Despite sporting the same name that brought the former governor of Arkansas the mother lode of political fortune, Microsoft Corp chief executive Bill Gates says there are no politics in his future. I could do it if I wanted to, but I don’t want to, he told a gathering of the Computer Journalists Club in Paris yesterday, as he held court on a range of topics, from the US government and economy, to the increasing pervasiveness of personal computer technology. Gates never publicly supported Bill Clinton for president, although a number of Microsoft executives campaigned for him. Of the Clinton-Gore tenure so far, he said In some ways it’s interesting to have a president interested in technology; it could be good, and it could be bad. But he’s very knowledgable, particularly his Vice-President, Al Gore.
Free trade
The administration’s record to date on trade, however, was delicately criticised. He hasn’t made clear his views on free trade, which is of acute interest to the technology business, Gates said. Technology thrives by taking the best elements of technology from countries around the world, so free trade is absolutely crucial, but so far he has not made a clear stand on free trade. Although he said it is really too early to tell what life in the US will be like under President Clinton, Gates said the US economy is definitely coming back, but that it has changed. It’s a very unusual situation, because a lot of large companies are doing very poorly. The measure of the economy used to be ‘How’s GM doing, or how’s IBM doing?’ and those companies have had to let people go and learn to become more efficient, he said. But the economy is sort of changing to be less based on the big companies, less based in some of the big centres of population where the media is based, and the defence industries are just having to adapt to a very new era. Most of the signs are quite positive. It won’t be a dramatic recovery, but there will be a pick-up, he predicted. In his own comments, Gates described the double-edged growth of personal computer technology: the accelerating movement of shared personal computer networks into the heart of a corporation’s business and, at the same time, its adoption by the consumer electronics industry. With the newly emerging client-server applications, Gates said, the role of personal computer technology in corporate computing is growing. We see companies rethinking how they can manage product design, how they can help people communicate between different groups in a company, how they can eliminate printed information and let people see information electronically and browse it exactly the way they want, or how they can keep track of their customers in a better way. Coincidentially, he said, there has been a missing element in making these applications work easily: a proper operating system. Windows was not considered robust enough, Novell’s NetWare was considered good for sharing files but not for these new applications. Then there are the many forms of Unix which, unfortunately, are not compatible with each other, so you have to choose one hardware supplier, which means a lot less choice. None of the three choices was ideal. Windows NT, he said in a shameless publicity spot, is really taking the best of the three – Windows, network operating systems and the workstation or Unix world and pulling those together. He also quipped that, since NT stands for New Technology, we will will have to change that when it’s a few years old. At the same time that personal computer technology is moving to centre stage for corporate applications, it is moving down into what you might call the intelligent television, where you can select any type of movie to see, or shop, or interact with information, Gates said. So we find ourselves moving this new technology to consumer markets, co-operating with entertainment and TV companies, and at the same time working with [information technology] consulting firms to help them with their key applications.
By Marsha Johnston
By moving in these two directio
ns, personal computer technology will have a lot more impact in the years to come, he concluded. In the area of consumer use of personal computer technology, Microsoft is working with Compaq Computer Corp to develop a personal digital assistant, with cable television equipment supplier General Instrument Corp, and with Thomson, Philips and Japanese consumer electronics companies to see how personal computer intelligence can come together with consumer devices, he said. On the flip side of partnerships, Gates talked about Microsoft’s competition. Asked which competitor – Novell, Apple, or, maybe, IBM – he feared the most, Gates said, I don’t think I’m going to crown any particular competitor as being particularly dangerous or fierce. For example, if you take what we’re doing with CD ROM software or in the consumer areas, other [computer] companies aren’t very involved yet. IBM talks about doing that, but it hasn’t done anything yet. There is no single competitor that has the broadest challenge. The second biggest software company is Novell and on the server, which is one of the areas I expect NT will be very successful, they have a very high market share. So if you want to look for a short-term, meaning 18 months, competitive battle that will be the most interesting, the server battle between NT and NetWare will be a major area of competition, he said. Whatever the outcome of the battle, Microsoft could hardly do better financially, be it worldwide or in Europe. For the first nine months of its current fiscal year, which ends in June, Gates said sales in Europe have grown 35%. Microsoft’s global sales for its previous fiscal year totaled $2,280m, with net profit of $581.4m. Our growth is very healthy in Europe this year; certainly above our competition because we’re continuing to gain share, but nowhere near the growth of the past, Gates said. He explained that a lot of Microsoft’s previous growth in Europe was attributable to penetrating new markets, including the UK, where our market share was not as high, and markets like Spain and Italy where piracy was being reduced, increasing the amount of software being sold per personal computer. The company also had made a lot of new product introductions, he added. He would not predict a growth figure for the full year, saying we never forecase future figures. Gates was very careful to caution about overestimating the duration of his company’s exceptional record on profit margins, however. We are quite profitable today, but the key point we try to make is that we take a very long-term view of our business. We’re going to keep making a lot of investments in the future because that’s what we’re excited about, and if that means we would sacrifice some short-term profitability for long-term technology, we would do that, he said. Gates said that, although price competition in the software market has increased, it’s not analogous to the hardware situation. The widely reported price differential between US and European software packages, has come down some, Gates said, but will continue to exist, while diminishing further. There’s still a measurable differential between US software and software in Europe.
Just amused
It gets a little complicated when you have currency fluctuations that go together with the lower volumes and some of the higher costs… so I think you will continue to see a difference between English and European software, he said. Measures Microsoft has taken to help the situation include dropping the price of its bundled Office product and helping users pay a lower price if they are a committed customer, he said. Does Bill Gates feel truly threatened by his competition or just amused? I don’t think any company that is simply amused by its competition is going to do very well. We take our competition very seriously. Sometimes we have competitors who disappear, but quickly there are new competitors who rise up in their place. We wake up every morning thinking about competition, and we adjust what we’re doing based on that.
