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Gates Sees Internet Finally Getting Down to Business

Summit: Microsoft leader says third phase of online evolution will be geared to corporate efficiency.


REDMOND, Wash. — Microsoft Corp. Chairman and co-founder Bill Gates said Wednesday that the Internet is entering a third phase--one that business largely will drive as it begins to take advantage of emerging Web-based technologies and services that could reduce costs and boost profits.

In this phase, Gates outlined how new technology is transforming the Internet experience from the more passive act of simply looking at Web sites to being able to program and manipulate information from those sites.

"A lot of things are coming together now that are going to make the Internet a qualitative difference," Gates said. "Technology is not standing still."

Gates' remarks came at Microsoft's annual CEO summit, which aims to give senior executives a glimpse at technological advances that could alter the way they run their businesses. Held on the company's sprawling Redmond campus, the event was attended by nearly 150 chief executives from 28 countries, representing 37 different industries. Among the corporate titans attending the two-day conference: Jerry Yang of Yahoo; Michael Eisner of Disney; EBay's Meg Whitman; investor Warren Buffett; John Chambers of Cisco Systems; Boeing's Phil Condit; Sony's Nobuyuki Idei; and Martha Stewart.

The executives also shared cocktails and dinner at Gates' $60-million lakefront mansion Wednesday evening, and participated in a "fireside chat."

The rise of electronic auctions and business-to-business exchanges reflects how the Internet is reshaping the commercial landscape, Gates said. But that is only the beginning.

In the near future, Internet services will help buyers and suppliers improve their online collaboration, expand communication between managers and employees, and improve efficiencies throughout the organization, he said.

"We're taking the Internet to a new level," Gates said. "It's not just about reading [Web sites] but it's about creating and collaborating."

Several other combinations of technology also are driving these changes, he said. He cited the growth of high-speed network connections and the rise of alternative devices to the personal computer that will play pivotal roles in the development of e-commerce.

Gates and Microsoft will provide a more detailed strategy next week, describing how the software giant aims to merge its Windows operating system with the Internet to create a new generation of online services.

While Gates spoke, U.S. District Judge Thomas Penfield Jackson was considering the possibility of breaking the company into three parts during a Washington, D.C., hearing in the ongoing Microsoft antitrust case.

In a brief meeting with reporters, neither Gates nor Chief Executive Steve Ballmer offered to explain how the federal government could alter Microsoft's Web strategy and its other technology efforts.

In his prepared remarks, Gates noted that the Internet is entering a more "rational" phase, where businesses are questioning how Internet technology relates to their bottom line. As a result, relationships between buyers and sellers, consumers and Internet companies will grow more personal, allowing individuals to choose from a wide variety of services rather than relying on a particular company for their content or commerce, he said.

Some of the emerging technologies that businesses will see soon include e-books and "tablet" PCs for note-taking, Gates said.

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