Gates sizes up the Web's next generation

Microsoft's chairman says it's time to embrace new Web trends, from programmable sites to ad-funded hosted services. Video: Rebirth of the cool Video: Gates keynote at Mix '06

Think Web 2.0 and think Microsoft? Not necessarily.

The company has long provided the tools for building Web sites. But it's been a couple steps behind when it comes to some of the bigger ideas and business models that have surfaced around Web 2.0, such as advertising-based software.

In addition, Microsoft has long made devices--whether it's the PC, server or handheld--the center of computing design. Now Web sites are becoming programmable, allowing people to "mash up" data from different sites.

To try to capture--and participate--in some of the buzz around Web 2.0, Microsoft organized a conference in Las Vegas called Mix '06 aimed at Web developers and designers. After his keynote speech at the conference Monday, Microsoft chairman and chief software architect Bill Gates spoke to CNET about the push into hosted services, competition with Google and mobile computing.

Q: A lot of the buzz and thinking around Web 2.0 has come from outside Microsoft. Is this conference an attempt to get more involved there? And does that concern you at all?
A: Gates: Well, for the key new technologies that enable us to take the browser to a new level--DHTML, JavaScript, XML capabilities--we've been the pioneer.

If I'm a consumer or small-business owner, I could get a lot of applications in a hosted version, from project management to word processing. In that world of Web applications, how do you make Windows Vista a must-have?
Gates: Well, Vista is probably more relevant now than ever because, as you're browsing, you want to download Active X controls and have a security framework in there. Having the kind of "reputation" services we built into Vista makes the community value more important: We know which Web sites are phishing Web sites. We know which controls people have had a good experience with. That kind of reputational value may be one of the biggest things people get out of Vista.

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Video: Gates on
Web 2.0

In interview with CNET, Bill Gates says Microsoft is ready to mix it up with rivals.

Likewise, the ability to download code and compartmentalize it--that's kind of a breakthrough that's come out of the fact that we're down the learning curve on security--way more than any other company--I can say 100 times as much. In the last three years, it's been our biggest R&D priority, and we've made breakthroughs.

Vista, in terms of rich media--people are doing movies more. People want to organize and find those things. They want to work offline as well as online. We picked the things where people want Windows to (work) better.

People are designing applications with the Web in mind. In the past, you've been more Windows-centric with development tools. Will you be pointing developers to write applications where the Web is the development platform?
Gates: The Web is where a lot of code is being written, and you can go back to the year 2000 and the .Net initiative. .Net was designed to let people do state-of-the-art Web sites. In fact, .Net's success has been the primary platform for building Web sites. It's been quite phenomenal.

People are using other tools--around scripting, PHP and all that. But we've come in and really targeted that market. And as people do richer Web sites, we think the richness of what we've done there will go beyond the scripting-language-type approaches, which are fine. But more and more people will do sophisticated things. So there's nothing dramatic here, in the sense that the Web just happened.

The Web is evolving. There's a little bit more maturity now, in terms of business models with advertising coming in, with some of the late-'90s mistakes understood. But we're probably, as an industry, making some of those same mistakes. And that's OK. The ferment, the creativity, is incredible to see.

You've been talking about the Web as a development platform for years. Internally at Microsoft, have you made the switch?
Gates: (Microsoft's) first company meeting around software as a service goes back over seven years now. We said it's a lot better for us and customers. Instead of viewing software as a one-time thing--you buy a new version, you're using that--if we have a continuous relationship (with) something like Watson, where we monitor what people are doing and the drivers they are using, Office Online can get templates and download new things.

It's letting our software innovation be more connected to the user, more customized to what they want. It's a great paradigm for us--to create new value. We did underestimate advertising, so an element of what we're doing there is catch-up.

There was a major demarcation when Ray (Ozzie) put out his memo last year, really saying the primary applications model will have everyone delivering through the Web, monitored through the Web, updating through the Web. And many of these services, like storage or authentication, that you think of as

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