So why services now? That idea has been around for a while. There have been some projects within Microsoft to offer Office-like capabilities that didn't actually make it to market. So what has happened to make this a reality?
Gates: The fact that Windows monitors when people are having crashes and problems and we get reports, that's been there for three years. Software is becoming better because it is connected up and you can see how it's being used and you can improve it over time. There hasn't been an infrastructure for doing the patching. Some of these security things have driven that, and we can benefit from having that infrastructure, not just for security but for other improvements. The services concept is coming along. The first company meeting where I talked about software as a service was in 1998. The relationship with our customers has changed from software in a box to something else.
So you will see the services thing increase. We bought a company called FrontBridge that's kind of a software service firm. We have a lot of expansion ourselves in this area. It's not just consumers. A lot of it, actually the majority of this, is focused on businesses. We're giving them a choice of how they do IT, and some of it is through services.
Telcos have been wanting to do this for a long time. Some of them are your customers. Doesn't this pose a conflict?
Gates: Our relationship with telcos is stronger than ever. As they have seen us be a proprietor of basic technologies that let them get into the video business, they are saying, could their R&D department have done that? So they are seeing how they can incorporate that in and be a service provider beyond telephony. So their strategic plans are more dependent on how we get those things done, more than ever.
With Oracle buying Siebel, does that change your approach to the customer relationship management software market?
Gates: Larry (Ellison) forecast big consolidation, and he wanted to see that come true, so he's making it come true. It's a brilliant forecast. If the next three people under you don't write code but they do deals, what do you get? You get deals. They will probably do more deals than anybody, and we'll write more code than anybody. We've been very serious about our CRM plans, including scaling that up to very demanding cases.
SAP is very strong in CRM and a good partner. Siebel was the original leader in CRM, and we have a good relationship with them. We'll maintain that, even though they are part of Oracle. A lot of what CRM is about is work flow, and we're building work flow deep into the cloud. You would have to say that CRM as a whole has not fulfilled some of the promise that was out there. So the fact that it is being repartitioned as an assumed part of Office and the platform -- lots of it -- I don't think that is too surprising. It never emerged as a clear-cut thing by itself quite the way that some people expected.
This morning, you were speaking about some of the tough problems that software hasn't solved -- speech recognition, security, presence. What's holding us back from solving those problems?
Gates: The pace of software innovation today is as fast as it has ever been. In speech recognition, over the past decade, the error rates have come down, down, down, down. Now, we haven't hit that magic threshold where speech recognition is better than the keyboard.
1%
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