LAS VEGAS – Hours before Bill Gates delivered what would be his last International Consumer Electronics Show keynote presentation as a full-time Microsoft employee, the chairman and co-founder of the world’s largest software company sat down for an interview.

Here’s an edited transcript:

Q. Given this is your last big keynote to CES as a full-time employee, will you miss doing this show? And will Microsoft miss not having the opportunity to grab the industry’s attention in the way your keynotes have for the last decade?

A. Well, I think people like (CEO) Steve Ballmer and (Entertainment and Devices Division President) Robbie (Bach) will come down here and do as good a job as I’ve ever done. They’re scheduled to do keynotes in the years ahead.

I’ll certainly miss doing it. A lot of my speaking will be focused on foundation issues around AIDS or global health or education and so I’ll certainly be speaking out, but it’s been a lot of fun and I’ll use my last chance to talk about the next decade and what I see happening.

Q. We’ve seen a lot of focus on more stylish Windows PC designs and a lot of comparisons made to the sense of style that characterizes Apple’s Macs. But what people like about those Apple products, I think, is the way the hardware and software work so well together. Talk a little bit about how the Windows ecosystem can counter that, given that it has so many more players building the different pieces.

A. When people want style, it’s not that people all want the same style. And it’s not just a few colors. They want some real choices, including fashion brands that come from even outside the technology space. So we’re equipped, because we have 100 partners in this, to give people more choice.

There’s a lot, you’re right, where the software and hardware have to come together.

That’s a huge area of focus for us with our partners and, you know, the PC ecosystem is large and it’s – if you look around here – you’ll see some phenomenal things that are going on with that. People don’t just want one hardware choice.

Q. Vista still doesn’t seem to be getting the kind of passionate, positive reviews one might have hoped. And while it has sold 100 million copies, why is there still some perception that it isn’t winning hearts and minds the way, say, Office 2007 has?

A. Well, Vista’s got a lot of great features that people love. There were some complexities in the ecosystem that we needed to do a better job on in terms of getting the drivers and the upgrade and making that easy. As we put new things online over the course of the year, that’s improved a lot, as the manufacturers have done things on their side.

Vista’s sold over 100 million, got very good user satisfaction. Most of the issues have to do with when you’re first getting up and going, and obviously we’re very serious about making that better. It’s the most important product in the whole ecosystem that people build on top of and gear their new hardware to. People expect us to do a lot of things and, you know, they’re very happy we did Vista, but there’s some lessons for how we can do that even better.

Q. I also wanted to ask you about the uptick in market share Apple has seen over the course of the last year. Does that concern you at all?

A. Well, Apple, if you go back in time, what did they have? Fifty percent of the PC market? So they’re still nowhere near the peak they achieved. The PC has had a phenomenal year this year if you look at the volumes. If you look at the results we’ve had around the PC, this is one of the strongest years ever. So demand for PCs is strong, and Apple and Microsoft are two of the big beneficiaries of that.


Q. Do you have any goals, personally around Vista or future versions of Windows you’d like to see Microsoft accomplish before you make your transition in July?

A. Well, Windows versions come every two or three years or so, so there’s nothing imminent there, although some phenomenal work is going on. I’m involved in the next wave of our products, even those that’ll ship well after I’m not full time. A few, like Office, or natural user interface, will probably be the projects that Steve Ballmer will pick for me to take the part-time involvement I have and make sure that I can keep helping with those.

Q. On the topic of search … MSN/Live Search has still not shown too much steady gain in market share against Google. Do you see that as something that’s going to impede your progress in the consumer-services strategy?

A. We’ve invested a lot in search and advertising. The quality of what we’ve done over the last year has seen fantastic improvement. Google’s a very strong competitor there and, you know, people, I think they’ll be very impressed with the rate of improvement that we have over this next year.

Q. What’s your favorite thing to do at CES when you’re not giving the speeches?

A. I get to walk the floor a bit tomorrow morning, see the biggest screens and the wild things that come out in this show. You know, we’ve got so many partners, I end up seeing even Windows-based things that are completely new to me, and that’s part of the fun of it.

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AP-NY-01-07-08 1654EST

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