Here is the transcript of the interview of Gates with larry king...

Gil...

KING: The new "Entertainment Weekly" issue has a fascinating interview with Bill Gates, focusing solely on computers and the entertainment industry. And you said things that -- that music companies will get their product out, CDs will become obsolete. What's it going to be like? How are we going to be entertained?

GATES: Well, the great thing...

KING: And how far away is this?

GATES: Well, I'd say in the next five years, entertainment will be redefined. The way that we think about TV channels and we think about going out and having a collection of CDs, where we have to open up the case and put it in there...

KING: Gone.

GATES: ... that will go away, because you'll be able to take the songs that you like and organize them the way that you want. You know, pick the mood you're in, pick the thing that you care about and have a little device that you carry around with you or...

KING: You've got something to show us?

GATES: That's right.

KING: Let's bring it all in.

GATES: OK, and so it won't just be computers that are changing, it will be the -- OK, this is a good example. This device here can hold...

KING: It looks like a cell phone, but it's not,

GATES: Right. You just...

KING: Let me show it.

GATES: This little chip here contains hours of music.

KING: I'll show it, you describe what I'm showing.

GATES: OK, so what you do is you take a song from a site where, hopefully, you pay for it and license it, download it into your computer, and then you put into this device. And then if you want to play it, you just, you know, push the button here and you pick exactly the song you want,

KING: Give me an example,

GATES: OK, let's -- well, it's paused right now. And let's see if we can plug that in,

KING: Plug that in, GATES: So this is in a digital format. And so we've got a song that's just one of the many that we put on to this little device,

KING: Hey, something's coming.

GATES: That's it. That's the song.

KING: Can we raise the sound? Is this your kind of music?

GATES: Not that one,

KING: Not that one. So you can just literally remote control your...

GATES: Yes, you skip around. And if you ever want to change the songs you've got here, you just take this little chip, put it in your PC and pick another set of tunes, and literally in a few seconds it's set up with the new music,

KING: How does it get in a chip?

GATES: Well, it all starts with the music label. Instead of printing disks, they'll have a site on the Internet where the actual song is stored. And they may have little snippets you can listen for free, but if you want the real song you have to pay some kind of price for it. And then it comes across the Internet, gets into your PC, and then the PC sends it on to these little devices,