World domination and the emperor's new clothes

The Road Ahead - I Sing the Body Electronic - Microsoft Secrets
February 9, 1996

The problem facing the judges in the trial of Joan of Arc was whether she saw visions or was deluded. That their judgement may have been clouded or even determined by political considerations was also important. It used to be that people who had visions were either canonised or consumed in flames as heretics. Of course, to be safe you did both.

Today, it seems visionaries run businesses, particularly those in the computer industry. In the case of William H. Gates III we are forced to make the same judgement as the court confronted by the youthful St Joan, whether the visions are true or false.

In his many interviews, talks and in The Road Ahead Gates emphasises the importance of foreseeing the future and preparing to make money from it. On this last test he cannot be faulted, since Gates has made himself the wealthiest man in the Americas. With Microsoft Network, Gates tried to go against the industry trend from proprietary to open systems. By admitting defeat last December, Gates showed signs of failing vision. For many companies such a mistake would mean a quick death. With its immense financial resources and brand image, Microsoft has time to readjust. In that sense it is almost unique in the industry.

There is no evidence whatsoever that the drive to push forward Microsoft will fail Bill Gates. If anything goes wrong it seems much more likely that he will need to be removed after a failure of vision. That was the fate of Steve Jobs and John Sculley at Apple Computer and of Ken Olsen at Digital Equipment Corporation. It is not clear how long a computer business has to get rid of such a person. In the cases of Apple and Digital, the scale of the damage was measured in tens of thousands of jobs and billions of dollars in revenues. In other cases it has proved fatal.

Associated with the launch of The Road Ahead, Gates made a world tour, appearing at such distant places as Georgetown University and the Hong Kong University of Science and Technology. His appearance in Washington DC, as distinct from his home base in Washington State, was particularly interesting, since it had politico-legal overtones. Gates was portrayed in the Washington Post as a latter day saint of an otherwise decayed American capitalism. This yearning for the days of 19th-century capitalism, red in tooth and claw is a little worrying. It ignored the litany of complaints against Microsoft, which allege that it is anti-competitive in its behaviour.

An interesting parallel is between Bill Gates and J. D. Rockefeller, the great industrialist and monopolist who created Standard Oil. There are two obvious differences in that Rockefeller took much longer to acquire his money and that Gates has yet to face the break-up of his empire at the hands of the courts, despite the many calls for this. The business environment has changed since 1911 when Standard Oil was broken up. Today the United States has lost its youthful exuberance and its global dominance, so that there is a politically respectable argument for allowing Microsoft to dominate in its domestic market in order that it can better compete in the world at large. Microsoft is primarily an industrial marketing operation, rather than selling to individuals. Consequently, the products need only run well on the latest hardware and not on the large installed base of obsolescent or already obsolete computers in our homes and offices.

It is not an innovative company. Its products follow where others have blazed the trail. Where others take financial risks and deploy considerable technical innovation, Microsoft does not. Moreover, the products which it serves up to the market seem to require several iterations.

Microsoft has succeeded by following and has done great damage to established companies in many markets. Its success seems to rely on a combination of human and financial resources, links to other companies in the industry and economies of scale.

Crucial questions unanswered in these books are whether Microsoft has abused its dominant position, whether Windows is a tax on computing and whether "Chinese walls" exist between the applications and operating systems areas in Microsoft.

Rivals denounce Microsoft and Bill Gates as cruel and unusual competitors. Yet neither Fred Moody nor Cusumano and Selby show this ruthlessness in the operation of the company. At the individual level there is drive and enthusiasm, dedication even to the point of excess, but never directed against anyone.

It is implausible to blame Gates alone, though his public and leaked utterances show a measure of viciousness towards rivals. The remaining explanation is that it is the determinedly commercial focus put on all activities at Microsoft which so upsets competitors.

The software business is known for its frequent failures and delays in the release of software. These have plagued Microsoft over the years and have led to stringent post-mortem analyses of all product developments. These seemingly masochistic exercises are detailed in Microsoft Secrets as one of the crucial ways in which Microsoft learns, developing improved processes and procedures. Yet the problems are still present, as the delays in the launch of Windows 95 showed.

Microsoft is also portrayed as incredibly selective in its recruitment. Only 2 or 3 per cent of those interviewed are selected for appointment, which compares with 14 per cent acceptance rate at the Harvard Business School. Those admitted are not only bright, but also young, with very little experience, so that they can more readily be indoctrinated.

Most are workaholics - a selection criterion at Microsoft. Their rewards include substantial share bonuses, in some cases amounting to the equivalent of a big win on the lottery.

The old joke about Apple Computer was that it was like the Boy Scouts of America, but without the adult supervision; a description which fits the Microsoft which Fred Moody encounters. As in Peter Pan's Never Never Land, adults are in short supply, except for Gates playing the melodramatic role of Captain Hook. Gates is certainly no saint, he is seen driving people like a fanatic. As a manager, Bill Gates is as frightening and direct as the legendary Hal Geneen who in the 1960s and 1970s made experienced executives at ITT break down and cry. As Fred Moody makes clear, "Bill meetings" are an ordeal by fire; legends within Microsoft that are an important part of the folklore and culture.

The best story, no doubt apocryphal, being that of Gates banging his head on the table during a presentation and repeating "you think I'm an idiot".

Picking between the three books, it would have to be I Sing the Body Electronic over the longer and less informative Microsoft Secrets. By comparison The Road Ahead s just too bland to be of any lasting interest or value.

Ewan Sutherland is a lecturer in informatics at the University of Wales.

The Road Ahead

Author - Bill Gates with Nathan Myhrvold and Peter Rinearson
ISBN - 0 670 77289 5
Publisher - Viking
Price - £17.50
Pages - 286

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