Gates looks to life beyond Microsoft

The second is much more about people. We pick great people. We believe in the innovative products they can do and we're relentless about staying behind them. That framework has been so key to this company whether it was DOS, graphics user interface, integrated Office.

We were not an overnight success in word processing. WordPerfect, WordStar, there were what, four products that were more popular than us at various times along the way? Eventually we persevered and did that very well.

And we're willing to take on things like Tablet (PC) that, you know, it's hard. At first, the hardware is a little bit too big and the software recognition is not quite as good as it should be, but you just learn and learn and learn.

Ballmer: Gosh, and I thought you were going to say the Basic interpreter for the model 100.

Gates: Well that's the last thing I personally wrote.

Many people, when they are looking to move on, the hard thing is there's one or two things at the top of their list that just haven't gotten done yet. Obviously you have a couple years to still work on those, but are there a couple things that are really at the top of your list?
Gates: Two years is a long time in this industry and I do hope that Microsoft, with my full-time help, achieves a lot in the next two years. Real-time communication: We're kicking off some things there that I think are going to surprise people. This new wave of products has a lot built into it that will only be recognized over this next couple of years.

There's a few things like unifying storage. I'm really going to infect Ray with my deep belief in unified storage so that any hour I'm not here, he is carrying that torch. This is one that people like to give me a hard time about, because it's taken a long time and some of the moves we've made in that direction have shown what a challenge it is. I still very, very much believe in that. Model-based programming--we have some of our technical fellows who come in and work on that. I want to make sure they get to a (certain) point. That may be one of my part-time things, we don't know.

Ballmer: I know this guy well enough to know, at any point in time if he was going to make a transition like the one we're talking about now, there would be a set of things that he's excited about. This is as good a time to do this (as any). Today it's "fu," tomorrow it would be "bar." Bill gets excited about this stuff pretty easily.

There does seem to be this disconnect between the way that you guys talk about where the company is at and the conventional wisdom. People point to a number of things--stock price, morale, faster-moving competitors.
Ballmer: The morale thing is a weird one. We poll our employees. Morale is in pretty darn good shape, in fact. We've recruited more people, we've had better success on college campuses and industry hiring. Attrition rates of good performers is near an all-time low. People want to work here; they are excited about the kinds of stuff we are doing.

Stock prices do go up and down but profits don't. Our profits have grown steadily. There's always some competitors we are doing well enough against and some we are not. If you look back three or four years ago, many people said open source would inherit the earth and we've done very well.

Sure there are competitive challenges in front of us. I don't deny that, but there have been competitive challenges before. I'm not casual about those. On the other hand, hey, we've got a lot of good people working on a lot of things in search and music and advertising, which I think are the areas people dwell on. Today, I guess we get a chance to surprise people on the upside. Conventional wisdom is often not right.

As you look back, is there anything you'd do differently?
Gates: I would not change a thing. I have such an amazing job. Sure, we've made mistakes along the way but every one of those has been a chance to learn and do things better. This is the most interesting company, the neatest set of both business and technical people. I wouldn't change anything.