DERTOUZOS: It is ironic to me that in the United States, the bastion of capitalism, where people have given of their work lives and capital to create a huge industrial economy, we are now asked to surrender the very same factors of production-our labor and our capital-to develop software that will be open and free for all. I do see some qualified benefits to open software, but I wanted to get your views on the big picture before going any deeper.
GATES: Most of the people and companies that create intellectual property will continue to want to get some payment for it, as with any creative area. The beauty of all intellectual property compared to physical property is that there is no marginal cost of production. The world benefits immensely from this, whether it’s from a great book or a new drug or a new piece of software. There are fixed costs, so most work will cost something, but for software sold on a high-volume low-price model the price is very small compared to the value.
There’s always been a role for open-source software, and there always will be. Free software has been around for a long time. Likewise there is commercial software where the source is easy to access so the pricing and the source availability are two different things. Ideally, software should be componentized enough that you could extend it without having to read and rebuild the source code of the product.
For any software to gain widespread acceptance and use-to be popular with consumers and corporate customers-it has to possess the infrastructure and support that make it efficient and easy to deploy. So just as the car became popular only when there was a network of gas stations, repair shops, dealerships, paved roads and so on, the same is true for software and most other products.
The role of common standards in intellectual property is central here. Thanks to a common operating system standard-Windows-a whole industry got created, one that employs more than five million people worldwide. When both hardware companies and independent software vendors have a common standard to work with, the end result is enormous choice for consumers.
Open-source software’s strength is massive customization but this works against consistency. Consumers don’t know what to expect when they load the software; corporate customers find it hard to stay current as each version is customized; developers don’t get a volume market because there are multiple flavors of the same product.
A lot of software that started out as university software-like browsers-transitioned to become commercial software when customers asked for rich features and broad support. In the case of browsers they stayed free because of the advertising value and additional demand for complementary products that they create.
DERTOUZOS: I agree with you that there is a role for all three-commercial, open, and free software-and add to the list another important benefit of open software: It accumulates for everyone’s use code contributed by many programmers. But what of commercial software, that has the potential of becoming a standard for millions of people? To be used widely, it will be given away initially, and sold later when it has taken hold. In the long term, after the software has stabilized and returned its development cost and a good profit, software developers may find it increasingly difficult to charge for it. I suspect that such software, and maybe most software, will, after a commercial period, become very low-cost, and in some cases, even free. Do you think this is likely?
GATES: One of the key characteristics of the software industry is that, because of incredibly rapid technological change, products must be continuously modified to reflect innovations. For example, software will need to change to support speech input, which will be fantastic for users. So development costs are ongoing. With the high-volume, low-cost model adopted by Microsoft and the PC software industry, such costs are spread widely, so consumers pay a very low price to benefit from billions of dollars of R&D.
The key is in value and utility-if consumers get both, they will be willing to pay for them and, if the software is good enough, it will be used widely from the outset. So the world you are describing already exists: Consumers already get an amazing amount of functionality from their software at a very low cost. Contrast the old proprietary computing model, where software accounted for a high proportion of system cost, with the PC model, where software is only a tiny percentage of overall cost. That comparison makes much of today’s PC software seem almost free.
DERTOUZOS: In the commercial period, when the software is still evolving, a successful strategy for maintaining revenue is, increasingly, the annual upgrade, which, incidentally, adds to the “feature shock” of users. This practice, together with an evolving Web, suggests that we’ll move from buying shrink-wrapped software to simply buying upgrades through periodic downloads at a monthly fee. Do you see Microsoft and other software developers becoming such “service” organizations?
GATES: Regular upgrades are clearly necessary in an industry that is changing as fast as the software business-just as they are in, say, the auto industry. I can’t ever imagine a time when software will not continue to evolve in this way. With the high-volume, low-cost model, you have to make the software as attractive as possible to as many computer users as possible, and that means lots of features. And clearly not all of them will be used by every buyer. But in general I think you are right that, in order to “hide” the complexity and adaptability of software from the average user, upgrades will increasingly be carried out transparently and automatically, without users having to do anything.
So rather than having to ensure that your software is always up-to-date, the software will do it for you-you’ll wake up in the morning and the latest version of the software will have been installed overnight. To that extent, software will evolve into even more of a service business than it already is, and in the long term there will probably be a move toward a subscription-style model.
DERTOUZOS: Browsers and operating systems will merge in functionality, simply because people need to have the same commands for dealing with information, regardless of whether it is local or distant. On this, you and I agree. However, we disagree on how to get there: I dream of a system built from scratch that gets rid of layers of old software and brings a new truly easy-to-use metaphor to the Web-centric world, as important as the desktop was earlier. I believe that you want to get there gradually, by upgrading Windows. Recall that the Web itself was created by a small team of people, yet ended up on millions of computers. Could something like that happen here, with a new system that might spring out of nowhere? Would you consider replacing your own baby, ahead of a competitive threat, with a brand-new, simple, super-efficient browser-operating system?
GATES: Whenever a new word is added to a computer language or a new feature to an operating system there is a question of whether it would be better to start from scratch. We actually did start from scratch with Windows NT and I am sure we will do so again. In the meantime, we are evolving every version of our operating system. We have made the browser and HTML the primary display language, replacing the old style help and folder display. There are new operating systems that integrate the browser like BeOS but none have done as much as Windows has.
For every new advance there will be many new competitors, including people who compete with a whole new operating system and people who compete using middleware to run on top of the operating system. If we do our job well, giving people the new capabilities and compatibility, we can make a big contribution.
With Windows running on well over 200 million computers worldwide, we constantly think about the customer base and how we get them from here to there. A lot of the “layers of old software” you refer to do get eliminated-we’re constantly stripping out redundant code or replacing it with faster ways of doing what the old code did.
DERTOUZOS: The millions of users of all operating systems and browsers, worldwide, appreciate the need for system stability. Yet the incremental changes that have ensured it have also led to today’s difficult-to-use systems-and I mean the systems of all software developers, without exception. Novices and experts alike kneel (I sometimes even cry) as we try to fend off a tangle of intertwined lizards and thousands of moving parts within these systems and the many applications that use them-until we luck in on a fix. We’ll have to clean up this mess if we are to provide the true ease of use that will enable people to achieve the 300 percent productivity gains we envision in the 21st century. People will have to rise above battling low-level details, to access the knowledge they need, collaborate with others, customize their systems to their own human needs and automate their own repetitive tasks. I think the time has come to bridge local and distant computation and support these much-needed capabilities in a new breed of system; applications will then be freed up to use all this new power in medicine, education, business, recreation, commerce and so on. I can’t see us getting there incrementally.
GATES: The danger here is that we may simply dismiss the progress that the computer software and hardware industries have already made. Twenty years ago nobody used a computer unless they were a hobbyist or employed by a corporate IT department. Now, even a child can use a PC to carry out computing tasks that were actually beyond the capabilities of those 1970s IT departments. We’ve already seen huge gains in productivity as a result of the PC, and enormous strides in education, medicine, recreation and commerce. Four years ago you couldn’t buy a book online; now you can buy almost anything online. And the gulf between remote and local computers is already being bridged, both by the Web and by other networking technologies. Clearly, we’re only at the start of the Digital Age, and our future progress will undoubtedly dwarf our past achievements. But we shouldn’t underestimate how far we’ve already come.
We also shouldn’t underestimate how much work remains to be done. Simplicity is a key goal, but it’s a constantly moving target. Both hardware and software are constantly becoming ever more sophisticated, we want to add more and different types of devices to our computers, and we want all this to work perfectly and easily-and be simple to upgrade too. Plus we’re trying to drive computer usage toward less-technical consumers-deep into the mass market. And that’s a huge challenge for the industry, but one we undoubtedly have to meet if we are to drive future growth.
DERTOUZOS: The Agrarian Revolution with its plow, the Industrial Revolution with its steam engine and the Information Revolution with its computer have all improved our economic lives. Maybe the time has come for a new revolution, not about things, but about the most precious resource on this planet-ourselves? What role and purpose do you see for human beings in the Information Age?
GATES: I’m very optimistic about the role of human beings in the Information Age, because this is an era where people-their knowledge, and their ability to put that knowledge to work-will be more important than ever before. There are great dangers to thinking that just because manual labor-whether on the land or in factories-is playing a relatively smaller role in wealth creation, then people are also playing a smaller role. In fact, the Information Age is enabling people who were previously forced to pursue a single means of wealth creation-those, for example, who lived in remote areas had no option but to work on the land-to choose from a far wider range of work. Technology such as the PC, the Internet and cheap telecommunications have brought amazing mobility to the factors of production.
The Information Age has brought people together in even more fundamental ways. The increasing speed and flow of information has opened up closed economies and helped democratize the most repressive regimes. You can close geographic borders but you can’t build effective borders in cyberspace. So technology is giving people more freedom, and the power to do more with that freedom. And technology will never replace the wonders of human interaction-no matter how good PCs get at recognizing voice or handwriting, they’ll never read body language or smile back at you.
DERTOUZOS: I fully share your views and optimism on human beings and the future uses of the technologies we are developing. However, I am concerned about a split that started 300 years ago in the Enlightenment that busted up faith and reason, man and nature, which until that time were united. The liberation of reason caused science to blossom and led to the Industrial Revolution, which made our part of the world wealthy. By now, this split has taken hold, and each of us goes through life in a compartment, labeled technologist or humanist, rational or spiritual, logical or emotional. I don’t see the Information Revolution curing this split. It may even aggravate it by increasing our reliance on virtual encounters and machine knowledge. Meanwhile, the world around us is becoming explosively complex with a myriad of intertwined challenges and problems that straddle these divisions and cannot be handled with such partial mindsets. To cope with this new world, but also to enrich ourselves, I believe we need to unite our divided selves and try to become whole again. That’s what I mean by a fourth revolution aimed at understanding, beyond things, ourselves. Any thoughts along these lines?
GATES: If the Information Revolution did lead to a reliance on virtual encounters and machine knowledge, then I would agree with you. In reality, though, the computer is increasingly a gateway to knowledge, to the arts, to new cultures, and so on, that were simply not accessible before. It is creating communities that, far from being mere virtual entities, serve as the foundation for real relationships. So to the extent that the computer can link people with knowledge and cultures and each other more efficiently than any other past technology, it can help push them toward healing the rift you see. But technology is only a tool-and, like all tools, its effectiveness depends on the skill and intentions of the user. In the end, you have to put your faith in human nature. If you think the invention of the book was bad, then you will feel the same way about the changes that are coming. If the book was a good thing, then these advances carry the empowerment even further.
DERTOUZOS: I agree with you on this last point: The angels and the devils are definitely within us, not within the machines we use. And so are our divided selves. That’s why I view this as a human problem in need of a human revolution. Speaking of human problems, I believe that left to its own devices, the new world of information will increase the gap between rich and poor people, simply because computers make the rich more productive and hence richer, while the poor are standing still. Do you agree?
GATES: The power of cheap software and cheap computing has brought enormous economic power to millions of people who in the past lacked it. It has helped democratize nations and economies around the world. It is bringing about the death of distance, as high-speed telecommunications link people, companies and countries faster and cheaper than ever before. And while this Information Revolution hasn’t yet reached deeply into the poorest regions of the world, it will-look at what is happening in India and China, for example. The Industrial Age did in many ways bypass poorer countries; the Information Age actually gives those countries a chance to compete on equal footing with richer countries. In fact many of the poorer countries have a comparative advantage in that they can now leverage their cheaper labor around the world-not just locally-using the power of the PC, the Internet and cheap telecommunications. The poor are not standing still; they are catching up faster than they ever did in the Industrial Age.
DERTOUZOS: I share the view that the poor could rise out of poverty, by using the new world of information to learn how to read and write, take care of their health, cultivate the land, and acquire language and other skills that they may use to sell services in the information marketplace. However, for this to happen, the poor will need communications, workstations and training-all of which cost a great deal, and therefore cannot materialize spontaneously. The people you allude to, in Bangalore and elsewhere, who deliver software services over the Net, speak English and know how to program. They are but a drop in the ocean of six billion people on Earth, barely 2 percent of whom are interconnected. My point is that all the benefits that we envision will not become available to the poor if we leave the Information Revolution to its own devices. We need to take an active role as individuals, companies and governments of the industrially rich world to help the poor ascend along this path. How can you disagree, in light of all you have done along these lines?
GATES: Unfortunately, the benefits of every new technology tend to trickle down slowly. Even the earliest tools of the communications revolution-the auto, the airplane, the telephone-have yet to benefit some poorer parts of the world. But what will clearly help the spread of information technology is the amazing speed at which computing costs have dropped, along with information technology’s ability to break down borders. We’re already seeing examples of how cheap PCs can transform companies and government agencies in poorer countries, and the benefits of these changes feed directly to the population. But generally, you are right: companies and individuals in rich countries will have to contribute technology and cash to kick-start a truly global Information Revolution.
I am a big believer in philanthropy, and I’m excited about the impact it can have. I think it is also important to consider priorities. I have chosen to focus on making sure that children in poor countries get access to vaccines so they can live a healthy life. This has to come before making sure they have access to computers. I have put more than $6 billion into my two foundations because of my enthusiasm for taking the great advances in medicine and information technology and giving more people access. We can do some great things here.
DERTOUZOS: I wish other people and organizations would follow your philanthropic lead. And thanks for this enjoyable and informative discussion.
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