Keeping Microsoft ahead of the pack

…directly downloading over the internet. That's the way Mediaroom TV works. That's the way Xbox Live works.

We've got more content with Disney and MGM coming onto that. It's been very, very successful. The convenience of not using media — we've seen that in music. iPod, Zune, your phone — that's how you are going to carry your music.

Your collection — it's up in the cloud. Any new device you get, it's there. That will happen for video too. The actual physical-format battle here isn't really, in some senses, that important. But getting the movies so you can access it through any broadband device — that's the future.

Would you do a Blu-ray add-on for Xbox?
Third parties can do peripherals for Xbox. Obviously, all of the different optical-drive technologies are supported in Windows. At the core, we are about software and making sure the HD activities get to critical mass.

I was reading a bunch of "Biggest tech disappointments of the year" stories, and Vista was on most of those lists. Do you think Vista has some work to do, in terms of convincing people it's something that they need?
Vista passed 100 million (units shipped), which is a pretty phenomenal number. A lot of people put it on their favourite-products-of-the-year [lists] because they are using neat new features that are there. We certainly got a lot of feedback about getting device drivers [out]. There were some compatibility things we didn't handle well. Definitely, we're a lot smarter there.

I'm proud of the product. There are a lot of things that, as the year went on, we got the polish and the extra drivers out there. Vista will be a lot stronger in the next year. We're taking the lessons learned from that and building the next great version of Windows, which will be even better.

A lot of people put [Vista] on their favourite-products-of-the-year [lists] because they are using neat new features that are there

Bill Gates

Is there an opportunity, where it's not tinkering with the operating system, but rather making the overall platform more compelling?
There's none of that we haven't been in, way before there was an iLife. Microsoft Works goes back 15 years. The photo stuff in Windows just keeps getting better. We did a Windows Live release that had photo gallery [component]. Movie Maker is a very strong product, and we are continuing to invest in that.

Can we package it up so it's a clearer message around Live? I think, definitely, there's things to do there, but having those neat scenarios be part of what you just get with a PC, having that be clear — I think that's important for the consumer market.

It seems like Windows Live has become the primary vehicle for that. Is that true?
[For] most of those experiences, because you want those photos online, a lot of the innovation will be in Windows Live. Some things, like Movie Maker, will stay as Windows client things. But Live is the centre of attention. That's a product we will update in a pretty dramatic way on something like a yearly basis.

It seems the notion of Media Center specifically as a way of getting content doesn't seem to be a huge platform. Does merging the Media Center folks with the IPTV folks open the door for one platform?
Yes, we can bring those together. What you are going to see is that IPTV and Media Center have gotten to a size [such] that content people are doing unique things. Robbie [Bach, head of the Entertainment and Devices Division] is going to show some Nascar things, some Fox things. Interactivity and personalisation really count.

Our deal with NBC on the Olympics is about taking video, and we'll offer that on general internet PCs and other ways of getting that video. The idea of programming video and bringing in the interactive pieces — that's a vision we've had for a long time now. It's becoming reality, with Mediaroom, with over one million (set-top boxes), and Media Center a bigger percentage of Windows than ever.