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Gates on The Future of Our Digital Lives

Microsoft chairman Bill Gates may have one foot out the door, but he hasn't let go of his crystal ball quite yet. And he still has the name recognition to draw more than 100 of the world's most powerful executives to the company's annual CEO Summit.

In a webcast of his keynote speech at the kick-off of the two-day summit at Microsoft, Gates kept it familiar and addressed the innovation in convergence, communication, collaboration and media and how it will affect our lives. But he said we still have a long way to go for some things.

The event originated in 1997 as a way to go beyond merely trying to communicate with Fortune 500 companies' IT czars and to reach out to those firms' top execs. At the time, some critics and analysts viewed the move as an attempt to make an end-run around CIOs who were skeptical of Microsoft's ability to deliver on Gates' fabled visionary promises.

Among this year's attendees are News Corp.'s (Quote) Rupert Murdoch, (Quote) head Jeff Bezos, Michael Dell of Dell(Quote), and Meg Whitman of eBay (Quote), representing $3 trillion in revenue and 11 million employees worldwide, according to Micrsoft.

Part of Gates' presentation was a reprise of the unified communications pitch he gave at the company's Windows Hardware Engineering Conference (WinHEC) in Los Angeles on Tuesday.

"On the desktop, you won't have a desktop phone [any more and] in an extreme form, you will no longer have a PBX at all because it's all going to be software."

He said that while there will remain differences between mobile phones and PCs, there will be increased convergence between the two devices.

"[In terms of] mega trends, I tend to believe the phone will move up and the PC will move down," Gates said. That is, the PC will become the phone and vice versa.

At the same time, the capabilities of computers worldwide have become equalized. "The average machine is the same between [the U.S. and China]," he said, despite much different standards of living in the two countries.

While, as in recent years, Gates continued to discuss his long-running theme of the "digital workstyle," he pointed to progress that companies like Microsoft have made, such as in the area of interactive online training. "More than 80 percent of what used to be face-to-face training is now done [online]."

During Gates' presentation, a Microsoft executive illustrated how the upcomingOffice Communicator, due out in the first half of next year, will allow users to access, originate and manage e-mail, instant messaging, file attachments, faxes, voice and video calls from within a single client.

And in a subtle dig at the media, Gates pointed to the use of the Internet to let corporations basically start their own television channels -- taking their message directly to customers rather than letting it be filtered through the press.

While he didn't mention it by name, Gates was referring to Microsoft's own popular online video channel for developers -- Channel 9. "It's really changed the nature of our relationship with developers," he added.

Gates also spoke of massive changes in communications brought about by the merger of traditional media -- video and music, for example -- and the Internet. IPTV, he said, is bringing interactivity to television and revolutionizing advertising. No surprises there.

Above all, Gates said he sees no slowing in the rate of innovation in coming years -- either in hardware, where he said Moore's Law is good for another decade at the least, or in software advances. But steep challenges remain in areas from speech recognition to software that sees what you're doing.

"We've got a long way to go in these things, which is the reason why we have research and development funding up at record levels."

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