Gates predicted that technology could soon make place-based learning five times less important for college and university students.
But for students in elementary and high school, Gates said he did not foresee online education shaking up the traditional framework anytime soon.
"I do not predict some radical change in that," he said. "K to 12 is partly about babysitting the kids so the parents can do other things."
Still, he said, technology would allow half the students in a class to be occupied with one activity while others are learning something entirely different.
He also hailed charter schools for looking for ways to use technology to enhance their offerings.
"Thank God for charters," he said. "There's no room for innovation in the standard system."
Gates pointed to "full-immersion" schools as an example. In these schools, he said, students work toward their learning goals during at least 80 percent of their waking hours.
They have a longer school day, attend school on some weekends and go to school for several weeks in the summer.