Gates: .NET not a catch-Up strategy

In answer to a question as to whether Microsoft's .NET strategy was a "catch-up" with Internet developments, Gates conceded that in the "browser era" of the Internet, Microsoft had spent two years catching up with innovators such as Netscape.

But things are different in the "third era" of the Net's development, he says.

"There's no equivalent of Netscape in this era," says Gates. "We are defining this era without there being some small guy where we say 'okay, we'll do what they do but we'll do it smarter, better, faster.'

"In this case, we were the ones who went out and said, hey, XML (Extensible Markup Language) is going to be important. We've been the ones who went to industry after industry and said okay retailers, provide your XML standards, healthcare provide yours, government provide yours."

Gates says Microsoft has long funded research into elements of the Internet that would be crucial to the new era -- such as tablet computing and speech and handwriting recognition -- even after "fads" for such things had come and gone.

"There were 50 [tablet computing] companies all going to take over the world the next day. Well, that all just completely failed. Those companies disappeared. But we've persevered in that. We've always believed in it."

Gates appeared to put Java in the fad basket when he described it as "one of these things like tablet computing and network computing" and preached the value of multiple languages being available to developers, with XML there to provide the interoperability.

Lest it appear that Microsoft was inventing the future on its own, Gates paid tribute to the "very constructive" role of IBM in also pushing XML forward.

Gates dodged a question about Microsoft's long-running court battles with the US Department of Justice and other authorities, but addressed a subsequent question about Microsoft's share price head-on.

"What we do is focus on the thing we're good at -- building great software. And at times the marketplace will take technology companies and run their valuation up ahead of what it should be and then run it back down. But the question is, is the underlying company really doing good work?

"I don't look at the daily share price. I do know the place where the greatest contribution will be in the years ahead will be in software. That's the thing that will really unleash the power of all this optic fiber and these new screens and devices. You can buy Microsoft's shares, you can short its shares -- whatever you want to do that's fine with me. I'm just here to talk to you about the work we're doing with software."

Gates also pushed a hardware product -- Microsoft's forthcoming X-Box games console -- as "the most powerful entertainment device ever created" and touted the fact that it boasts a hard disk as "a fundamental advance."

The console, not due for release until 2001, will have superior graphics performance, he says, "and the ability to get at that performance is real."

"Our primary competition is Sony. There's other people in the business -- Sega, Nintendo -- but Sony's gotten the high volume out of Playstation. But I think they made some mistakes in their design strategy in not having a hard disk and not doing the graphics the way we did. So we think we can make a real contribution to that business."

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