Bill speaks on integration, lawyering and Linux

When he was talking to shareholders yesterday Bill Gates didn't just deal with the trial. Remember this is probably the most favourable audience he could ever had (so long as the stock price stays up), so they get to ask serious questions, and they get answers that are a cut above your average press conference. That process threw up some interesting data yesterday, and we were watching. Office in the browser A questioner at Microsoft's AGM yesterday wanted to know why Office, Word and Excel couldn't be made functions of the browser. Ah, said Gates, "We actually have two product lines there, we have Windows and we have Office. And they're two separate revenue streams... We keep Office separate because it's the high powered productivity tool, it's a separate revenue stream, and it makes sense that some Windows users want that, some Windows users don't want that... But, actually, the high level of functionality that's in Office, it makes sense for us from a business point of view, and from the users point of view, that we retain that as a separate offering." So much for the tighter integration argument for the browser. It's a shame that nobody asked why IE was not also a revenue stream, just to hear what he'd say. Bad lawyering A shareholder expressed his "feelings of disappointment at best that I had, and of humiliation at worst that I had in how the case against Microsoft was handled by our counsel. I'm very concerned. I'm very concerned that the quality of our company is not reflected in the quality of our counsel. And I would ask that the board take a strong look at shifting our approach to the legal situation that we find ourselves in, so that we are not outrun and out-manoeuvred by the government." There was applause at the question, and Gates responded, rather than legal counsel Bill Neukom. Because his response was unscripted, it probably gives better insight into his views, so here's his response in full: "I think it's pretty important in a case like this not to look in a very superficial way for someone to blame, or some way that this could have been done differently. We sit a lot at the company and talk about, how did we get into this situation. And one of the most defensible things we've ever done is the support of the Internet in our operating system. And we cannot back off on that. It's something that's very important. And when the government decides that they're going to block that innovation, your own government decides they're going to take you to court and say that you shouldn't make those kind of advances, it's not going to be a pleasant experience. It's not going to be something that anyone should have to go through. "You know, at every step of that process there was an attempt to distract from the core issue, whether it was taking emails, or meetings, or various things, to distract from the fact that what they're really saying we've done wrong, and if you read the findings of fact it becomes pretty clear. It's because that browser was attractive, there was another product that was distributed somewhat less, because they didn't keep up in terms of those kinds of advances. And so I think you can ask yourself how we got into it, but it's really the government that made the decision to block those innovations. And Microsoft is a very self-critical company. "We can certainly look back, whether it's the statements we've made, the style of various things, and say, in retrospect could we have been smarter about that? But, I'd say that what we've done, in terms of how we've conducted this case, the employees who went there to testify, the way that we put forward the story through our internal and external counsel about why our work is good for the economy, good for consumers, I'm quite proud of the work that's done there. And I'm really quite supportive of what's been done, and we're going to continue to tell that story, because it's a very, very important story, and we really ask your support in that." Note that there was no direct response to the question, just some stuff about innovation. Linux and browser-based computing Gates was asked about devices that go straight to the Internet, bypassing the PC, and how these devices - and Linux - would affect the PC business. Gates regarded the two as "very potent sources of competition" and specifically mentioned devices that would go to AOL specifically. Some of them are on Linux, he noted, while others ran on other code. He continued: "It's important for Microsoft to make the value of Windows, which will make the device modestly more expensive, on the order of, say, $70 to $90 more expensive, that the value you get in terms of being able to run the applications..." It seems pretty clear (remember he's talking to the shareholders) that Microsoft is still focussed on getting that $50 fee from everything that goes out the door. Bill, and Microsoft, still don't get it. Gates mentioned WebTV, but so far as the competition was concerned, he said Microsoft would "rededicate itself to making Windows easier to use, and having the value that justifies Windows being on those devices." So far as Linux was concerned, Gates said: "In terms of Linux, in general, there's a lot of different versions of that out there. There's no sort of centralised control. But, it's definitely a competitor. This is a piece of sort of public domain, open source type software. And, again, the challenge to us is to advance Windows in ways that through our innovation and testing makes it preferable to that choice that's out there... we're challenged now... as we deal with those competitors." With an understanding of Linux like that, and the promise of all that innovation and testing for Windows in the future, it looks as though the Linux community can rest easy. ®