IP Democracy: Gates in Middle on Net Neutrality

(Carlsbad, CA) For more than an hour, Bill Gates talked tech (Vista operating system, Xbox, network-based software), markets (social networks, search engine competition, entry into the health care category) and a few other matters (philanthropy, Microsoft management). But never did the opening session at the “D: All Things Digital” conference delve into policy or heavy-duty communications issues. Interviewers and hosts Kara Swisher and Walt Mossberg of the Wall Street Journal, which is hosting this fourth annual event, played to their geek-centric audience - which is understandable given the interest in Microsoft’s competitive position and product plans.

But I came here with policy on my mind, so a few minutes after the early evening session ended, when I saw Gates near the poolside pastry/dessert table, I inquired about his latest thinking on net neutrality.

“I’m in the middle,” he admitted, acknowledging Microsoft’s feet in camps on both sides of the issue. As a major supplier to AT&T’s IPTV initiative and portal partner (via MSN) to Verizon’s DSL services, he recognizes the telcos’ stance. Yet MSN generally aligns with other portal suppliers in seeking assurances that content suppliers and packagers will be assured of access to the net.

“Ivan wants to give them hell,” Gates said, referring to Verizon feisty CEO Ivan Seidenberg. When I asked him about AT&T’s Ed Whitacre, Gates characterized his customer’s position as more moderate, willing to give and take as the process evolves. Gates diplomatically noted that his long-time lieutenant Craig Mundie, a versatile Microsoft executive, is heading the company’s tight-rope walk through the policy evolution - and then Gates was whisked off by Washington Post Co. CEO Don Graham, another D attendee. I spotted Gates later at the other end of the pool/dining area espousing on Digital Rights Management, but could not get close enough to hear his words.

The Microsoft chairman had addressed copy protection issues earlier, during the Mossberg/Swisher interrogatory. In several fleeting references, Gates acknowledged the challenges of downloading services - and admitted that he has become a fan of YouTube.com, saying that he recently was watching Harlem Globetrotter clips on that popular site.

“If we did YouTube, we’d be in a lot of trouble,” he joked - admitting that many of the shows are in questionable copyright territory. “Rights models are very complex,” he added before turning to other issues.

The wide-ranging discussion touched on long checklist of issues that are on Microsoft’s agenda, including:

TV on the Internet: It “blows away the broadcast model,” Gates said, predicting that “this is the year all the pieces” will come together and eliminate the “dividing line between TV and the Internet.” Asked about the traditional broadcast model, he bluntly pronounced, “It’s gone. It was a hack.” He offered a variety of vague references to the emergence of an on-demand world but acknowledged that the current linear process may still survive in some form because “the marketplace will demand that.”

Reality acquisition and an “augmented reality viewer”: Obliquely admitting that Microsoft is working on a portable media player - a device that may compete with video iPod, mobile phone and portable game machine - Gates discussed the importance of this kind of always-on connectivity tool. He bantered with Mossberg about the poorly kept secret that Microsoft is creating such a device as part of its ramped-up hardware initiative, but offered no timetable or details about the project.

Social networks: Gate waxed rhapsodic about social networks and user-generated content several times through his comments, plugging Microsoft’s “Spaces” site. He said that consumers and companies must get their “relationships defined in a concrete way” and said that there is a “lot to be learned in social network space.”

Search: Admitting that Google remains strongest in this category, Gates jibed that his competitor “has done less in the way of innovation than I would have expected a year ago.” He also joked that since Microsoft remains an also-ran in this category, “There is more upside than downside.”

Games: Gates spent a great deal of time on the success of the Xbox 360 and its competitive position against Sony’s Play Station. He bragged that Xbox will not change for the next four years, emphasizing the stability of the device itself and the opportunity to add content to that platform. Unlike recent presentations (such as his remarks to the E3 conference in early May), he did not talk about cross platform play between Xbox and PC users.

Office and other core businesses: Office 2007, the next generation of Microsoft’s core software suite, will debut by year-end - slightly sooner than the delayed new Vista operating system. It is a “big release,” Gates said, demonstrating some features of Word (which Mossberg noted are already available in rival WordPerfect), PowerPoint, Outlook and Excel.

That opened a riff on the future of network storage and integration with desktop applications. Gates envisioned the “Petabyte in the sky,” a reference to the economics of storing some applications and content in the Internet cloud itself.

“We’ll have a variety of services,” Gates said elusively - a fitting tease for the opening session of a lively D event. The agenda continues through Thursday, featuring discussions with a media-skewed line-up including Disney’s Bob Iger, Comcast’s Steve Burke (substituting for Brian Roberts), Sony’s Sir Howard Stringer and Current TV’s Al Gore.

Gary Arlen is president of Arlen Communications Inc., a Washington research company. GaryArlen@columnist.com

Update: For live blogging on the D conference (which I thought was prohibited), check out Blogging Stocks…Cynthia B.

Posted by Gary Arlen on May 31, 2006 9:49 AM to IP Democracy