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Gates holds to line on public sector pricing

"This is the decade when IT will change the productivity of the economy," said Bill Gates in London last week, when he met...

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"This is the decade when IT will change the productivity of the economy," said Bill Gates in London last week, when he met chancellor Gordon Brown and addressed software developers.

Between trying to hold the line on Microsoft pricing to the public sector and promoting Longhorn, Gates took on the sceptics who have been claiming that IT investment makes no difference to business success.

From breakthroughs in speed and memory capacity in the 1980s to the decade of the internet in the 1990s, Gates said, "The missing link has been software." He added that there is no software more significant than XML.

HTML, the protocol pioneered by Tim Berners-Lee and used on every page on the web, "Is just a text protocol. XML will achieve the dream of exchanging information in any way," he said.

Gates predicted the next wave of computing would be the "smart client," which would be fuelled by low-cost computing power.

PC hardware would combine powerful desktop processing power with a permanent internet connection, providing an IT environment Gates described as "stateless". Longhorn will be the first Microsoft OS to support this concept.

However, Gates admitted his vision was also dependent on "super-cheap broadband".

On security, Gates said hackers were no longer looking for holes in systems, but instead were waiting for a patch to be released, presenting users with a race against time to install it before hackers could exploit the weakness.

He admitted that Microsoft patches were still too big. "Clearly we still have work to do if only 20% of our customers are up to date," he said.

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