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Gates bullish on tech, says broadband is weak link

The spectacular bursting of the dot-com bubble is not the end of the technology boom, only ''the end of the beginning,'' Microsoft chairman Bill Gates said.

''This next decade is the big one. This is the decade when your involvement with computing will be pervasive,'' Gates told a meeting of about 140 corporate leaders at Microsoft's fifth CEO summit on Wednesday.

Although dot-coms never lived up to their unrealistic promises, technology will radically improve, Gates said.

The next few years will see software and the Internet tie together everything from PCs to handheld computers to new devices like the tablet PC, a folder sized portable computer with a large-screen that can be written on, he said.

Gates said in his address that the only weak link in deploying new technology and services was high-speed Internet access, which was proving too costly to roll out to consumers quickly.

''There is no hardware limitation that will affect what you want to do, but there is one exception and that is the cost of broadband communication, primarily to the home,'' gates said. ''That is an area where progress continues to be very slow.''

Gates said it was optimistic to think that 20 per cent of US homes would have a fast Internet link within four years.

''So that's the one thing holding us back. You wish there would be some breakthrough in that but there won't be in the next three or four years,'' Gates said.

He said the past year, in which the value of the Nasdaq index was cut in half, high-flying dot-coms were laid low and spending on technology slowed, provided the insight that the so-called ''new economy'' had not suspended old economic rules.

''Some of the mania about this has really changed. I certainly don't think that the rules of profitability or cycles in the economy have been suspended,'' Gates said.

''How could a technology that reduces barriers to entry allow the creation of companies whose value is greater than ones that created assets in the real world where you build stores and there are barriers to entry?'' Gates said. ''That paradox has now been resolved -- there was no reason for that to take place.''

But Gates said he expected retail sales over the Internet to quadruple in the next five years and put his stamp of approval on online auction house eBay Inc and retail giant Amazon.com Inc as examples of web companies that will survive.

''There's no doubt in my mind that some companies like eBay and Amazon, that were created partly as part of this Internet excitement, are going to be here,'' Gates said.

''In those cases, because you know it's a reliable place, you know what to expect from them and they've pioneered those businesses, they will be very successful companies.''

As for his own business, Gates said software was becoming a tough sell. ''Intellectual property has an interesting problem, which is that it lasts forever. Your own installed base is serious competition. You have to do better,'' Gates said.

Microsoft has seen sales of its core products, the Windows operating system and the Office suite of software, slow down in recent years as sales of new PCs trail off and existing customers find little reason to upgrade.

Microsoft is launching new versions of Windows and Office this year and plans to increasingly convert its products into fee-based web services that provide a steady stream of subscription revenue.

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