"CHIEF SOFTWARE ARCHITECT" OF MICROSOFT LAYS OUT BLUEPRINT FOR INTERNET FUTURE.

In his first year as Microsoft Corp.'s (Nasdaq: MSFT) chief software architect, Bill Gates used his annual "state of the industry" speech to describe sweeping changes he sees in computing and to lay out a visionary blueprint for the next generation of the Internet. Gates predicted a fundamental shift away from the current passive "publishing" model of the Internet toward a future in which powerful new software will connect servers, PCs and personal devices and allow people to personalize the Internet to meet their specific needs.

"Ninety-nine percent of the great Internet applications have yet to be written," Gates told a sold-out crowd of more than 12,000 COMDEX/Fall 2000 attendees at the MGM Grand Garden Arena. "Today, thanks to Internet standards like XML, there's an enormous opportunity for developers to write breakthrough software. Consumers and businesses will see immediate benefits from our ability to tear down the walls that prevent people from using data and information in a really meaningful way.

"Three years from now, all of us will use Internet services that we take for granted," Gates said. "They will make us more creative, keep us connected and save us time, and they will help every business run more efficiently and serve their customers more effectively."

Gates' presentation showcased breakthrough technologies from Microsoft that will contribute to this next-generation Internet. He demonstrated a Web service built using Visual Studio.NET, the beta 1 release of which was announced during his speech. Gates showed off a prototype of a new breed of PC called the Tablet PC. The size of a pad of paper and only an inch thick, this fully functional personal computer combines the power of the PC with the convenience and simplicity of pen and paper. He previewed the next version of the Microsoft Office suite, and demonstrated how the Smart Tag functionality inside can be used to create smarter, more useful documents that take advantage of new Web services and applications.

At the core of his speech was the instrumental role software will play in profoundly changing the way people experience the Internet -- transforming it into an extension of everyday life.

"Microsoft was founded 25 years ago on the passionate belief that software can empower people to achieve great things," said Gates. "Software remains at the center of every exciting development on the Web. Smarter devices, smarter servers and great new Web services can work together only through the magic of software. Software is at the heart of making this next generation of the Internet a quantum leap in power, flexibility and agility."

In his speech, Gates announced the availability of Visual Studio.NET and the .NET Framework beta 1 release, which will be distributed to millions of developers, enabling them to develop .NET Web Services and ushering in the next generation of Web computing. Visual Studio.NET and the .NET Framework are the essential tools and platform technologies required to build Web Services.

"Some people have had the mistaken notion that in order to make the server smarter, you need to make the client dumber," Gates said. "Developers are looking to combine the rich, personalized power of the PC with the incredible reach of the Internet. These new tools allow them to do that -- quickly, easily and using their existing skills."

Gates profiled several companies currently offering Web Services, including Dollar Rent a Car and Galileo International. He emphasized the importance of industry standards such as XML and SOAP, both supported by the .NET Framework, which are used by developers to ensure that Web Services work together across the Internet.

Demonstrating Microsoft's further support for industry standards, Gates announced that the company has submitted C# (pronounced C-sharp), a powerful new object-oriented language for C and C++ developers, and key parts of the .NET Framework to ECMA, a vendor-independent international standards organization committed to driving industrywide adoption of communications technologies.

Gates also demonstrated a prototype of the Tablet PC, developed by Microsoft's Emerging Technologies Group. The Tablet PC is a fully functional PC that combines the simplicity of pen and paper with the power of a computer, allowing knowledge workers to bring the power of their desktop PC to tasks such as note-taking and reading. The demonstration showcased that the Tablet PC represents a major evolutionary step in PC mobility and usability, finally realizing a long-held goal of many computer visionaries and designers. Gates said the Tablet PC, which is not expected to be available until the spring or summer of 2002, represents a great example of the computing universe adapting to meet the changing needs of business professionals.

The Tablet PC demonstration showcased the "rich ink" functionality, which is built into the Windows operating system and Microsoft Office, as well as unique applications such as on-screen note-taking. With the Tablet PC and a stylus, users can simply write on the screen as if it were paper: They can take notes; annotate documents, e-mail and presentations; or use the Tablet PC as a high-resolution-display reading device. The notes and comments are "captured" as digital ink, which then can be sent along with the documents and stored or sorted without users having to re-enter the data via a keyboard.

Since the Tablet PC comes with all the familiar applications and capabilities associated with desktop and notebook PCs, it is much more than a companion-type device, weighing less than three pounds and offering stunning high-resolution color displays, Microsoft ClearType display technology, wireless connectivity and long battery life.

Discussing how employees will benefit incredibly from rich client computing, Gates delivered an overview of the revolutionary next version of Microsoft Office. Describing it as the most significant release of Office ever, Gates announced Office will include advanced speech-recognition technology that will enable customers to control any Office program and create and edit documents by simple spoken dictation.

Gates demonstrated a fundamentally new way for Office users to create dynamic, Web-enabled documents using technology called "Smart Tags," which will allow them to automatically link to rich, up-to-date corporate and Web information directly from within Office documents. For instance, Office will recognize a name in a document and a Smart Tag will let users easily send e-mail or an instant message to or find detailed information on the person right from within the document. Gates said that Smart Tags are built with an extensible architecture that anyone can take advantage of, and showed how West Group, the top provider of e-information and solutions to the U.S. legal market, has created a Smart Tag that enables legal professionals to easily access up-to-date case histories, legal definitions and other West Group legal resources without leaving Office. This same Smart Tag functionality lets Office users easily and intelligently use a much broader set of new and existing features to quickly complete everyday tasks. The new version of Office also will contain a new Web-based collaborative application called Microsoft SharePoint that tightly integrates with Office.

While every computing device will be connected, more powerful and smart, Gates explained that the personal computer will remain the primary device for creativity and communication for business users and consumers. Gates said that the next version of Windows, scheduled to be available in the second half of next year, will make the PC much simpler for consumers and business users alike, while featuring the rock-solid performance of Windows 2000 that businesses have relied on. He explained that cutting-edge hardware and software companies are excited and already planning for the Windows 2001 launch.