When he engages you in conversation Bill Gates has a habit of placing his forearms on his knees and swaying backwards and forwards on his chair like a rocking horse, so intense is his concentration. Up close it is evident too that he badly needs a haircut. The richest man in the world still doesn't wear a tie, even though he had just appeared before several hundred suited representatives of corporate America in New York on Thursday to launch Microsoft's new Windows XP.

The 45-year-old Microsoft chairman thus still projects an image of the driven boyish techno-geek at the cutting edge of software technology. "I have a lot of exciting ideas which are still not realised," he told me, sipping from a bottle of Diet Coke. "There are a lot of things about communications and readings and meetings, annotations, software development, e-commerce; we've got many years of work ahead of us and I want to focus on the engineering aspects. My job will certainly stay the same."

Mr Gates naturally expressed optimism that Windows XP, with its improved operating features, would revitalise the sluggish technology sector. I asked him how did Microsoft in Ireland, which employs some 1,600 people in Dublin, fit into the Windows XP project and future Microsoft research and development, especially given the widespread tech fatigue in the US and elsewhere.

"A lot of our product work that we do in Europe we do in Ireland, the translation work, the production work, and we have partners there," he said.

"It's been a site that has worked very well for us. They have been very busy and involved in doing the localised versions of windows XP. Microsoft has always had a fairly conservative way of managing themselves financially and so the PC slowdown is not good for us, it affects Windows sales very directly, but we are optimistic enough about the future that our R and D spending has continued to go up this year and that's what's going to allow us to keep moving full speed ahead.

"We went through the '99 and 2000 period where people were sort of manic, manic in terms of stock prices and expectations, new start-ups that changed things overnight, the whole get-rich-quick kind of a deal. But actually Microsoft found itself being a little out of tune with that, we focused on long-term developments, we focused on things that could be profitable and believing that big changes don't happen overnight. They happen through a lot of perseverance.

"Now that we've exited that manic period, people are almost depressive because we've got to work through the excesses, and it wasn't just in the Internet sector, the telecom sector as well. So the economy is not in the same strong shape it was for so long. Then again, why was the economy so strong when it was, and what will put it back? It's innovation and productivity increases. And there's no doubt that what we have done in terms of productivity is less than half of what is possible.

"If you look at e business, we have just scratched the surface. If you look at the efficiency of knowledge workers in terms of how they communicate with each other and browse information, we can do dramatically more. And so I find myself far more optimistic than most people because they have gone too far in correcting their views.

"But advances in the hardware and the software are taking place, the communications costs - although somewhat slowly and it varies by country - are absolutely coming down, and so we'll see the economy being re-energised because of these efforts. Work like Windows XP fits into that."

I asked him why anyone should bother upgrading to the new system when they could do all they wanted with earlier Windows versions. "There is quite a large percentage of PCs where you need to get more memory to run Windows XP," he admitted. "That doesn't mean you have to get a whole new system, you would have to get more memory. We sell windows XP in two ways. We sell it on new computer systems and we sell it as an upgrade. And just like every version of the operating system we've ever sold, the bulk of the sales are on new computers.

"We make a very strong proposition to serious users that it's worth the upgrade, even if you're not about to buy new hardware. You know the price of the upgrade is quite modest compared to saying, hey, this is my most important tool, this is the tool that I'm using every day and if it's slow, that really affects my output, if it crashes it really affects my output. With this thing of real-time communication I can share my screen, I can help somebody with their system, they can help me with my system.

"Often there's one feature alone, where say an upgrade to the pro version is $199, that one feature alone for many people would justify making that upgrade. Not everybody will upgrade but a lot of serious users will upgrade because they see the breadth of things that we have done and they want to be on that new foundation."

As for reports about the reluctance of American business to invest in new technology, he pointed out that a lot of computer makers such as Gateway and Dell already had XP on their new computers. "Companies are continuing to give their knowledge workers state-of-the-art tools," he said. "I mean, after all, why would you have all these knowledge workers come into their offices if you weren't willing to spend a few hundred dollars to give them the tools to communicate, or cast, or co-ordinate rich information things, in the best way possible?" Having the latest software in the machine was a rounding expense "compared to the cost of that salary in that office".

"Sure corporations take time in terms of what cycle they want to go at, but we'll see heavy use of this, either by upgrading or new hardware, very very heavy use of this in the corporate environment. We expect most people over a period of years to make the transition," he said.