Microsoft Chairman Bill Gates acknowledged that government's number one concern with the software giant revolves around security, but he spoke optimistically about the upcoming version of Windows (currently called Longhorn) as a stable, secure platform on which the public sector can run its applications.

Gates spoke on a wide range of issues during Microsoft's Government Leaders Forum in Washington, D.C., as part of a two-day summit of public-sector leaders from North and South America. Besides addressing government concerns about security, Gates also mentioned that Microsoft had made changes to its software licensing to better fit the needs of government customers.

Gates began his remarks before 200 political and technology leaders from government by noting its unique role as a customer. "It's the sector where we've done more special work than any other, and I think that's fully justified," he said. Whether it's government or education, Gates spoke of the tremendous change taking place in a world that has grown flatter as technology and telecommunications brings different economies and societies closer together.

Gates cited vast improvements in technology that have made devices -- such as cell phones and PC tablets -- more versatile and improvements in networks that have increased the volume and speed at which data can flow, and improvements in interoperable software that make it easier to deliver new services to citizens.

As a result of these changes, government should be able to do new things with the software they have today, said Gates. "We're not saying get rid of old systems, we're saying that software projects with the latest tools shouldn't be a matter of three-plus years, they should be more like three-month projects where you can see the results and make evolutionary progress in building better Web sites."

Asked to give some advice for government, Gates pointed out how the private sector has moved toward simplifying its IT systems, but acknowledged that doing the same in the public sector isn't quite so easy. He stressed the need for more public-private partnerships, but cautioned government not to expect companies like Microsoft to embrace performance-based partnerships, where the vendor foots the entire bill for an IT system upfront and in return gets to keep a portion of the savings generated by the use of better technology. Too often, the public isn't happy when they see the private sector profiting from improvements it makes to government operations.

Rather, Gates suggested that with the lower cost of today's software development tools, firms like Microsoft are in a position to develop -- and absorb the costs of -- pilot projects for government that could be turned over when the test is completed.

As Microsoft's chief software architect, Gates spends lots of time looking at future innovations and he spoke briefly about technology trends that could benefit government in the years to come. He mentioned how VoIP can both lower telecommunications costs as well as provide a rich set of features that can improve worker productivity. And he pointed out that video on PCs will only grow in the years to come and should have a positive impact on how government trains its workers.

Asked to comment on the impact of commercial software on developing countries when a growing proliferation of free, open-source software was so readily available, Gates reminded the audience that commercial software added up to only 2-3 percent of a project's total IT costs. What you get with that 2-3 percent cost is software that is fully supported by commercial vendors, Gates pointed out. You can't get that kind of backing and support when you use free software, he said.

Remarks by Bill Gates.