A legendary quote attributed to Bill Gates, who never stated such utter nonsense. It's just one of those things that won't die because of a general bias against Microsoft and Bill Gates in general.
Here are 2 instances where Gates had responed to the allegations:
From a New York Times column Gates writes (January 19, 1996):
I've said some stupid things and some wrong things, but not that. No one involved in computers would ever say that a certain amount of memory is enough for all time.
The need for memory increases as computers get more potent and software gets more powerful. In fact, every couple of years the amount of memory address space needed to run whatever software is mainstream at the time just about doubles. This is well-known.
When IBM introduced its PC in 1981, many people attacked Microsoft for its role. These critics said that 8-bit computers, which had 64K of address space, would last forever. They said we were wastefully throwing out great 8-bit programming by moving the world toward 16-bit computers.
We at Microsoft disagreed. We knew that even 16-bit computers, which had 640K of available address space, would be adequate for only four or five years. (The IBM PC had 1 megabyte of logical address space. But 384K of this was assigned to special purposes, leaving 640K of memory available. That's where the now-infamous ``640K barrier'' came from.)
A few years later, Microsoft was a big fan of Intel's 386 microprocessor chip, which gave computers a 32-bit address space.
Modern operating systems can now take advantage of that seemingly vast potential memory. But even 32 bits of address space won't prove adequate as time goes on.
Meanwhile, I keep bumping into that silly quotation attributed to me that says 640K of memory is enough. There's never a citation; the quotation just floats like a rumor, repeated again and again.
From a U.S. News & World Report Interview (August 20, 2001):
No! That makes me so mad I can't believe it! Do you realize the pain the industry went through while the IBM PC was limited to 640K? The machine was going to be 512K at one point, and we kept pushing it up. I never said that statement–I said the opposite of that.