Gates addressed the crowd of press and analysts in his capacity as founder of Corbis, which is developing a database of digital images taken from private and public photography and art collections, rather than as chairman of the software giant. Gates did not touch on the recent setbacks in the antitrust case filed against Microsoft.
Although Gates was theoretically removed from his Microsoft role, the software giant plays an integral role in digital imaging and content. The company has been aggressive in its support for imaging, offering its own online and desktop photo editing services and software and developing increased support for digital cameras and scanners in its consumer operating systems.
"It's very exciting to be in this market," Gates said. "I see great opportunities."
The consumer market for digital imaging products is potentially huge but could be held back by typical hurdles like widespread broadband Internet access and copyright protection measures, Gates said.
Currently, the digital imaging products and services on the market are not compelling enough for most consumers to invest, he said.
"Bandwidth has been restrictive...you'd rather have someone FedEx you photos than email them," he said, adding that "all of the pieces have to come together," to transition the photography industry to the digital realm.
In addition, the photo quality of digital images is still not comparable to real photographs, and displaying, sharing or printing the images can be a hassle. Despite these obstacles, the advent of home networks along with price decreases on fancy flat-panel displays will drive consumer interest in digital imaging, he said.
"Eventually, flat panel screens will become inexpensive enough to have around the house," connected to a wireless home network and capable of displaying any image from a database of thousands of photographs and pieces of art, he said. "The house that I live in is a glimpse of the future," Gates added, in reference to his high-tech equipped home in Washington.
These advances will drive technology improvements in other related fields, like electronic books, which will benefit from improved displays as well, he said. With e-books, "resolution is very important," he added.
Gates pointed to the editorial and advertising industries as two sectors which will see real benefits from transitioning to all digital media. However, copyright protection for digital images needs to be addressed before these groups will likely make the leap.
Drawing a parallel to the controversies surrounding digital music piracy, Gates advised content producers to embrace digital media early, before illegal content is widely available.
"This is a constant issue in this industry," he said, explaining that because many record labels delayed releasing music in digital formats like MP3, many users became accustomed to downloading illegally copied music.
"The habit was developed and the music companies have to undo that habit," he said. "It's a short-sighted approach." Microsoft has developed a proprietary music player, the Windows Media Player, which protects legally distributed music from illegal copying.