April 27, 2005

Remarks by Bill Gates, Chairman and Chief Software Architect, Microsoft Corporation, WINHEC Apr 26, 2005... part 1

Bill Gates' Web Site - Speech Transcript, WinHEC - Windows Hardware Engineering Conference 2005

WinHEC - Windows Hardware Engineering Conference 2005
Seattle, Wash.
April 26, 2005

BILL GATES: Well, good morning and welcome to the Windows Hardware Engineering Conference. This conference has a tradition of really ushering in the breakthroughs that allow Windows software and innovative hardware to drive the PC to be an even better tool. And it's the most important tool that's ever been created. It's driven more communications and productivity than any other.

Here, this year, it's another big year for us in terms of the things going on at the driver level, at the PC design level and how we want to work together on that. Combining our strengths, the huge increase in R&D that we're putting into Windows, along with your strengths, really leads to a very big impact out there in the marketplace.

We're talking a lot about memory space and expanding that, so this is also an opportunity for me to kind of set the record straight. I've tried to do this before but this time I'll do it very clearly. I did not say that 640k of memory should be enough for anybody. Anybody who believes that I said that probably also believes that when they get these e-mails that say that they've won a big contest or I've got some tracing programs, that I'm also out there sending these on a very regular basis. (Laughter.) But, in fact, I'm not doing that either.

So I'll be very careful not to say that 2 to the 64th will be enough memory for anyone. I will say that it might last us for a little while, it's quite a bit of memory, but some day somebody will write code that wants to go even beyond that.

This is an interesting milestone in that Windows now is about 20 years old. The graphics interface, the bet that Microsoft made on that, of course, was key to the success of the company. The first decade was really a pretty tough decade, to be frank. It was a decade where there was a lot of questioning of the graphic user interface. Was the hardware capable enough? Did we have the clock speed, the graphics resolution,-- all the things that would make that possible.

But Microsoft had made the commitment, a lot of other companies in the industry came along with that commitment, and built that on top of the success of the 16-bit MS-DOS machine, which the IBM PC became the model for that.

So we went from the 8-bit world to the 16-bit world with the DOS machines, and then Windows started out really very, very slowly, both in terms of the market acceptance and in terms of the performance.

You could say it was almost ten years in before Windows became commonsense, that everybody thought, yes, of course when I write a new application, this is what I use. By '92, '93 I think it was clear to most people, but it wasn't until Windows 95 in 1995 that it went to the commonsense level and then we could focus on that next frontier.

The second decade was clearly about connectivity. That brought in the 32-bit capabilities and allowed for these applications, both server and client-based, to be rich enough to really drive the connections to have value, to make the whole Internet phenomenon come along, and that was a pretty phenomenal thing.

We put behind us the complexities we'd gone through of having the 8086 with its 16-bit address base and then the 286, the 8086 really with the 20-bit address base -- sorry, 16-bit data path but a 20-bit address -- and then we had the 286 with the 24-bit address that was segmented. We got back onto a 386, we got the linear address base, that was messy.

Whenever we run out of memory, there's some complex things going on where people try to stretch the memory by doing a lot of bank switching and we saw that in the old 8-bit computers, we saw that at the end of the 16-bit. Even with 32-bit, we had features like PAE and some other things that tried to stretch beyond the 4-gigabyte physical limit that we've had. Now we're getting the very clean way of doing it, and that always triumphs; it's something that can be done at not much additional cost and you just have to get it to critical mass.

So this is the decade where we can have the most impact of all. The pervasiveness of digital approaches, the kind of capabilities that we've finally achieved are things that have been talked about for many, many decades, really commonsense to think about business being done in a digital way, entertainment being done in a digital way, scheduling, purchasing, still a lot that needs to go on in the foundation work of that 64-bit address base and the software runtimes, that means that you can't just not only connect a browser to any Web site, but you can connect any piece of software to another piece of software on any Web site across the Internet -- things like those Web Services standards that are coming down into the platform, allowing for these new applications.

So this is the decade of greatest importance and this is the one therefore of greatest competition, greatest opportunity. That's why you see us putting record levels of R&D into the Windows operating system, record levels of investments into the outreach, both to the hardware community and the software community.

Now, when we think about moving to 64-bit, there's always people who say, 'How much trouble does this create?' and, 'What's the benefit, how quickly will this proceed?' Some of these address base transitions have been very difficult indeed. Certainly from the 8-bit machines to 16-bit, we basically started over -- new operating system, all new applications. As we went to 32-bit, it was a bit cleaner, but we have some legacy of different approaches. What you'll find out in this conference is this is going to be --amongst these transitions -- the simplest one that there's been, and it's going to happen far more rapidly than any of the others.

First, you have very substantial performance benefits. We've been surprised ourselves as we've taken applications and moved them over to 64-bit. Part of it is things like not touching the disk quite as much. When you can increase the size of your caches, that is often a very, very big deal. That varies from application to application, but it can be huge in many of those.

Also, just the compiled code, its ability to use more registers -- in many applications, that makes a big difference. You're just moving data in and out of memory less, you can stay with the data on the chip in that large register pile, so that is a very great thing.

We've also taken the opportunity of the move to 64-bit to ask for some more hardware features that relate to security. In particular, this feature called the "no execute" bit has showed up and showed up in all the 64-bit chips. And that means that malicious code can't get executed, it comes in as data, but then when it tries to be jumped to or executed in some way, that page is not marked that way, and so it defeats a very large class of exploits, it's really a very great thing.

A key factor about this 64-bit world is the ability to run 32-bit applications and 64-bit applications at the same time and the 32-bit applications do not slow down. Now, that's across a process boundary. Within a process, you're either 64-bit or 32-bit. And the device drivers for the 64-bit operating system need to be 64-bit.

So when you think about the transition, number one, device drivers, a very relevant thing for the group we've got gathered here; and number two, when you want to move an application you need to have everything within the process actually come across.

There is not a change in terms of what the development tools are, what the APIs are or anything like that. You can take the 32-bit APIs you've been calling, they have 64-bit equivalents and so the application moves over.

So we're going to see this be quite rapid, particularly on the server. It's amazing what's already gone on there. We at Microsoft started to use this to pilot it, but as soon as word got out about the performance improvements it really spread and was broader than we even expected.

One of the places we're seeing the most dramatic performance improvement is what we call Windows Terminal Server. This is where you can remotely execute Windows applications, it's just a nice display protocol. We use this for Office, people use it for other hosted applications. Here we're seeing a 2.7-times increase, and that's way greater than we would have expected there and that's a big deal, it changes the economics and lets people come in and do more things.

With Active Directory, having additional memory has made a big difference. Web hosting -- of course there you don't want to go out to your database much when people are coming in and trying to get snappy responses.

Technical computing, the floating point capability here is pretty phenomenal, and that has a big impact. Those are often big data set type problems. Even down in the gaming world with all the textures and the rich artificial intelligence now in the games, those will be better. And many client workloads involve lots of photo data, lots of data mining information that you want to work with.

And so, if I had to rank this, I'd say database-oriented applications and terminal services applications, those will move very rapidly because simply by running on the right hardware and the updated software you see such benefits.

All the other server applications will move not quite at the speed of those but over the next several years most of these will move: hosting, directory, any sort of caching-type applications, almost all the things that go on on the server.

On the clients it will take more time. You'll have the top 20 percent of demanding client scenarios moving very, very rapidly, and then because this is just coming out as a chip feature, you'll eventually take it for granted.

Eventually, as we get out in the future, depending on the application, some software developers will decide to only release 64-bit versions, but we're going to go through a period here where Microsoft and others are releasing both 32-bit and 64-bit versions of their applications. We've got the tools set up now so we can do that in a very effective way.

I thought we'd kick off your excitement about 64-bit by giving you a sense of how impactful it is through something that's incredibly visual and one of the greatest demos of that we have is this NewTek LightWave 3D running in 64-bit mode. So let me ask Jay Kenny to come out and give us a look at that. (Applause.) Welcome, Jay.

JAY KENNY: Thanks, Bill.

Well, we just heard about some of the great advantages of the Windows X64 platform, and now I'd like to show you some of those benefits in action. Today we're going to get a behind the scenes look at creating computer animation for Hollywood, and I'm going to show you how the Windows X64 platform is making that process even better.

We're going to look at the major steps of creating and editing content on the desktop, rendering content on the server and then we're going to get to view an exclusive clip that was developed just for this demonstration. Along the way we're going to compare the 32-bit environment to the 64-bit environment so we can really understand the difference.

One of the companies leading the 3D animation world is NewTek. You may recognize some clips from movies like The Aviator that have been developed on their Emmy Award winning 3D application LightWave 3D.

LightWave 3D offers a virtual studio for artists to create whole new world and NewTek is also leading the way to the Windows X64 platform and they're the first 3D application to fully port to 64-bit native, and today we'll get to see LightWave 3D 64.

Now, what I'd like to do is start in the 32-bit environment and so I'm going to open up LightWave 3D 32, and this is a typical view for artists working on the forefront of 3D today. And because of the limitations of 32-bit, in order to get the level of interactivity an artist needs to do their job they're forced to work in this flat scale model. Other options are to work in wire frame or to break it into smaller pieces to work in more detail. But any way, the limits of 32-bit are forcing artists to make compromises and that's a problem Windows XP Professional X64 Edition is solving.

So what I'd like to do now is show you a side-by-side comparison with the 64-bit development environment.

You can immediately see the difference. The 64-bit environment on the inner screen offers a much more realistic working environment. and with this color and texture you still maintain that level of interactivity that you need to do your job as an artist.

But that's not where it stops on the 64-bit platform. We can actually add even more detail. I can go in and add lighting and fog and I can still do animation. I'm going to come down here and make some adjustments. Let me go and change the position of the head, see if I like this angle better. Then I'm going to move the creature in the scene and move it back and this way I get to see how the light reflects off the head, how I like the position in front of the city. This can't be done on the 32-bit platform.

Windows XP Professional X64 Edition is enabling artists to take what starts in their imagination and realize it in the development environment. Once an artist has a scene they like they take that 3D scene and send it to a large server farm to create files that are eventually turned into a viewable clip. This process is called rendering.

For a complex scene you have to render in layers. First you do the background, then you do the lighting, then you add the creatures and you combine that all together to create a final clip.

In the 32-bit world, producing one layer, which is a render pass, for a 12-second clip takes three days or more, depending on the complexity. Windows Server 2003 X64 Edition is making this much better. To produce that same clip we can reduce the time by two-thirds, so a 12-second clip instead of taking three days can be done overnight thanks to Windows Server 2003 X64.

So we've created a scene, we've rendered it, now we get to view the final output. And what we've done here is we've created a one-render pass comparison between 32 and 64. What that means is we pushed the 32-bit system to the limit to pull as much information out, we did the same with 64 to see what we could produce in one render pass so we could get a direct comparison.

So let's see that 32-bit clip. (Video clip.)

That's a nice scene, but you can do so much more with the Windows X64 platform. Not only will you see more creatures in the 64-bit version, but the artist was able to go in and add atmospheric details like volumetric lighting on the ocean floor, particulate matter in the water and custom animation to the lead creature.

So let's see what can be produced in one render pass on the 64-bit platform. (Video clip.)

That's really incredible. On the 32-bit platform, we're only able to get 11 creatures in the scene, in 64-bit we get 141 and all the atmospheric details. That's an order of magnitude more information with more than a 10x increase in output.

Another way to think about this is consider a movie. Some of you may have seen Troy, and there is a scene there where there were a thousand ships in the ocean. And that can be done on the 32-bit desktop, it just takes a lot of time. A comparison here is if we wanted to create a scene with a thousand of these creatures, it would take a hundred render passes on 32-bit and just seven on 64, so that's taking a three-month production cycle down to seven days.

So the increased memory capability is really offering new opportunities for artists and the increased processing power is making calculation intensive processes like rendering much, much faster.

The Windows X64 platform is really making an impact in digital content creation, and I can't wait to see what artists are going to create next on this platform.

Thanks a lot. (Cheers, applause.)

BILL GATES: The engineering work we did with the 64-bit versions involved more than just comparing for 64-bit; this is also a release where we went in and did an immense amount of work on the processes we use -- the testing, the security threat models that we go through -- so we're very proud of this release. It's a major set of releases, and it's the base on which we will build "Longhorn".

To be very specific, here are the different products that are becoming available this week. Windows XP, the 64-bit version we've referred to, and then up on the server we've got Standard, Enterprise and Datacenter.

I should be clear that we're supporting both the X86 architecture and we continue to have support for the Itanium 64-bit architecture. In some very high performance demanding cases, the Itanium really shines in a unique way. We've put a big investment in that working with Intel, and we're very committed to have that as part of the overall 64-bit strategy. And so you'll see different server roles appropriate to pick the hardware that matches into each of those things.

Now, we're extending beyond just the operating system itself. That's very important because a lot of software developers build on top of not just Windows but, say, SQL or the other products that we build. And so here I'm going to go through exactly how those release schedules come out.

Of course the 32-bit versions of these server add-ons run just fine on top of 64-bit operating systems, but to get the performance and to be able to call into them in the same process from a 64-bit application you need the 64-bit version.

This year we have SQL Server, and that will be a very big thing and you'll see that in the benchmarks. That was what was codenamed "Yukon", coming out later this year.

The update of Visual Studio, that's a very important release for us, that was codenamed "Whidbey", a lot of breakthrough development tools there so it's not just 64-bit in these releases.

And then many other things: Commerce Server, Host Integration Server, BizTalk and our services for UNIX, all moved over to 64-bit.

As we get past the end of the year then, of course, we start to get into the "Longhorn" cycle but even before we get that server we get an Exchange update that's very rich in terms of new things, very strong in that enterprise e-mail market. We get our Operations Manager product, Virtual Server and we get a new edition of Windows that has to do with compute clusters and targeting that where 64-bit really makes sense for that, and so a very rapid rollout of these different 64-bit versions.

We're making it over the next several years standard for us that everything has to be in 64-bit as we get to new releases and, of course, that applies to everything that will come out of "Longhorn". As we come out with "Longhorn" client, we will ship at the same time the 32-bit and 64-bit. We have the client schedule, we'll do that and then somewhat later we have the server schedule where we'll do that as well.

Well, speaking of SQL Server and having the applications on top of the platform really show off 64-bit, I'd put this at the top of the list. Now, very often SQL demos are not too visual, so we've worked hard on that and I think this is one of the clearest and neatest SQL demos I've ever seen. So let me ask Francois Ajenstat to come on out and show us SQL in 64-bit. (Applause.)

FRANCOIS AJENSTAT: Great, thanks, Bill. Good morning.

Large databases and business intelligence applications are great beneficiaries of the power of the 64-bit architecture. In the past, customers perceived SQL Server as hitting a glass ceiling when reaching certain scale and availability requirements. Well, with SQL Server 2005, we've invested heavily in performance, scalability and high availability to be able to support the most demanding applications in the world.

In this demo we're going to compare the performance of SQL Server 2005 running on 32-bit versions of Windows on the left compared to SQL Server 2005 running on Windows Server 2003 X64 Edition on the right hand side.

Let's start by going through an ETL scenario, Extraction, Transformation and Loading of data. I'm going to go ahead and start that process on the 32-bit environment.

While that's running. let me move to the 64-bit machine and explain what the process is actually doing. We're going to be loading data from our call center into a large lookup table and manipulating that data by adding some aggregation and then parsing that out into the different types of calls that we've received.

It's important to note that the servers powering these demos are identical in every way: processor, memory storage and data are exactly the same. The only difference is the one on the left is running on 32-bit software while the one on the right is running on 64-bit.

Now that the 64-bit server is starting, what we're going to be loading is five million records into our lookup table. The boxes will move from yellow when we're processing to green when it's completed.

Now, already you can see that the 64-bit machine is loading that data much, much faster than the 32-bit one. That's due to the increased memory that's available to load our data into those lookup tables. And with more data available we're able to process that data faster and perform more queries faster than we can on the 32-bit environment.

And actually we've already hit the 5 million mark on the 64-bit environment, the 32 is still chugging along, trying to get that data, reading from disk to get the data into memory.

But let's go ahead and stop that right now because that's probably going to carry on for another minute or so and move over to our client load environment. Now, what we're going to do is now compare various loads hitting our 32-bit and 64-bit servers. On the left hand side once again is 32-bit while on the right is 64-bit.

Before I start to load, let me explain the interface a little bit. In the middle we'll have these various bars representing CPU utilization on the server. The bars will go red when we max out the CPU utilization. On the top we have the memory usage, the page file and then the different types of queries and the number of queries that we're executing on our server.

So let's start that load and you'll see we're going to start sending a number of different relational reads and writes to our server, but very quickly you'll see our CPU starting to hit 100 percent and that's due to these analytical queries that we're executing on our servers. We're really sending very complex queries to our servers to analyze all call center records that are available in a year-long period in our database.

Now, although the 32-bit environment is quite strong, we're really pushing the boundaries of 32-bit by running these very complex queries and then we're going to go ahead and you'll see probably another query being hit. These are all randomly generated and we're going to hit that limit again on 32-bit.

Now, let's see how that load looks like in the 64-bit mode. So, now we're going to move to the 64-bit machine and hit that load, the same load that we had on 32-bit now executing on 64, and you can see the processors are barely moving and that's due to the virtually unlimited memory that's available on the 64-bit environment.

So, OK, let's go ahead and double that load and see how the machine does. So now with twice the load compared to the 32-bit we're still able to handle that load with relative ease compared to 32-bit and that's really because of that additional memory that's available.

Now, if twice isn't enough, I guess four times should be better, so let's go ahead and hit that and go to four times the load compared to the 32-bit environment, and you'll see the CPUs really moving up but we're able to handle much more queries. And actually if you look at the numbers here on the 64-bit environment, we're quickly hitting the same or actually surpassing the 32-bit environment that's been running for much longer than this 64-bit one.

So with 64-bit we're able to support more users and a much more complex data environment than we could on the 32-bit environment.

But, of course, with more users hitting that 64-bit box, business continuity concerns are elevated when you have all these users hitting that same machine. So what I'm going to do now is actually intentionally fail over the database and see what happens. With SQL Server 2005 we've added many new features to support high availability scenarios so that we can ensure maximum up time should the database be unavailable for whatever reason.

Before I fail over that database I'll want you to look at what happens to the CPUs between the 32 and 64-bit boxes as well as the queries between the 32 and 64-bit boxes.

So I'm going to go ahead and fail the 32, and we should see the CPUs going down on the 32-bit environment, the queries are going to start executing again, they're just going to fail over -- and move that over to 64-bit, and now 64-bit is going to receive that increased load and you see the CPUs maxing out a little bit because it's now receiving five times the load that we had on 32. And in just a few moments. you'll see the load is going to stabilize and get back to normal.

So really what I wanted to show you is the fast query response times in a highly complex database environment that the 64-bit platform provides, and with SQL Server 2005 running on Windows Server 2003 X64 Editions, we're really able to demonstrate the scalability, performance and high availability of mission critical applications so you can run your business and your most demanding applications on this platform.

Thank you very much. (Applause.)

BILL GATES: Well, let's talk about the experience we've had in terms of building applications on 64-bit. We often make sure we eat our own dog food, we're there early on using the product, getting that experience. Here we had a pretty high goal for ourselves, both on the desktop side where we wanted to have thousands of desktops and that quickly got up to 5,000, and we wanted to have some of our key server applications.

One of those is the work we're doing in search and, as you know, search is a very interesting problem, very competitive space involving really billions and billions of documents. Now people are going from 5 billion to 10 billion and up, and you've got to have incredible responsiveness.

We decided that all of our machines, all of our servers would be based on 64-bit and that's allowed us to have way more memory and operate with less hardware and operate with better performance. And so, each of those machines has a lot of RAM and is running 64-bit Windows. It's all put into a very managed cluster where any machine that fails doesn't cause a problem. You can wait days before you go in and pull that machine out because the software layer is really what's doing everything. We wouldn't have been able to do this as quickly as we did with the kind of performance without 64-bit Windows, so that was a great partnership.

Another good example is what we've done with Messenger. This is our instant messaging service where we maintain presence information for lots of people. And we were running into some real limits on 32-bit machines -- we had a socket limit, memory limits. And when we went to 64-bit, we got rid of those limits. We were able to move up to over 62,000 connections per server there, and we were actually able to reduce the size of the cluster quite a bit and still get better performance. So double the load and much lower CPU usage on Messenger.

We also took Microsoft.com, one of the top 20 or so Web sites in terms of the traffic that we get there, and we decided, hey, let's go ahead and put a few 64-bit machines in. We started that off and it went well enough that now we've got everything 100 percent on Windows 64. And partly, we do have 32-bit applications running on the 64-bit Windows but that just shows how seamless it is.

They are getting performance benefits because even for the 32-bit applications, they get a full four gigs for themselves whereas in the past they would have gotten just, say, a fraction of that, and so a wonderful experience for us.

We have a few other listed here: Microsoft Treasury in terms of doing investment analysis, their simulations are very compute intensive, they like to get them done overnight so they can have that data in the morning. 64-bit is the first time that we've had an opportunity to do that.

So wrapping up on 64-bit, it's a very big deal for us. We've got the enabling pieces here. We're very excited about what AMD and Intel have done. The pace at which they've gotten this done, the way they're moving into their product line -- virtually all their servers even this year and then virtually all the PCs next year in 2006. And so, go back and look at that compared to other transitions like that and look at how it's not really being done at a price premium, it's coming into the standard hardware as just a feature that you can almost take for granted; and so really great cooperation there.

We're also really dependent on what goes on with hardware drivers, so we're going to underline that a lot of times in this conference. We're happy with what's been done today but we need to keep the progress up there.

We are going to go out and do a lot of training so people understand 64-bit, so customers can think through when they need that, including out in the system builder channel. We've got a plan to train over 10,000 system builders over the course of this year, and really get everyone to understand that at the server level in many of these client things, the time is now, and the benefits are very dramatic.

Let's now move from 64-bit to talk a little bit about the new waves and the new applications. What are people doing, not just with 64-bit, with all the other things that have happened with the hardware and software, what are the driving applications that we should be anticipating so that your investments and ours go on and have broad success.

First, let me say that the PC ecosystem, the numbers for this year are pretty fantastic. This will be a year of 10 percent growth, and that's big, that's 20 million more units than in 2004. It's hard to think of a market of this size in terms of the gross sales, the number of companies involved, that's still growing at that level after so much time. In 2002, we sold the billionth PC, so that was over the entire life of the PC going back to 1981. By 2008, that's just three years from now, we will have sold the second billionth PC. And when you get up to two billion, that's compared to six billion people on the planet, two billion is starting to get somewhere. Remember the original Microsoft vision of a computer on every desk and in every home. Well, we're starting to make that a very real thing.

One of the ways we do this, of course, is by having versions of Windows very targeted to emerging usage patterns. One of those has been our Media Center Edition, and many people in the hardware ecosystem have done amazing things in terms of getting the form factor right, getting it to be quiet, getting the features we need for video, for high definition connections, a lot of innovation on those Media Center Edition hardware pieces. The investments we've done mutually on that have paid off. We've had a million Media Center Editions just since the recent launch -- that is on October last year -- we launched the latest Media Center, and now we've got over a million units of that out there. If we go all the way back to the beginning of Media Center, we're at over two million, and that's over a three year time period. So, you can see both it's a very significant number, and it's quite a good ramp.

We have some key partners now really pushing out large volumes of Media Center, and people are going to understand, if you want to have video, photos, those things, projecting it onto that large display, Media Center is the place to do that. So, we're at a very high run rate, over half a million a quarter, and people like Dell and others coming in and moving it into price points where it wasn't available before. We had the really high end Media Center hardware, but we've also got it now on some machines that are even well under US$1,000.

Another special thing we do in Windows is we promote the idea of not just portable computing, but Tablet computing, where you take all the portable features, but you also have the richness of ink, and the ability to read just off of that screen very directly. This has been a major investment for us. It's something we totally believe in. Hardware evolution is very important to us here. We need sleeker form factors. We need the price premium for that tablet to come down, and the capabilities to improve. We've done a lot ourselves. Last year, we had a new version of the software, a pretty big deal there. Obviously, we'll have a major new version of that that comes in with the "Longhorn" as well.

This quarter, we've had over 60 percent growth compared to a year ago, and that's because the hardware is just getting better, the applications are getting adapted, and so we're on that rapid ramp up where both in the vertical space and the horizontal space, we see this moving to the mainstream. The price premium has gotten down from about $250 when we started, then it got to $200, now for many of these units it's only about $100, and this is from lots of different partners are doing a great job on this. Many new machines coming out over this next year.

Speaking of that, let me just show off some of these that are particularly notable here. These are some of the latest Tablets. Of course, HP was an early partner on the Tablet, and has done very good things. This is their latest, this is the HP TC-4200, and you see very sleek here, a nice design, and that's one of these ones that's achieving a very small price premium over the typical mobile machine.

Here we've got a larger form factor machine from Toshiba. They've done a lot of things here to make this a great machine for media type usage, a really no compromise Tablet there, and some great things going on. And, again, the price premium brought down to be very, very small. They've also got in their Satellite Series, they've got machines that are aimed for home users and education.

If we look here, this sort of represents an even more kind of futuristic look that I think is how the hardware will go, this is from Acer. They were in some ways one of the earliest supporters of the Tablet vision, and have done on and constantly improved what they're doing there. This, you can see, you have the screen here, and it folds down and folds up in a very simple way. So that's a prototype.

These machines have shipped recently, they're in the market. This is the kind of thing you can expect to see over time here. We're working together to make sure that the software blends in with the work that's going on. Far more aesthetic, better user interface moving to the mainstream.

Another thing that we've seen with portable machines is this desire to get at information very easily. When somebody is in an elevator, you sometimes see them opening up their laptop, trying to boot it up to see what the meeting room is they were supposed to go to, that's kind of a painful thing. And so, together with Intel, we're backing this idea of what we call the auxiliary display. And Asus is the partner that's got this built into this portable machine, you can see it's closed here, but here there's this little display area with a simple control. What I can do with this is simply, it starts out with a clock, but as soon as I push it, I can go in and look at different things.

For example, a very typical thing is that I would want to look at my calendar, see where is that meeting room, what am I supposed to do next -- am I late? So that's easily accessible. I might want to look at my mail, I go in here and see what I've got. I can just actually zoom in, see the mail messages, self-scroll through that, just a simple interface. I can go back up to the top. If I'm on a plane with my headphones, I can go in and see my different ways I want to organize my music, pick a tune, have that be played. And so the information is accessible to me through this little display. When I turn the machine off, the information is brought in so that it is up-to-date, and then if I want something like my music, the machine turns on, and I have access. So, auxiliary display is something that we think you're going to see a lot more of.

Looking further out into the future, we have the idea of a really ultra-mobile device. And this is going to require a lot of innovation by all the different kinds of components. The idea is, we'd have something that looks like this, ultra-thin, we are working at the chip level, and the display level to make sure that a device like this can be done for something well under $1,000, hopefully even in the $800 range. We call this our Ultra Mobile 2007. There's a lot we need to do in the software to make this something that's very easy to work with, and probably having a touch screen. We want to get down below two pounds, as close to one pound as we can, get an all-day battery life in this thing. We do believe this is achievable, and we're certainly doing our part of the work, and then working with others as well. This will be a camera, this will be a phone, this will be a thing where you have the touch screen and the ink, you'll be able to watch, listen to your music, of course, watch motion video, and so as we get this under $1,000 as a companion device, we think that will be popular.

We talk about this as the MPC, you wouldn't necessarily I think almost nobody would have that as their only PC, but have it be complimentary to their PC, and then have all their states, the same applications, be able to carry that around, we think that's very attractive. And so, you'll see as we're filling in the space, as mobile phones are getting more powerful, they'll come up in screen size doing neat things, we of course do software for those as well. And then we're taking the PC and getting it into smaller, more convenient form factors, and so you'll have a whole spectrum of devices working very well together. We think the hottest, though, will be that ultra mobile PC, and a lot of investment is going on in the industry that will make that come together.

We think about software, one thing that's always been interesting is that we really have our compute cycles far more on the edge of this network than we have them in the center. The center is great for pulling up data, doing the search, but when it comes to presenting things, when it comes to peer-to-peer type things, the edge is where the action is. And having applications connect up and find each other, that's really been a big investment for Microsoft. It's at the center of that .NET vision. It's what drove us to have standards like these Web service standards that are really coming into fruition, and those connections, any software on the edge talking to any other software, really are leading to new things.

We love the extra performance that's coming out. We love the move towards this multi-core. We think the evolving user model of having information brought to you as well as you're going to get it will be very attractive here. We think the new form factors will be very attractive here, and we need to build more rich experiences that exploit what the edge is very good at. So, the idea of speech over time, telephony integration over time, the rich media capabilities.

High definition is coming. And the PC will be at the cutting edge of that because PCs can, of course, drive that high definition display, and have software that's really rich there. And so that's the example of something at the edge, telephony, voice, ink, and peer-to-peer. As "Longhorn" developers see it, it really is the first time that we've had that idea built into a platform as a strong notion.

For "Longhorn", it's our big investment here. You know, we've got some very clear messages about "Longhorn" that we're delivering here at WINHEC. We have the driver model ready for you. It's very exciting what we've done in the display driver side, the device driver ecosystem. That stuff is locked down and ready to go. So, we're giving you the opportunity to be there ready to go with "Longhorn". Very clear technical messages about this, and that would be our simple message and what's important for us to be working on in partnerships.

If we looked at "Longhorn" as a whole, it's very broad what we're doing. It's easy to say it's the next generation platform. You have to go back, certainly, to Windows 95 to see something where we did a broad set of things that really enabled more types of applications. What we're showing today is just going to be a small glimpse focusing on this issue of the hardware platform, and a little bit of some of the other things, not even half of what will be there. We've got a rollout schedule that we've got ourselves on, and many milestones along that. The next big one will be our touching base with the developers at our Developer Conference.

Overall, you can think of many, many experiences that are different here. You can think of the fundamentals around security, deployment, resilience as being different here. You can think of it as the industry coming together where we support the neat hardware things that have gone on and these new form factors as well. So, when we think about it, we always think of platform as being very key. The Windows 32-bit APIs, of course, extended up to 64-bit, and new APIs that we bring in from what we call WinFX. That's where the software connection capability I talked about, was code named "Indigo", it's an implementation takes those Web services standards and makes those very rich.

WinFX is something that application developers are really figuring out why those can make the applications better, and we're leading the way with our own applications. The virtualization, the peer to peer, the new interface controls, the new user interface guidelines, all fit into that. At the hardware level the exploitation is also very broad. We support multi-core but the tuning on "Longhorn" will make that by far the best we've done on that.

New storage capabilities, whether it's portable storage, new wireless interconnects, the whole thing for the drivers is we have this WS Discovery that allows those drivers to connect up more automatically, have richer capabilities exposed automatically in the operating system. You're going to hear a lot of concrete things there, because that's another piece that's been locked down. And we're really saying there's a call to action there around WS Discovery, and a lot of the fundamentals extending down to the driver level with the new tools that we make available.

I've got actually two sets of looks at Longhorn, but this will focus in on these platform capabilities, and let me ask Shannon Bedford to come up and give you a look at why this is an exciting platform advance.

Welcome Shannon.

SHANNON BEDFORD: Thank you. We wanted to take just a few minutes today to show you where we're headed with the Longhorn platform. And really the Longhorn platform is about one thing, it's about all of us working together as an industry to introduce the next generation of applications, applications that are fast and easy to develop. Applications that are secure and connected, applications that are cost effective to deploy and manage, and most of all, applications that leverage today's hardware to deliver a redefining end user experience.

Let's start by taking a look at, a sneak peak at the Longhorn user interface, and how we're using this new graphics infrastructure to improve it. So right away you'll notice some of the transparency effects, and glass effects. If you look closely you can see the reflection. We're using pixel shaders here, and vector-based graphics to scale this opportunity, to give you this transparency. You can see some beautiful drop shadows; let me start this video here so you can see us render this live. You see as I drag the window over you see a beautiful blur effect happening.

We're also using this to redefine the aesthetics, but also as a functional design principle in the way that we're building Windows. So we're giving the user cues, highlights in the buttons, animations in opening and closing Windows. Let me scroll down so you can get a good look at it. Again, using the graphics hardware to create this very rich experience.

You're going to see us use this idea of transparency, of visualization throughout the system. Arvind is going to come up in a minute and talk to you a little bit about some of the information management capabilities that leverage this, as well. But, this is just the beginning. It's going to get so much better as we head into the betas and the final RPMs.

In addition to the aesthetic, this graphic infrastructure is also going to solve some keep problems that exist today. One of those key problems is around high DPI support. Bill talked about high definition coming to the PC. Well, today there are great parts available in high definition, there are great panels and laptops, there are great monitors out there, but customer satisfaction is a little bit low with these products today. One of the main reasons is that software that's not high DPI ware gets very tiny in this experience. So when you run an older application, I've got Calculator here, and in high DPI mode you see how very tiny it gets, almost unusable. But, with Longhorn, in the Longhorn display driver model, I can simply tell the operating system to scale up an application. So here I'm running Calculator at three times its regular size. I'll tell it to run it also at double the size so you can see the difference. And we're running the same application code side by side here, so at the same time you can run applications in high resolution, and high definition, as well as scaling up some of the older ones.

So if I'm a CAD/CAM engineer or a high end animator, I'm going to want to be running my very rich animation or CAD/CAM design program in high resolution, but I also might want to check my e-mail, or fill out my timecard, this is going to allow people to do that, to get the most out of their hardware, get the most out of their software in applications, and really unblock a key issue for us today.

Let's move on to software. I wanted to show you an example of the next generation software. And here we've got an example of an online retail site. We're all familiar with these sites, a little bit of text, the graphics on them. They're pretty basic in general. This isn't driving me to come back to the site. It's not creating a lot of customer preference for this particular site, and the reason for that is that these developers want a system that's easy to develop and easy to maintain over time. So you get driven to this lowest common denominator experience.

But with the application model and Longhorn, let me show you what the next generation application of Media Mania might look like. When I click that button I've opened up this new type of application. From a systems administrator perspective, this is just a Web page that I opened, but from an end-user perspective, this is a rich Windows application that gives me great visualization, great navigation controls. You can see the highlighting here, you can see the live animation in the background happening.

Let me use those scalable graphics, vector-based graphics to show you an example side by side of the new and the old. Here we've got a live 3-D model, a rendered model, an animated icon, that really gives a rich experience. You can see how sharp that is being rendered next to an older style bitmap type of icon. From a developer's perspective, the effort to create these on Longhorn is about the same.

So we're going to see a much richer experience for the end user. Let me zoom out and let's start using this application. I'm in the mood for some Beatles tunes, I'll conduct a search. And what we're doing is, we're kicking off a Web service call to a publicly available Web service on the Internet to pull back some information. So we're using the same text and graphics that I showed you on that initial Web page, but this client is rendering it in a much richer, a much more compelling user experience. You can see here the application model allows me to zoom in, it's reflowing the text automatically for me, it's resizing the graphics. It's a great experience for the customer.

I can even take it one step further and use some of the 3D capabilities of the Longhorn platform to create a carousel view that's very interactive. I can zoom in on the different albums, I can page through them, I can make a Web service call out to get product information about the back of the CD. I can go ahead and show you the high speed animation here, this is all hardware accelerated, and you can see how it's using the hardware. I can go ahead and buy that album, a great checkout experience. I'm done. So this is a simple example of what an online retail experience might look like, but it's really just the beginning.

So how do you become a part of this next generation? Well, this week it's important for you to focus on the driver model, as Bill said, for the capabilities that I showed you, here it's important that your hardware is supporting the Longhorn display driver model, so you're going to want to attend those track sessions, and really invest in making those driver's a reality.

On the software side of things, you should start thinking about the next generation of your applications. If it's healthcare how are you going to enable doctors to view detailed patient charts. If it's supply chain, how are you going to use visualizations and connectivity to deliver a great supply chain experience? So it's really just the beginning.

Thank you very much, and join us in the next generation.

Back to you, Bill. (Applause.)

BILL GATES: Whenever I see those demos I think, gosh, let's get Longhorn done. A lot of work to do, and we're hard at work on it, but boy, it will be super to get that out in the hands of our customers.

Let me give you a little sense of some things that are also going on under the covers in terms of Longhorn. Security and privacy, many things, for example, today virtually all systems users are administrators. They are for good reasons, because to install applications and change settings you have to be an administrator. Unfortunately, though, it means that you've also got the ability to do a lot of things that you shouldn't be able to do. We haven't got the right boundary there.

With Longhorn we bring in what we call limited user administrative rights, and get this thing partitioned in such a way that people will not have to be administrators. We take things like the firewall, and now it's a rich, two-way firewall. We take the ability to have a machine that's been out, and maybe gotten code on it you don't want and quarantine that as it comes into a network, look it over and then admit it into the network. We make that very straightforward. Those are just a few things on the security front. If you had to take one area where we put the most investment in for our releases the security area would be head of that list by a significant amount.

Let me talk about deployment. There's a lot of effort between the hardware manufacturers getting machines set up, corporate customers getting machines set up, the different language version that they have to deal with. It's quite complex. Here what we're doing is really radical. We've taken their checklist of things they wanted, and doing hot-patching without rebooting, a great migration capability if you've got an older machine you want to move to a new machine we help with that. One binary, we've had many, many binaries in the past, so you've had to manage those for the different languages, here this is the first time we get to that single binary.

Image-based set up there's been a lot of manual installation that has to take place on machine after machine here, it's all done in an image-based way. So getting the independence so you can bind to that hardware environment early, you can bind late, you don't spend a lot of time doing those things. A lot of good dialogue there and we've been able to make a big advance in this version.

Reliability, we're taking the idea of Watson, which was the crash data that comes back to us and lets us see which drivers are doing particularly well, which ones are having a problem, what applications are having problems, we've taken that to a whole new level, because we have a much better ability to record what's been going on in the system. Think of it as a flight data recorder, so that any time there's a problem, that black box is there helping us work together and diagnose what's going on, and then taking the updating capability and using that to make sure that even before any other user runs into that same problem that that doesn't happen to them -- completing that loop of understanding, when the first user gets a problem and avoiding it for all the rest of them. We as an industry can deliver far better experiences because we have this infrastructure in place, the kind of monitoring and analysis of that data, and then the mutual analysis we do of that together.

Performance, a lot of emphasis on having it be sort of like a cell phone, you push a button, boom, it's there. There are many things technically possible, that means F4 hardware, a big deal for us. It means really smart caching, so we're going out to the disk a lot less. In fact, we'll have a number of benchmarks that will stun people in terms of starting applications up, using memory in a better way. We call this the "super fetch capability."

We do a better job moving files around on the disk so that they come in far more rapidly. We also have a very smart way of doing resume from hibernate. So you can go all the way down to hibernate, we're also able to use nonvolatile memory now as we come up, so we know which things we don't have to fetch back into memory. So a lot of things that the perceived performance, the difference between hey, why does a phone turn on quickly, what does the PC do, and just the general performance, going in and moving around in applications will feel very different on this release.

In terms of device drivers, this is something we're always putting more in. It's a strength of Windows that we have the breadth of device drivers, and we really appreciate the support we get from all of you on this. There's been challenges getting drivers out, getting them updated, making them easy to install, easy discovery, reliability, in every one of those dimensions the tools and approaches that we're using here will make a big difference.

The driver foundation, a lot less code to write, the driver kit, better ways of testing these drivers. The way we're going to do driver verification and put signatures on there, we understand the variety of drivers and special approaches that work in terms of getting those through quickly. Even a class of drivers, unusual drivers where we can understand those and get the signatures on them, so that most customers will go to only using signed drivers. That's been our expectation over time, and we take a very big step here.

Working together on Windows Update, that's something that's come along. Windows Update has become a very key tool for Windows users. Over 20 billion downloads during calendar 2004, and even as we looked at the trends it's up over 50 percent. We can see the benefit of this if we take driver crashes and compare a six-month period to a six-month period, we've got a decrease of about 80 percent in those driver crashes. So we're able to take the big classes, some things in display drivers, anti-virus, some of the storage add on things, and really work together with you to get those things to be better. More can be done, but the tools here are there to make that straight forward for us to do.

So underneath the covers a lot going on with Windows, including the new display driver model that enabled some of those things you saw demonstrated to be so efficient.

Now, if we move up to the top of the system, I'm not going to focus in on these or even talk through them, but that's where a lot of the work goes on, mobility scenarios, getting when you undock making sure you're replicated there, connecting up to the wireless network, if things aren't working how do you diagnose that and have that be straight forward. Sharing and collaboration, the media capabilities advancing in the system in a pretty dramatic way, building in a lot of photo-richness that we've never had before in the system.

So experiences are a place that we think you should just turn on the system and have something that's pretty fantastic. We did want to pick one of those and highlight it a bit, because it's been a very big deal. How do you visualize and organize your information? As we changed the WinFS file system to be something that's a runtime for developers, and not in the core shell itself. I think people naturally misunderstood that we weren't going to do a lot on visualization and organization.

In fact, Longhorn, I'd call this out as something we are doing something that's pretty amazing and relates to what we've been showing over these different years. By doing indexing, rich indexing in a smart way, we can get a lot of these capabilities without having to go to a full database. As we eventually move to that database, in effect, it's a natural migration. But a lot of the benefits come, and things that I think you'll be pretty surprised about in what we're doing with this, inside Longhorn. We're not just saying you search, search we'll make really great, but we can avoid you having to search for things by making it easy and natural to organize things. We're going beyond the file system that, yes, we have a long name there, but in terms of the different ways that we have metadata on those files, we weren't taking advantage of that, and that meant people weren't putting the meta data on here. ISVs will think of it in a different way, and users will be thinking about it in a different way, and it's going to enable people to work in a pretty different way.

So, let's go ahead and get a glimpse of what we're trying to do in visualization. I would like to ask Arvind Mishra to come out and give us a little look at that. (Applause.)

ARVIND MISHRA: All right. As Bill said, my name is Arvind Mishra, and I'm going to walk through a high level overview of the major features in the product that will make the lives of information workers a whole lot easier. The first thing I want to talk about is actually one of the most important areas in the product, and it's all about Longhorn's ability to visualize, organize, and search for information on your PC. It starts very simply with the Start Menu, because that's the place in Windows where you go to start stuff, start anything you like. And in Longhorn it's going to get even easier for you to start something.

If I bring up the Start Menu, you can see now we've got a field, a text entry field down in the left-hand corner, now all I have to do is type in the name of an application, I just type in notes, and I hit enter, and I'm into Notepad. If I think of something that's a little bit harder to find that we use periodically, like Solitaire, because no one ever plays that, I just type in, Soli, enter, and I'm into Solitaire. It's just that simple to launch an application on the Windows PC. I will never launch one personally the same ever again.

Let me show you a richer experience around desktop search, and this is our new Windows search. Now, for those of you out there who are really tied to the dog, unfortunately the dog is going away. But that being said, search is going to work powerfully, and it's going to be integrated. For starters, I'm looking for a document, for a piece of content, it contains a Latin word. So, I'll just type in the word and I'll hit enter, and boom, I instantly get results across my e-mail, across my documents, across my photos, and across my music. It gets better, because in the Beta 2 timeframe, you're going to be able to search over RSS feeds as well as past Internet sites that you've visited. And for our corporate customers, it's also a fantastic platform because from my Longhorn PC, I can instantly search any other Longhorn PC that I have access to. I can also instantly search SharePoint. And, lastly, I can instantly search in the future Longhorn servers. That, in a nutshell, is our desktop search experience.

What I'm about to show you is the thing that puts Longhorn over the top, the thing that we're doing and no one else is doing, it's going beyond search, and it's all about being able to visualize, and organize your content in the way that you probably think about it in your head. We'll start by bringing up the Document Explorer, and for those of you that are upset that we used My Documents in Windows XP, we're getting rid of the "My" prefix, so My Documents is now Documents, My Photos is now just called Photos and Videos. And in Longhorn, the explorers are the most perfect way to view your information, and we're going one step further to help you visualize your information in some more interesting ways. For starters, when I select a document, you can see down in the bottom, we have an area called the preview panel. This allows me to get a lot of rich information about whatever it is I'm looking at without having to right click and go into the property page, it's just all right there. The other thing that we're doing, you heard Bill say we've moving beyond icons. Indeed, we have these new types of thumbnail icons, we call them Live Icons, because they actually give you a live snapshot of your data. Indeed, I can take this nifty little slider control, and I can scroll my documents up to a very large 256x256, that is, indeed, the very first page of that PowerPoint. That's the very first page of this Excel spreadsheet, and that is a Word doc.

We've even applied this same treatment to our folders. You can see here that these are the top documents in my folder, it makes it really easy for me to see if perhaps that's the chart that I'm looking for right there. I know it's in that folder, I can click in, and there you go. I've got instant feedback. I know before I go into a folder that what I'm looking for is actually in there.

The thing that you might have noticed is that up here there are these blue things, I'm in the Documents folder here, there are these other blue things. What are these things called? They're new. They're called quite simply, virtual folders. Virtual folders are sort of like regular folders in that I can double click on them, I can open the up, and I can see all of the contents inside of them. But, unlike a regular folder, they're not static, they're dynamic, meaning, any time I click on one to open it up, it instantly goes across my hard drive, and it finds all the files that meet a given search for meta data or properties criteria. In the case of the all documents virtual folder, I'll click on this, and there you go. It instantly goes across my hard drive and it finds every single document, and it just presents it to me as a flat list. You can see here that I've got 402 documents that I'm using for today's demo. The other thing is, our virtual folders show up on the left-hand side. For example, I've gotten an authors virtual folder, I select this, and it takes the same 400 documents, and it instantly puts it into neat little stacks organized by authors. I've got another one for keywords. I select that, and it instantly gives me a view of the same content now organized by keyword, dynamic. Think about how you would do that today. It would be kind of hard. You would have to have the foresight to organize all your content into folders, organize by author, then you would have to have a parallel tree of folders organized by keyword, and you'd have copies and shortcuts, and it would be a mess. It would be really hard to get a dynamic view like this. And so, in Longhorn, we're making it really easy to get all sorts of flexible views.

Okay, here's a common scenario. I have a friend, he recently sent me five documents, six documents. I don't know where they are. I just put them on my hard drive somewhere. I don't even remember where I put them. I didn't open the documents up, so it's not like I can do a desktop search to find them. How can Longhorn help me find them? Well, for starters, I might remember some very vague properties about the documents that I'm looking at. I'll start by going to the all documents virtual folder, and the first thing I remember, perhaps, is that the documents that I'm looking for are authored by my friend Brutus. So, I'll just go in and type in Brutus into the top right-hand corner in what we call the quick search box. And you can see that we quickly went from the 400 document down to the 42 documents that have something to do with Brutus, they have Brutus in the name, or they're authored by Brutus. In any case, there are 42 documents that have something to do with him.

The next thing I remember is that Brutus and I are working on an advertising project together, and so I'm guessing that it

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