Gates to spend 20 percent of his time on Microsoft projects in retirement

At a reception prior to the start of the D6 conference, Bill Gates held court among a throng of reporters. He explained some of the specifics of his July 1 "retirement" from daily duties at the company he founded. Gates said he would invert how he spends time today. Instead of spending 80 percent on Microsoft and 20 percent on the Bill & Melinda Gates Foundation, he will spend 20 percent of his time on Microsoft issues and the remainder on his foundation work.

Gates, who will remain chairman of Microsoft, said he will spend two to three days at Microsoft, where he will have an office, and two to three times that amount of time writing, thinking and working on a variety of pet projects, including the next generation Microsoft Office, natural interfaces (such voice and handwriting) and search. "I'm very involved in search, the internal development," Gates said. "We will build the world's best search." He didn't say with or without Yahoo, but that has been the Microsoft message.

Regarding the courtship of Yahoo, Gates said it wasn't a big deal in the grand scheme of things. "When we bet on the graphical interface, that was way bigger than any acquisition," he said. It took Apple to show Gates and his team the way, however.

During the D6 interview with Walt Mossberg and Kara Swisher, CEO Steve Ballmer said: "Look, we made a bid for Yahoo. It was out there for three months, and there was difference between bid and ask. We thought we could accelerate our business. We were going to be financially disciplined about it. We walked away. We are talking with them about other ideas, but we are not rebidding on the company. I won't comment on what we are talking about." Microsoft has been in talks with Yahoo about some kind of business deal for just search.

"We have a good team and we are patient," Ballmer said about Microsoft's search efforts. "People in our industry are way too impatient. Great things rarely happen overnight." He then expressed a core component of the Microsoft DNA--tenacity. Microsoft will keep coming and coming, as he likes to say. And Google is the target.

Regarding Ballmer not having him around as much, Gates said: "Steve is a founder just like I am. He came when the company was a rounding error. We have created a completely new company many times together." When Ballmer took over as CEO about 8 years ago, the two had to learn how to work in their different roles. "Steve wasn't used to explaining why he does things as I was, such as why you time out (no longer have confidence in them) on a person. As No. 1 you need to be able to articulate that."

During the interview, Gates said that he has been the junior partner for the last 8 years.

Gates also pointed to Microsoft Fellows and $6 billion annual research budget as a key for Microsoft's future. "I am betting on the quality of Microsoft Research," he said.

Gates also said he would work on education, agriculture, and other initiatives that interest him. He is also involved in a project to map all of Africa, using Microsoft resources as well as contributions from Gates himself and his foundation.

Click here for full coverage of the D: All Things Digital conference.