area. In fact, we'll have some news about that as part of our event this morning. We understand that we are not a media company and so this partnership approach really gives us the best of both worlds, having channels that partners are pulling together, driven by the software that Microsoft creates. And so it's way beyond the simple browsing that you would have thought about in the past.

We're going to drive online usage, both in terms of the number of people and the number of hours online in a very significant way because of this, more and more activities that make sense.

This morning I want to take you through three different scenarios around MSN. We want to go through better browsing, we want to go through better communications, advanced communications, and online safety.

But let me say before we dive into these that the philosophy here is to take the new software and try it out with people, to make an investment in having experts go into people's home and sit there while they're using the Internet and see what's frustrating, what's tough, what things do they really like that we could make even better. And so it will be a constant process and we expect to have yearly releases that drive this forward.

So the first breakthrough area that I mentioned is the better browsing. Let's go ahead and take a look at how MSN 8 brings browsing to a new level.

(Video segment.)

BILL GATES: Customization is a very core concept for MSN 8. In fact, we can watch the things you're interested in and help suggest to you how you might customize your experience. I remember exchanging mail with the MSN team about how for sports scores they weren't making it simple enough to have exactly the information you wanted. Well they really nailed that one with the design of this dashboard, a small strip of a screen that gives you the at-a-glance information that you really care about.

We've been willing to take the user interface and make a lot of changes, and yet we think people will get familiar with what we've got here in literally just a few minutes.

Another big change for us is that the first page you see in MSN 8 will be the one that you've customized. Back in the previous MSN, we were worried about that because we didn't know if we could deliver that with enough performance. And so there's been a lot of work on the servers and the technology to be able to have the best of both worlds: the speed of an immediate page coming up and yet having it be the page that you care about.

Another aspect of MSN 8 is that we have software that runs on the PC itself. The boundary between what you do online and what you do on the PC no longer exists. If it's an activity like looking at your financial portfolio, some of that information and interface is there on the PC, but going out and seeing your bank information and your stock quote, that's done online. But we've made it so that as a user you don't have to think about switching from running an application on the PC to going online; it's all one very integrated experience.

The same thing is true for browsing photos. You have online sites where you want to have nice photos, but you might want to touch those up, you might want to make changes to those. Well, we have built-in software, what we call Picture It! as part of the MSN 8 offering. And so you can navigate right to those capabilities from the e-mail that you're putting the photo into or the family Web site that you're creating and it's a seamless experience.

The same thing has been done with Encarta. That's our encyclopedia offer. Everybody who signs up for MSN 8 gets full access to the learning and research capabilities that are in Encarta. And even though we have a lot of that information locally on your machine, we're always checking to see if an article has been updated or changed so that you've got the latest information and so again a holistic experience.

So browsing really is quite a bit different with MSN 8.

Now, browsing is about a third of how people spend their time on the Web. The biggest thing they do is communicate; e-mail and instant messaging are really huge things. And although people love this stuff, there's a lot of frustration about how this could be better. In fact, if there's any dimension that I see year by year that there's no limit to what we can do for many, many years, it's this area of communication. We've invested heavily in this to make it easier to connect. So let's go ahead and take a look at MSN 8 advanced communication.

(Video segment.)

E-mail is something that almost everybody takes advantage of. Over 93 percent of the online users have at least one e-mail account and lots of people have multiple e-mail accounts. Three or four years ago the amount of junk mail that I got was pretty modest. It would be those funny chain letters that people would send or the occasional promotional thing, but that's changed very dramatically. In fact, if we take the current rate of junk mail being sent, which is almost a billion messages a day, by 2007 that will be over 600 billion messages sent in just one year. And so you have the whole Internet, a sizable percentage of all those resources, sending mail that people don't want to get. And it's not just the time it takes to delete that unwanted mail; a lot of this is quite objectionable.

I thought I'd share with you a little bit of the junk mail I get so you can appreciate what it's like. (Laughter.) Here's one I got. (Applause.) I did not click on this one. I'm not sure they had me profiled quite properly. (Laughter.)

Let's go ahead and look at another piece of junk mail. (Laughter.) It says, if you can't read it, "University diplomas. Obtain a prosperous future, money earning power and the admiration of all. Diplomas from prestigious, non-accredited universities." (Laughter.) So that one they might have had my resume to target for that one.

And then finally -- (laughter, applause) -- this is one that actually might have been useful to me if I'd gotten it about four or five years ago. It says, "Get protection from top law firms for just pennies a day." And the law firms I've been working with do not offer their services for just pennies a day. (Laughter.) So I may have to look into that.

Obviously, these are some of the nicer pieces of spam mail you get and spam mail takes up a lot of capacity. It's often got photos enclosed, it takes a long time to download when you're waiting for the mail that you care about.

And what's interesting is that when you get spam mail you're not very confused about it. I mean, even if they spoof the address and make it look like it's mail coming from you or somebody you know, you look at that e-mail and very quickly decide that it's something that really isn't targeted at you. And that's what we had our people at Microsoft Research go after and start thinking about: Wasn't there some way that software could look at the legitimate mail and look at the spam mail and be able to draw a distinction between them based on the content of the mail? In fact, isn't there a way that the software can learn over time and get more and more confident that it understands which is the legitimate and which is the junk mail, and therefore be more aggressive about automatically moving the junk mail into a folder for you or deleting that mail?

This research has been going on for many years. There are some very deep techniques here. And when we trailed it this summer it did extremely well, and so that's one of the breakthrough features we've included in MSN 8.

When you first get MSN 8 it's got a sense of junk mail and normal mail, but over time, based on your profile of what's legitimate for you, it gets smarter and smarter and it's more and more helpful.

This is a great example of many groups at Microsoft coming together, the Hotmail group that runs the back-end for MSN mail, the Exchange group, the Outlook group and so we're going to improve the e-mail experience no matter which back-end or which client our customers are working with, but for the first time we're getting that out as part of MSN 8.

Well, I said the third area that I wanted to address was what we've done in this area of online safety. After all, parents want their kids out on the Internet. Kids have a lot of curiosity. Kids should be able to go out and explore not just a few known sites but to be able to do searches and find things that might really spur them to learn more and more things, and you want to show the trust to let them get out there and really use the Internet. But the tools today don't allow parents to know what's going on and so this was a major focus. Let's go ahead and hear from some parents how they think about online safety and what they want.

(Video segment.)

BILL GATES: When we first investigated the area of parental controls, we were stunned to find that over two-thirds of families had not turned on the parental controls. And when we dug into that, most of them had tried them out at first but they were too brute force; that is, they excluded a lot of things that they wanted to let their kids go out there and learn from. And so that approach of just having a few levels based on age is not a rich enough approach to give you the best of both worlds, the richness of the Internet and yet the controls that you'd like.

And so we knew right away we had to make it so that you could have individual sites that could be in override, we knew we had to make it easy so you could just notify your parent and have them approve something and get that added to the list without waiting.

But I think the real breakthrough came when the idea of having the activity log as a complement to the idea of the restriction came up, and the reactions to this activity log have been pretty incredible.

It's important to say that the activity log is also customizable. For kids of a certain age, you might feel it's appropriate to know not only who they're sending e-mail to but what they're sending to them, particularly if a stranger is sending e-mail you can block that or just monitor that. For kids who get older, maybe just knowing who's on their buddy list without monitoring the communication itself is how that should work.

And so we think the activity log with that customization will generate a dialogue between parents and children, not just about the activity filter itself but talking about the Web sites, what kind of curiosity there is and give parents a chance to get involved that they didn't have before.

My kids are very young. My oldest is now six. She's just starting to browse the Web and so I'll have the activity log turned on with all its features, but I'm sure in the years ahead there will be some argument back and forth about what is appropriate as the kid gets older.

So it's a big area for us and one that we needed to make some breakthroughs on.

Also, part of our online safety is the virus issue. There we do scan all the e-mail that goes through the server. We have broad anti-virus capability to make sure that you don't have these broad infections and that individual users don't have to go to all the effort of understanding about these things and scheduling these things. They've been brought in to the low level elements far more than they should have to. Somebody who's an MSN 8 subscriber should simply get the capabilities that allow their PC to work for them all the time.

Well, this has been fun going through these top features, but one of the ways I think you'll appreciate the ease of use is if we give you a quick look at MSN 8 in action. And so I'd like to ask the Vice President of MSN, Yusuf Mehdi, to come on up and give us a quick tour through some of the highlights of MSN 8. (Applause.) Welcome, Yusuf.

YUSUF MEHDI:Thanks, Bill.

Well, this is looking great. As you can see, we're pretty excited. We think MSN 8 is a better product at a better price. And you got a good look at it there in the videos; I want to take ten minutes and show you a couple things that just went live today that you haven't seen. And I'll just go ahead and walk over here, Bill, and get a short demo.

Okay, so the first thing that you see up here on the screen, this is the new MSN 8 look and feel, just to show you a couple nice things about it. This is a very flexible system that really scales to all sorts of users. So if you're a novice user and you like the big, friendly buttons like you see here, you can have that, and if you're a little more advanced we can shrink this down all the way, so you can see the power of software makes it very simple just to selectively control the user interface.

The second nice feature about it down on the right hand side is the dashboard that Bill talked about earlier. This gives you quick access to your favorite buddies, to your latest stock, news, weather. In fact, it's so flexible you can come in and choose a photo and personalize it. I'll just put here a little girl to put together on the board there, so you can see the flexibility to customize it is quite powerful.

And then finally a new feature that just went live tonight is the My MSN page. This is a brand new page that is shipping with MSN. Bill referred to it earlier. This page has all of the content from our partners and it's organized in a way that allows you the user to completely control this page, so you have complete control now over your Internet experience and you can come in and pick the content you want and the ones that you don't want you can delete. So we've got the great new modules here like this weather module from Weather.com that allows us to have the four-day forecast but also since I know you travel a lot, Bill, we can have multiple cities of where we're traveling. San Diego is looking pretty good right now.

You've got local news, local sports information. We can keep track of the World Series here. It's a tight game. We'll have to keep track of that.

And we've got some fun things, too, like what are the top searches on the Web, what are some of the top things in the box office, et cetera.

And the amount of content behind here is quite pronounced. In fact, if you take a look here at all the different content, I think it's a good opportunity, Bill, to thank frankly all the content partners and people who have come and made MSN 8 a great product. There are a lot of people who have built stuff behind here; I won't be able to name all of them but just a few of them are MSNBC, for example, Disney for kid's content, ESPN for great sports content. We have Overture for local search. We have Expedia for travel information, for example, so really just a great variety of services. And then, of course, from USAI we have some great content providers like Ticket Master, City Search and Match, so really just a great set of content here that makes the whole user experience we think something that's going to be really favored by the users.

So that's the first thing I wanted to show you, a powerful thing.

Now let's talk about online safety. Bill, you talked about it. Online safety is obviously one of the tops things. As a father you know that protecting kids online is a top priority. Let me just show you the power and the ease of the parental control we have here and really how that is quite differentiated from what's out there on the Web.

So first let's go ahead and just talk to you about the setup. So I'm going to come in here and set it up. Now, I hope you don't mind, since it's a demo I had a little fun to do a role-play so I'll be the dad and you'll be the teen. And so I've taken the liberty of setting up an account here for you. (Laughter.)

BILL GATES: I was pretty young then.

YUSUF MEHDI:Yeah, I got you in the early years, Bill Gates the early years. (Laughter.)

And so I'm the dad here and so I'll go ahead and pick Bill. Now, if I want, the default is very simple. We have a couple of categories here, as you can see, that allow us to set it up automatically. So, for example, in your case I'm going to put you as a pre-teen and this will automatically set up all of the defaults, so what sites can Bill go to, who is he allowed to chat with, is he allowed to have instant messaging access, is he allowed to do a bunch of different things. We've preset all those by default and then basically with a few clicks to set up your account you have parental controls installed; very simple, very powerful to turn on.

Now, the key thing, of course, is what happens in practice, how does that look for the user. We saw some kids up there on the Web site and you heard them say, "Oh, parental control kind of sucks." Well, you know, there is some of that but let's take a look over here on this PC. So we're going to assume here that this is your PC, the kid's PC and it's up on this side here. It's kidz with a "z" because that's the hip thing for kids who are a little bit older. We've got kids with an "s" for the younger kids. And you can look right here and see some of the content that's popular. Let's go ahead and click on the search.

And so what we've done is in addition to just the content we have a special version of MSN search for kids with over 70,000 different topics from people to go search on age-appropriate things. So it's really a great way to open up the power of the Web for kids and you as a parent can feel secure about what they're out looking at.

So now let's do the tough one. Well, what happens when you want to go to a site that gets blocked. So go ahead and pick a site, Bill.

BILL GATES: I'll just go out to MTV; nothing wrong with that.

YUSUF MEHDI:Okay.

BILL GATES: Uh-oh.

YUSUF MEHDI:MTV, it just so happens in the parental control that MTV is actually blocked for pre-teens. Now, this is the same situation. (Laughter.)

BILL GATES: Come on, dad.

YUSUF MEHDI: We need to talk about that. (Laughter.)

Now, this is the same scenario you have on AOL. So on AOL service if you're a pre-teen, the same problem, you get blocked.

Now here's where the difference occurs. On the AOL service there is no option for the child to go access that site and in the studies that we saw there, you saw all the anthropologists who did the research at home, we saw this in the home and it's amazing that the mom would be working over in the office and the kid would be at the computer and the kid would say, "Hey, mom, I can't get to MTV.com." And she says, "Ah, you know, I'm kind of busy; I don't have time to go and try to figure that out." One of two things happens. One, she says, "Here's my password, I'm going to trust you on this site you'll do well" or she just turns them off, so they didn't get used. And so we took that feedback to heart and we put in some features here. This is a feature for you, Bill. We can click here to get permission. And so if you come here, I as a parent can just walk over and it's super simple; I just type in my password for MSN one time and now you'll get approved and you can get through to the site.

So this is the difference between parental controls that are going to get used and those that aren't going to get used.

(Applause.)

All right, let's come back here, Bill. The last thing I want to show you on parental control is that report card feature you talked about. And so I don't want to have you feel uncomfortable but I can actually keep a pretty good list of what's going on with your activity online. So, for example, as you can see here, it shows the total time that Bill was online was an hour and five minutes. I can see that you sent some mail to Melinda.

BILL GATES: She wasn't born yet.

YUSUF MEHDI: She wasn't born yet at that time. (Laughter.)

And I can see the sites you've gone to, how many times you've gone to them and, in fact, which sites you've gone to that are blocked and which sites that you've been seeing. So just like the girl in the video said, we can actually see, for example, that you've been on a site that maybe you shouldn't.

Oh, look, I got an instant message here from Mickey that draws attention to the last feature I wanted to show you, which is a great new feature in MSN 8 that allows us to not only instant message with people but then to collaboratively surf the Web and interact together. So let's take a look at how that works.

So this is my friend Mickey. Now, Mickey, he's deep in the field of entertainment. He's an expert. I kind of defer to him. But we have a new entertainment site and I want to tell him, "Hey, let's check out the new MSN entertainment." And then I'll go ahead and click Browse the Web Together. And so now what you see up on the side is that screen on the right is my screen, this is Mickey's screen over here and now we're both looking at the same page. So if you look at the cursor here, okay, there's the two of us up here and we can each drive this experience.

So when I click, for example, if I click on entertainment I automatically navigate both the pages to the entertainment site and I can show off our new entertainment site here with some great content for movies, so it knows that I'm from over in Seattle so it's got my local cinemas, great information on music, for example, downloads for artists and even things for TV so I can find out what's on television. So, the software here can be quite powerful, and it's really a great service.

Now, Mickey, of course, whenever we get on here, he likes to tell us where he wants to go. So he wants to hit his favorite site. All right, Mickey, let's go ahead and take a look at your favorite site, and he will navigate my page. And so he did and so now he's taking us to, not surprisingly, the Disney Blast site. For some reason he's got a penchant for the Disney site. And as you can take a look, there's a lot of great content. I'm actually a big fan of Disney. I used to stay up watching the Wonderful World of Disney, 7:00 PM on Sunday nights, and then I had to go to bed, but I cherished that moment and I'm a big fan of it now for my kids, a lot of great content here. I'm a particular fan of the Surf Swell Island, which is a way for kids to have adventures and learn about online safety.

So that gives me an idea to tell Mickey, you know, we should get MSN and Disney together and so something great for families. So I'll go ahead and do that and see what Mickey thinks about it. I've got a friend who just might be able to help and, in fact, actually, Bill, we're having some fun, he actually is here. Let's meet the person I think on the Internet and in the entertainment world that can help us do something great for families that we have here. Let's welcome our special guests.

ANNOUNCER: Ladies and gentlemen, please welcome Minnie Mouse, Mickey Mouse and Michael Eisner. (Cheers, applause.)

YUSUF MEHDI: So thanks very much, Mickey and Minnie for coming. A big hand for Mickey and Minnie Mouse. Thank you. (Cheers, applause.)

BILL GATES: We're thrilled to have Disney here as part of the MSN 8 launch. We've had a dialogue for a long time about could we get something that was great for families, could we get their strengths and our strengths to come together. And over the years they've said, well, there are some things missing in the software, gave us good feedback on that. In the meantime, they built up some pretty incredible content, their Blast site and a lot of things that are very popular with kids.

And so today marks the milestone where based on Disney's feedback we've created a partnership that should be great for families.

MICHAEL EISNER: Yeah, we're really excited about this. We've been looking for a long time for a family safe environment to take Disney to the next level and we've been talking to Microsoft for a long time and they are by far and away the most sophisticated software and technological company for the parental controls that you just saw.

And we have, starting with Walt Disney with the multi-planed camera and synchronized sound and our parks and everything else, used technology to advance fun, entertainment and good times and to be able to do that in a partnership kind of two "Ms" coming together, Mickey Mouse and Microsoft, we think it's pretty awesome and we're really excited about it.

BILL GATES: That's a real coup, and we've always worked with Disney on ESPN. That's been very successful and now extending that to the kids and having a Disney on MSN ISP offering we think is going to be very popular.

MICHAEL EISNER: For a parent to be able to have an ISP that they can have all the great things that you've seen on MSN 8 and then to be able to set it up for their kids to have the controlled environment that they want and to use the Disney channels of marketing, we'll be making this available through the parks and through our stores and our DVDs and our home videos and Disneyland and anywhere else we can think of -- (laughter) -- we'll think of a few other places, right outside there. (Laughter.)

But anyway we started a year ago with ESPN on Microsoft, on MSN and in one year we have just separated ourselves from the competition with their great distribution and technology and we're hopefully -- we're not hopeful, we're confident that if parents feel that they can organize for their children a way to do, the kids on their own, the kind of entertainment that they want them to do, we feel that this is a great advancement for the Disney Company, so we thank you for allowing us to participate in this launch.

BILL GATES: Well, that's great. I just have one last question for you. Who should I root for in the World Series? (Laughter.)

MICHAEL EISNER: I don't think that's a difficult question to answer. Mickey Mouse will be there. He's flying out right now to give the extra boost and then he goes right to his computer to start MSN 8. Root for the Angels!

BILL GATES: All right. Good luck.

MICHAEL EISNER: Thanks, Bill. (Applause.)

BILL GATES: Well, that about wraps it up. I hope you got a sense of the enthusiasm we have for MSN 8. It's a constant learning process, but this is a big milestone. We think across the board we've got a leading product, we're going to gain a lot of share here, we're going to make a lot of consumers happy.

Today the product is out there, people can go to www.msn8.com. The CDs are available here. This dome that you're in is actually going on an eight-city tour. It will be here for three days. People can come down, learn a little bit about MSN. We'll show people how it compares to the competition. We'll talk to them about neat things that they can do out on the Internet. And so I think it will be a fun thing and we'll get a lot of people and get the buzz going on MSN 8.

It's great that you've been willing to join us today. As a very special treat, after a small break to set up the stage we'll have a concert from Lenny Kravitz, and I think that will be pretty fantastic. So thanks again for joining us today.

(Applause.)