Gates, who opened the 23rd annual Comdex trade show, said there was a negative perception of high tech following the collapse of the tech bubble more than two years ago.
"Even though we're in an economic downturn, we're in an innovation upturn," he said. "I believe people are dramatically underestimating all the innovation going on in our industry."
Gates said the industry is moving away from focusing on personal computers and moving toward a world of personal computing -- where portable and everyday gadgets can perform tasks typically run on full-powered systems.
New devices introduced by Microsoft's Bill Gates include wireless refrigerator magnets that tell time and give sports scores.
Read more: CNN.