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The two sides of Bill Gates

Speaking at the TechNet Innovation Summit, Microsoft co-founder wears both philanthropist and hypercompetitive businessman hats.

PALO ALTO, Calif.--There were two Bill Gateses on stage Wednesday at Stanford University: the philanthropist, and the hypercompetitive Microsoft co-founder and chairman.

While he spoke of prosperity not being a zero-sum game, he also espoused the need for Microsoft to outmaneuver rivals like Apple Computer, Google and Sony.

"We want to either be No. 1 or on our way to being No. 1," Gates said while speaking at the third annual TechNet Innovation Summit, hosted by a membership of technology CEOs.

Bill Gates Bill Gates

Gates, whose comments came during a taped interview with TV host Charlie Rose, showed he hasn't lost any gusto for Microsoft's leadership in technology, despite having announced plans to relinquish his day-to-day role with the company by 2008 to concentrate on philanthropy.

Gates, for example, characterized the success of the Apple iPod as "phenomenal, unbelievable, fantastic." But to put its own Zune out ahead, Microsoft built features into the media player that the iPod lacks. "We're doing connected entertainment analogous to the Xbox," he said, in the hopes of nabbing new customers and luring those ready to switch.

On Sony, Gates said that Microsoft has traded places with the PlayStation maker because it shipped a sleeker, lower-cost Xbox 360 a year earlier than expected, before Sony came out with its PlayStation 3, he said. (On its first try, Sony beat it to the punch.)

"We get what you get in the game industry--the chance to play again. Here we are with Xbox 360 playing by different rules," Gates said.

Addressing the subject of Google, Gates said the search giant might be most like Microsoft, given its ferocity for hiring smart, talented people and its business focus.

"They are a software company--they deliver a lot of it over the Internet," Gates said. "We overlap a lot (and) the overlap will get larger over time, which is fine."

Still, the competition is "fun for both companies" and encourages innovation in areas like mapping and language translation, he said.

In online media, Gates hinted that Microsoft has created a technology that lets people belong to many different online communities and control their activities and personal information from one interface.

"We have technology that will make it easy to belong to many communities and see them in one place. We have some software that will actually put the user back in control," Gates said.

Although Microsoft is still entangled in legal problems with European regulators, Gates said he was "pretty pleased" with where things ended up on Vista. The company did make some changes to the software, but he said that most of the major new features will not be taken out in Europe.

"For the first time we said to them, 'Hey, you're a sovereign, we do what you say. Should we take this feature out?' None of those regulators told us to make major changes. We were happy with the dialogue (and) all the neat things are in there," he said.

Gates said it boils down to whether regulators are looking at making changes that benefit consumers or competitors. He said that competitors always want to see Microsoft limited.

"Hey, if you can castrate some guy's product, why not," he said.

Some of the issues on the foreground for the Bill and Melinda Gates Foundation, which he will run full time in 2008, are global health and education.

"Most people in the world are living in developing countries...and of the last 1,500 (modern inventions), only 20 have anything to do with the majority of mankind," Gates said.

Gates compared the challenge of global health to the advent of the microprocessor. At the time, he said, there was an opportunity to be had in microprocessors, but someone needed to put all the pieces together. Similarly, someone needs to put all the pieces together to bring about solutions to global health issues like malaria.

Gates also spoke fondly about his friend Warren Buffett's to the Gates Foundation, which has doubled its endowment.

"He's let us dream far more," Gates said. "I get to make sure that it goes back to society (in a specific way). That's kind of daunting."

Still, , even though he'll still be at the software maker part time after 2008.

Given the chance to do it all over again, Gates said he might have pursued medicine with the potential to help improve billions of people's lives, he said.

"That would have been a close second. Even if I had known (about medicine), I don't think it would have drawn me away...from the personal computer. I don't think it would have topped it," Gates said.

CNET News.com's Ina Fried contributed to this report.