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Bill and Steve: Together Again

Time for the most-hyped session at D: All Things Digital: The semi-historic onstage interview of Bill Gates and Steve Jobs. Who together make up one of the most amazing facts in the history of personal technology: They've been at the heart of it for more than three decades now.

First, some classic footage, including a 1983 Apple promotional parody of the Dating Game in which Gates extols the virtues of the Mac.Both men enter, along with Mossberg and Swisher. Handshakes all around.Swisher asks each to talk about the other's impact on the industry. Jobs credits Gates for founding the first software company; Gates mentions the vision shown by the Apple II and Mac, Jobs' taste and class, and how he revived a dying company when he returned.

Jobs mentions the companies' cofounders (Woz and Paul Allen) and all the other talented people who made their successes possible.Mossberg mentions there was Microsoft software in the Apple II--Gates and Jobs talk about Microsoft BASIC and how it helped the II.And then Microsoft's role in the early days of the Mac. "What people don't remember is that Microsoft wasn't in the applications business then," says Jobs, pointing out that Lotus was the big app company of the day. "We made this bet that the paradigm shift would be the graphical interface, and particularly that the Mac would make that happen," says Gates. They discuss the challenge of squeezing the original Mac system into 128KB, and bicker about whether the OS itself took up 14KB or around 20KB.

"Bill and his team did some great work," says Jobs of the early Microsoft apps for the Mac, such as the first version of Excel.Next, discussion of why Microsoft deemphasized Mac activity--Gates says that during Jobs's exile, Apple lost its lead in graphical interfaces. Gates says he'd been talking to former Apple CEO Gil Amelio when Jobs returned; the mere mention of Amelio's job prompts snickers from the audience.

"Gil had a saying," says Jobs. "Apple is like a ship with a hole in the bottom, and my job is to get it pointed in the right direction." Major yuks form the audience.

Mossberg says he doesn't want to get into the whole story of Jobs's return. "Thank you," says Steve.They discuss the Apple-Microsoft detente that was achieved after Jobs returned to the company. Jobs says there was no benefit to the company squabbling. "There were too many people in the Apple ecosystem playing a game of, 'For Apple to win, Microsoft must lose,'" says Jobs. "To me, it was essential to break that paradigm."

"So I called Bill up and we tried to patch things up," says Jobs. And Gates explains that since then, there's been a Microsoft team dedicated to the Mac. Jobs says it's been a great relationship.Jobs says that "the art of those [Mac and PC] commercials is not to be mean, but for the two guys to like each other." Gates doesn't seem to be convinced that they're not meant to be mean. Laughs all around.Mossberg says that Microsoft is a much larger company in more markets than Apple. It thinks about Google and Linux and Sony and other competitors. "How often is Apple on your radar screen at Microsoft in a business sense?"

Gates says the Zune team "loves the fact that Apple has created a giant market, and they're going to come in and try to contribute something." Mossberg says that the Xbox was developed in part on Mac systems, and Gates talks about how the Xbox adopted the Power PC at the same time that Apple was abandoning it. So yes, the Xbox 360 was developed on the Mac.""And we never ran an ad on that," says Jobs. "Steve is known for his restraint," Gates retorts.

Jobs returns to a theme of his appearance earlier today: Apple is a software company that happens to make hardware. "There aren't a lot of us left, and Microsoft is another one." Mossberg talks about how Apple has always integrated hardware and software, and notes that Microsoft has been doing something similar with Xbox and Zune and the new Surface table.Jobs quotes visionary Alan Kay: "People who love software want to do their own hardware." Gates says that in the early stages of development, you want to do hardware and software together. But in a market as big as, say, phones, you can't do everything, and you can't scale to become huge, if you try to do all the hardware yourself.

"Apple does what works super-great for them," says Gates. And Microsoft will take that approach with certain products, but not everything.Jobs follows up by saying that except for Windows, "it's hard to see examples of the hardware and software being decoupled working super well....it might with phones." But it's too early to tell.Mossberg asks Jobs if there was anything he could have done at any point to give the Mac bigger market share. Jobs says he has no regrets and mostly thinks about tomorrow.Swisher asks what Gates and Jobs think of the market right now. "I think it's super-healthy," says Jobs, saying there are a lot of exciting new companies. Gates agrees, talking about new interfaces and coupling of the Net and the local machine to do interesting things. "We'll look back at this as one of the great periods of invention."

Mossberg says that both companies are heavily invested in the Net, but on another level they both represent the rich desktop client. Some people think that the platform's migrating to the cloud and you won't need a powerful computer. "In five years is the personal computer still going to be the linchpin of all this stuff?"

Gates points out that the network computer came and went. "The mainstream is always under attack." He says you need a lot of power locally for rich interfaces, voice, etc. "There are lighterweight hardware Internet connections." But you can't do everything on the Net.

Jobs says that he loves Google Maps, but when they wanted to put it on the iPhone, it needed to be a client app written by Apple. "The app we wrote blows away any Google Maps client...it's way better than the computer...and it's because of a lot of technology on the client....You can't do that stuff in a browser." Net-based apps are getting richer, "but it's happening fairly slowly..there are still pretty cool things you can do with clients."

Jobs says that mixing rich client apps with Net services "is a very powerful marriage." Gates talks about the responsiveness of a local app compared to a Web service.Swisher asks what folks' principal computing devices will look like in five years. Mossberg says it might look like a tablet PC, even though tablets haven't been a hit. Gates says that current tablets are "like Windows 1992."Gates predicts that people will have both something fairly laptop-like and a device that fits in their pocket. "Those are natural form factors." At home, you'll have some sort of device for entertainment in the living room, and something in the den that looks like a desktop. Projectors will turn every surface into a computing environment.

Mossberg expresses concern at screens everywhere; Gates says there won't be any in the bathroom.Jobs says that the PC--be it Windows and Mac--has proven "to be very resilient." They "kind of plateaued and got stale for awhile," and then the Internet made things interesting again. And then the PC because a digital hub for your life--and now there's something interesting going on with Net services.He believes that the PC, in some form, will survive. But focused "post-PC devices" like the iPod and phones and Zunes are going "to be very innovative."Mossberg asks if smartphones aren't really just computers in a new form factor. "We're getting to the point where everything is a ocmputer in a new form factor," responds Jobs. "So what? ...it's what you do with it."

Gates says it's hard to figure out when all the portable gadgets in your life coalesce into one pocketable gadget. And even then, you won't want to edit documents on it, unless it has some sort of roll-out screen. Mossberg says the first D show had an e-ink demonstration--"it's always five years out."

Jobs says he doesn't know what pocket-sized gadgets will look like in five years--five years ago, he wouldn't have thought today's phones would do maps. And there's a lot of innovation going on.Swisher asks what tech advances excite Gates and Jobs outside of computing. Jobs says Apple is working on exciting stuff it can't talk about. They're working on things that solve problems that people know they have.

Mossberg says that iTunes is a big Internet business, and mentions .Mac and says a lot of people feel it hasn't developed. Jobs agrees and promises "we'll make up for lost time in the near future."Walt then asks if Microsoft worries about not being as nimble as smaller companies. Gates says there's lots of good stuff coming out of little companies. He says that Microsoft wants to do more with search. He talks about how video streaming can improve education, a dream that goes back to the start of the industry. It takes a whole ecosystem to make that happen."I look at this a little bit differently," says Jobs, saying that there's a lot Apple doesn't try to do, since it can't do everything. It finds great partners--it doesn't even try to do search or maps. "We want to be that consumer's device...with a wonderful user interface in a coherent product." Sometimes that means building something from scratch, as with iTunes, but not always.

Swisher asks about the fact that both Microsoft and Apple have become entertainment companies. Gates says that Microsoft is really about technology and building entertainment delivery vehicles, not entertainment itself. It's taken a long time to build that infrastructure.

Mossberg asks Jobs if Apple, which launched the YouTube feature for Apple TV today, similarly sees itself as an enabler of entertainment. Jobs says that it's great for entertainment companies when more people want to enjoy their content in more ways, "but the transitions are difficult sometimes."

"Hollywood, I think, has watched what's happened in music and learned some things to do, and some things not to do." The industry's offering consumers more choices, and some good stuff is happening.Mossberg says that Vista has come out and is the best Windows yet, and that Leopard is on its way. He's saying that both "are still built on what you started with--what Xerox did research on." He's asking if a new paradigm might be on its way in the next five years.

Gates says that people have been thinking that 3D might change everything. It hasn't yet, but with maps, interesting things are happening with 3D on PCs. You might see online stores use 3D to show books on shelves.

Mossberg asks about multi-touch input, as seen in both the iPhone and Microsoft's Surface table, as well as an HP display here at D. "Will this make its way into mainstream laptop computers?""Software is doing vision," says Gates. He talks about Wii-like games involving swinging baseball bats--except they could involve your bat, not a game controller. Mossberg responds that both his Vista laptop and his Mac laptop aren't that much different from PCs ten years ago. Gates talks about touch, speech, and vision, but says they won't suddenly radically replace everything. It'll happen slowly, as search became important over the past decade.

"Evolution is a good thing," he says, talking about Office 2007 and how it melded old Office stuff with the UI reinvention called the Ribbon.Swisher asks Jobs to talk about what's next: "I know you're working on something and it's going to be beautiful."Jobs says the big question is how much innovation will happen on the PC, and how much on post-PC devices. "There's a real temptation" to focus on post-PC devices, because there are fewer legacy issues. It's harder to change PCs because people are comfortable with them: "They don't want a car with six wheels--they like four wheels."

Swisher asks Bill and Steve what the biggest misunderstanding is about their relationship."We've kept our marriage secret for over a decade now," says Jobs. Laughter. Gates looks genially speechless."Neither of us has anything to complain about," says Gates. "...it's been fun to work together....people come and go in this industry, and it's fun when someone sticks around."Jobs gets serious: "When Bill and I first met each other and worked together...generally, we were the youngest guys in the room." Today, "I'm the oldest guy in the room most of the time." He quotes the Beatles: "You and I have memories/Longer than the road that stretches out ahead." Applause from the office. And a standing ovation, even.

Audience questions: Investor Roger McNamee of Elevation Partners asks them about problems ahead that people don't see. Gates discusses education. Jobs says that Silicon Valley depends on stability, and talks about investment in alternative energy.

Someone from Sony asks about whether we'll have tons of disparate focused gadgets or "grand convergence devices." Gates says the industry is good at latching onto standards when appropriate, and allowing diversity when appropriate.Jesse Kornbluth of HeadButler.com asks about legacies, complimenting Gates on his his philanthropy. Audience applause. What would he choose as his legacy? And does Jobs envy Gates because of his second act?

Gates says that the most important thing he's done is the personal computer. He delayed getting married because he was obsessed with it. "That's my life's work." But he's glad he can put resources to helping the world with big problems.

"I think the world is a better place because Bill realized his goal wasn't to be the richest guy in the cemetery," says Jobs. He says he grew up middle class, and Apple allowed him not to worry about money. He and Gates are two of the luckiest people around because they've gotten to spend thirty years doing what they love and work with smart people. "I don't think about legacy that much."Another question from an entrepreneur involving advice on creating value. Gates says that the excitement of the PC revolution wasn't about creating value--in 1975, when Microsoft set out to put a PC on every desk, it didn't realize that would involve being a big company. The fun and the challenge was all in figuring out how to make it happen. "It's about the people and the passion, and it's amazing that the business worked out the way it did."

Jobs agrees and says that if you don't love what you're doing--or if you're just a rational person--you'll quit. "It's a lot of hard work, and it's a lot of worrying, constantly." And "you've got to be a really good talent scout...no matter how smart you are, you need a great team."

Another question: Gates and Jobs approached the same opportunity very differently. What did they learn?Gates compliments Jobs on his taste for products and people. "The way he does things is just different...and it's magic.""Because Woz and I started the company based on doing the whole banana, we weren't so good at partnering with people," says Jobs. Microsoft was one of the few it worked well with. And Microsoft has always been good at partnering. It took Apple decades to figure it out.Last question: A lot of innovation in the industry is youth-oriented. Is there stuff going on in the two companies addressing aging baby boomers?

Jobs says that seniors love the cameras built into Macs, and are using them for video conferencing to stay in touch with extended families. Gates says that natural-use interfaces may help--"we're warped because we grew up using the keyboard, and so it's extremely natural to us." But he showed Microsoft Surface to some execs who were blown away from it.Jobs says that personal training sessions at Apple Stores are "up to a million a year." And many of the people coming in to learn Office and videoconferencing and so forth are seniors.

OK, one more question. Science fiction has long given us visions of the Matrix and the Metaverse and the Holodeck and other forms of virtual communication. Is anything that cool really on the horizon?Gates says that Jobs is going to announce a transporter soon. And then he talks about movement in space as a way of interacting with machines, and that deep investments in research on man-machine interaction will pay off.

"I don't know," says Jobs. "And that's what makes it exciting to go into work every day."