Bill Gates…on the Palm Deal. Bloomberg Boot Camp, a report on today's technology. First it was Apple deciding to use Intel processors. Now…Palm says it's coming out with a Treo smartphone….that will use Windows Mobile…instead of the Palm operating system. How did that happen? Microsoft Chairman Bill Gates…

"We've been talking over a number of years about was there a way to bring together Palm's strengths and our strengths and create a product that had the usability they're known for but also connect it up to Outlook and Office in the classic way that only we can do." Now does this spell a victory in any way for Microsoft over the Palm operating system in this handheld business? "Well there'll be continued competition between devices using Windows Mobile and that Palm OS. What we have is the great hardware design and some value added software that Palm did with the Treo that runs Windows Mobile. We see this market expanding a lot. Of today's Exchange users, only about 10 percent have mobile email. We'd like to see that go up to 80 or 90 percent. We've actually built in that mobile capability into Exchange. You don't have to buy extra servers and licenses. And I think when you combine this device with that kind of a software advance, we're going to see this market explode." Now Motorola will also be selling a new handset. Sort of a Razr smartphone with your software. Between the new Treo and new Razr, does this mean the cell phone software business is finally taking off for Microsoft? "Well certainly we made a bet many years ago that the magic of software in the phone would be increasingly important. And we built a great team. And yes, these milestones mean that the volume is going up and that justifies the huge investment that we're making here."

Microsoft Chairman and Chief Software Architect Bill Gates. More with Gates in an upcoming report. Bloomberg Boot Camp, I'm Fred Fishkin.