Bill Gates started by talking about speech recognition and how this is the next big evolution in the input systems. He also talked about malware and that even himself has to run Ad-aware in order to keep spyware away from him home computers. In fact, he believes that malware is even worse than viruses, because they transmit through downloadable applications that have them embedded in them on purpose. He expects that Microsoft will include anti-malware/spyware software soon on Windows.
Gates believes that connectivity is a very good thing and while this creates new dangers, everyone needs to get extra education on the subject on how to secure or behave on such interconnected environment. He believes that the real WiFi generation is just starting now.
Answering the question about hackers crack DRM and other secure technologies, Gates said that it's always possible to crack anything. However, it is better to have such technologies around and hope for the best, rather than not publishing online music or movies just out of fear that someone will crack their security. In the first case you have some piracy and some sales, on the second case you only end up with piracy.
On ITManagerJournal's question about how Microsoft is going to compete with the 50% Linux sales on new servers, Gates replied that "my numbers are different, depending where you are getting them". He also said that MS has seen many other competitors, including IBM & OS/2, Borland, Apple etc and have survived them all, and he doesn't see something different with this competitor. He did say though that "fast forward 10 years, the two leading OS technologies will be Linux and Windows" hinting that most others (Sun, Mac?) will be eclipsed from the main business scene.
Gates also mentioned that Linux is taking over Unix, not Windows. The problem with Unix is that the OS companies involved (SGI, Sun, IBM, HP, SCO) never managed to get together and adhere to common standards and direction, he said. When a Unix brand would get a bit better than the other on a particular thing, the others would "conspire" behind its back to bring it down. It's this fragmentation and lack of business relationships that has destroyed Unix to the rival Linux (our editorial).
As to how Microsoft is going to beat Linux according to Gates, it seems to be via its software's value, rather than the price. Bill Gates is trying to create software that needs little maintainance and little support. By doing so, he hopes to cut down the number of IT administrators needed on companies (a good admin costs overall up to $200,000 per year for a given company here in the Bay Area, for example). On the other hand, Linux rivals (e.g. Red Hat) are making money primarily by support calls and require capable administrators. Gates hopes to elliminate this need.
Regarding the point that Linux is catching up in market share with Windows on small/poor countries, Gates said that countries are evolving quickly. He said that a few years ago Hong Kong, China or Taiwan were not big Windows buyers, but now, as their economy & business sectors evolve, they are catching up with Windows orders made in the US. He expects more small countries to be able to evolve in that way, and he also said that Microsoft will be adjusting prices for these countries so that the Windows prices there will make more sense and be more affordable.
As for consumers, in these same countries Windows piracy is high. In other words, Windows is free for some of these people. And so is Linux. Having two products that are essentially "free" in one way or another, it all comes down again to the actual value of the software.
Special thanks to Jean-Baptiste Queru for the picture.