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Here is part two of my discussion with Microsoft front man Bill Gates, where we talk about the future direction of Windows relative to the rest of Microsoft, and the possibility of Apple launching their own Office competitor. It looks like we'll be serializing these as I transcribe them throughout the week. If you missed the first part, I just made you a hyperlink.

Gizmodo: Now to change—but sort of the same subject—where do you see the PC going, let's say post-Longhorn. Obviously, the PC is going to be around for a while, even with the connected homes, Media Centers and all that. But do you see a point where you might need to move Microsoft in a direction where Windows is maybe a part of your platform, but isn't your main focus anymore?


Gates: Well, there's no company that is heterogeneous as when it comes to writing different software for different hardware form factors. From the SPOT watch, to the phone, to the set-top box, to the car—we write software for everything. So we are the least uni-focused company there is. Our focus is software. Anywhere software can add value we'll do that.

The idea [is] that there are some natural form factors. That is, having a full-sized screen if you want to write a letter or do your homework. A full-sized screen tends to be better than a pocket-sized screen. So when people always talked about m-commerce—that you would be driving home and couldn't wait to buy a new refrigerator and so you would just buy it on your mobile phone and not wait to see the comparison and information on a full screen—I never really did get what that was about.

Each device should play its own role, and the magic of software should make sure that your schedule, your contacts, your notifications work across all these things. So yes, they're all connected to the internet, they all have common media formats that they can play. Synchronization—we're doing better all the time with that. We can keep doing a lot better. Make that sort of built-in and automatic. Even syncing PC-to-PC, not to mention to other things.


Gizmodo: And that's kind of what I'm saying. Do you think that at some point... Not that Windows is necessarily going to go away, because you might always need a PC-level OS, but do you think that there just come a point where its just another piece in all the devices in all the devices you're supporting?

Gates: But the full-screen... The idea that you get when you sit at two feet and you have a full screen, that will always be fundamental. That's just human physiology. There's nothing that substitutes for that. So whatever the software is—the platform that drives that two foot experience—will always be the most important software we do. Not so important that if we don't connect up with other people's software and other devices and ourselves write software for those other devices that we'll stay successful. It's a heterogeneous world. Will it be more tablet oriented, will it be more speech recognition oriented—well we put more R&D into those breakthroughs than any company on the planet. We're very optimistic about those things.

As you get things like ultra-wideband, the idea that you can have different screens connecting to different PCs, different storage connecting to different PCs... you can have some desegregation so you can have some different abilities. But still when you go to a software developer and you say, "Here's what you write your application to," something's got to have critical mass there. It's got to be clear. It's got to have people who monitor it for security 24 hours a day, super-responsive, keeping it up to date. And so that will always be a big part of our R&D budget.

Gizmodo: That'll always sort of be the center of it and everything might branch out from it.

Gates: Well, 'center' might be a little strong. Today our office software and our Windows client business and our server software. Those are the three biggest business. Between those, that's over 80 percent.

Gizmodo: How do you feel about this rumor going around that Apple's going to launch their own Office competitor? Their own office suite.

Gates: They've always had a Works-type product.

Gizmodo: Yeah, but if they end up coming out with an actual competitor and sort of billing it as that, would that... Since Office for the Mac has always been—well, not a huge revenue generator, but it's always been that one...


Gates: It's been a great business for us. I mean, not as a percentage of Microsoft, but it's a very, very good business. We have a great relationship with Apple.

I don't know what they're thinking, but they've always had the low-end product—It's actually not that low-end. It's pretty good. Not as good as Office, but not bad at all—that they've bundled in with different machines.

Gizmodo: And that's why it seems sort of weird to me, because Office for the Mac is sort of one of the must-have OSX programs.


Gates: Because we've done a good job on it. There are freeware Office-type offerings that run on MacOS. I don't keep up to date on which ones and all that, but it's not like Mac users don't have various alternatives. We've kept the price of Office low enough—Student and Teacher editions, educational pricing—and we're very aggressive. Those are the markets where over 90% of the Macs sell into. I think it's a very good value. So, we hope we keep doing well! It allows us to invest in it. Our Mac Office group has been very, very innovative.