Gates tried to buy the rights to various artworks, thinking that he could make money by licensing them. First, he overestimated the public's taste. Second, that shows how out of step he really is with the information age. Napster and the Internet proved that you can't hold information hostage.
Microsoft made a killing in the 1990s by running on IBM PC clones. They showed that the software eclipsed the hardware. But the story doesn't stop there. The Internet brought information, and information eclipses software. Who cares whether it's Windows or Linux or Mac that gets me to the Internet, as long as I get there?
The wild mess of free information that is the Internet must irritate Bill Gates to no end. I'm sure that if he had his way, it wouldn't look anything like this. He'd want the Internet to be a Windows add-on, so that it looked like Windows was leaking out of your computer and absorbing the world. Boy, isn't it great that he missed his chance to make that happen?
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The Lost Decade
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But the problem with putting nontechies in charge of tech companies is that they have blind spots. Gates was quick to recognize that the Internet represented a threat to Microsoft, and he led the campaign to destroy Netscape. In those days Microsoft was still nimble enough that it could pivot quickly and catch up on a rival. Since then the company has become bureaucratic and lumbering.
Worse yet, as Microsoft slowed down, the rest of the world sped up. The new generation of Internet companies needed little capital to get started and could scale up quickly. Google got so big so fast that by the time Microsoft recognized the threat, it could not catch up. With Apple, the threat was not the iPod player itself but the Internet-based iTunes store; by the time Microsoft could create a credible clone of the Apple store, Apple had the market locked down.
Meanwhile, Microsoft's core business hit a snag with Vista. Its engineers have spent three years undoing their mess; Windows 7 doesn't leap past what Apple offers, but it's still really terrific. But while Microsoft has been distracted fixing its broken Windows, yet another new crop of Internet saplings has gained root: Facebook and Twitter in social media, Hulu and YouTube (owned by Google) in online video.
And so it goes. This is perhaps why, in the 10 years of Ballmer's reign, Microsoft's stock has dropped by nearly 50 percent, from $55 to $29. (Apple shares have climbed 700 percent; Google has gone up 400 percent since its IPO in 2004.) A spokesman for Microsoft points out that the company pays a quarterly dividend and in 2004 paid out a special dividend worth $32 billion. Still, it's been a pretty dismal 10 years. Unless the company can do more than focus on the past, the next decade might not be any better.
Daniel Lyons is also the author of Options: The Secret Life of Steve Jobs and Dog Days: A Novel .
© 2009
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