IT is 8.30 a.m. in San Francisco. About 10,000 personal computer engineers and software writers are gathered to hear the man whose vision of a computer on every desk and in every home has created a $180 billion (£116 billion) industry.
Ear splitting music accompanies a flashing montage of milestones in the history of the personal computer. This is nostalgia, computer industry style.
Enter Bill Gates, Microsoft chairman and co founder - and one of the richest people on earth. With his hair slightly tousled and clad in a red conference T shirt, he fits right in with this crowd of fashion unconscious techies.
"The entire world is going digital," he says. Digital television will help to put PCs at the heart of home entertainment systems. Home use of PCs will "skyrocket" as they are increasingly linked to the global Internet. The audience enthusiasm is palpable, but Gates is not just playing to the crowd. His vision of ubiquitous home computing, which encompasses a range of "information appliances" as well as general purpose personal computers, is near to becoming reality.
As the next speaker takes the stage, Gates retires to a side room to begin the interview. He talks about the convergence of computing, entertainment and communications. "The PC is going to be at the centre of home entertainment systems," he says. Electronic mail will be commonplace.
This is no rehash of the grandiose notions of a trillion dollar industry and futuristic computer applications in vogue a few years ago. Gates is talking about the here and now business deals that are unfolding, battles over technical standards, and the nuts and bolts of extending the reach of PC technology.
Last weekend, Microsoft announced the $425 million purchase of WebTV, a Silicon Valley start up company that has developed technology enabling users to access the Internet through their living room TV sets. WebTV "settop box" adapters sell for about $350, compared with between $1,000 and $2,000 for a standard home computer. Users can send and receive e mail and surf the World Wide Web, where multimedia information is published on the Internet.
WebTV cannot, however, run PC software. Unlike any other, product that Microsoft sells, it is not compatible with Windows, the Microsoft PC software. Explaining this dichotomy, Gates is unusually pragmatic. "The more powerful device is the PC, and the PC is going to come down in price and go up in power. But it is not going to be as inexpensive as a sub set (special purpose) device can be.
"WebTV has built a product that you just plug in and go out on the Internet. They have done an excellent job. You don't get a lot of things that the PC brings, but, if you just want to get on the Web, it comes through in a very impressive way.
So called information appliances - smart televisions, telephones and hand held devices - are all part of Gates's vision. This is expounded in The Road Ahead, his best seller published last year. According to his view, these devices will share software standards.
WebTV will be drawn into the Windows fold next year, when a model that runs a version of Microsoft Windows will be launched.
Some see Microsoft's purchase of WebTV as an admission that PCs are too expensive and too complicated to become true massmarket consumer products. But Gates is having none of it.
THIS battle aside, the biggest challenge facing Microsoft and the rest of the PC industry is to expand its market beyond the approximately 40 per cent of US households - less in other parts of the world - that already have PCs. As sales to first time PC buyers slow, many analysts have questioned whether the home PC market is reaching saturation. Gates is dismissive.
Gates is convinced that the PC will soon take its place in the living room as part of an all digital home entertainment system. He acknowledges, however, that the PC must become easier to use if it is to be as common in the home as in the workplace.
Microsoft has demonstrated its rapid reaction times. Within days of a decision by the Federal Communications Commission to allocate digital television channels to US broadcasters earlier this month, the company jumped on the opportunity. Gates is already demonstrating the ability of the PC to enhance digital TV signals with interactive features. He has campaigned for the adoption of PC friendly digital TV video display standards - which have been opposed by TV manufacturers - and promises that the ability to display digital TV will be a standard feature of PCs built next year.
The PC will "bootstrap" digital TV, Gates says, suggesting that the success of broadcast digital TV will depend on his industry. There will be tens of millions of PCs capable of receiving digital TV signals in use by the time US broadcasters begin transmissions next year, he says. Consumers will choose those PCs over digital TVs.
This is not the first time Microsoft has tried to enter the living room. Three years ago the company invested heavily in the development of interactive TV, only to see its efforts fail. "Patience is a key element of success, Gates says with a smile.
It is a philosophy that has served him well in several aspects of Microsoft's business. Windows, now the most widely used PC operating system, went through several iterations before becoming a commercial success. Similarly, Gates doggedly supported the CDRom for the best part of a decade before it caught on.
"We have been working on interactive TV for a long, long time," says Gates. The problem has been the technology is too expensive, but he is optimistic that the magic of semiconductor chips, which double in power every couple of years, will overcome this.
Gates will not shirk this task, or indeed any other that may further Microsoft's prospects.
