Bill Gates | ‘Google’s honeymoon is coming to an end’

Bill Gates | ‘Google’s honeymoon is coming to an end’
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First Published: Fri, Jul 24 2009. 11 46 PM IST

Long-term outlook: Microsoft Corp. chairman and co-founder Bill Gates at a Nasscom event in New Delhi on Friday. Raj Kumar / Mint
Long-term outlook: Microsoft Corp. chairman and co-founder Bill Gates at a Nasscom event in New Delhi on Friday. Raj Kumar / Mint
Updated: Fri, Jul 24 2009. 11 46 PM IST
New Delhi: A year after moving away from day-to-day operations at Microsoft Corp., the world’s biggest software maker, Bill Gates remains as driven as ever. “When I was with Microsoft, I was fanatical of that work. And, now I am fanatical full time about (healthcare) work,” Gates, visiting India, told an audience of senior executives at a tech event in the Capital on Friday.
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A day after Microsoft reported 29% weaker net profit at $3.05 billion (Rs14,762 crore today) for the June quarter, Gates, 54, still chairman of the company he co-founded in 1975, spoke to Mint about the downturn in his firm’s business; its rivalry with search leader Google Inc.; work at his foundation; his personal goals; and what he is betting on. Edited excerpts:
From where you sit in the tech world, what is your outlook on the tough economy the world is in?
Companies such as Microsoft that are conservatively managed are still quite profitable. We are not making as much as we did last year, but the drop-off is not some tragedy that has us not believing and investing long-term, including the fundamental research, which is at the centre of our future.
(At Microsoft), the innovations are continuing at full pace—Windows 7 (a new version of the Microsoft operating system due for release in October) is about to come out; Bing came out. We just went through our fifth anniversary of Microsoft Research where we talked about the breakthrough things that that lab was able to bring forward.
So, the information technology industry, even though it has got a volume drop that’s affecting profitability for some of the players, is the most competitive industry.
When we interviewed Craig Mundie (Microsoft’s chief research and strategy officer) earlier this year, he talked of the current global situation as a “permanent reset” of the economy. (CEO Steve) Ballmer has repeatedly said that the worst is not over. But the tech analyst world still seems bullish on signs of economic recovery. At Microsoft, what are you telling them after yesterday’s results?
Long-term outlook: Microsoft Corp. chairman and co-founder Bill Gates at a Nasscom event in New Delhi on Friday. Raj Kumar / Mint
Well, it is key to remember that the real decisions that a tech firm such as Microsoft makes don’t really depend on knowing whether 10% more PCs will sell next year or 13% or negative 5%.
The basic bets we make on secure software, speech recognition, putting the camera on the PC...those bets are really based on whether you can make the breakthrough. Go back to graphical user interface, Office suite...they are not based on my being a great macroeconomist. Microsoft was founded during this huge recession, it was terrible. But I barely noticed it. I didn’t say that I better call Alan Greenspan and find out what interest rates the Fed will be setting so I know whether to hire programmers or not.
So, the basic proposition of the magic of software is unchanged.
The earnings figure for the next couple of years for something such as Microsoft will be affected by the economy. So that’s what Steve, for the interest of investors, is doing a good job (on). Microsoft’s always been careful in having modest expectations for investors; no company, I think, has done as well as we have of really being brutal on expectations. PC demand doesn’t look (as if) it is down too dramatically, but no one really knows what the next few years will look (like). But, fortunately, it is not so down that the basic proposition of what kind of software we are doing and the scale at which we are doing has changed.
Are you excited about Windows 7?
Very. It is an incredible piece of work. The team’s done very well; it will certainly be our best release in a decade.
Microsoft and search—what’s the way forward? (Microsoft’s latest search engine) Bing’s out and is getting good reviews.
Bing has achieved our goals; it’s raised our market share and it’s got a clear awareness that we are in the game. People can simply type Bing and key a term and it will give a coupon or give you directions or a lot of integrated results. We have a lot of things that our competitor (Google) does. They are very strong, their market share is overwhelming that will take many years of chipping away before there is any sign of that changing.
However, we are a long-term company. We have hired some amazing people at Microsoft. The leading indicator of that activity is how they are coming up with ideas that you can really bet on that we think will be different from what the company, Google in this case, is betting on. Every time we improve, they improve some. We have really caught up on some, but they are not remaining still. We are in the game; we are very proud of that. And, when Microsoft’s in the game, we stick to it and do out best.
There is a lot of profit potential in that space. I think it is better for the world to have a deep, long-term technology company really into competing. Coming down to it, Microsoft is the only one that has a chance of doing that. Even for us, it has required a phenomenal dedication to work and investment. It’s still not profitable but it will be.
You said they are not standing still. They are making these inroads or intend to make inroads into some of your core areas. How do you rate their chances of catching up?
It is a competitive business; it’s always been. There’s nothing really new about that. You can list our past competitors and those made for a lot of good news articles that Microsoft was on its last legs. We would not want to deny anyone the opportunity of denying those articles. Again and again and again. And someday, it will be right, too. (Smiles.)
More seriously, they are moving into operating systems (OS).
They have done an Android OS. How many more OSs are they going to do? I hear they are announcing one next week. The more the better.
And, are moving into productivity suites...
How’re they doing? Take Google Talk. I mean, Google Talk was going to take over the world; it really was going to take over the world. But, who’s written an article since it was released, (saying), “We should look at its incredible contribution to the universe”? And, Orkut? What an incredible thing they did! I hear there are some Brazilian girls still using them. So, you know they are not infallible. But they do good work. Microsoft’s the same way. You know, Google’s in this kind of honeymoon...actually, their honeymoon is slowly but surely coming to an end. And, that’s fine. Our honeymoon came to an end and theirs has to come to end, too. And then, they will be just a normal company.
They do interesting work and we are going to be competing with them five years from now, 10 years from now. And, that’s a very good thing for customers.
On your philanthropy work, give us a 10,000-feet view of how you think technology can be leveraged to address problems that are centuries old?
Almost everything we are doing (is around technology), like these new rice seeds that work well when they are submerged so that you don’t lose your crop and lots of very interesting seed work for farmer productivity. In health, it is new vaccines—vaccines for tuberculosis, AIDS, malaria—not only getting those invented but making sure they get delivered. (Some) 10 million children die every year. With the new vaccines, we could cut that in half. There is some real work to be done there.
Then, there is financial service for the poor...using cellphones for banking. Education is a lot about online or video—asking teachers in online video.
Has capital really been the fundamental stumbling block to develop, say, vaccines?
Some five years, ago we did a $60 million grant for the malaria vaccine and it more than doubled the money going into the field. This is a disease that not only kills a million children a year—200 million people suffer from it in the course of the year.
Africa bears the brunt of this terrible disease and even India and some parts of South-East Asia have significant amounts. It is unbelievable how the world is not focused on that and it’s a market failure. There is no market because its poor people and in the marketplace, you speak with money and they don’t have the money to fund the research to focus on that disease.
Fortunately, we put enough in and we have a vaccine that we put in a phase III trial (human trials) and we are fairly optimistic—that was not happening earlier.
Are you seeing tangible change?
Well, we have saved millions of lives with new vaccines already, but there are many millions more to be saved. But some of the big wins are the things that we hope to achieve in the years ahead.
Apart from healthcare, which you drive at the foundation, you are also interested in a whole lot of technologies that will change lives. What are those top things on your radar at this point of time which you think will make the big changes?
IT (information technology) is still the business I know the best—the magic of software, the chip... Microsoft is still growing its research activities and they are very fanatical about driving that force and I stay involved in that in some projects that involve about 20% of my time.
Fortunately, there is a big marketplace for those innovations. It’s a very competitive space. I think Microsoft has done a good job of being realistic of how those things can help poor people—bringing sociologists and psychologists in. It takes a lot of very special design.
Another area that I see more of a marketplace for is energy, where we need a breakthrough and fortunately there has been a lot of companies looking at that. The scale and the opportunity is very big and the science says that there are many things that if they can be brought down in cost can provide immense amount of energy at low cost while not creating any environment problems.
Things like high wind, offshore wind, solar chemicals, solar thermal... I have some investments to encourage innovative companies—there is even a nuclear one called Terrapower that I am a investor in.
Of the thousands doing this work, overwhelmingly, most will fail but the world will benefit immensely from the three or four that actually do bring the cost down because after all—when you talk about clean water, fertilizer or transport—that’s the cost in energy. The progress of civilization maps very closely to bringing the cost of energy down and now getting rid of the side-effects at the same time.
When Bill Gates goes away from this world, what would you like his friends to describe him as?
Immortal! (Laughs.) He never left. But seriously, I don’t think you have a goal really after you’re gone. My motivation is more here and now—disease goals, family goals, backing some start-ups and activities that will have a big impact.
Tell us your thoughts about India’s national citizen identity project.
Ambitious projects like that often don’t work out. But they don’t often pick somebody of his (Nandan Nilekani, the head of Unique Identification Authority of India) ability. The potential benefits of that are particularly large here including something such as vaccination that I know best. And, so, I think there’s lot that can come of that. A year from now, that will be concrete: There will be milestones, he will appoint partnerships to get the thing going.
Shauvik Ghosh contributed to this story.
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First Published: Fri, Jul 24 2009. 11 46 PM IST
More Topics: Bill Gates | Google | Microsoft | Bing | Craig Mundie |