This partial transcript from Your World with Neil Cavuto, May 31, 2001, was provided by the Federal Document Clearing House. Click here to order the complete transcript.

NEIL CAVUTO, HOST: Well, the latest Windows product won’t be out until next fall. The latest Windows software -- office software -- well, that’s out right now. Now, if that strikes you as odd, you’re not alone. I raised that very issue in a sit-down earlier today with Microsoft Founder Bill Gates, who insists there’s nothing weird going on here.

(BEGIN VIDEOTAPE)

BILL GATES, CHAIRMAN, MICROSOFT: Office has always been a bit on its own release schedule. This comes two years after the last upgrade of Office, and this is a very major upgrade. It’s one that we’ve designed with the Internet in mind, with collaboration in mind. It doesn’t require Windows XP, although when Windows XP comes out it will be one of the premier applications.

CAVUTO: But a lot of folks would, if they had their druthers, wait for that, right? I mean, do you face that possible resistance?

GATES: Well, it’s very simple to do the Office XP upgrade. You stick in the CD and literally a few minutes later you’re up and running. We didn’t change the file formats. The user interface will be totally familiar to people, and so there’s no reason for them not to go ahead right now, take advantage of Office XP. If they go up to Windows XP, boom, Office XP will be there, no change required at all.

CAVUTO: Now, you’re releasing this at a very different time from Windows 95, Windows 98, even, even ME, because the economy is slow. Are you worried that the environment just isn’t very good now?

GATES: Actually, the economic conditions we see look good to us. And it’s important to remember that...

CAVUTO: The economic conditions look good now?

GATES: Yeah. There’s still growth. We sell on a very global basis. We’re not as exposed to the start-up sector or the telecom, new company sector as many of the technology companies are.

CAVUTO: Well, because you have John Chambers, you know, of Cisco, bemoaning slowdown in Europe, slowdown in Asia. You don’t see that?

GATES: Well, what he sees, as a communications provider, is very driven by his telecommunications customers or start-up type customers. And while we sell to those, it’s not the same factor for us as it might be for Cisco. We’re selling to knowledge workers everywhere. Anybody who’s got a job where you’re dealing with information, you’ll be best off if you have the latest version of Office, which is Office XP.

CAVUTO: There was one corporate buyer, I think, Mr. Gates, who put it in these terms. It’s a great product but it’s still, for a lot of companies that are stretched for cash, an impulse product. How do you tell them it’s not an impulse product?

GATES: Well, companies are spending a lot of money on their knowledge workers. Their salaries, the PC, the network, the support they provide for those people -- to spend a few hundred dollars to have the very best productivity software for them that will work for them for many years -- that’s a great investment. It’s such an obvious investment. If you’ve got the knowledge worker you might as well let him be fully empowered. And that’s partly why you often see this software sold as a sort of bottoms-up phenomenon, driven by word of mouth. That’s how the PC got to be successful. It was not a tops-down phenomena. That’s how Office and the idea that people should be able to work with each other in a simple way, that’s where the excitement starts.

We’re also seeing corporate applications taking advantage of the Internet integration and the XML support we’ve got here. The idea of getting rid of paperwork, having -- being in closer touch with partners -- that’s the kind of thing that your knowledge workers are central to, and Office...

CAVUTO: Well, see, that’s the kind of thing, too, your competitors are saying makes this a bit of a Trojan horse. They’re worried that you’re going to use this to leverage your way into other businesses. And they say, well, because it looks as if he’ll get off the government hook, this guy is going to try to do what he did all over again.

GATES: Our office is a totally open architecture, just like Windows. Anybody can build add-ons to it. All the technical knowledge about it is out there, and you can see that, you know, we’re building extensions to Office. We let any partner who wants to come in, including people who compete with us in other areas, and build on that.

CAVUTO: So, when designing this, you -- the ongoing government investigations (UNINTELLIGIBLE) be resolved shortly -- none of that entered into this or how you designed this?

GATES: The design of Office XP was driven by the breakthrough ideas, like the commitment we had to XML, and also the customer feedback. You know, which features were they finding it hard to get to? Which things were kind of confusing? For example, Clippy, which is an assistant, that’s now turned off, and that’s been a very popular change, because we found other ways to make it easy to get at the features.

CAVUTO: Do you feel, when it comes to this government investigation, that it’s over, that you won? That you’re not going to be even remotely slapped?

GATES: Well, there’s a court suit that’s still ongoing. The next stage in that court suit is for the appeals court to rule. During that process, though, one thing we’ve done a great job of is staying very focused on what we’re best at, and that is building new software. So you’re going to see from our company this year, not only Office XP, but Windows XP, the X Box...

CAVUTO: So full throttle.

GATES: In terms of doing what our customers want and building better software, you bet. We’re doing -- every day we do the best we can.

CAVUTO: Because I don’t mean to be disrespectful, Mr. Gates, but I talked to one of your competitors, Scott McNealy at Sun Microsystems, who said, and acknowledged as much, that you’ll come out of this OK, this Justice Department suit. And that’s what bugs him, that you will come out OK. What do you say?

GATES: Well, I think, you know, companies ought to compete in the marketplace. You know, we compete with Sun because Windows servers have now got the scalability and reliability that traditionally would have associated with the mainframe.

CAVUTO: What do you think of the trouble they’re in, by the way?

GATES: Well, customers are now have more of a choice. They can see the Windows area, where you actually have hardware competition. You can buy Windows servers from Compaq and HP and many others, unlike the approach that Sun has taken, where their hardware is only available from one company. So once you pick that, you’re locked in. You’re going to keep having to go back to Sun. With us, the hardware comes from many different companies. So there’s different business approaches. The fact is, Windows has grown up. The benchmarks now, whether it’s the database benchmarks or SAP benchmarks now, Windows, which wasn’t even in the running a few years ago, is at the top of most of those benchmark lists.

CAVUTO: Let me ask you on something that happened in Washington, the eventual phase-out, Republicans hope, of the estate tax. Your dad has come out, we had him on our show not too long ago, essentially saying, you know, it’s bad. Don’t get rid of it. what Do you say?

GATES: Well, I’ve stayed out of that debate, because in my personal case, my wealth is going to the Bill and Melinda Gates Foundation. So that means that it’s really moot, from my individual situation, what happens with the estate tax.

CAVUTO: But do you share that view of his, that the rich, the very rich, have an obligation?

GATES: I’m pleased that my dad chose to speak out. It’s an issue I chose not to get involved in. I’m thrilled with what’s gone on in the foundation, the fact that we’ve found causes where we can make a difference, getting to go know the different doctors, learning about world health -- and so I think of that as something that I'll spend more and more energy on. And that’s where my wealth is going.

CAVUTO: Finally, Mr. Gates, on to rumors about you hooking up with Rupert Murdoch to buy Direct TV from GM Hughes -- is that true?

GATES: I don’t think there’s any secret that News Corp and Microsoft have been talking about using Microsoft software and technology to take Rupert's satellite platform, which he has in many places, and see if that can’t be taken to the next level. What actually comes out of that, in terms of what kind of deal might come together, how that relates to Direct TV, I think we’re sitting and watching. I don’t know where it’ll end up.

CAVUTO: Because the talk was $3- to $4 billion that Microsoft would commit to that. Is that figure right?

GATES: Well, there’s something definitive there. I understand that News continues to be in talks with various parties like Direct TV.

CAVUTO: (UNINTELLIGIBLE) arrogant, if EchoStar got it, would you be worried that you’d be the odd man out in that?

GATES: The satellite activities that News Corp has are present in many countries not in the United States at this stage. So the kind of things we can do with our software, you know, are independent of whether or not various deals take place. So, you know, we want to provide software to all these platforms. We see satellite as one of the important ones, and so we’ll have partnerships that reflect that.

CAVUTO: But would you be rooting for Murdoch?

GATES: What Rupert's vision is, in terms of having a global satellite platform, you know, I think what he’s got there is very exciting. And we’ll have to see how he pulls that off, where he goes with it, but we would certainly like to be partners supplying software to help him with his ambitions.

(END VIDEOTAPE)

CAVUTO: All right. Bill Gates.

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