[Money-Book-Club] [Image] [Digital Jam] Plotting the PC's future Microsoft and Hewlett-Packard talk about what's [Image] next for partnership March 20, 1997: 10:02 a.m. ET NEW YORK (CNNfn) - Microsoft Corp. and Hewlett-Packard Co. announced plans Wednesday to team up in a broad partnership designed to increase Microsoft's share of the network server market. [Image] Lewis E. Platt, HP chairman, president and chief executive officer and Bill Gates, Microsoft chairman and CEO joined anchor Jan Hopkins on CNNfn's "Business Unusual" to discuss the implications of the union. The following is a partial transcript of their discussion: [Image] Jan Hopkins: My first question to you Mr. Gates, it seems that there are alliances in the computer industry. There is a Microsoft camp and an anti-Microsoft camp going after this business computing network. Is it a war, in your view? [Image] Bill Gates: Well I think there's a lot of competition, which is great for customers. The Windows NT product is growing in sales quite dramatically and an element of that is the partnership's strategy that Microsoft has taken. And a key partnership for is this HP work that we're taking to a new level with the announcements we've made today. [Image] Hopkins: Is it a winner-take-all war? In your view because you're really competing for the operating basis right? [Image] Gates: Well there's many, many things in a corporate computing environment. There's consulting services, support services, communications, hardware. And in every category you'll find many different supplies competing to do the best job. And the expectations of customers are very, very high. [Image] Particularly with the rise of the Internet, companies are seeing they can share information in a better way, move more rapidly, be more competitive. And information technology, particularly, PC-based technology, is playing a, a major role in allowing companies to do that. [Image] Hopkins: Mr. Platt, what does this alliance do for you and your company? [Image] Lewis Platt: Well, I think what it does for us is it gives us a better opportunity to meet customers' demand for bringing together the NT and UNIX in the enterprise space. [Image] We've long been a strong supplier of UNIX products. Recently, more recently, we have really come on as a leading supplier of NT products based on Intel technology, Intel hardware technology. Now this is about bringing them all together and meeting some real customer needs, addressing this cost problem that's been talked about a lot lately. And also just addressing the total usefulness of this environment, two companies. [Image] Hopkins: Mr. Gates, you have other alliance, one with Digital Equipment . What does this alliance ... does it kind of supersede the Digital alliance? Are you planning on doing alliances with other computer companies? [Image] Gates: Well, Microsoft's strategy is very dependent on alliances. We're focused on our core competence, which is building high volume software products, in particular, Windows, Windows NT, Office, and Back Office. And so HP is an ideal partner for us. They've not only got the system strength but they've got the support in the field. They've got the consulting capabilities in the field. [Image] Many, many customers who buy from both of us, have been asking us to work together in a number of new ways. And we've taken all of those requests and put those together in the more than a dozen new things we're doing together here. We'll continue to have the other partners. Fortunately there's enough demand in the market place that there's room for everybody we're working with to be quite successful. [Image] Hopkins: Mr. Platt, what does it do for customers? Are they going to get more computing for less money? [Image] Platt: Well, I think what they're going to get, probably, is more effective computing, hopefully, for less money. This is not necessarily about delivering more hardware or more software for the same dollars. It's about making what we are delivering more useful and more effective. So I think the bottom line for customers is, yes, probably a less expensive environment but probably, more important, a more effective environment. [Image] Hopkins: Bill, you have a new daughter. Let's look into the future. When your daughter goes to work, will she have a PC on her desk? Will it be based on a Microsoft system? Or will there not be an office? How do you see that future? [Image] Gates: Well the PC is one of the fastest improving products the world has ever seen. Through the magic of chip technology we can bring the price down and more than double the performance every 2 years. And if you look out in the kind of time frame your talking about, which is say 20 years or so, the whole way we interact with the PC will be different. [Image] We'll be able to talk to the PC. The PC will see us. All the machines will be connected together. Much higher speeds than they are today. And so every knowledge worker will just take it for granted that they have these systems and the ability to get at very, very rich data. So we'll still call it a PC but it won't look anything like what we have today. [Image] In terms of who will lead at that point, in the technology world there's no guarantees. Every company has got to come into work every day, listen to customers, do the right research. I'd rather be in Microsoft's position than any other software company but we have to earn the business 2 years from now, 10 years from now, not to mention, 20 years from now. [Image] And that's why we have such a strong research group. In fact one aspect of this announcement is that we're exchanging intellectual property licenses that are going to let HP's very fine research group work more closely with the Microsoft research group. [Image] Hopkins: Mr. Platt, how do you deal with the management issues of an alliance like this - two different companies, two different cultures? [Image] Platt: Well, I think you deal with it like you would deal with managing your own company. [Image] Quite frankly, I don't think the difference in cultures, which I don't think are all that great by the way, get in our way very much. What we simply do is get teams of people put together who have like interests in working in some aspect of the alliance, and that's the way we drive it. [Image] There frankly isn't some attempt for Bill and me to drive it heavily from the top. This thing is going to live or die based on lots of working relationships between the individuals and our company, and that's how we're going to drive it. That's how we've been driving our partnership, which has already been in place for many years, and I think it will work extremely well. [Image] Hopkins: Mr. Gates, I want to ask you a stock question. Your friend, Warren Buffett was quoted this week as saying that basically investors had a risk of overpaying for stocks in virtually all companies, whether they're good or bad at this point. What do you think about his views? [Image] Gates: I think he understands that subject better than I do. You know, stocks go up and down. His advice is quite wise. My focus is on building great products and using partnerships to do that, and companies that build leadership products in the long run are going to be the ones that are rewarded. [Image] Hopkins: Barton Biggs on Wall Street today was talking about growth slowing for technology stocks and including your own company. Do you see that, growth slowing for the company? [Image] Gates: Well Microsoft is growing in products like Windows NT and Back Office, fueled by announcements like this one with HP. When we were a very small company, we grew at a high percentage rate so the percentage growth is always going to slow down as companies get as large as we are but we can still see good growth ahead. In fact, the demand right now for Windows NT is so strong that it's just hard to get all the services and support in place, and today's work addresses that. [Image] Hopkins: Mr. Platt, your company just joined the Dow 30, one of the [Image] newest Dow 30 stock. Is that a mixed blessing from your point of view? HP, [Image] Platt: No, I don't actually see Microsoft to much downside. I was quite pleased about partner - it. We were, by the way, it's not March 18, something we lobbied for, they just 1997 chose us and we were actually pretty happy to see that happen. Software [Image] We are increasingly a consumer sales slumping - goods company and I think this simply March 13, gives us some added visibility so I 1997 think the whatever downside there might be, and I haven't even put my finger on [Image] what that is, is far outweighed by the upside in the extra visibility that we get. CNNfn - [Image] Hopkins: Thank you very much, Business Unusual both of you, for joining us. My thanks to Bill Gates, Chairman & CEO of Microsoft Microsoft; and Lewis Platt, Chairman, President, & CEO of Hewlett-Packard. Hewlett-Packard [Link to top] home | digitaljam | contents | search | stock quotes | help Copyright © 1997 Cable News Network, Inc. ALL RIGHTS RESERVED.