Research Brief

Microsoft’s Gates Predicts the Future


Þ Microsoft CEO Bill Gates recently penned a column for the New York Times with his thoughts about the changes we can expect for the computer industry in 1997. Gates’ predictions focused on the Internet, electronic communications and the increasing price performance levels of personal computers.


Workgroup Strategic Services’ Analysis


Announcement Highlights


The following is a synopsis of Gates’ predictions.

Gates on the Internet:

Because of the media hype and outrageous forecasts made about the Internet, Gates believes that 1997 will see a backlash in the press about promises and features that the World Wide Web won’t fulfill in the near future. Internet surfers will search for and find security and privacy problems that will be highly publicized by the media. This publicity will encourage safeguards and policy debates about the Internet. Gates also believes advertising revenue on the Internet will increase but not to the level predicted by most analysts and industry insiders. Gates predicts that companies developing advertiser-supported content for the Web will only realize about a quarter of the total ad revenues they anticipate. The government will also try to tax the Internet. Unless they also tax other forms of communication equitably, Gates believes the attempt will fail.


Gates on Electronic Communication:

Telecommunications rate schemes in the United States will change dramatically. Gates predicts that regulators will stop forcing phone companies to undercharge for local service and overcharge for long-distance service. Therefore, heavy users of the local telephone services will pay more as long-distance telephone prices fall. Electronic mail systems will become pervasive in the corporate world. Employees will typically send or receive e-mail several times a day as corporate cultures adapt to the advantages of electronic mail.

Gates goes on to say that video conferencing use will increase by corporations, but more important is the ability to simultaneously share documents—and conversation—across corporate networks and the Internet.


Gates on PC Evolution:

Gates has very strong views on the future of the personal computer. He believes PC technology will continue to take on the most demanding and important corporate computing tasks, adding to the perception that PC-based solutions can scale up to compete with any computers in existence. Further, differences between personal computers, network computers, and TVs will diminish as their capabilities are integrated into one system. For instance, some PCs connected to networks will be diskless, and some networked PCs will use disks solely as caches—storage areas that help deliver information rapidly.

In addition, Gates thinks that portable systems, particularly laptop computers, will continue to grow as a proportion of the market. As prices fall, many who would have bought a desktop computer will purchase a laptop instead. These mobile workers may plug their laptops into docking stations at home or work that let them use large monitors, external keyboards and external mice.

Gates says hand-held PC sales will grow by more than 50 percent for a total of 500,000 units in use by year’s end. Within a few years, "wallet PCs" will be more popular than cellular phones are today.

In terms of PC performance, Gates says three-dimensional graphics will become mainstream for users of new PCs. In 1996 few machines and games supported 3D images. In 1997, impressive 3D graphics will be a big reality, a development that will transform the everyday experience of using a PC.

Finally, according to Gates, users will be able to buy great PCs for less than a thousand dollars in 1997. The total cost of owning a PC—including training, upgrades and support—will be reduced for organizations that configure and administer their PCs across a network.