Bill Gates knows that when it comes to the Zune, Microsoft has some catching up to do.
The success of the iPod has been described as "phenomenal, unbelievable, fantastic". And that was just Gates talking about it on Wednesday.
But despite catching up, Gates thinks that Microsoft can win some pocket share for its own media player, over time. While today's music players are largely islands, the Microsoft chairman paints a picture of a future in which all manner of devices — from cars to music players to digital cameras — all share data.
And as Gates told a crowd at Stanford University this week, Microsoft has no intention of being number two at anything for too long.
"We want to either be number one or on our way to being number one," he told the crowd.
In the first part of a two-part interview, Gates talks about the Zune and some of the things that its wireless connection makes possible, as well as about the sweeping changes Microsoft is making with Office 2007, the revamp of the ubiquitous software package.
Q: The Zune went on sale on Tuesday, and people weren't exactly lining up at midnight to get them. Was the reaction, both in terms of sales and critical acclaim, something that's a concern?
A: No. It turns out the stores weren't open at midnight, so we're glad that they waited to come in. The Zune is something we've done a really great job on the manufacturing piece, so there isn't this need to say, "Boy, I've got to get it", because we actually have quite a bit of volume.
We expect to do quite well this holiday season. The orders from the retailers have been great. And then, well, who knows what the regularity will be? But, certainly at least every year, you can do more, including things that work on the existing hardware, and then new hardware as well.
Apple has built a pretty big lead with the iPod. Why is it a market that's important to go after? Why develop the Zune at all?
You're going to have entertainment capability built into the car, and we're working on that with the car manufacturers. You're going to have it in the new-generation set-top box. You're going to have it in your phone, you're going to have it in your PC, and you're going to have some dedicated devices — dedicated media devices.
We thought to really fulfill our vision of connected entertainment that we wanted to have a device that had the wireless connection. Obviously, the iPod doesn't let you do third-party software, doesn't have a wireless connection — so, the connected entertainment vision, we can build on Zune and do some new things.
Looking at Office — big changes this time around. The user interface is really different. There's clearly some risks in that, and some investment required by companies when you change the way things look and feel. Why is it worth it to change Office so much?
Well, first of all, there's no effect on companies really. It's just as an individual, when you fire up Word 2007 you go, "Wow, those options are right there. You know — all the familiar stuff that you use regularly is just there. It's pretty obvious what we've done, but you'll probably take the first half-hour getting used to those things.
We have over a million users on the thing now, we understand the usability quite well. People adjust very quickly. In fact, within a few days, people do not want to go back to the [old] version because the ribbon [feature] takes advantage of the idea that screens are bare now, and instead of burying things in a two-level menu, just [has] them out there.
It was a very risky thing to do, and Julie Larson-Green and the team who internally championed that, I love what they did. It's been less controversial than we expected. You know, the world's most-used application, as you say, hundreds of millions of people who know...
