Hours before Bill Gates delivered what would be his last International Consumer Electronics Show keynote presentation as a full-time Microsoft...

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LAS VEGAS — Hours before Bill Gates delivered what would be his last International Consumer Electronics Show keynote presentation as a full-time Microsoft employee, the chairman and co-founder of the world’s largest software company sat down for an interview

The conversation took place Sunday in a two-story, Microsoft-built tent full of settings such as living rooms and conference areas designed to highlight the company’s technology. Gates sat next to a Microsoft Surface, a touch-controlled computer built into a coffee table.

Gates talked about his last time at CES in his current role, how Windows Vista is faring, Microsoft’s efforts to catch Google on Internet search and his own transition to full-time work at the Bill & Melinda Gates Foundation.

Here’s an edited transcript:

Q: Given this is your last big keynote to CES as a full-time employee, will you miss doing this show? And will Microsoft miss not having the opportunity to grab the industry’s attention in the way that your keynotes have for the last decade?

Gates: Well, I think people like [CEO] Steve Ballmer and [Entertainment and Devices Division President] Robbie [Bach] will come down here and do as good a job as I’ve ever done. They’re scheduled to do keynotes in the years ahead.

I’ll certainly miss doing it. A lot of my speaking will be focused on foundation issues around AIDS or global health or education and so I’ll certainly be speaking out, but it’s been a lot of fun and I’ll use my last chance to talk about the next decade and what I see happening.

Q: We’ve seen a lot of focus on more stylish Windows PC designs and a lot of comparisons made to the sense of style that characterizes Apple’s Macs. But what people like about those Apple products, I think, is the way the hardware and software work so well together. Talk a little bit about how the Windows ecosystem can counter that, given that it has so many more players building the different pieces?

Gates: When people want style, it’s not that people all want the same style. And it’s not just a few colors. They want some real choices, including fashion brands that come from even outside the technology space. So we’re equipped, because we have 100 partners in this, to give people more choice.

There’s a lot, you’re right, where the software and hardware have to come together. That’s a huge area of focus for us with our partners and, you know, the PC ecosystem is large and it’s — if you look around here — you’ll see some phenomenal things that are going on with that. People don’t just want one hardware choice.

Q: Vista still doesn’t seem to be getting the kind of passionate, positive reviews one might have hoped. And while it has sold 100 million copies, why is there still some perception that it isn’t winning hearts and minds the way, say, Office 2007 has?

Gates: Well, Vista’s got a lot of great features that people love. There were some complexities in the ecosystem that we needed to do a better job on in terms of getting the drivers and the upgrade and making that easy. As we put new things online over the course of the year, that’s improved a lot, as the manufacturers have done things on their side.

Vista’s sold over 100 million; got very good user satisfaction. Most of the issues have to do with when you’re first getting up and going, and obviously we’re very serious about making that better. It’s the most important product in the whole ecosystem that people build on top of and gear their new hardware to. People expect us to do a lot of things and you know, they’re very happy we did Vista, but there’s some good lessons for how we can do that even better.

Q: I also wanted to ask you about the uptick in market share that Apple has seen over the course of the last year. Does that concern you at all?

Gates: Well, Apple, if you go back in time, what did they have? 50 percent of the PC market? So they’re still nowhere near the peak they achieved. The PC has had a phenomenal year this year if you look at the volumes. If you look at the results we’ve had around the PC, this is one of the strongest years ever. So demand for PCs is strong and Apple and Microsoft are two of the big beneficiaries of that.

Q: Do you have any goals, personally around Vista or future versions of Windows that you’d like to see Microsoft accomplish before you make your transition in July?

Gates: Well, Windows versions come every two or three years or so, so that there’s nothing imminent there, although some phenomenal work is going on. I’m involved in the next wave of our products, even those that’ll ship well after I’m not full -time. A few, like Office, or natural user interface, will probably be the projects that Steve Ballmer will pick for me to take the part-time involvement I have and make sure that I can keep helping with those.

Q: Do you think you’re going to get to pick some projects, too, I mean, say, “Steve, I want to work on this”?

Gates: Well, it’ll be mutual in the sense of, I do my best work like anyone, on the things I’m very passionate about. Search is very important for the company, natural interface, Office. … It’ll likely be something like those three. But, you know, he gets to pick the priorities. He’s been CEO and doing that even for my full-time work.

Q: On the topic of search … MSN/Live Search has still not shown too much steady gain in market share against Google. Do you see that as something that’s going to impede your progress in the online consumer services strategy?

Gates: We’ve invested a lot in search and advertising. The quality of what we’ve done over the last year has seen fantastic improvement. Google’s a very strong competitor there and, you know, people, I think they’ll be very impressed with the rate of improvement that we have over this next year.

It gives us some opportunities, not to be No. 1 in the next year, but to show a lot of differentiation and even tonight we’ll show you some of the great things going on there. I think it’s a thing where our research work has really come into play in a deep way. Some of that will take a year, some of it will take two years. We’re the company, other than Google, that’s really putting deep thinking into taking that to a new level.

Q: I think many people expected [Chief Software Architect] Ray Ozzie to become a little bit more visible for Microsoft in the industry, especially given his responsibilities as part of the leadership transition plan and in his role leading the services efforts at the company. But thus far his appearances in public and comments have been pretty few and far between. I wonder why that might be or if that’s something we’re going to see changing as the transition takes place here in the next six months.

Gates: Well I don’t think you should ever expect to see Ray do as many speeches as I chose to do. He’s his own person and when he does speak, people love what he’s talking about. I think you’ll see him a lot more as the Live platform work comes into focus, and there’s a couple of milestones this year where Ray’s going to come out and really explain to people what we’re doing there.

So his voice will be very important and very impactful, and then he’s going to get some of the top developers also to step up, you know, people like Scott Guthrie who has been involved with the Silverlight thing, people who do the Office work, some people in search work. Ray will be the leader, but it will be a broader set of faces than it was when I was giving 20 speeches a year.

Q: And with that leadership transition now just half a year off, is there more work that needs to be done among Microsoft’s leaders to complete it, or are you feeling pretty comfortable that it’s done at this point?

Gates: Well, I don’t think there’s any transition that’s been planned as much in advance and thought through carefully. I get six more months to share any advice and do things. But we’ve really done all the concrete things in terms of Ray [Ozzie] running the architectural agenda and [Chief Research and Strategy Officer] Craig Mundie stepping up to a broader set of responsibilities.

I moved pieces like research to work for Craig, and there’s very little that works for me directly at this point. I think they still like me showing up, but I’m not necessary like I would have been when we made the announcement over a year and a half ago.

Q: What’s your favorite thing to do at CES when you’re not giving the speeches?

Gates: I get to walk the floor a bit tomorrow morning, see the biggest screens and the wild things that come out in this show. You know, we’ve got so many partners, I end up seeing even Windows-based things that are completely new to me and that’s part of the fun of it.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com