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Microsoft After Gates. (And Bill After Microsoft.)

 

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Was it only a decade ago that Silicon Valley quaked at Microsoft's every move? Start-ups would abandon business plans if they felt that Microsoft was thinking of competing in their space; no one wanted to take on the "800-pound gorilla," as pictured in the cover image for James Gleick's influential 1995 New York Times Magazine story. Yes, Microsoft's revenues are still massive, and its core products still permeate the computer world with monopoly-level market share, but in terms of intimidating Valleyites, the gorilla is a chimp. When Web start-up guru Paul Graham was telling a young entrepreneur about how companies used to fear Microsoft, the kid couldn't understand why anyone would behave that way. "It was as if I told him how much girls liked Barry Manilow in the '80s. Barry who?" Graham wrote in a well-linked 2007 essay entitled "Microsoft Is Dead."

It's hard to characterize a company's taking in more than $50 billion a year as deceased. But Microsoft has some serious woes. Its stock has barely budged in five years. (Its core business of Windows and Office is still hugely successful, though —so much so that, while its U.S. antitrust matters are settled, the EU is constantly investigating Microsoft for behavior that supposedly exploits its 90-plus percent market share.) The latest version of Windows, Vista, was a disaster: Microsoft released it years late, without key features originally promised, and its performance failings have led customers to make unprecedented demands on PC makers to downgrade their new computers to run the previous operating system, Windows XP.

Then there is Google. Microsoft is doing so miserably in competing with the Mountain View, Calif., search giant—in both the number of searches and the ad revenue from those queries—that it attempted, unsuccessfully, to buy Yahoo for almost $50 billion. In the aftermath of that fiasco, Microsoft is left with an admission that its Internet strategy needs a deep fix that isn't forthcoming. Meanwhile, the hostile takeover attempt sent Yahoo into the willing arms of Google, as CEO Jerry Yang arranged to let Microsoft's key rival handle some of his search advertising.

To Gates, such pressure is business as usual: it has always been this way. (Indeed, looking back on over a dozen years of interviews, that's what he has said consistently.) "Every year that we've existed, we've had the excitement that this is a fast-changing business. This wouldn't be a fun business if it wasn't always risky," he says.

But doesn't the Yahoo move mean that Microsoft's online strategy—forged in 1995 with a Gates memo, "The Internet Tidal Wave"—has been swamped by Google? "Let's see," says Gates, his voice raising in volume. "How have things gone since 1995? Have our sales increased? Have our profits increased? (Answer: yes, about tenfold.) Then he softens a bit. "Do we also wish we'd done everything that Google has done? Sure. But I'll take our track record since 1995 versus anyone."

That's a refrain that echoes down the corporate chain. "A lot of the company's strength is that Bill created a culture of crisis—if there weren't a Google, we'd have to make one," says Ray Ozzie, who has inherited Gates's title as chief software architect. "While they are significant competitors, Google and the rest aren't materially different than others in the past. This is a period of unprecedented strength for the company. If there had to be a time when Bill transitioned out, we couldn't have set it up better than it is right now."

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Member Comments

  • Posted By: Sinibaldi @ 06/28/2008 2:30:48 PM

    Like a pearl on the beach.

    A sandy shore,
    when the soft wind
    arrives presenting
    a sound and a
    luminous torpor,
    converts in a feast
    the crying of a
    swallow, going to
    bed, and always
    recalling the present
    idea.

    Francesco Sinibaldi

  • Posted By: 1sky7 @ 06/28/2008 12:04:04 AM

    BILL GATES one of the human history shots WHICH left more of the effective foot-print on the rocks - on the books- on the electronic messengers AND made the largest civilization in Childs hand with open sky
    BILL GATES ONE OF THE FIRST ELECTRONIC MESSENGERS AT THE END OF THE TWENTY CENTURY
    AS NO RETIRING FOR MESSENGERS NO RETIRING FOR HUMAN MIND WHICH A FEW OF PEOPLES LIKE BILL GATES PROVED IT
    WHEN BILL GATES EXITS MICROSOFT TO FOCUS ON CHARITY WORK THAT IS THE NATURAL ATTACHMENT TO BE AS NATURAL MESSENGER

  • Posted By: desireeguasch@yahoo.com @ 06/27/2008 2:06:06 PM

    I'm holding "The Plot to Get Bill Gates" I'll go through it again. Read pp. 328-9 and laugh out loud, but with the LOL comes a warm tug at our hearts at how the weirdos democratized the IT highway for the masses even way out here in the Philippines. If not for the weirdos, IT would have been exclusively for the economic elite. On December 7, 1978, I gave birth to my firstborn Nadja, now in Dubai cooking for Emirates Air. Hurrah !

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