Microsoftthinks the advertising business model for traditional media — venues where advertisers still channel most of their spending — will fall apart faster in the coming five years.
"We're saying newspapers will go online, and there will be massive innovation that comes out of that," Gates said. "We're saying that TV, the biggest ad market in the world, will completely go online and have the kind of targeting interaction that you only get out on the Web today.
Gates gave other specific examples of old media facing withering competition from new technologies.
He said IPTV, the underlying technology for TV over the Internet, makes traditional broadcasting obsolete, supplanting the model in which one show goes to many viewers who may or may not be interested.
The IPTV model presents opportunities for advertisers to tailor messages to viewers.
"In this environment, the ads will be targeted, not just targeted to the neighborhood level ... but we'll actually know who the viewers of that show are," Gates said.
Not everyone agrees on the pace of the transition to digital media and the demise of traditional forms.
"The timeline between now and when that happens I think is questionable," said David Cohen, executive vice president at Universal McCann. His agency is an arm of the McCann Worldwide ad agency, which counts Microsoft among its blue-chip clients.
"There are very few companies that have such a wide range of digital assets that you can run messaging across all those platforms," said Cohen, who works with clients including Johnson & Johnson, Intel, Bacardi and the U.S. Army.
He said Microsoft's challenge is to link all of those platforms to give advertisers a comprehensive profile of a consumer — her preferences, what ads she viewed in the last month and which ones she acted on.
"That's the code that they're trying to crack, and if they do, they'll be unmatched," Cohen said.