Bill Gates: looking back on the road ahead

At the end of June, Bill Gates will finally stop doing the job he loves in order to concentrate on his philanthropic foundation. It is the end of an era that started with Microsoft Basic in 1975, continued with MS DOS in 1981, and exploded after Windows 3.0 was launched in 1990. Not everyone believed in Microsoft's vision of "a computer on every desk and in every home", but nowadays, lots of people have more than one.

During Gates's 33-year stretch, Microsoft built three big businesses: Windows, Microsoft Office and its suite of server operating systems and applications. It has been less successful in other areas including games, mobile phones and MP3 players, but it does not give in easily.

Persistence has paid off. A company that used to consist of a handful of hippies in Albuquerque, New Mexico, has become a global powerhouse with almost 80,000 employees and annual revenues of almost £30bn. The corresponding growth in Microsoft's share price made Gates the world's richest man, and its most prominent geek.

Who would have predicted that a college dropout writing a Basic for hobbyists would end up being interviewed by everyone from Terry Wogan to Playboy, rubbing shoulders with world statesmen, and collecting an honorary knighthood. Who would ever have expected more than 10,000 people to queue round the block in Las Vegas to see a man with an annoying voice and a bad haircut talk about "information at your fingertips" using PowerPoint slides?

Nobody predicted that the corporate server rooms that used to be, literally, "IBM shops" would now be packed with racks of servers running Windows, Exchange, SQL Server and other Microsoft software. And I doubt that IBM seriously expected "server farms" - which are basically barns full of commodity PC parts - taking over from their all-encompassing mainframes.

Reminiscing during his last keynote speech at Microsoft's TechEd conference on 3 June, Gates reminded us that Microsoft started writing code for the MITS Altair with just 8Kbytes of memory, not 8Mbytes, let alone 8Gbytes. "And the presentation layer in those days was taking characters in from the paper tape and printing them out on the teletype, and the big breakthrough was when we got lowercase," he said. "It was very exciting. So we have come a long way."

Continuous visible progress in computer software and hardware plus his great wealth made Gates what mainstream reporters call "a story". And unlike Steve Jobs, who uses his fame to flog Apple geegaws, Gates preached that IT could make the world a better place.

Obviously, Gates had an ulterior motive: he wanted the world run on Microsoft software. But "Windows everywhere" was a business strategy, not personal aggrandisement. Although Gates could seem overbearing in small meetings, he was never a natural when faced with a large audience or TV cameras. Billy Gates would never be confused with Billy Graham, but at least he got positive computer stories into the papers.

In a mixture of defence and defiance, Gates took to making fun of himself in videos that became one of the main attractions of his regular gigs, opening the Comdex and CES trade shows. The latest, based on his last day at Microsoft, shows him phoning famous people who are not always sure who he is, and who are definitely not interested in giving him a job. Bono, for example, tells him a high score on Guitar Hero is not going to get him into U2.

The video ends with Gates packing the stuff from his desk in a small cardboard box, putting that on top of his old car and then driving away. It falls off. He is not Buster Keaton, obviously, but nor is he the devil incarnate.

Perhaps Gates could have done something to perk up his nerdy image, but he genuinely lacks the taste for really expensive toys: the huge yachts, the private jets, the football and baseball clubs. He plays golf, and loves playing bridge with his great friend Warren Buffett, the multi-billionaire "Sage of Omaha". They have played together at the Omaha Bridge Club and online at OK Bridge. Gates has even competed in the World Bridge Championships.

When Gates did splash out on something absurdly expensive, in 1994, he bought one of Leonardo da Vinci's notebooks for £15m. And whereas Armand Hammer, who owned it, had changed its name to Codex Hammer, Gates modestly renamed it back to Codex Leicester, after the Earl of Leicester who bought it in 1717. After that, Gates put Microsoft's resources into developing the British Library's Turning The Pages 2.0 project so that now everybody can enjoy it online in stunning detail - well, as long as they use Windows XP or Vista 9 (a Silverlight version will follow).

Against all that, of course, Gates personally and Microsoft corporately carry the huge stain of monopoly abuse. A long string of anti-trust cases and lawsuits in the US and Europe have obliged the company to pay vast sums in fines. On the web, where stupidity rules, Microsoft has taken over the role of the Evil Empire, a position that had previously been held by IBM for about 50 years.

This is somewhat amusing because Microsoft liked to see itself as the small scrappy underdog, fighting for its life against IBM's much bigger, richer monopoly. It was, after all, pure luck that Microsoft was asked to provide IBM's new PC, launched in 1981, with a disc operating system as well as Basic - Digital Research had been expected to supply IBM with CP/M, and eventually did. Microsoft did not so much create a monopoly as steal one.

Microsoft was well aware of who was boss. Its strategy for coping with visits to IBM was known internally as Bogu, for Bend Over, Grease Up. Well, IBM was a £27bn giant and Microsoft a £0.17bn tiddler.

Although the two companies publicly worked together for more than a decade, there was plenty of tension behind the scenes. In the popular imagination, and in Microsoft's own mythology, personal computing was about personal liberation. The PC let you do your own thing: your terminal was no longer a slave controlled by the data processing department. IBM, by contrast, saw the PC as just another device that needed to be centrally purchased and controlled.

Ultimately this is why the two companies went through a widely publicised divorce. Ordinary users bought PCs running Windows - It is fun! It plays videos and games! - while IT departments failed to buy IBM's replacement for the PC. This was the Personal System/2 running IBM's Operating System/2 Enterprise Edition, all tied to proprietary IBM minis and mainframes under the umbrella of its Systems Application Architecture.

IT managers used to say that nobody got fired for buying IBM, but they soon meant that nobody got fired for buying IBM-compatible PCs. The problem was that IBM had stopped making them. That left Microsoft and Intel to set the standard: one that could be followed by thousands of PC manufacturers. You could build your own. When Microsoft and Intel levelled the playing field, it felt like, and was, a liberation.

The separation of IBM and Microsoft led to their divorce in 1992, and that led to Gates's greatest victories. Microsoft could no longer "ride the bear", it had to fight the bear. And although IBM was bigger, richer and stronger, it was also slow-moving and bureaucratic. It had thousands of programmers using a "masses of asses" approach, whereas Microsoft tried to have small teams of really smart people writing clever code - Gates was himself a really smart self-taught programmer.

"Fighting the bear" also meant Microsoft could get into the real data-processing business and attack the server side, where in 1995 it had zero market share.

People laughed - literally - when I said Windows NT4 could work as a cheap server, but it was not just about code. Microsoft was heading in the right direction for the IT industry. Intel chips were becoming powerful enough to do serious jobs, and PC economies of scale meant they were much cheaper than minicomputers. In-house programming was becoming increasingly expensive, so many IT departments were becoming more receptive to PC-style packaged software, which was far cheaper than the mini and mainframe stuff. Also, as the number of computing tasks continued to grow, integration was becoming increasingly difficult, so Microsoft's Office-suite approach to server software had a strong appeal.

Corporate IT also benefited from Windows' mass-market popularity. Microsoft was consciously creating a platform with a vast supporting infrastructure of compatible hardware manufacturers, programmers, education courses, books and magazines. There was an expanding pool of people who were familiar with how Windows worked. This "virtuous circle", where success reinforced success, helped Microsoft to achieve Gates's stated ambition - according to Robert X Cringely's book, Accidental Empires - of becoming "the IBM of software".

But as is clear from Windows Vista, Microsoft succeeded only too well. It had also become big, slow and bureaucratic. The small groups of smart people seemed to have been replaced with "masses of asses". Yes, there was a PC revolution, but having won, the rebels had become the new status quo, and much like the old status quo. Naturally they are now being attacked by a new generation of rebels. It goes with the territory.

Gates must find this tiresome. After all, he has played a large part in building the entire PC industry out of what most people thought was a generally harmless hobby. And although anti-monopolists might worry about Microsoft becoming "the IBM of software," it is also true that Intel has become the IBM of processors, Cisco has become the IBM of networking, HP has become the IBM of printers and so on. The situation is far better than it was when IBM was the IBM of everything.

It seems that Microsoft would now like to become "the IBM of the web," but Google already has that job. The world is moving on. And although we will miss him, it seems like a good time for Gates to move on too.

See also: Bill Gates' spoof retirement video

Related links:

Bill Gates: looking back on the road ahead>>

Goodbye, Bill Gates: Essential Guide and Video Round-up>>



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This was first published in June 2008


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