Gates touts licensing's economy, R&D

There are very few topics Microsoft chairman Bill Gates didn't address during his media briefing in Sydney this morning from the "low cost" of Microsoft licensing to the "poor value proposition" of open source, and Apple's "diminishing" market share.

Even in the most extreme cases, Gates said, software licensing is such a small [part of the] costs in IT shops today compared to the cost of communications and staffing.

He said this expense is lessened even more when taking into account the productivity returns and savings generated from software or Microsoft products which, he added, include such a high level of research and development (R&D).

Boasting that Microsoft is the biggest spender in the world when it comes to R&D with the exception of one drug company, he said the next biggest IT R&D investor after IBM spends less than half the amount Microsoft outlays.

This, he trumpetted, is Microsoft's value proposition, adding that the software giant has been competing with open source for the past decade. Gates recalled that about 10 years ago there was a free spreadsheet application around (which has since disappeared) but couldn't remember the name of it, asking the audience "can you remember?" emphasizing his point even further.

"We have the simplest buying proposition there has ever been; we believe a worker deserves the very best tools to do their job effectively," Gates said.

"We've competed with free [open source] software since we began, but my toughest competition is pirated software." Asked about government IT policy, he said most governments around the world are not anti-or pro-IT; it is about allocating financial resources to get the right mix.

Gates said every government buys software with the best value in mind and without any bias toward a single type of software.

He also pointed out that Microsoft is not a company that promotes the re-election of George Bush in the US, or any other government for that matter.

Reiterating Gates' message that Microsoft doesn't take a political stance, Microsoft Australia managing director Steve Vamos was quick to add that, "we don't think legislating on technology is a high priority for any government".

Responding to a question about end-user backlash as a result of technology providers not delivering on promises, Gates said when it comes to technology there are always dreams unfulfilled.

His job, he said, is about those missing pieces and overcoming problems like user frustration, and security.

"Are we half way towards what we need to do? Maybe. The pace of improvement is faster than it has ever been," Gates said.

"Scepticism is a great thing; we are not standing still. No industry has improved its product while bringing prices down."

Gates delivered a 15-minute spiel on seamless computing, how tablet PCs will become mainstream, the advent of Web services, Microsoft's efforts to improve automatic patching and the company's planned assault on the search market, specifically Google, before moving on to Apple. "Mac's market share has gone from 4.1 percent to 3.7 percent; it is making a contribution to industry," he said.

"But once upon a time it had 40 percent of the education market, today it is about 20 percent.

"You bet we compete with Apple, but overall its presence is less today than it was historically."

Gates briefly touched on Microsoft's search strategy, pointing out that it was in the search business before Google.

"The way searches are done today is very low-tech; there is no understanding of the document," he said adding that Microsoft is undertaking linguistics research to improve current search capabilities by combining all the history on a user's PC, their personal preferences and attaching domain knowledge for better search results.

"Generic Web searches today are terrible; it [search technology] is still in its infancy. We will take a list of what you like and use, to make sense of your searches. We want to make it 10 times better than it is today."

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