Personal computers are still a big business, he said in a " Squawk Box " interview, appearing from Omaha, Neb., with fellow billionaire Warren Buffett. Gates, a board member of Buffett's Berkshire Hathaway (BRK-A), added that it's going to be harder to tell the difference between the tablets and personal computers.
(See Related Video: Buffett: Bonds Are 'Terrible Investment' Right Now)
"With Windows 8, Microsoft is trying to gain market share in what has been dominated by the iPad-type device. But a lot those users are frustrated. They can't type. They can't create documents," he added. "So we're providing them something with the benefits they've seen that has made that a big category but without giving up what they expect in a PC."
"If you have Surface or Surface Pro, you have the portability of the tablet but the richness of terms of the keyboard, Microsoft Office of the PC," said Gates, referring to Microsoft's tablet.
(Read More: Microsoft 'Not Dead Yet,' Wall Street Pros Say)
As for the soaring stock market, Gates said interest rates are a significant issue for long term investors to consider.
"There is always the question of what's going to happen with interest rates. It has this fundamental effect on things," he said.
"Certainly you could say that equities are a good deal relative to bonds at this point," Gates added. "But if interest rates are going to go shooting up, you like ... stay liquid."
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