Gates Like Tablets, Taxes; Dreads China

Despite rampant piracy abroad, and withering competition and market churn at home, Bill Gates remains bullish on the technology industry and, in particular, Corp.’s tablet and operating system efforts.

The former-Microsoft-chairman-turned-billionaire-philanthropist has one more message for those shopping online for a Surface tablet (or anything else for that matter): You need to pay your sales taxes.

In a wide-ranging interview on CNBC’s morning Squawk Box program this week, Gates sat alongside friend and fellow billionaire Warren Buffet and talked about Microsoft’s changing fortunes in the post-PC era. Gates poked at rival Inc. and said he thinks the company he founded remains well-positioned to capture tablet market share as consumers look to do more routine business tasks on the devices.

“It’s going to be harder and harder to distinguish products, whether they are or PCs,” Gates told CNBC co-anchor Becky Quick. “With , Microsoft is trying to gain share in a market that has been dominated by the -type device. A lot of those users are frustrated. They can’t type. They can’t create documents. They don’t have Office there. We’re providing them with something with the benefits they’ve seen that have made [] a big category but without giving up what they expect in a PC.”

Gates says he doesn’t put much stock in comments that Microsoft is being outgunned by competitors in the market or that traditional technology vendors are on the ropes.

“With tech companies, whoever is the leader is always questioned. They say, ‘Is this the end of them?’” Gates said. “We’ve got some amazingly strong companies like Apple, Google, Microsoft, and companies coming up like Amazon, Facebook, and Samsung. If you do deep software both on the client and deep services, if you have things unique for businesses the software business is an amazing business to be in both in terms of growth and profitability.”

That’s not to say the industry is without its challenges, however. For a prime example, look east, where Gates said rampant software piracy has made China’s “uniquely high piracy market” a “disaster” for western technology firms.

“We have piracy in places in China that we don’t in most of the world … in government institutions, state owned enterprises and large businesses,” Gates said, adding that Microsoft estimates it gets paid for roughly one over every 10 instances of its products in use in the communist Asian nation.

“China has been a disaster,” Gates said. “It is improving, but fairly slowly. There’s a constant dialog with the companies and the government there as to how to get compliance rates up.”

On the matter of taxes, Gates said the Senate’s passage earlier this week of a bipartisan bill to require the collection of sales and local taxes by online retailers was the right decision.

“The bill that asks them to collect these taxes makes a lot of sense,” said Gates. “It’s very unfair to the person who has a physical store. Not only do they have those expenses, but that the other person isn’t collecting sales tax.

“[The bill] is a good thing for state budgets. It’s a good thing for fairness in terms of the competitive framework.”

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