D came out swinging on Tuesday evening with Walt Mossberg's and Kara Swisher's dinner interview with Bill Gates (and my trusty blogwallet was close at hand). All of my posts on the substance of the conference talks will consist of the highlights that caught my highly selective, unsophisticated, imperfect and incomplete notice. Please take them with a whole shaker of salt, and whatever you'd like to pour it on (for me, lately, that would probably be ice cream).

The Introduction

The conference opened with some remarks including an observation from Walt Mossberg that the Internet now is in place almost like an electrical grid, ready to power a host of different things. Spotlit, black and white portraits of the speakers were arrayed on all sides of the room, as Walt said, "like Red Square." This began a recurrent joke from the stage, characterizing these folks as "the Heros of Socialist Labor."

Next was an utterly hilarious and star-studded video short that took its cue from VH1's "Behind the Music." "Behind the Technology" began with a tongue-in-cheek tribute to the MITS Altair, which "lit a young industry on fire," and boasted revolutionary features and cutting-edge industrial design (great commercial parody with the Altair spinning along in a row of indigo iMacs). Moving on to DOS, with a ringing endorsement from P-Diddy, who (who knew?) apparently is a big fan. "It's a terrible operating system, but musically very interesting." Fond reminiscences of Microsoft Bob ensued, as well as great footage of Steve Ballmer channeling a home shopping/infomercial huckster. Cue the Internet, and two of the video's funniest moments. Mark Andreessen: "Yes, I invented the browser—since then, nothing." This was followed by the characterization of Bill Gates as an Internet pioneer, and Gates: "It was especially clear after everyone had already gone there." (That was all I took down from the video, but keep an eye out for it if the WSJ should make it available; it's well worth checking out.)

The Interview

Mossberg, Swisher and Gates began by discussing the current environment in the technology industry. Gates mentioned strong growth and advances in several areas like microprocessors, optic fiber and LCD tech, and his perception that in general the pace of innovation is being underestimated. They asked about GUIs and whether we are due for a new way to use a computer. Gates commented the idea is to simplify a number of concepts and make certain features central and uniform. Layout, presentation and usability need to be taken to a new level. They asked where these and other new developments will come from, and Gates said they're more likely to flow from long-term research at either companies or universities. The PC was an enormous leap forward, and we're unlikely to see something as dramatic again, but digital ink, speech recognition and Web services are big steps. Microsoft is increasing its r&d budget 15% (there was a funny moment when Gates tried to do the math and figure out how much this means they're spending) and investing and doing partial ownership deals with Comcast and other companies to encourage adoption of Broadband. Korea is "it" when it comes to broadband these days, Korea Telecom has a single sign-up, nationwide service.

Getting back to the growth areas Gates mentioned, Mossberg asked, "What the hell are Web services?" Gates mentioned a CEO conference last week where, in trying to explain the same thing, he showed how a spreadsheet could be created that would link seamlessly with the Amazon site. Web services is about connecting applications together, and it's the infrastructure needed for ecommerce. Today, phone, email and faxes still are the dominant means of commercial communications. Describing XML, Gates mentioned the ability to do customized sourcing (he didn't say it, but I was thinking news aggregators). When Mossberg suggested this would all run on a proprietary Microsoft platform, Gates was quick to say no, the XML movement is founded on the idea of total interoperability and open standards. He mentioned WS-I, the Web Services Interoperability Organization. Web services represent a sea change in the way data is moved within organizations as well. On the ecommerce side, it's not about comparison shopping. The real dream of ecommerce is yet to be realized.

The discussion moved on to Tablet PCs. To Gates, it's common sense these things will become pervasive. Mossberg and Gates went back and forth about whether the interface is easy or cumbersome. Gates: "A lot of people learn the pencil before they use the keyboard."

This then led to WiFi. Gates said if you're designing products today, you're designing for WiFi and quality service for audio and video. They asked about the effect of WiFi on the way cell phone services are priced. Gates called cell phone service pricing "truly ridiculous." He posited that over the next five years WiFi will become very mainstream, a complement to how people get broadband. He mentioned that having another approach to delivery of wireless services probably is a good thing.

They briefly discussed Microsoft's P2P chat and music app, Three Degrees. (Yeah, I hadn't heard of it either. Here are some reviews, etc. courtesy of Google.) General discussion of what's up with MSN, what services make it compelling. Gates mentioned projects to make files accessible on any machine, provide automatic back-ups and family scheduling (sounds very .Mac-y, to me).

They asked what Gates thinks of current developments in online music delivery. Gates responded that the big question is whether anyone will cut into piracy's 90% share of the market. The fact that record companies have cut deals on more liberal terms for Apple's Music Store is a step forward.

They discussed the Gates foundation, and Gates identified its primary goals on an international scale as health oriented. "Malthus was more than wrong, he was the opposite of right." Better health care equates to lower birth rates. It's premature to think about trying to solve digital divide issues in countries with health concerns that must take precedence.

Swisher asked what Gates would go into if he were seventeen years old and starting over today. Gates mentioned that the artificial intelligence field has never really delivered on its potential, and in the next few decades there's the possiblity of a breakthrough there. He's also interested in bioscience, and being someone who could reason about biology would be good.

The session concluded with questions from the audience. (A note about the audience questions throughout the conference: the illustriousness of the audience members often rivaled that of the speakers. My apologies for not immediately recognizing more of the questioners. For example, Steven Levy asked several questions, but never having seen him in person before I didn't realize that until later.) One audience member inquired whether Gates perceived the open source movement as a threat. Gates responded that we will always have free software and commercial software. Microsoft is always comparing its products to comparable open source offerings to make sure its products have value. (I was reminded of Dave Winer's recent "Who Will Pay?" pieces: part I, part II). Another audience member asked why Microsoft decided to license SCO Unix. Gates replied that Microsoft has Unix servers for Windows, and wants to be able to match whatever you could get from a straight Unix solution. Someone else asked about Placeware. This is an application that makes it easy to create an IP session to do meetings. Will involve integration with office training capabilities. MIT is using it for university training. Others can build on the Placeware APIs.

The final question from the audience concerned motivation, what keeps you engaged, interested, doing what you're doing? Hearkening back to the earlier exchange about the Tablet PC interface, Gates said it's to read a Walt Mossberg column that raves about a Microsoft product. In a more serious vein, he said that the dream born 25 years ago has not yet been achieved. Technology is not as easy and cheap as it could be, not yet the ultimate tool. There's nothing more fun than working in this industry.

More to come from the Wednesday sessions...