Gates Shrugs Off Criticism of XP

It's the week of Microsoft's biggest software release in six years and chairman Bill Gates is shrugging off criticism that his company's new juggernaut operating system is designed to muscle out the competition. 

Love it or fear it, Gates says, Microsoft's Windows is ``the most important tool that's ever been created.'' 

``It's a tool for communications, for creativity - it's the basis for the entire software industry,'' Gates said in an interview in his unassuming office overlooking the company headquarters. 

On Thursday, Microsoft formally releases Windows XP, a major retooling of the operating system that runs the vast majority of personal computers. 

To some - including the Justice Department - Windows' massive reach creates a difficult quandary. As Microsoft keeps improving and expanding its dominant product, consumers may get a better deal, but competitors face the threat of being squashed. 

And as Microsoft's software and Internet services become more pervasive, critics say so does the potential for breaches in information security. 

To Gates, Windows XP is simply about saving computer users time and money. 

``It's a value for consumers,'' Gates said. ``Why are there headlights in cars? Why don't they make you go and buy those things separately?'' 

It's also about money: Desktop operating systems accounted for more than $8 billion of the $25.3 billion in revenue Microsoft reported for fiscal year 2001. 

Friends and foes agree that Windows XP is the souped-up sedan of the desktop operating system world. It offers new features for listening to music, playing videos, for editing and organizing digital photographs. A new feature called Windows Messenger lets users communicate instantly with others using text, voice and video. 

``If you look at the value of the stuff that's in Windows XP, compared to the stand-alone packages you'd have to buy for the equivalent, that's many hundreds of dollars,'' Gates said. 

When competitors such as America Online, Kodak or Netscape complain that Microsoft's built-in products threaten to squeeze them out of the market, Gates doesn't flinch. 

They are welcome, he says, to develop more alluring products. 

``Windows has always moved forward by including the popular things that you used to have to buy separately,'' he said. 

Gates' no-holds-barred vision for Microsoft's growth has built the company into a multi-billion-dollar enterprise and made him the richest man in the world. 

Gates asserts his company's products have driven the technology revolution - not handicapped it as some critics assert. 

He says that's part of why Microsoft has refused to curtail its aggressive efforts to keep adding more features to Windows despite the legal threat from the federal government and attorneys general from 18 states and the District of Columbia who sued Microsoft for antitrust violations. 

``The PC ecosystem is very rich and we have a huge responsibility to that ecosystem,'' Gates said. ``We work extremely hard and we put out a new version of Windows every couple years as best we can, and no legal thing has prevented us from doing that, and I don't expect that it will.'' 

Although a federal judge ruled the company guilty of monopolistic practices and penalty hearings open next month, Microsoft has refused to put Windows XP on the bargaining table. 

In fact, Microsoft has only expanded its reach. A new feature in XP called Passport seeks to become the standard online authentication system, storing Web site passwords, credit card numbers and other personal information required to complete Internet transactions. 

Critics say that by requiring Passport sign-up to use such features as Windows Messenger, Microsoft is coercing people into giving the company personal information. Groups such as the Electronic Privacy Information Center have complained to the Federal Trade Commission. 

Gates calls Passport a savior, not a threat, to Internet commerce. 

``We're trying to make the Internet more effective and allow not just large companies to get to critical mass with these user names and passwords, but let any company who wants to participate in Passport just do it,'' he said. 

Still, Microsoft stands to gain most from Passport. The company is building a set of paid Internet-based services, called .NET My Services, that will depend on Passport authentication. 

Again, critics say Microsoft has incorporated Passport into Windows so it can grow a customer base for .NET. They worry about the security risk if Microsoft holds personal information on millions of Internet users. 

Gates dismisses those concerns, though Microsoft has suffered serious security breaches in which hackers gained access to the company's internal network - and may have even obtained valuable source code. 

``There is no new security challenge created by Passport,'' he said. 

Microsoft also is fighting a competitive battle for Passport users against AOL, whose dominant instant messenger system encourages people to stay within AOL's environment for shopping and other online activities. 

Gates accuses AOL of excluding others on the Internet; AOL accuses Microsoft of doing the same on the computer desktop. 

Meanwhile, Microsoft forges ahead with the next version of Windows, working with a $5 billion annual research and development budget. The company won't say when to expect the next upgrade. 

``The reason we can find that $5 billion in R&D is by coming up with new innovations, and so if we ever stopped innovating we'd have no income,'' said Gates. ``So we do need to move forward and our partners are very dependent on us moving forward.''