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A CONVERSATION BETWEEN BILL GATES&STEVE JOBS AT D5

Two men changed, or rather shaped, the personal computer industry and are directly responsible for what it is today. One of the them, the former chairman, and the chief executive officer (CEO), and a co-founder of Apple Inc. Steve Jobs was curiously born in the same year as the other man, his counterpart Bill Gates, in 1955. Only 20 years after that he was well on his path to create history, when in 1976 he founded Apple with his partner and school friend Stephen Wozniak.

Bill Gates, the co-founder of Microsoft, met Jobs many times on the battle field of the computer market since he launched his iconic PC software company with Paul Allen. Bill Gates and Steve Jobs met at the battlefield of ideas and innovation throughout their career. They both ruled the world as kings. But they didn’t just fight. They worked together, they shared ideas, traded between their two companies. When Jobs was terminally ill with cancer Bill Gates spent “literally hours reminiscing and talking about the future,” as Gates would later reminisce.

Among their many meetings, the most elaborate public conversation between them was perhaps the one at the D5 convention on May 30, 2007, where they shared the stage and talked over an hour. It is particularly fascinating to hear them tell the audience in 2007 what was going to come in tech and software. Unsurprisingly, all of those came true by 2017. Following is a transcript of the interview Kara Swisher and Walt Mossberg conducted with Microsoft Chairman Bill Gates and Apple CEO Steve Jobs at the D5 conference. The transcript first appeared on All Things Digital’s website allthingsd.com. We are reproducing an abridged version of the conversation for our readers. Audience Q&A is excluded. Kara: The first question I was interested in asking is what you think each has contributed to the computer and technology industry?

Steve: Well, you know, Bill built the first software company in the industry and I think he built the first software company before anybody really in our industry knew what a software company was. And that was huge. And the business model that they ended up pursuing turned out to be the one that worked really well for the industry. I think the biggest thing was, Bill was really focused on software before almost anybody else had a clue that it was really the software.

Walt: Bill, how about the contribution of Steve and Apple?

Bill: Well, first, I want to clarify: I’m not Fake Steve Jobs. What Steve’s done is quite phenomenal, and if you look back to 1977, that Apple II computer, the idea that it would be a mass-market machine, you know, the bet that was made there by Apple uniquely–there were other people with products, but the idea that this could be an incredible empowering phenomenon, Apple pursued that dream.

Then one of the most fun things we did was the Macintosh and that was so risky. People may not remember that Apple really bet the company. Lisa hadn’t done that well, but the team that Steve built even within the company to pursue that, even some days it felt a little ahead of its time–I don’t know if you remember that Twiggy disk drive and…

Steve: One hundred twenty-eight K.

Bill: Steve gave a speech once, which is one of my favorites, where he talked about, in a certain sense, we build the products that we want to use ourselves. And so he’s really pursued that with incredible taste and elegance that has had a huge impact on the industry. And his ability to always come around and figure out where that next bet should be has been phenomenal. Apple literally was failing when Steve went back and re-infused the innovation and risk-taking that have been phenomenal. So the industry’s benefited immensely from his work. We’ve both been lucky to be part of it, but I’d say he’s contributed as much as anyone.

Steve: We’ve also both been incredibly lucky to have had great partners that we started the companies with and we’ve attracted great people. I mean, so everything that’s been done at Microsoft and at Apple has been done by just remarkable people, none of which are sitting up here today. Walt: I know you started Microsoft prior to 1977. I think Apple started the year before, in ’76.

Steve: ’76.

Walt: Microsoft in …

Bill: ’74 was when we started writing BASIC. Then we shipped the BASIC in ’75.

Walt: Some people here, but I don’t think most people, know that there was actually some Microsoft software in that Apple II computer. You want to talk about what happened there, how that occurred?

Bill: Yeah. There had been the Altair and a few other companies–actually, about 24–that had done various machines, but the ’77 group included the PET, TRS-80 …

Walt: Commodore?

Bill: Yeah, the Commodore PET, TRS-80 and the Apple II. The original Apple II BASIC, the Integer BASIC, we had nothing to do with. But then there was a floating-point one where–and I mostly worked with Woz on that.

Steve: Let me tell the story. My partner we started out with, this guy named Steve Wozniak. Brilliant, brilliant guy. He writes this BASIC that is, like, the best BASIC on the planet. It does stuff that no other BASIC’s ever done. You don’t have to run it to find your error messages. It finds them when you type it in and stuff. It’s perfect in every way, except for one thing, which is it’s just fixed-point, right? It’s not floating-point.

So we’re getting a lot of input that people want this BASIC to be floating-point. We’re begging Woz to make this floating-point and he just never does it. You know, and he wrote it by hand on paper. I mean, you know, he didn’t have an assembler or anything to write it with. He just never got around to making it floating-point.

Kara: Why?

Steve: This is one of the mysteries of life. I don’t know, but he never did. So, you know, Microsoft had this very popular, really good floating-point BASIC that we ended up going to them and saying “help.”

Walt: And how much was the–I think you were telling us earlier …

Bill: Oh, it was $31,000.

Walt: That Apple paid you for the …

Bill: For the floating-point BASIC. And I flew out to Apple, I spent two days there getting the cassette. The cassette tapes were the main ways that people stored things at the time, right? And, you know, that was fun. I think the most fun is later when we worked together.

Walt: What was the most fun?Tell the story about the most fun that was later.

Bill: Well, you know, Steve can probably start it better. The team that was assembled there to do the Macintosh was a very committed team. And there was an equivalent team on our side that just got totally focused on this activity. And we had really bet our future on the Macintosh being successful, and then, hopefully, graphics interfaces in general being successful, but first and foremost, the thing that would popularize that being the Macintosh.

So we were working together. The schedules were uncertain. The quality was uncertain. The price. When Steve first came up, it was going to be a lot cheaper computer than it ended up being, but that was fine.

Walt: But wasn’t Microsoft one of the few companies that were allowed to even have a prototype of the Mac at the time?

Steve: Yeah. What’s interesting, what’s hard to remember now is that Microsoft wasn’t in the applications business then. They took a big bet on the Mac because this is how they got into the apps business. Lotus dominated the apps business on the PC back then.

Bill: Right. We’d done just MultiPlan, which was a hit on the Apple II, and then Mitch did an incredible job betting on the IBM PC and 1-2-3 came in and, you know, ruled that part of the business. So the question was, what was the next paradigm shift that would allow for an entry? We had Word, but WordPerfect was by far the strongest in word processing dBase database.

Walt: And Word was kind of a DOS text …

Bill: All of these products I’m saying were DOS-based products. Because Windows wasn’t in the picture at the time. That’s more early ’90s that we get to that. So we made this bet that the paradigm shift would be graphics interface and, in particular, that the Macintosh would make that happen with 128K of memory, 22K of which was for the screen buffer, 14K was for the operating system. So when the shell would come up, it had all the 128K.

Steve: The OS was bigger than 14K. It was in the 20s somewhere. We ship these computers now with, you know, a gigabyte, 2 gigabytes of memory, and nobody remembers 128K.

Walt: So the two companies worked closely on the Mac project because you were maybe not the only, but the principal or one of the principal software creators for it, is that right?

Steve: Well, Apple did the Mac itself, but we got Bill and his team involved to write these applications. We were doing a few apps ourselves. We did MacPaint, MacDraw and stuff like that, but Bill and his team did some great work.

Bill: Well, Apple, they hung in the balance. We continued to do Macintosh software. Excel, which Steve and I introduced together in New York City, that was kind of a fun event, that went on and did very well. But then, you know, Apple just wasn’t differentiating itself well enough from the higher-volume platform.

Walt: Meaning Windows, right?

Bill: DOS and Windows. By 1995, Windows became popular. The big debate wasn’t sort of Mac versus Windows. The big debate was character mode interface versus graphics mode interface.

Walt: But Apple wasn’t able to leverage its products?

Bill: After the 512K Mac was done, the product line just didn’t evolve as fast–Steve wasn’t there–as it needed to. And we were actually negotiating a deal to invest and make some commitments and things with Gil Amelio. No, seriously.

So, I was calling him up on the weekend and all this stuff and next thing I knew, Steve called me up and said, “Don’t worry about that negotiation with Gil Amelio. You can just talk to me now.” And I said, “Wow.”

Steve: Gil was a nice guy, but he had a saying. He said, “Apple is like a ship with a hole in the bottom leaking water and my job is to get the ship pointed in the right direction.”

Walt: Windows 95 really was an enormous, enormous leap.

Bill: Windows 95 is when graphics interface became mainstream and when the software industry realized, wow, this is the way applications are going to be done. And it was amazing that it was ridiculed sort of in ’93, ’94, was not mainstream, and then in ’95, the debate was over.

Walt: You said you had decided that it was destructive to have this competition with Microsoft. I presume that there was some tactical or strategic reason for that, as well as just wanting to be a nice guy, right?

Steve: Apple was in very serious trouble. And what was really clear was that if the game was a zero-sum game where for Apple to win, Microsoft had to lose, then Apple was going to lose. But a lot of people’s heads were still in that place.

Kara: Why was that, from your perspective?

Steve: Well, a lot of people’s heads were in that place at Apple and even in the customer base because, you know, Apple had invented a lot of this stuff and Microsoft was being successful and Apple wasn’t and there was jealousy and this and that. There was just a lot of reasons for it that don’t matter.

But the net result of it was, was there were too many people at Apple and in the Apple ecosystem playing the game of, for Apple to win, Microsoft has to lose. And it was clear that you didn’t have to play that game because Apple wasn’t going to beat Microsoft. Apple didn’t have to beat Microsoft. Apple had to remember who Apple was because they’d forgotten who Apple was. So it was just crazy what was happening at that time. And Apple was very weak and so I called Bill up and we tried to patch things up.

Bill: And since that time, we’ve had a team that’s fairly dedicated to doing the Mac applications and they’ve always been treated kind of in a unique way so that they can have a pretty special relationship with Apple. And that’s worked out very well. In fact, every couple years or so, there’s been something new that we’ve been able to do on the Mac and it’s been a great business for us.

Steve: And it’s actually–the relationship between the Mac development team at Microsoft and Apple is a great relationship. It’s one of our best developer relationships.

Walt: Microsoft is a much larger company. You know, when you were running the company or when Steve Ballmer is running the company, you think obviously about Google, you think about, I don’t know, Linux in the enterprise, you think about Sony in the game area. How often is Apple on your radar screen at Microsoft in a business sense?

Bill: Well, they’re on the radar screen as an opportunity. In a few cases like the Zune, if you go over to that group, they think of Apple as a competitor. They love the fact that Apple’s created a gigantic market and they’re going to try and come in and contribute something to that.

Kara: How do you look at Microsoft from an Apple perspective?

Steve: You know, what’s really interesting is–and we talked about this earlier today–if you look at the reason that the iPod exists and the Apple’s in that marketplace, it’s because these really great Japanese consumer electronics companies who kind of own the portable music market, invented it and owned it, couldn’t do the appropriate software, couldn’t conceive of and implement the appropriate software. Because an iPod’s really just software. It’s software in the iPod itself, it’s software on the PC or the Mac, and it’s software in the cloud for the store. And it’s in a beautiful box, but it’s software. If you look at what a Mac is, it’s OS X, right? It’s in a beautiful box, but it’s OS X. And if you look at what an iPhone will hopefully be, it’s software.

And so the big secret about Apple, of course–not-so-big secret maybe–is that Apple views itself as a software company and there aren’t very many software companies left, and Microsoft is a software company. And so, you know, we look at what they do and we think some of it’s really great, and we think a little bit of it’s competitive and most of it’s not.

Walt: Well, Bill loves software.

Bill: The question is, are there markets where the innovation and variety you get is a net positive? The negative is that in the early stage, you really want to do the two together so you want to do prototyping and things like that, you know, really as one thing.

And then take the phone market. We think we’re on 140 different kinds of hardware. We think it’s beneficial to us that even if we did a few ourselves, it wouldn’t give us what we have through those partnerships.

Likewise, if you take the robotics market, very undeveloped. We have over 140 tiny-volume robots using Microsoft software. And the creativity, building toys, security things, medical things, we love the innovation and the ecosystem that’s going to grow up–who knows when, but we’re patient–around that and we’ll have a great asset with this robotic software platform.

Walt: Do you ever regret–was there something you might have wanted to do differently?

Steve: Well, before I answer that, let me make a comment on Bill’s answer there, which is, it’s very interesting, in the consumer market and the enterprise market, they’re very different spaces. And in the consumer market, at least, I think one can make a pretty strong case that outside of Windows on PCs, it’s hard to see other examples of the software and hardware being decoupled working super well yet. It might in the phone space over time.

There’s a lot of things that happened that I’m sure I could have done better when I was at Apple the first time and a lot of things that happened after I left that I thought were wrong turns.

One of the things I did when I got back to Apple 10 years ago was I gave the museum to Stanford and all the papers and all the old machines and kind of cleared out the cobwebs and said, let’s stop looking backwards here. It’s all about what happens tomorrow. Because you can’t look back and say, well, gosh, you know, I wish I hadn’t have gotten fired, I wish I was there, I wish this, I wish that. It doesn’t matter. And so let’s go invent tomorrow rather than worrying about what happened yesterday.

Kara: There are many, many companies that are becoming quite powerful. How do you look at the landscape at this moment and what’s happening especially in the Internet space?

Steve: I think it’s super healthy right now. I think there’s a lot of young people out there building some great companies, who aren’t just interested in starting something and selling it to one of the big guys. And I think there’s some real exciting companies getting built out there. Some next-generation stuff that, you know, some of us play catch-up with and, you know, some of us find ways to partner with.

Bill: Yeah, I’d say it’s a healthy period. The notion of what the new form factors look like, what natural interface can do, the ability to use the cloud, the Internet, to do part of the task in a complementary way to the local experience, there’s a lot of invention that the whole approach of start-ups, the existing companies who do research, we’ll look back at this as one of the great periods of invention.

Walt: In five years, is the personal computer still going to be the linchpin of all this stuff?

Bill: The mainstream is always under attack. The thing that people don’t realize is that you’re going to have rich local functionality, I mean, at least our bet, whereas you get things like speech and vision, as you get more natural form factors, it’s a question of using that local richness together with the richness that’s elsewhere.

And as you look at the device, say, that’s connecting to the TV set or connecting in the car, there are lighter-weight hardware Internet connections, but when you come to the full screen rich, you know, edit the document, create things, you know, I think we’re nowhere near where we could be on making that stronger.

Steve: I’ll give you a concrete example. I love Google Maps, use it on my computer, you know, in a browser. But when we were doing the iPhone, we thought, wouldn’t it be great to have maps on the iPhone? So we called up Google and they’d done a few client apps in Java on some phones and they had an API that we worked with them a little on. And we ended up writing a client app for those APIs. They would provide the back-end service. And the app we were able to write, since we’re pretty reasonable at writing apps, blows away any Google Maps client. Just blows it away. Same set of data coming off the server, but the experience you have using it is unbelievable. So when we show it to them, they’re just blown away by how good it is.

Bill: Yeah. Architecturally, the question is, do you run just in the cloud and all you have downloaded locally is the browser? And that is the same question for the phone as it is for the full-screen device. There will always be different screen sizes [and] those are things that there will be some type of computing behind all of those things, all connected to the Internet, but the idea that locally you have the responsiveness of immediate interaction without the latency or bandwidth limitations that you get if you try and do it all behind, that’s what leads to the right balance.

Kara: What does that device look like in five years?

Walt: What’s your device in five years that you rely on the most?

Bill: I don’t think you’ll have one device. I think you’ll have a full-screen device that you can carry around and you’ll do dramatically more reading off of that.

I believe in the tablet form factor. I think you’ll have voice. I think you’ll have ink. You’ll have some way of having a hardware keyboard and some settings for that. And then you’ll have the device that fits in your pocket, which the whole notion of how much function should you combine in there. So there’s quite a bit of experimentation in that pocket-size device. And the evolution of the phone will both be extremely high volume, complementary–that is, if you own one, you’re more likely to own the other.

Walt: So what’s your five-year outlook at the devices you’ll carry?

Steve: You know, it’s interesting. The PC has proved to be very resilient because, as Bill said earlier, I mean, the death of the PC has been predicted every few years. I mean, personal computer in general. And, you know, there was the age of productivity, if you will, you know, the spreadsheets and word processors and that kind of got the whole industry moving.

And you can sort of see that there’s something starting again. It’s not clear exactly what it is, but it will be the PC maybe used a little more tightly coupled with some back-end Internet services and some things like that. And, of course, PCs are going mobile in an ever greater degree. So I think the PC is going to continue.

But then there’s an explosion that’s starting to happen in what you call post-PC devices, right? You can call the iPod one of them.

Walt: So what are the core functions of the device formerly known as the cellphone?

Bill: How quickly all these things that have been somewhat specialized, the navigation device, the digital wallet, the phone, the camera, the video camera, how quickly those all come together, it’s hard to chart out. But eventually, you’ll be able to pick something that has the capability to do every one of those things.

And yet, given the small size, you still won’t want to edit your homework or edit a movie on the screen of that size. And so you’ll have something else that lets you do the reading and editing and those things. Now, if we could ever get a screen that would just roll out like a scroll, you know, then you might be able to have the device that did everything.

Walt: You, five years from now, what’s going to be on that pocket device?

Steve: I don’t know. And the reason I don’t know is because I wouldn’t have thought that there would have been maps on it five years ago, but something comes along, gets really popular, people love it, get used to it, you want it on there.

Kara: Outside the computing area, what are the exciting areas in the Internet space at all that you’re looking at that’s interesting to each of your companies and in general for you? Any social networking, any kind of the Wikis, those kind of things, things we’ve talked about?

Steve: There’s a zillion interesting things going on on the Internet. The most interesting things to me are these incredible new services that people are bringing up and…

Walt: Do you worry about not being as nimble as somebody sitting out there with, you know, the kind of ten employees that you guys had in 1977?

Bill: Well, there’s always going to be great new things that come out of other companies, and you want to be in a position to benefit from those, to have those inventions drive demand for Windows and personal computers and then some of those upstream things you want to participate in. I hope Steve mentioned we are going to participate in search, hopefully to a higher degree in the future than at present.

Steve: See, I look at this a little bit differently, which is, we’re not trying to do a lot of this stuff because it’s not what we do. We don’t think one company can do everything. So you’ve got to partner with people that are really good at stuff. Like, we’re not, I mean, maybe Microsoft is great at search. We’re not. We’re not trying to be great at search so we partner with people that are great at search.

Kara: Let’s talk about entertainment. Entertainment’s important to both your companies. Where do you see that going in the era of YouTube?

Bill: Well, the big milestone is where the delivery platform is the Internet and so you bring the richness and the interactivity. I think you can get a little bit of a glimpse of the future of TV more from looking at community-type things like Xbox Live, where people are talking to each other, finding friends, you know, watching things together, talking about those things. As you map that onto genres like educational shows or sports shows or watching the Olympics, the elections, that ability to navigate becomes very, very powerful.

Walt: In the next four or five years, is it possible there’s a new paradigm for organizing the user interface of the personal computer?

Bill: One of the things that’s been anticipated for a long time is when 3D comes into that interface. And there was a lot of experimentation, sites on the Internet where you’d kind of walk around and meet people, but in fact, the richness, the speed, it just didn’t sustain itself. Now we’re starting to see with some of the mapping stuff, a few of the sites, that the quality of that graphics, the tools and things, are getting to the point where 3D can really come in.

So 3D is a way of organizing things, particularly as we’re getting much more media information on the computer, a lot more choices, a lot more navigation than we’ve ever had before. And we can take that into this communications world where the PC is playing a much more central role, kind of taking over what was the PBX, sort of one of the last mainframes in the business environment.

Walt: And what about this multi-touch stuff? Will this make its way into mainstream, let’s say, laptop computers as a new UI or that just a thing for specialized devices?

Bill: Well, go beyond the laptop. Vision. Software is doing vision and so, you know, imagine a game machine where you’re just going to pick up the bat and swing it or the tennis racket and swing it. And that means this stuff becomes pervasive. You don’t just talk about it being in a laptop device. You talk about it being part of the meeting room or the living room.

Walt: But, you know, you have the mouse, you have the icons, you move around. I’m just wondering is that going to change.

Bill: Touch, ink, speech, vision, those things come in, but they don’t come in as a radical substitute. I think you’re also underestimating the degree of evolution. Because you’ve lived with it year by year, you know, say we’d sent you away for 10 years and you came back and you said, wow, there’s a search paradigm and that’s more at the center of how you’d find these things. There’s tagging. That’s more at the center of how you’d find these things. You know, the evolution is a very good thing.

Kara: What’s the greatest misunderstanding in your relationship and about each other? What would you say would be–this idea of cat fight? Which one of the many?

Bill: I don’t think either of us have anything to complain about, in general. And I know that the projects, like the Mac project, was just an incredible thing, a fun thing where we were taking a risk.

But, no, it’s been fun to work together. I actually kind of miss some of the people who aren’t around anymore. You know, people come and go in this industry. It’s nice when somebody sticks around and they have some context of all the things that have worked and not worked.

Steve: You know, when Bill and I first met each other and worked together in the early days, generally, we were both the youngest guys in the room, right? Individually or together. I’m about six months older than he is, but roughly the same age. And now when we’re working at our respective companies, I don’t know about you, but I’m the oldest guy in the room most of the time. And that’s why I love being here.

And, you know, I think of most things in life as either a Bob Dylan or a Beatles song, but there’s that one line in that one Beatles song, “you and I have memories longer than the road that stretches out ahead.” And that’s clearly true here.

Walt: Oh, you know what? I think we should end it there. Let’s just end it there.

Kara: Thank you so much. ■

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