"We're approaching the second decade of (the) digital age," Gates told Lee at the start of their meeting at the presidential Blue House, according to a media pool report.
South Korean automakers Hyundai Motor Inc. and affiliate Kia Motors Corp. announced with Microsoft Tuesday that they will use Microsoft's in-car software for controlling personal music players and telephones with voice commands.
"We're doing some very interesting work on automobile software," Gates said after dining with Lee. "That's a really wide open area."
The three companies also plan to set up an automobile innovation center. Hyundai and Kia form the world's sixth-largest automotive group.
Separately, Microsoft also said Tuesday that it will invest $280 million in a new research and development center in Beijing and will double its full-time research staff in China to 3,000 people in three to five years.
Lee, a conservative former construction CEO, swept into office in February with a vow to boost economic growth through deregulation and increased foreign investment.
He named Gates to his global advisory committee on Tuesday.
The joint projects in South Korea announced during Gates' visit could trigger $6.9 billion in economic impact over the next five years, the Blue House statement quoted Gates as saying.
Gates, making his first trip to South Korea since 2001, predicted the Internet will change substantially over the next 10 years.
After meeting with Lee, he spoke at an event sponsored by South Korean television network SBS and presented his ideas on the future of software and how humans will interact with it.
"We are finally getting a level of hardware and software" whereby "natural interaction has become practical," the Microsoft co-founder said, mentioning technology he often touches on, such as speech commands and tablet computers.
