Gates touts “information economy” over new economy

Microsoft’s chairman Bill Gates gave a roomful of fellow business leaders a short economics lesson on Wednesday at Microsoft Corp.’s CEO Summit, saying intellectual property – an issue close to Microsoft’s heart – is the linchpin of the “information economy.”

Gates told the 160 CEOs, including eBay’s Meg Whitman, Compaq’s Michael Cappellas, and Disney’s Michael Eisner, at the two-day conference that the recent economic downturn had separated the wheat of the “information economy” from the chaff of the New Economy.”

While predicting that “reliable” Internet pioneers like eBay Inc. and Inc. will survive, Gates showed the CEOs a long list of dot-coms, such as, that have gone under.

“It’s not just the dot-com phenomenon that changed, but a coming of age of people thinking about intellectual property, and the uncertainty surrounding some of these investments,” Gates said. “Almost every company has [issues] of this nature. The thing you really control is the talent of the people involved.”

Microsoft recently has focused on intellectual property issues, responding to concerns like software piracy and upgrade revenue streams with a controversial new licensing plan that pushes enterprises toward upgrading to Office XP by Oct. 1, at the risk of paying larger license fees later.

Many observers have said that Microsoft’s licensing changes, in part, reflect a problem that has come with the software giant’s success: The operating system and productivity suite markets are so thoroughly dominated by Microsoft that there are few new customers to win over.

“Customers don’t always need to upgrade,” Gates acknowledged. “Your own installed base is, in effect, your own competition.”

The CEOs each were given a Compaq Computer Corp. iPaq handheld device as well as a brief demonstration of Microsoft’s business-to-business technologies, such as XML-based BizTalk. In the demo, a Microsoft official showed how Web services, based on the company’s emerging .NET architecture, will facilitate b-to-b transactions.