Gates sells 'Phase 3' of Internet to CEOs

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Microsoft Chairman Bill Gates gave the keynote address at the annual CEO Summit in Redmond, Wash. but refused to speak about a hearing in the government case against Microsoft

May 26, 2000
Web posted at: 10:44 a.m. EDT (1444 GMT)

by Bob Trott

(IDG) -- Hosting a group of more than 160 CEOs from around the world while across the country in Washington a hearing was being held on the possibility of breaking up his company Microsoft Corp. Chairman and chief software architect Bill Gates today described a technological future that he said will emphasize personalization and desktop-free computing.

Not surprisingly, Gates' vision of the future looks suspiciously like the path his software company is trying to take. Next week, Gates and other Microsoft officials will unveil their plans for Next Generation Windows Services (NGWS) at a conference here (see story).

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NGWS is intended to move Microsoft away from its desktop-computing paradigm to a world where personal information is stored on servers and can be accessed from any device, anywhere.

"That information essentially will be magically stored on the Internet itself," Gates told attendees. "With any device, once you prove who you are with a pass card or a smart card, the things you care about, (such as) e-mail, bookmarks . . . will appear on that device, but in the way that matters to you."

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"Part of the goal here is to take all these transactions, these business understandings, and really get those into digital form," Gates said.

The two-day CEO Summit, Microsoft's fourth, gives Gates and President and CEO Steve Ballmer a chance to outline Microsoft's products and goals to a high-powered audience. At last year's summit, Gates first unveiled the Digital Dashboard, personalized portal technology that then found its way into Microsoft's knowledge management agenda.

Gates broke down the Internet into three phases. The first phase Gates characterized as the "Do you have a Web site?" period in which businesses had to "just get in the game, and people in this phase would talk about [Web site] hits."

The second phase of the Internet -- which is going on now -- has an emphasis on Internet transactions and piling up revenues, Gates said. "Gross sales are what people worshipped even at the expense, in many cases, of what the long-term profitability model might be," he said.

The third phase, which Gates said is right around the corner, will be a "rational phase" when, in relation to the Internet economy, "people will be saying, 'What does it have to do with profit?'" That also is when the Internet will transform from "the ultimate library" into a service-oriented, two-way tool that relies on automation, voice, and handwriting recognition.

A more robust Internet will need more robust connections, and Gates acknowledged that both DSL and cable modem technologies have not yet caught on at a sufficient volume for a variety of reasons. He predicted they would soon, as will smart cards, wireless devices, and other technologies important to his Phase 3 period.

"Three years from now everyone will have a wireless PC device with them at this conference," Gates told the CEOs. Of course, Microsoft ensured that prediction would come to fruition by giving each attendee a new Hewlett-Packard Jornada, the first available Pocket PC running Microsoft's Windows CE 3.0 operating system.

Gates also pitched two hardware projects Microsoft is working on: the keyboard-less PC tablet and the eBook.

Dick Brass, a Microsoft vice president in charge of eBook technologies, told the crowd that the electronic-book format "may overtake p-books [paper books]" by 2008, and by 2020 "the revolution will be complete," and the definition of a "book" will have changed from "paper bound with leather to an electronic display."

Alluding to the ongoing controversy over the Napster Web site where users can download and trade music files for free, Brass said e-commerce security must be shored up in order for eBooks to be a success.

"The Web must be a safe place to surf and also a great place to buy content and entertainment," Brass said.

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