News

Gates Addresses R&D, EU Decision, Outsourcing

• By Linda Briggs
• 03/30/2004

In a far-ranging question-and-answer session, Microsoft chairman and chief software architect Bill Gates discussed his company’s R&D spending, last week’s mammoth European Commission fine, outsourcing at Microsoft -- and how he views his philanthropic spending.

Gates spoke to several thousand attendees Monday at Gartner Symposium/ ITxpo 2004 in San Diego, the research and analysis company’s annual spring conference. Gates was interviewed on stage by Gartner CEO Michael Fleischer.

The two talked at length about how Microsoft divides what Fleischer said is a current $6.8 billion research and development tab, up from $3 billion just five years ago. Over the next three to five years, Gates said, most R & D money at Microsoft will be allocated to four things: security, reliability, spam and privacy. Within the next two years, he said that the symposium audience, mostly IT executives and managers, would be able to take security “off [their] Top 5 List” of IT concerns.

In a vague comment about last week’s decision by the European Commission to fine Microsoft $613 million, Gates said of Microsoft, “It’s a fascinating business model, to take the $50 operating system, and spend billions in R & D on new features, [then sell it for] the same price. Or, you can [continue to] use the old one for nothing.” That sort of model, he said, makes it incumbent upon Microsoft to continue to innovate order to sell new software.

On outsourcing, Gates said Microsoft’ core software development will remain in Redmond, although he spoke highly of developer groups the company works with in both China and India. “The bulk of Windows development and testing is going to stay in one location, even thought the cost is high,” Gates said. “We’re not about doing Longhorn 20 percent cheaper.”

Lastly, Gates addressed questions from Fleischer about his philanthropic spending through the Bill and Melinda Gates Foundation, which gives grants focused heavily on world health issues. He likened his efforts there to software development, in that “you pick bright people, mix skill sets, take risky solutions,” and work with foreign governments. “But the economic reward is lives saved,” he said. “We’ve already saved way over a million lives – we’ve just scratched the surface.”