KL: How do you see your role as head of Microsoft, and do you feel you need to differentiate yourself from Bill Gates?

SB: I'd say my job is to do my best to see that the company is successful and there are parts of our business that need to be shifted and changed and reinvented and there's things that work super well, and they don't need to be shifted and changed. One of the things we've done this year is we've talked about the reinvention of the company around the new vision [Microsoft's new mission statement]. We've had some new organisation designed to give a little better customer focus.

KL: Where do you want Microsoft to go tomorrow?

SB: This next generation Web platform is just a huge opportunity. Think of Windows as just a part of it. Think of it as a new thing called i-Windows - it's a client and it's a server and it's a set of services that live out on the Internet. It's a building block. That's what we're known for.

KL: There are 29 million lines of code in Windows 2000. Is there too much complexity for users?

SB: No, I don't think users will have a problem with the complexity. We're going to need to go back and improve the usability in a few ways for some systems administrators, but there's not going to be any user problems. I mean, there's such great things in there for admins that I think they'll love it. But this is about value for users. And if we don't give you more software in the box next year than this year, what did we do [wrong]? We can never take anything away from a user - that's a fundamental principle of software, that you can't take back something unless nobody used it, and most things, somebody uses. Software should get bigger every year. If you're trying to improve your products, your job's to add more value and improve the products, to listen to the customers and give them more. So I'm unapologetic about the amount of software.

KL: Isn't the release date in February, just after Y2K, going to mean people will be unlikely to have the cash for something as major as a new operating system installation?

SB: Will they have the money? Absolutely. Will some companies wait? Some will. Most will wait until it fits into their cycle. Companies don't really orient their business cycles around our product releases. I don't think anybody should ever expect that enterprises move like consumers and have an immediate uptake. These things happen over a period of years.

KL: Define innovation.

SB: [Laughs] I think innovations are new things that are good for people, that people use. Now take Windows. It was a new thing people used because we were able to synthesise - it's not all new ideas but it was an unique synthesis that made something popular, that basically no one else could make as popular as we did. And it wasn't just that we had many users - the first system didn't have many users - it was the combination of that, and supporting multiple hardware platforms and application models and application availability.

KL: Do you honestly think that there are threats from other operating systems out there; from Linux for example?

SB: Absolutely.

KL: And why?

SB: Why?

KL: With Linux one of the main arguments against it is still this complexity issue; that it isn't something that's simple for system administrators; it isn't easy for users to use.

SB: But people keep working on this stuff. It's free. It's a real threat. I also think people underestimate the role of what I might call `Windows middleware' - that's a threat. Marc Andreesen, who was running Netscape at the time, used to say, `Some day, Windows will just be a poorly debugged set of device drivers running Netscape Navigator. And all the users will know about is Navigator, and all the developers will talk to is Navigator.' I mean, you could say DOS [Microsoft's original operating system, which runs beneath Windows] is now a poorly debugged - well, it's welldebugged - it's just a set of device drivers running Microsoft Windows. And so the people who'll obsolete us could be somebody who comes along the side of us, or someone who comes along on top of us. You've got thin client competition, that just would be sort of browser only; you've got Linux competition, you've got Java competition - there's a lot of competition out there.

KL: In a wider sense, where do you see challenges coming to Microsoft? What about larger shifts within the Internet, within the way in which people interact with PCs? Voice recognition for example has been something that was touted quite heavily by Bill Gates but seems to have been moved to the side.

SB: It's just going to take longer to get done, that's all.

KL: Is the operating system going to become less important? Some say the importance of Windows, of any operating system, is waning because of the Net.

SB: As I said, I think the platform is more than a clientside operating system. It's the client, the server, and a set of services. That's my belief.

KL: What do you think of a technology world in which you, personally, can make the Nasdaq fall 3 per cent in a day [by suggesting technology stocks are over-valued]?

SB: I think it's a world in which nobody listens or pays any attention to what I said! [laughs]

KL: Did you expect that kind of reaction to that comment? Was it just a throw-away comment?

SB: I knew it wasn't a throwaway, but I didn't think it was that big a deal at all. I mean, somebody asked me - it was a group of writers and editors - what's the unwritten story of technology. And I said, well, duh. I didn't expect anything like it. And obviously, no one agrees with it. Everything's much higher than at the time I made my comment. [laughs]

KL: Did you buy any Microsoft stock, a la the late-1980s, when there was a crash and I think you picked up close to a million shares?

SB: Yeah, I don't even remember how much it was now anymore. [Mr Ballmer bought 935,000 shares at an average of $48.91 a share in 1989.] But no. I'm all happy now. [laughs] And I don't think our stock went down that much.

KL: No, and it certainly seems to have been unfazed by the Findings of Fact [in the anti-trust case taken by the US Justice department and 19 states against Microsoft].

SB: Yeah.

KL: Some people would say the very fact that you can postpone the release date of Windows 2000 so many times and still expect a huge market for it is proof that Microsoft is a monopoly.

SB: I think people know they have something good coming. People don't have to upgrade. 500 million PCs in the world and you know what? If the product doesn't offer any value, nobody'll ever upgrade.

KL: Did you feel personally battered about when the Findings of Fact came out?

SB: Well - I'm probably OK with rolling with punches myself.

KL: You have that reputation.

SB: Well, it's my self-protection mechanism. We certainly respectfully disagree with the Findings of Fact. We know we're in a very competitive business and for some reason the judge didn't quite end up agreeing with us about how competitive our business is. We're glad to see that the judge acknowledged that our browser is a good product, that it advanced the state of the art, that it benefited users, that it gave users good price - you know, that got buried in most of the press coverage. The judge chose to highlight a set of relationships we have that we would consider very positive, and somehow to make them appear in a negative light, not that that has anything I think to do with antitrust law, but - you know, we have a great partnership with Intel - but somehow that managed to be made to look funny. And with a number of other companies - like Apple. I think we were disappointed, and respectfully would disagree with the Findings of Fact.

KL: Many of the findings would have been criticisms of dealings with customers, channel relationships, certain pressures applied - that litany of accusations would have fallen under your watch, under many of the areas you were covering at the time. Would you have done anything differently?

SB: I don't think I'd do anything differently. I think we behaved 100 per cent according to law, and in the best interests of our customers. Intel was getting ready to bring out a piece of software that was completely incompatible with Windows 95. I think it was our obligation to tell them, as our partner, and in our customers' best interests, that they were going to do that. I think it's in our best interests to work with Apple, I think it's in our best interests and in our customers' interests to have discussions with Netscape about the best way forward together. But we don't have to. If it doesn't make sense, it's OK. [pause] I am sure there're times when people at Microsoft, you know, were - could have put things more, what shall I say, low key or gently. That's bound to be true. But the customers' best interest, the partners' best interest - are always, you know, are always first blush. When we're competing, do we compete hard? Do we always ask ourselves, why did we lose that customer? Could we do better? Could we have a better price; could we have a better product? I mean, that's what you're supposed to do, you're supposed to build things that everybody wants. You're supposed to ask yourself, what can I do better? That was the way that I was brought up.

KL: How would you define a Microsoft personality?

SB: Passionate. Concerned. Loves the products, which means loves what the customers do with them. Likes to see their stuff used. Energetic.

KL: What would you like to attain that you haven't attained yet?

SB: Number one: we're just in the middle of the revolution, so to speak. We're just in the middle of this incredible opportunity wave that the world's experienced with first, the PC and now, the Internet. I certainly have great ambition to see our company rise up and provide the technology for the next wave, benefit consumers and succeed as a company. Number two, I've got three small kids and I have an ambition to be a great dad. I'd like to be a pro basketball player but that's not in the realm of the real [laughs].

KL: A final question. Settlement or litigation?

SB: We'd love to settle. That would be our preferred course, but certainly, we have to have the ability to add capabilities to our products that consumers want. And that's the one principle we're fighting for. We can compromise on a lot of other things but that's essential.