NEWSWEEK: How do you assess Microsoft’s performance in remaking the company for the Internet?

GATES: We’ve done better getting those things done than I would’ve expected. In December, no one inside or outside Microsoft would’ve said by August we’d be winning virtually all of the browser reviews. I’m not saying we’re done. But we’ve come a long way.

NEWSWEEK: What do you think of all the talk about the network computer, the stripped down, low-cost Internet machine?

GATES: The network computer is more a symptom of what our challenge is: simplicity. We’ve got to give people the benefit of the PC, all the flexibility, the rich set of applications, the hardware that they’ve already paid for, together with a lot more simplicity than we’re delivering right now. That’s the rallying cry at Microsoft.

NEWSWEEK: Microsoft is demonstrating a system called the Active Desktop. How important is this?

GATES: It’s as big a shift as the graphical interface. The graphical interface says that when you look at your computer screen, you want to see a bunch of folders. My job is not to sit and look at folders! My job is to know how the sales are, or to see my latest appointments, or to know if there’s some news thing that I’m interested in. Now for the first time, you get to pick what information you want, whether it’s a news ticker or a short version of your schedule.

NEWSWEEK: How do you, as a company, stay hungry?

GATES: We never waste a lot of time talking about what we’re doing well. It just isn’t our culture. Every meeting is about ““Sure, we won in seven of the categories, but what about that eighth category?''

NEWSWEEK: Microsoft seems to be aiming for a much deeper relationship with consumers and end users.

GATES: Absolutely. Our relationship to date has been if the people buy a product, which historically was a box, they’d take it home and use it, and then a few years later they’d get another one. That will change to where you’re connected up to the Internet. We’ll ask you to register and we’ll ask your permission to send you mail once a month, and if you’re willing, we’ll upload a few profile bits about how you’re using the applications and what your hardware is. If you happen to buy a new upgrade to your hardware, then we’ll suggest: ““Here’s these great new features that you could use because you have more capabilities.’’ And so the relationship, even on productivity software, is a lot more intimate and ongoing. And with the interactive content you go from contacting us every two years down to contacting us two or three times a day, where you’re saying, ““What are the top stories that I care about’’ or ““Is there a new airfare that I might be interested in?''

NEWSWEEK: And in exchange you’ll collect an annuity?

GATES: The easy way to do that is just to have the concept of membership. If you belong, then we’re constantly sending you the information, and you have full access to the richness of what we have. If we do this well, then a lot of people will want to essentially pay a subscription for that.

NEWSWEEK: Are you worried about the current antitrust investigation?

GATES: No. This is the most innovative sector of the economy, and prices are coming down. Antitrust is supposed to look for areas of the economy where a lack of competition is causing prices to go up and there to be no innovation, and yet here we have more money going into software start-ups than ever before. You go down to California and everybody’s driving Ferraris–not everybody, but, you know, it’s like on the trees down there.

NEWSWEEK: Then why are your rivals picking on you? Why are they complaining?

GATES: Well, we’re very successful. But I think it’s very draining to fool yourself into thinking that you’ll be able to hobble Microsoft. That’s not right. It’s not gonna happen.

NEWSWEEK: Sometimes it seems to get very personal, almost a demonization of Microsoft. Scott McNealy of Sun recently showed a video parodying the commercial that introduced the Macintosh, only in this one you were Big Brother.

GATES: Scott hates PCs and he hates the fact that customers like PCs. When PCs were selling 6 million units a year he said that it was a stupid idea. Now PCs are selling 70 million units a year, and Scott’s trying to tell corporations they should just rip PCs away, that flexibility and empowerment is bad stuff. If he’s using my image as part of that attack, then fine.

NEWSWEEK: Who is going to be the next CEO of Microsoft? What happens if you get hit by a truck?

GATES: If there was some surprise, Steve [Ballmer] would be the key leader who would have to coalesce things and make sure things would happen. People’s perception of the importance of my role is certainly greater than the reality. I’m planning to be here for more than a decade doing the job I’m doing, so you’re talking about just a contingency plan.