MR. GATES: Well, it's exciting to be here at NetWorld Plus InterOp, and see the constant innovation taking place around the Internet. For all of us, I think not a day goes by where we don't hear a story about a great new company, or an anecdote about somebody who found a friend or a product that was exciting to them that they never could have without the empowerment of the Internet. Recently, I've been getting a lot of mail that says: I love you.

(Applause.)

MR. GATES: And it's just filling up my mailbox, and I'm saying to myself, this is kind of like an IQ test. Am I going to open that enclosure or not? So, it's always interesting to see which employees I get that mail from.

(Applause.)

MR. GATES: What I want to talk about today is now the Internet is going to move forward, and my proposition is that the Internet will change more dramatically in the next five years than it has during its entire history. We have just seen the beginning of what the Internet can do for us as a revolution in communications and the way business is done.

The Internet started out really as just HTML Web Wwebwebeb pages. And there was a flurry of activities, every company realized, boy, I've got to get a Web site out there. But what that meant at first was very simple, it meant simply having pages that described what the company was doing so people could get information. Then there was an evolution of that to say, we can use the Internet to do transactions. And so some of those pages became fill-in forms, where you would type in your name and address for the hundredth time, because every Web site needs you to do that again. But it was a big advance because you could actually do transactions. You could buy books, buy records, do business-to-business.

My claim is that we're on the verge of moving beyond that transaction phase into a phase where we can really think of the Internet as a platform, where we have programs that work between multiple sites, where we have programs that are essentially written to the Internet and can empower knowledge workers to see information about the economy, or their market, a single screen that combines information from many places, and that they can do rich things with that information.

And so there are limitations that we need to move beyond. Right now, when you browse the Internet, it is the browser that you're using. When you get a screen of information, you're essentially just reading that information, annotating it, editing it, is very complex because it wasn't written to make that possible. You're seeing only the information from one site at a time. And so, if you want to take information from multiple places and bring that together, you're often using the clipboard in a very manual way, or even scribbling down the numbers or information you're seeing on a site onto a pad of paper.

Also, the way that we're accessing the Internet is primarily through the keyboard, and there are some software breakthroughs coming where things like voice annotation, handwriting recognition, and speech recognition come into this to allow us to use the Internet in a very natural way, and to use it for many different devices.

So, the incredible levels of investment that we see in the Internet, whether it's through venture capitalists, or gyrating valuations, or the great number of engineers being focused upon these things, all of this is going to have a huge payback as we move the Internet to the new level where it's an XML platform.

Of course, XML is just a framework for the standards that we need here, standards about what does an invoice look like, what does a medical record look like, what does a catalogue entry look like. So that if somebody wants to buy something, they can do the search that brings them exactly the products that they're interested in. And it's very complex. Words like schema and schema masking are going to become a standard part of the lingo as we move into this XML world.

The XML world implies a revolution in all the development tools, the databases need to deal with heterogeneous information in a way that they never have been before. And so whether it's at Microsoft or Oracle, or any of the database companies, there's a rush of work to accommodate that XML environment. The development tools themselves have to make it easy to work in XML. In fact, we will see breakthrough language innovation, extensions to the computer languages themselves that relate to XML. So, I'm very excited about that XML platform.

When we have that, we will have given people the ability to source information from multiple sites, to view it in the way they want. Not just to customize it, but when they're on a different device, say a cell phone with a small screen, the information will be mapped to appear the way that it should. And so this will form the foundation of the digital economy.

If you do an agreement with somebody across the Internet, the understanding of what happens if it's delivered late, or if there is some change in the order, all of that will be specified through software messages flowing across this XML platform.

So, what is Microsoft's role in this? Well, it's the same role that we've had since the beginning of the PC era. And that is to focus on building software platforms that allow all the other companies in this industry to take that and build solutions. So, it's about empowerment, and it's about empowerment on all these new devices, no matter where they're used or how they're used.

Now, as we get excited about where we come from and what we've done, it's important to keep in mind that there is still a lot that we can do better. When you think about how hard it is to learn a PC or some of the error messages people get, you realize, hey, this stuff can be a lot better. And it's really fun to work on that. In fact, when you go home at night sometimes you think, boy, I'd like to turn on the TV and get away from this a little bit, but it's also mainstream, you almost can't get away from it, no magazine, no TV show.

In fact, I've got a little set of videos here that shows how the Internet and the PC are being talked about on TV all the time. So, let's take a look at that.

(Video shown.)

MR. GATES: So we've got a lot of work to do. We've got to make everything simple and reliable. So what are the key elements for this future Internet? Well, extremely high availability, extremely high security, interoperability of all the different systems connected up, the new programming platform that I talked about, and then of course incredible performance to deal with the heavy usage that it's all going to receive. So let's step through and look at the PC architecture and Windows and see how we're going to deliver on all of these elements.

Well, Windows 2000 was a huge milestone for us. It was a release of a product that we spent over three years on, with the reliability goal being upper-most in everything that we did. The majority of work that went into the product was focused on that. And we decided that we needed to be extremely numerical about this, in order to make sure that it's clear that through that heavy R&D we've gotten to a whole new level. This is a real world test that Aberdeen did looking at Windows 2000 servers out on the Internet, coming up with a 99.95 percent reliability, that's for individual servers.

As I'll discuss later how through clustering techniques you can take that and go to even higher levels. Aberdeen has talked now about how really it is Windows 2000 that has moved the PC server architecture up to the enterprise class of operating environments. And that's a very important milestone, because it's the first time that there hasn't been the tradeoff between the very expensive lower volume equipment, and the good price performance PC architecture with all of the great software tools around it.

What we're providing here is the best of both worlds. We're also very interested in tracking exactly what the customer experiences are. So what we did is we went out to a few hundred customers and put in monitors that would detect any time that they would restart a system. And we'd go back and understand exactly why they were doing that. Now, we're moving that to a new level with the reliability online initiative. Here what we do is we use the Internet to take data off of these systems, so we can set up not just hundreds, but literally hundreds of thousands of systems can report into us, and we can diagnose anything where they think they've had a problem. And so those problems will be mapped into the database to make sure that we are tracking and eliminating anything that remains in the area of system malfunction or blue screens, using this online tool.

Well, security is another key element here. In fact, every week we're reading about how some security hole has been opened up, or how there's some case where security principles weren't followed through. The fact is, over 99 percent of all security problems really relate to the fact that it's very difficult to administer these systems, difficult to know if you have changed the passwords enough, if you have gotten all the policies on all the different objects set so that your intent is being obeyed. And the answer to this, a key answer, is the use of a unified directory that determines all of security and policy against the users, the files, the devices, the applications, everything that's out there. So we think that integration to make it simple for the administrator is very, very key here.

For Microsoft our approach to security involved from the very basic design, we have to have the top experts looking at what we're doing and then reviewing every line of code in this area. In addition, you have to have a 24 hour response team that's there taking any reports of a vulnerability and immediately getting involved in that, and then have an infrastructure across the Internet that can make sure that any improvements that need to be made are immediately transmitted through the Internet out to those customers. There's a lot of cooperation here between various groups, and the standards are very, very important. Security is something that's got to work in a common way across all these different systems.

With Windows 2000 we did achieve a number of milestones. It's the first OS that's got the integrated smart card support. It's got this very reliable authentication system in Kerberos, we've got the support for IP SEC, the encrypted file system. And it's really the first time you've got a public key infrastructure that through the directory you can make sure you know exactly who has what privileges and what challenges have taken place against the security system. I would say today that the weakest link in the security management is the fact that passwords are used to identify who is running the system. And passwords, because people are writing them down or using the same password on systems that are less secure, that's really the weak link. In fact, somebody calling up the administrator pretending to be somebody that loses their password, that's probably the simplest way to break into most corporate systems.

So what's the real answer to that weak link? Well, fundamentally it's to move away from having the password be the only form of authentication. And although there are many approaches here, including the biometric approaches, I think the dominant approach will be the physical possession of a smart card, so that over time every keyboard, every physical access within a corporation will be based on having a smart card or a smart card plus password. Today almost no corporations are using this approach, so there's a lot of work to be done in the industry to get this bootstrapped.

Let's take a look at some of these availability breakthroughs and security advances in a customer setting. So Nadine Kano, Ron Cully and John Clowers are going to come out and show us how in the mythical company CyberDoug all of these things are benefiting them.

So come on out and let's take a look.

Good morning.

MR. CULLY: So, Nadine, we're going to use Windows clustering to get the availability that we need across preventive maintenance, hardware failures, even rolling upgrades.

MS. KANO: I thought clustering was really hard to do, though, Ron.

MR. CULLY: Well, actually Microsoft's worked with server vendors to make it really affordable and easy to do. In fact, we're using Netfinity HA4500 servers, we just tell them our parameters, they send us the system pre-configured. We just type in the product ID, the machine name, start it up and it's running.

MS. KANO: Hey, that's awesome. Hey, Ron, this invoice says printed on Windows NT 4.0. I thought he said we had upgraded to Windows 2000?

MR. CULLY: Well, we're actually in the process of completing that job. This is the last system to be upgraded. It's one of the Netfinity servers we got before we started to do the upgrade. So it's running NT 4.0 right now. I upgraded cluster node number one, so it's actually running Windows 2000. All the processes are running down on cluster node two right now, and you can see we have SQL Server and our print jobs. So I simply right click on this SQL Server group, click move group, and that will move the whole SQL Server processes up to Windows 2000. Now, the print queues are still running here on this NT 4.0 box, so those are continuing to run. When the processes restart up here on the Windows 2000 box, then the print jobs will start reading data off of the SQL Server there. Now, as you can see, the processes will start up here very shortly, and the print jobs should switch over to the Windows 2000 side. You can see the processes now are just starting to come up, and they'll complete soon.

MS. KANO: So we moved the print jobs from the NT 4 machine, and you just moved the SQL Server database and the printer started on Windows 2000?

MR. CULLY: Yes.

MS. KANO: Awesome, but speaking of print jobs, Ron, I heard the other day that we caught a couple of guys trying to steal our secret plans right off the printer. And we really must have much tighter security around here.

MR. CULLY: Right, well what we're doing to solve that is we're using this Gem Plus smart cards to authenticate everybody. I've already signed into this machine as administrator with my smart card, and let me show you how we do that. The first part of getting a secure network is to know what you have. So I used Visio 2000 to automatically discover the entire network. From there I used the tools to organize the system, the way we physically lock down the systems, so you can see we took all of our secure printers and all of our critical servers and locked them into a room, and we're using IP SEC on the links to encrypt the data. So everything there is locked down and secure.

Now the other thing that's neat about Visio 2000 is we were able to import the Active Directory properties for all the machines, so it automatically diagramed our network in terms of the organizational structure. I can click on a single system, take a look at the properties on that device, and I can see all of the Active Directory properties and policies. I can scan through there and see what IP SEC policies apply and everything.

MS. KANO: Okay. So that's securing the system, which is great, but I'm actually a lot more concerned about our network.

MR. CULLY: Well, let me show you that. We use Active Directory there, as well. You can see that we created an organizational unit called Secure Computers. We placed the secure computers into that group. If we click on this and look at the properties, you can see that in the group policies we have an IP SEC policy assigned to all these systems. If we drill into that policy, you can see that we have actually a number of choices we could have made on IP SEC policy. We created a special one for CyberDoug that was customized for us, and if we take a look at that policy, you can see that it has two different rules. This first rule is the one that does all the work.

If we look at that it has a filter. This is just like a route filter. It recognizes all the IP traffic into and out of the box. When it recognizes traffic it kicks off this filter action. The filter action requires the negotiation of IP SEC before the communications can even start. We've applied this rule to all of the network connections in the server, so everything is locked down and we're using IP SEC transport mode so it's secure end to end, from the client all the way to the server. And then finally, to make sure that we had strong trust, we're using a certificate authority that is from a specific CA, and that way we know that things are safe.

MS. KANO: Wow, certificates, that's going to cost us a fortune to manage.

MR. CULLY: Actually, it's not that hard. We're using the certificate authority that's part of the Windows 2000 operating system. It's integrated with Active Directory, and we can use group policy to assign certificates. So we've assigned this group policy to the secure computers, as well as other places in the directory. When the computer gets added to the domain, it automatically receives a certificate, and so we can manage it very easily. We can also use the STDP protocol with certificate authority to assign certificates to our Cisco routers.

MS. KANO: To our routers, well, I don't know about that, Ron, because I understand the need to encrypt things, but I don't want to do anything that might slow down our servers.

MR. CULLY: Well, we've got that covered, as well. On lower speed connections we can do software encryption, for high-speed needs we're using the three common Intel hardware offload nets. These offload all the IP SEC encryption, leaving the CPU available to do applications processing at speeds as high as 80 megabits per second or higher.

MS. KANO: Well, this all sounds really good. But, I have to be honest, it sounds awfully complicated, too. I mean, how are we going to train our new employees so that they don't have to worry about all these security details?

MR. CULLY: Yes, security transparency is important. I've got a great idea. Let me just show you.

You must be John?

MR. CLOWERS: Yes, hi. Nice to meet you, Ron.

MR. CULLY: Yes, HR said that you'd be by. Did they get your smart card and your Internet wireless adapters for you?

MR. CLOWERS: They sure did.

MR. CULLY: Great. So we've already set up your machine, and you just need to log in and get going. When we get new systems in, or if we recycle PCs, the first thing we do is wipe the disk to make sure it's clean, make sure there's nothing left on it. Then we use this SysPrep image, and copy a standard configuration onto the system. From there we simply add the product ID, and the name, and add it to the domain.

MS. KANO: Okay. Well that gets the machine, which is half the problem. But, I hope you don't expect John to set up all the applications himself.

MR. CULLY: Well, actually we're using IntelliMirror to do that, so that we can assign applications based upon his group ownership. Why don't we take a look and see how John is doing.

MR. CLOWERS: Great. Now, the first thing they told me to do in HR when I got to my desk is go ahead and open up my CyberDoug dashboard. Let's go ahead and do that. Now, I've done a lot of research before applying to work at this company, so I know a little bit about the company history, but I think I would like to know just a little bit more. We're using Windows Media Technology scans to give it a custom look for the company, makes people feel really part of the company.

MS. KANO: I like that.

MS. : Well, good morning, Mr. Groncki. Will you be traveling business or pleasure today?

MR. GRONCKI: Business. I just came up with a groundbreaking idea for a new start-up, and I'm going to make billions. I just need to find a venture capitalist.

MR. WENTWORTH: Shop no further, my good man. You have parked yourself at the right port of call. William Wendell Wentworth, you can call me WWW.

(Applause.)

MR. WENTWORTH: CyberDoug.com, my good man, CyberDoug.com will be the newest jewel in the Wentworth crown. Go ahead, young man, name your price.

(Applause.)

MR. CLOWERS: Well that seems to be a great boss we have there, but as you saw, I had a reminder for a meeting that I must attend. So, I'm going to go ahead and shutdown and undock, and just take my computer so I'm going to get there a few minutes early, I can continue to do work. Let me just eject.

And since I'm going to be away from my desk, let me go ahead and take my wireless network card, and plug in. So that way, when I get over to the cafe, everything is going to work just fine.

MR. CULLY: The Cisco Internet system uses secret keys to secure access to the wireless network. To get maximum data protection, we're using IP SEC encryption through the wireless network as well.

MS. KANO: Very good, very good.

MR. CLOWERS: You've got to love these new dot-coms, 10,000 stock shares, and a cafe. So, what I'm going to go ahead and do is plug in my video and audio so that you can see what I'm doing. And I've been told that part of my job is going to be working with Excel and some spreadsheets, charts and graphs. So I need to get a little bit of help on this because I really don't know much about it. I'm going to go here to my Virtual Help Desk.

MR. CULLY: With Windows Media Technology 7.0, we can encode full screen information into our tutorials and deliver it even over 28k modem links with good results.

MR. CLOWERS: So, let's get some help.

MS. : Hello, I'm Nina. Welcome to the Virtual Help Desk. I'm here to assist you. Please choose a topic from the list.

MR. CLOWERS: Well, Excel is supposed to be a desktop application, so let's go look here.

MS. : Thank you. Which of these products would you like help with today?

MR. CLOWERS: There's Excel.

MS. : Okay. How can I help you? There are several areas of support that most users find helpful, which area is closest to your needs? Choose one or type in your question below.

MR. CLOWERS: Well, help with pivot tables and charts is really what I need to learn about, but I am running a little late for this meeting, so I'd better go ahead and take off, and meet up with these customers.

MS. KANO: Okay, I admit it, Ron, that's really impressive. But, you know, we are growing by leaps and bounds, so how can we make sure that we continue to offer these kind of great features for our users moving forward.

MR. CULLY: Well, we're using SMP processors from Dell and Compaq to get this scalability we need for computing. We're also using Compaq Storage Works to get the disks at the performance level and the scalability that we need as well.

MS. KANO: Okay, okay. All right. So, you've convinced me that we're secure. And you've convinced me that we can train people, but what about our people on the road? Doug wants a mobile workforce?

MR. CULLY: Well, we're using the Virtual Private Networking feature that is included with Windows. So, we used the connection manager administration kit to create a custom dialer that automatically launches applications so that they can just get a simple experience. It uses our smart cards, it uses IPSEC encryption, and it just makes everything a lot easier.

MS. KANO: Wow. I wonder if John will find that useful. I wonder how his first day went?

MR. CLOWERS: Well, it sure is great to be home. But I think I'm going to go ahead and check a little email before I go to dinner. Now, HR told me once I got home I could just plug straight into my DSL line, which I've done here. Then I can just go into our corporate dialup. Let's go ahead and launch this. Now, when I've launched this, they told me all I'll really need to do is make sure that I have my smart card plugged in, and that's what it's going to ask me. This is really nice because I log on one time through Smart Card, and I have access to everything else I need. So, as this comes through, I must have mistyped my password. I'm horrible at this. So, let's try that one more time. There it looks like it's securing me to the network.

Wow, it even pops up a screen with my mail, just what I want to do. It's so smart. Oh, oh, Nadine Kano sent me an email. She's supposed to be a really important person in CyberDoug. So, I'd better finish up with this.

MS. KANO: Okay. Very good work, Ron. Very good. But what about our contractors and partners? I mean, I'd like for them to have access to the network, but not to all of it.

MR. CULLY: Well, we're using VPN as a way of assigning certificates to them through PVTP, but then they can have access with layer two tunneling protocol and IPSEC, the standard way of doing IPSEC based VPNs. Now, to control where they get to, we're using the Internet authentication service that's in Windows. It's a radius authentication service that uses policies to control how people get access.

If we look at the contractor access policy, you can see that anyone who belongs to the contractor's group gets this type of enforcement. Now, under the IP tab, you go in, and we can look at, we have IP filters. These are route filters that get plumbed when the session starts up. So whenever a contractor comes in, these get applied, and it locks them down to only the critical systems they need access to, and prevents them from getting anywhere else.

MS. KANO: Very good. I'm really starting to understand why Doug is so excited about Windows 2000. I mean, we have the availability and rolling upgrades that come with clustering. We have end-to-end security for our employees and our contractors and partners. And it looks pretty seamless, so that new employees like John could get productive immediately. I think Doug is going to be very pleased, Ron.

(Applause.)

MR. GATES: So, security is getting a lot simpler, even for the very complex scenarios that typical businesses require. Everything we saw in the demo is real today, and people are using it. But the one thing that is not widespread, as I mentioned, is the use of smart cards. And I think there's a lot of elements that need to come together here to make sure that that weak link gets eliminated, the weak link of passwords, that is. We need the hardware vendors to do the integration, the extra costs here of the smart card readers is very, very low. And we need the developers to make sure their software connects up to that kind of authentication. We need customers to have policies about the use of this, and really drive it forward to see that this is an important step. And, for us, we need to continue to build this kind of support into our software and make it easier and easier based on the feedback we get as people move forward. But this is going to be a huge milestone as end user authentication moves to smart cards.

Well, now let's talk about interoperability. If you go back in the computer industry, interoperability was pretty much about the network level. Could you read SNA messages, could you get the bits to flow at all between two different systems? And then it was up to people to write all sorts of custom software once the bits had flowed to make sure that the data was understood between the different systems.

Well, today that picture has improved very, very dramatically. Not only do we have TCP/IP and all the standards around it as a network level standard that virtually every system supports, but up at the data level, standards like XML in particular, are meaning that we can exchange information that is self-describing. And so that the purchase order comes along with a description of the different data types and the field names.

At the applications level, we have a lot of APIs that are being implemented on many different systems. So, for example, in Windows, we're embracing the idea of UNIX compatible APIs, so that those applications can run in our environment very easily.

Then, at the management level, which is very, very critical, the standards, SNMP and WBEM that are built on more and more on these XML approaches, those are allowing you to take a holistic view of everything that's going on in the system, so you didn't have to have a different management tool for each type of system that you might have to have out there. In fact, these new management tools are allowing you to work at the network layer, and at the logical application area and move back and forth between those in a very rich way. So, there's really progress being made with interoperability.

We have two products that are very recent for us. One is the Windows Services for UNIX in its second version that's just being announced today, and it is now available. And the second is Microsoft Interix 2.2, which actually came out a few months ago, and that let's people move UNIX applications across to their Windows-based systems.

So both of these are just part of a whole suite of products we have that relate to interoperability. Interoperability is the substantial part of our R&D budget. Many hundreds of millions of dollars with special efforts not only in the UNIX area, like these two products I've talked about, but also a lot of very special work in connecting up with mainframes, and having rich data exchange with all the different applications that run at that level.

Let's go ahead and see how UNIX interoperability works at CyberDoug, and see it in action.

MS. KANO: So, I got a call from Doug today. He said that we bought StreetMarket.net, and I'm very excited about this because it's really going to help us build our business. But there's a catch. Their whole business runs on UNIX. We need to find a way to take their UNIX applications and integrate those with our Web services.

MR. CULLY: Well, I kind of anticipated something like this might happen. So I picked up Microsoft Services for UNIX, and their Interix solution. This will let us integrate the administration of the UNIX and Windows users together, and it will let us share information between both of the groups. So, let me show you what this is about. On the outside screens, you can see we have a Sun workstation. And on the inside screens, you can see we have a Windows 2000 administrative console. So, if I go to the Sun system, and I take a look at where it's getting its directory services from, I type in the command YPWICH, and you can see that it's getting its NIS from the Sun server.

Now, earlier I had compiled an application on the machine. And so we're going to go ahead and run that application, it's called Tide. It types out the tide tables at different ports of call. So, what we want to do is move this application over to the Windows 2000 system. Now, the first step of this is, we want to integrate the administration of the users. So, I'm going to go over here to the Windows 2000 administrative console, and I'm going to start up the NIS server migration tool. Now, this tool will integrate the NIS users into Active Directory, so we can have a single place to administer users. We type in "UNIX Domain." This is going to be sub-domain, and the Active Directory will manage things. I'm the administrator. I'll click next. I'm going to move across the groups, and the passwords. The next thing I need to do is specify the file location where the directory information goes into. So, we'll type that in. Next.

Now, I'm going to migrate this to a new domain. So we click next. Now, I'm going to overwrite any existing NIS data, I'm going to create a log file, and when I click finish, now it's taking all the user data from NIS, it's integrating it into Active Directory, it finds account names that are the same and merges them together, and now we can administer all the users together. So, we can close this out.

MS. KANO: Now, if you can do that, you should be able to administer a UNIX user from the Windows machine.

MR. CULLY: Right. To show you that, the first thing we need to do is go tot he Sun machine. We'll de-mode it so that it's no longer the NIS directory. So, I've written a script file to do this, make client. So this is turning off the NIS services and changing it so that it gets its information from another place.

So, we're going to prove that by typing in the YPWICH command here.

And now you can see we're getting NIS services from active directory. Now, in the directory there is a user named John CLOWERS, let's take a look at his information. So I go look at a password file, for John. And you can see about midline it says 109. That's his user ID in UNIX. Now, normally we would not change that, but just to show you we can administer users we'll go to the Windows system and we'll bring up the Active Directory users management tool.

Now, we'll find John, we'll look at his properties, and you can see that there's a UNIX attributes tab. We open that up, there's his user ID. So we'll go ahead and change that to 555, and apply. Now, it gives me a warning. Normally, you wouldn't want to do this, but we will, just for the purposes of this demo. Okay. So now let's go back to the UNIX box, and let's type in the same command again. And you can see that the user ID is 555. So we've integrated the administration of users.

MS. KANO: Okay. So that's administration, but what I said was we needed to do was move the applications from the UNIX box to our Windows server. So how are we going to port those?

MR. CULLY: Well, there's two ways we could have done this. One way is we can put NFS services on Windows 2000, so UNIX users can gain access to the files on Windows 2000. The second thing that we can do is we could use an NFS gateway. Since we want to leave the source files and the object code on the UNIX system, what we'll do is we'll have the Windows users get it from UNIX. So I'm going to go back to the Windows console, and we're going to close this down and start up the NSS gateway.

So we double click on it. First I need to give it a share name for the Windows users to access the files from. So we'll type in GW share one. Next we need to find the NFS mount point on the server, on the Sun server, click connect to it, and then we'll close that down. That's all it takes. So now all the Windows users have access to the NFS mount point on the UNIX server, but they're using their native SMB protocol.

MS. KANO: Okay. But, now we have to train all the developers in how to take that UNIX code and make it Windows code, right?

MR. CULLY: Well, actually it's pretty straightforward to do that. Let's switch over to Windows 2000 Pro, and you can see that we have an Antares Korn shell. So this gives us a complete UNIX environment, so the UNIX users can run code and develop code on Windows. Now, previously I created a script file here, this is a Korn shell complete environment. I'm going to run this script that will bring the code over to my local machine, and compile it and make it run.

MS. KANO: Okay. Well, I actually didn't mean for you to like port the app. right now, because I have a really packed day. So maybe you could just tell me later.

MR. CULLY: Actually, this won't take very long. We've already moved the code over. We used open source UNIX tools to compile the code. And you can see we've just moved it, and we didn't change a single line of source.

MS. KANO: Interesting.

MR. CULLY: What's really cool about this, though, is that now that the application is running on Windows we can take advantage of the Windows environment to do things, like IP SEC encryption transparently, we can also integrate the applications as part of COM objects in our Windows Web applications. So I'm going to close this down, and we're going to bring up the spreadsheet that I built earlier that embeds this application as a COM object.

So I'm going to type in Darwin, Australia, which is a port that we want to see. I'm going to enter that in, and then I'm going to click control T. Now, it ran the application, imported the data, and plotted it.

MS. KANO: Well, I have to say; I think that looks a lot better on Windows. I think Doug is going to be really pleased.

(Applause.)

MR. GATES: I love seeing those applications migrate like that.

(Laughter.)

MR. GATES: What's the future of interoperability? It's really to work at this semantic level. And despite the fact that we have the foundation standard in XML, there's a lot of hard work ahead. As the tools, as the databases, and the very rich high level standards get into place. This is going to be a key industry focus in the next few years. And certainly, we're going to do our part by working with other companies on the standards. In fact, there was recently an announcement made about this loosely coupled message based approach for applications talking over the Internet called SOAP. That's something that we and IBM and many other companies are getting involved in. So through those standards, through the vertical industry work that's built on those, and the tools, the pain and the problems of interoperability of the past really are going to get solved in a pretty dramatic fashion.

Well, the final category we talked about being important for the Internet to achieve its full potential is the area of performance. The number of transactions going against these systems is going to be far, far greater than any system had to deal with in the past. And, in fact, the importance of those transactions being handled with virtually 100 percent reliability is greater than ever before. These are real time systems, systems where customers are sitting at the other end. It's not batch processing where a 10 or 15-minute delay in printing checks is perfectly acceptable. Here that customer is going to go away if there's any kind of downtime that doesn't give them an almost immediate response.

So Windows 2000, the second priority area after the number one, which as I said was the reliability, number two was performance. To make it clear for once and for all that the highest level of performances can be done around the PC architecture. Many different things went into this. As we look at how have we done on the workstation, that I think people really accept that the PC has come a long, long way. Even the most demanding applications, that historically you would have associated with the UNIX environment, like a design package, continued being probably the highest end of those. Even those packages now, the latest version, the richest capabilities, and the best performance are in the Windows workstation.

In fact, this diagram shows from Catia Solutions Magazine, that's from Dassault, the creator of that product, how they've measured UNIX and Windows for the graphics capabilities and system performance. And even ignoring the fact that the price of the Windows based systems were lower, in both dimensions it was substantially ahead. That's part of the virtue of cycle you get, because these are high volume systems, the custom chip work, the competition there is really driving them in an exciting way.

Now, that same phenomenon is moving from the desktop to the server. And how do we get scale up on the server? There's really two things we can do. We can take individual systems and scale up the hardware capability. And of course, there's many ways to do that hardware scale. We get the faster processors, which Intel is doing a great job on, we get those processors to expand their memory capability with the 64-bit Itanium work that we're very excited about, and we get more processors being used in a single system.

And so there's a huge amount that can be done using this approach we call hardware scale. However, hardware is always going to have an upper ceiling, and it's always going to have the situation that if that one box goes down, it's a single point of failure. And so there's a complimentary approach called software scale, where you take multiple systems and you view them logically as a single system. And you get the performance at that level, and he reliability at that level. In fact, this approach was the approach that Tandem took historically, and that's what made them the choice for all the really demanding applications, stock exchanges, phone systems, that they've gone beyond a pure hardware approach to what we're now calling software scale.

So, using this approach, we said, well, we've really got this. Let's take the most popular benchmark and show what can be done here. And so with the introduction of Windows 2000, we took TPC-C and showed that taking a Compaq 12-node system that we could deliver a level of performance that was dramatically above, almost a factor of 2 above what any other system, even the most expensive systems, had been able to achieve. And, of course, the price performance was pretty dramatic. So, here you're seeing the top ten benchmark results with the Windows there in both the 12-node and 8-node being well ahead.

Another way to look at this is to say, for any number of CPUs, what kind of price performance are we dealing with here? And here we've done a very direct comparison to our friends at Sun. If you look at an 8 CPU system, you can see it's about a four times price performance difference, if you go up to 64 CPUs, it's about a five times, and then if you go to the 96, which is using the clustering, again, about a five times. So, starting with the simple server that a small company might want to have all the way up to the server that's dealing with transaction loads well beyond the requirements of any Internet application today, you move up, and of course you retain all the advantage of the rich software tools.

Another thing we wanted to do to really show performance is to look at end-to-end data transfer capability. You know, a lot of the things that people have done in this area have been fairly artificial. So, we've said, how can we work together with the people doing Internet2, and take the Windows platform and go to a level of data transfer that's never been done before. We had great partners in this; both Qwest and the USC Information Sciences Group helped us put this together. But what we did is, we took information and sent it across the country to 10 hot networks moving over 8 gigabytes of information, and we were able to do this in 82 seconds. So that's 957 megabits per second transfer rate. That is, by far, a world's record, and if you compare that to the kind of speeds you get, say, at DSL or 56k modem, you can see that it's orders of magnitude ahead of that.

Internet2 is very exciting because they're really looking at not only this kind of incredible performance level, but also quality guarantees where you can know in advance so you reserve bandwidth. And so, whether it's transactions or key multimedia data, it is going to get through.

So, for our last demonstration at CyberDoug, let's see how they're taking some of these elements and getting the very, very high performance they require.

MR. CULLY: Thanks for coming today, Nadine. I'm really, really excited about this.

MS. KANO: Well, this had better be good because time is money, and I need a lot more of both.

MR. CULLY: You know, the Internet is growing by leaps and bounds in terms of optical throughput in the core of the Internet, and many businesses are now starting to get gigabit right into the business, even some of the communities are now being plumbed with fiber. So, I thought, how could we take this stuff that Microsoft just did and make it available to us as a business offering or something.

Well, okay, let me just show you what we did. I wanted to simulate the Internet, so I worked with Nortel and I got an Optera, which is a dense wave division multiplexer, and so that's acting as the core of the Internet. I have two Compaq servers with Emulex fiber cards in them, and those are acting as my two end systems across the Internet connected to some EMC symmetric storage. I needed a lot of spindles to get the disks performance up to keep up with the networks. So, I've got 24 disks there.

Now, a friend of mine works at Intertainer, and he helped me build this Web page that allows me to show this movie here. I'm going to show this trailer to Sixth Sense.

MS. KANO: That's what you want to show me? I've seen movies over the Internet a hundred times. That's not new.

MR. CULLY: Well, we have a little twist here. We're going to try this. I want to watch this movie, so I'm going to download it right now.

MS. KANO: Oh, gee, that's going to take a week.

MR. CULLY: Well, actually, what I did was, I wrote this tool, it's a multithreaded file transfer tool that just brings the data from the disk on the EMC box, and brings it across the network. If we go down here to the task manager, you can see that we're moving the data, the processors are moving, and all this data is coming across really fast. In a second, this will all be done, and we'll have the whole movie on my system.

MS. KANO: That's the whole movie?

MR. CULLY: Yes, that's the whole movie. That was 1.4 gigabytes encoded at 1.75 megabits per second. So we're getting really great video quality.

Now the other thing that's important here is that this movie came across, we want to protect it so that people don't steal it. So, we're using Digital Rights Management from Windows Media Technology. And we can apply it in different ways. We can have it view once, view for 24 hours, or have unlimited viewing, so it gives us flexibility in how to license things.

So, I'm going to submit my credit card here to get this movie so I can play it unlimited use. And we're going to go ahead and play this now.

MS. KANO: So that's the movie?

MR. CULLY: This is the movie, this the real movie. This is the Sixth Sense movie.

MS. KANO: Okay, prove it; let me see the middle.

MR. CULLY: Okay.

MS. KANO: Okay, well, let's see the end.

MR. CULLY: Okay, so we'll zip right down here to the end, all the way to the credits.

MS. KANO: Okay. I think I see where you're heading here. This is pretty exciting stuff. I mean, what we should do is, we should expand CyberDoug's service offering to deliver rich content over the network, what do you think? Great idea. Doug is going to be pleased.

(Applause.)

MR. GATES: The challenge with performance is to make sure that there's no bottlenecks that show up, whether it's transferring data inside an enterprise or transferring over the Internet as that gets more and more capable. And that's really our commitment is to push that forward. The next year is going to be quite exciting in terms of the Windows 2000 arena as a number of things roll out around Windows 2000. We've got the data center product coming out in a few months. We've got the 64-bit product, which, as I said, is really a partnership between ourselves and Intel as they're getting the Itanium out into a new generation of both workstations and servers. A whole range of products, the XML revolution is really starting with SQL Server 2000 and Exchange 2000, a lot of different products that take these digital workflows and move them onto the Internet in a way that's going to be simple for people to build.

I hope I've gotten across my excitement and my optimism about where we're all going with the Internet. The opportunity for all of us here is really quite incredible. It's going to be this fantastic XML platform. We're going to have the software to enable the natural interface. We're going to have all the different devices from your cell phone to your TV to these revolutionary PCs. We're going to have business transactions in their most complex forms being expressed in this digital way, and we'll make sure that all the elements about reliability, security and performance are there to make sure that it really works the way people want it to. So, we're excited about working with all of you to make this a reality.

Thank you.

(Applause and end of event.)

Transcript by Federal News Service, Inc. 1-800-211-4020