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US superpower status challenged - Gates

Microsoft bit wobbly, too

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The rise of China combined with failing US education and tough visa systems means the US must surrender its superpower status and adopt a more multicultural worldview.

That's according to Bill Gates, Microsoft chairman, who said the US is failing to turn out sufficient numbers of computer science graduates or to attract enough talent from abroad to maintain its edge at a time when China is becoming "the pace-setter for a lot of things."

Gates today told an audience at Stanford University, California, that the US must accept that as the world gets richer in terms of innovation it can no longer take unilateral economic or military action. "The US has been spoilt by being a leader for so long. It's a more multilateral environment [now]," he said. "

"It's a very different world compared to a single superpower with the innovation coming from one country," he said. "China is ... drawing on the talent they have in business of all types. There is a sense of urgency and speed."

Gates urged the US to renew its commitment to the things that had made it strong. "If we want to get our share of the world's improvements, we need to look at our edges. One of our edges is smart people around the world want to come to the US. That's been a huge benefit to us. It's an unfair advantage. We are making that tougher with our immigration policies. You can get tax-subsidized education [at Stanford] but not a visa to stay here and work," he said.

Interviewed by veteran talk show host Charlie Rose, Gates made it clear that China's rise does not mean the US loses out, but riches and wealth from innovation get spread around more.

Grilled by Rose over Microsoft's own spotty track record on innovation, he acknowledged Microsoft is four years behind Google on internet search - which he called a mistake of "omission". During that time Gates was betting on internet TV, a crusade that staff pressed him to dump, he said.

With Microsoft now trying to convince its own employees to re-direct their browsers to www.livesearch.com, he conceded it wasn't the first time Microsoft had been slow on the draw or come from behind. He highlighted Novell's leadership in network operating systems and WordPerfect on spreadsheets, which Microsoft trounced respectively, using Windows NT and Office.

He also defended Microsoft decision to "innovate" anti-virus, firewall and anti-spam security into Windows Vista as giving consumers what they want. He repeated earlier comments security vendors lobbied European antitrust regulators to "castrate" Windows Vista to protect their businesses. He said Microsoft felt "very good" about its relationship with the European Union on Windows Vista having made changes to the operating system.

Asked to rate other innovators and their innovations, Gates gave Apple Computer's iPod two thumbs up. Fresh from launching Microsoft's iPod rival Zune this week, Gates said the iPod was "phenomenal, unbelievable, fantastic" - something the market had latched on to. Microsoft's goal with Zune is "more modest" than replacing the iPod, Gates said. "It's a growing market... we can get some of the new users and some of the switchers. We need to excite people about the concept - the idea of sharing" music and video through Zune's built-in WiFi, he said.

Gates was cool on social networking wannabes trying to emulate YouTube and MySpace, which Gates characterized as part of a bubble. "There is this notion that traffic equals profit. Traffic equals maybe you can translate that into something," Gates cautioned.

Microsoft has joined the social networking herd with its Soapbox video site beta, but is trying to cross-pollinate traffic between other online properties like Hotmail, MSN and Passport, re-branded as "Live" services.®

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