Q&A: Gates' role as innovator, deal-maker, philanthropist

Microsoft co-founder says PC industry has had greatest impact in the past 30 years

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With increasing competition from abroad, innovation is of increasing importance to U.S. companies. What's your thinking around the link between innovation and intellectual property? Well, we're a company that's based in the United States, but obviously we're drawing on engineering talent from all over the world. We've got an unbelievable research group in China, we've got an unbelievable research group in India, and we're delivering to consumers all over the world as well. And we file for intellectual property in all of these countries. They're all in different stages in terms of copyright, or patents, and it tends to be a pretty complicated area.

Other countries look at what's going on in the United States and they say they'd like their engineers to have those same opportunities, those same incentive systems, and so there really is a sense of progress in that. It's just one of the elements that make sure people are willing to take risks and keep the innovation in this industry the fastest of any industry in the world.

You're going to be talking here about new partnerships for Microsoft's MSN, Xbox Live and Mediaroom IPTV services that will provide more content to drive Microsoft's consumer entertainment strategy. Can you talk about what you needed to do -- on the technology side and on the business side -- to make these deals happen? XBox Live is attracting virtually all the content people because of the volume we've got there, and they see this group of very engaged users spending a lot of hours and finding new media in that environment, so that's made it easy for us. Our announcement with NBC on the Olympics is about our innovations in Silverlight, where you can view interactive content, multiple video streams, so it's really a perfect match for the Olympics where you have all this different content and yet different people care about different parts of it.

As your consumer entertainment strategy comes to fruition, how will your business model change from what it has been in the past? Can you quantify goals for advertising-generated revenue? We've seen good growth in our advertising revenue. That's an area where Google's the leader, and we need to be very innovative to drive the scale. A huge partnership with Viacom is helping us with that. We'll be signing up more partners around the world. Taking the advertising platform to scale is very valuable for things like the search property we offer.

We participate in a lot of business models. We have consumer software like games that you buy on a one-time basis. We have things that you can pay as a monthly fee, that we run up in our servers, as more of a service-type model. We have some software we give away for free. And so, ads are coming in as a big, strong component, but I don't see it replacing the others. We need all modalities to be strong.

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