Gates boasted that Microsoft's innovative software has been a major driver of PC sales, and is partially responsible for the fast adoption of broadband internet connections.
"Five or six years ago, if you said to people that software would be incredible in terms of making photos better, music better, TV better, phone calls very different, they would have been quite sceptical," he told delegates.
"Now, particularly in music, they've seen that it makes a huge difference. Software has got to provide simplicity. That's why we are investing more in the toughest problems: security, privacy, speech recognition and video recognition. "
Gates went on to praise the advances of hardware vendors, most notably Intel, saying that it " allows us to be more and more ambitious with that software".
The company did, however, officially launch its Urge online music service co-developed with MTV. The service, first unveiled in December, offers two million music downloads along with unique MTV content such as its 'Unplugged' sessions.
Gates also showed off a hybrid cordless telephone from Philips that allows users to make traditional phone calls and has a Skype-like capability to place VoIP calls to users logged in to Microsoft's MSN Messenger. A display on the phone allows users to view their buddy list.
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