Microsoft chairman and ex-CEO Bill Gates cajoled a packed Memorial Auditorium yesterday afternoon by playing heavily to the home crowd.

Gates pointed out that current CEO Steve Ballmer M.B.A. ‘81 attended Stanford, although Gates persuaded his “fellow drop-out” to leave the Stanford MBA program and join Microsoft. Gates also mentioned notable Stanford alumni such as Microsoft research head Rick Rashid ‘74 and Windows Live executive Chris Jones ‘91, concluding that “we [Microsoft] owe a lot [to] the school.”

Gates’ purpose in speaking to yesterday’s mostly student crowd, however, was neither to focus on past achievements nor the innerworkings of the corporation he started over 30 years ago. Gates plans to move away from full-time work at Microsoft at the end of June, using the bulk of his time toward philanthropic endeavors instead. Making light of his upcoming departure, Gates played a comical “home video” — which featured Bono, director Steven Spielberg, Senators Hillary Clinton (D-N.Y.) and Barack Obama (D-Ill.) and other celebrities — to spoof his last day at Microsoft.

The 52-year-old Gates noted that he has been working on Microsoft every day since he was 17 years old. He described leaving the day-to-day work of the corporation as possibly “traumatic,” but said he was looking forward to the change — and to the new time he’ll have for the Bill and Melinda Gates Foundation, which he and his wife co-chair.

In introducing Gates, Stanford President John Hennessy pointed out similarities between the University and the ex-CEO. Hennessy said that they both were “dedicated to serving public good” and share the common entrepreneurial drive.

Gates’ lecture, “On Software, Innovation, Entrepreneurship, and Giving Back,” was open solely to Stanford students, faculty and staff. The event primarily focused on the future of technology, as well as how that technology has the potential to affect change in developing countries.

“This is the start of the second digital decade,” Gates said. “[The changes we will see will be] far more dramatic than in the first digital decade.”

In outlining the growth in capabilities of the personal computer (PC), the entrepreneur noted how the Internet has helped to make the world a smaller place. In the future, Gates said that he hopes the movement of data between devices — such as laptops and cellphones — will become much more seamless. These changes, he explained, will have significant implications for every industry, including education.

Furthermore, Gates argued that the current learning systems could be enhanced greatly if universities better utilize technology, allowing more materials and lectures to be available to the public.

“How many universities should have to give lectures on subjects like physics?” Gates asked. “The answer is ‘very few.’”

Explaining that he will remain involved in Microsoft’s work with “natural user interfaces” — examples of which include the Nintendo Wii control, the iPhone’s touchscreen and Microsoft Gestures — Gates said he is committed to the structure of knowledge, “and [will] really take on the big frontiers of software.”

Over the past few days, it was speculated on tech blogs and in business news that the ostensible purpose of Gates’ Stanford visit was to talk about Microsoft’s new program, which will provide free developer tools to students. However, Gates did not discuss the program in detail.

Dubbed “DreamSpark,” the program makes available, at no charge, a broad range of development and design software for download. According to a Microsoft press release, the program is available to more than 35 million college students in Belgium, China, Finland, France, Germany, Spain, Sweden, Switzerland, the U.K. and the U.S. Further expansions could mean that up to 1 billion students worldwide will have access to the development tools.

Gates said he hoped the release of the software will help make “huge breakthroughs” in technological research using the Microsoft platform.

He added that software is particularly important in sciences such as biology and astronomy, which require a deep analysis across large amounts of data. Gates noted that the company dedicates a significant amount of its resources to research.

“Microsoft is spending a bit over $6 billion a year on research and development, spread across the globe,” he said.

Despite this spread by Microsoft itself, Gates said that that the relative benefits of research in general have been available overwhelmingly to the people who need it the least. He referred to the fact that the ratio of money spent on baldness to that spent on malaria is about 50-to-1 in favor of baldness.

“Of 12 million children who die every year, less than one percent are in the rich countries,” Gates said. “But over 90 percent of medical research is spent on diseases in rich countries.”

In a 15-minute question and answer period after Gates’ talk, most audience members focused on the Gates Foundation, touching on topics such as microfinancing, immigration and the impact of social justice.

One student asked Gates about the risks of regulation on the Internet.

“I don’t see any risk in the world at large that someone will restrict free content flow on the Internet,” he responded.

Gates added that the Internet is not a place where nuclear bomb designs should be exchanged at will, but emphasized that it should be open enough to find and exchange most information.

He also reminded students that there is an increasing desire of people to have impact measured beyond core market incentives. Gates pointed out that the poorest populations, which do not have electricity or literacy, will simply not own a PC, even if it costs them 10 cents.

Gates further stated that students should not graduate from top institutions without some experience of the average human condition — one beyond the experience they have living in one of the richest countries in the world.

“Right now is a wonderful time to be a student,” Gates said, “to learn and gather these skills.”