Bill Gates Reveals Secret of Microsoft's Success

Hugh Pickens writes "Bill Gates, in a interview with the BBC, revealed the secret of Microsoft's success: 'Most of our competitors were very poorly run. They did not understand how to bring in people with business experience and people with engineering experience and put them together,' said Gates. 'They did not think about software in this broad way. They did not think about tools or efficiency. They would therefore do one product, but would not renew it to get it to the next generation.' Mitch Kapor, founder of the Lotus Corporation, has a different view: 'Claims by Microsoft that people were buying the software because it was good are pretty self-serving. I'd like to smoke what he's smoking.' Gates also said that he took a 'conservative balance sheet approach' to running Microsoft explaining that he wanted 'great financial strength so we would have the flexibility to do software in the new way, or whatever we wanted to do.'"

Comments

Re:It's not a business model

[Hairy Heron]

Apple actually licensed the GUI patents from Xerox. They didn't steal anything.

Re:It's not a business model

[fred fleenblat]

Amiga, ATARI, DecView, GEM, Lisa, MacOS, OS/2, PARC, SunView, X11

Microsoft didn't "bring about" the GUI, they stole the most basic aspects of it and wedged it on top of DOS, which BTW they also stole.

You just couldn't be more wrong.

English not your first language?

[khasim]

I knew this thread would fall into the trap of recursive "reasoning".

Of course you did. Even though no one has said that, you still believe that is what you read.

Repeat after me, "a company cannot exploit its monopoly to become a monopoly".

Why? No one said that they had.

But it was somewhat controversial at the time, at least among the big computer hardware makers, and so I admire them for pulling it off and for being a major player in the "re-wiring" of the computer industry.

Admire them all you want. That isn't the way it happened.

Case in point, Bill Gates did NOT write MS-DOS. He BOUGHT it from someone who DID write it. And only then because Bill Gates had already been approached by IBM for licensing of such.

So that alone disproves your theory.

Success through relentless mediocrity

[presidenteloco]

Microsoft leadership wisely understood that the vast majority of business owners and other people at the time had no clue what would be good or bad in computing equipment generally, or software or operating software or application design and features specifically.

The key was to get something out there fast, market it as if it was good, and make sure it was what was installed by default on all of
the cheapest computers available.

Only the 0.01% computer or software experts out there would be lamenting for the substantially greater quality and simplicity that could have
been, if only there had been a sophisticated market to begin with.

The effect continues. I mean, for example,
it's now clear to absolutely anyone with a
clue that macs and osx are far superior to
windows xp or vista pcs, but the market share
is still the exact opposite of what it would/
should be if quality were the deciding factor,
and price and lock-in wasn't.

For our British viewers...

[jrothwell97]

...as I type, the full programme from which the interview is sourced is on BBC Two until 8pm. It's hosted by Fiona Bruce and is called How a Geek Changed the World. It'll shortly be available on the BBC iPlayer, alternatively I'm sure some kind Beastmaster-lover (or hater) with a TV capture card will upload it to YouTube in good time.

Re:Thus the "handed" portion

[molarmass192]

Not to mention that Bill always seems to forget that his mommy was on the board of the UnitedWay with IBM's then CEO. I'm all for using your connections, but this was by far the most significant, and most overlooked, factor in MS getting the IBM PC contract.

Actually...

[Nom du Keyboard]

Actually that all makes sense. In many new markets success is often easy. Look at all the car companies at the beginning of the automotive boom -- or all the dot com companies leading up to the bust in 2001. But as markets mature less efficient, less smart, less agile competitors don't make it. You either have to become big (PC's Limited (nee Dell) quit building computers in Michael Dell's garage rather quickly) and efficient, or you are either taken over or roadkill along the way.

So for once Bill Gates has said something of significant importance for everybody -- everybody, that is, who is smart enough to recognize the wisdom here.

Re:Microsoft's Success

[mlwmohawk]

I don't consider the XBox "innovative" in any way. They basically took an existing set of technologies wrapped it in a box and added DRM.

They didn't design anything.

Re:Thus the "handed" portion

[Chris Mattern]

You're being disingenuous, but I'll answer anyways. They were handed the monopoly for the PC operating system by IBM, who actually left control of the OS in Microsoft's hands while making it the official OS for what would become the official desktop hardware, because everybody who wanted a desktop repeated, "Nobody ever got fired for buying IBM" and bought an IBM PC, or, if they were thrifty, a clone (which still had an MS operating system).

Re:Bill was handed a monopoly ... and he learned.

[Shotgun]

We didn't used to. We used to break monopolies like ATT up. No longer. But then, we didn't used to have a global marketplace in most things; we didn't have the WTO, we didn't have jobs exported to other parts of the world, we didn't have Clinton and we didn't have Bush. It didn't seem that CEOs were psychopathic sociopaths like today's CEOs, and we didn't reward those CEOs for failure like we do now, and those CEOs didn't starve our lowest paid workers.

Wow! Such naivete is stunning. Simply stunning. Do a little history reading, for the love of Pete. Look into why unions were created, anything on the industrial revolution, or even one book on coal mines. Read about Pinkerton from someplace other than their corporate brochures. Sheeesh! The good ol' days weren't all that great.

Re:Thus the "handed" portion

[drsmithy]

They were handed the monopoly for the PC operating system by IBM, who actually left control of the OS in Microsoft's hands while making it the official OS for what would become the official desktop hardware, because everybody who wanted a desktop repeated, "Nobody ever got fired for buying IBM" and bought an IBM PC, or, if they were thrifty, a clone (which still had an MS operating system).

The IBM PC was available with 3 OS choices.

To say nothing of how it is - by definition - impossible to be a monopoly in a "market" you created.

Re:Thus the "handed" portion

[iserlohn]

Yes, and CP/M and p-system were more expensive, and thus DOS became the dominant system. They gained a monopoly through a bit of luck and a bit of business acumen. Then they exploited that monopoly.

Re:Thus the "handed" portion

[Pictish Prince]

I recall 2. I had the choice of shelling out $175 for DR's CPM/86 or accepting PC-DOS which came with the machine for free. The other one you referred to I'm sure wasn't free. Now if that doesn't constitute a monopoly for MS, it's because you're playing with the meaning of words.

Re:Bill was handed a monopoly ... and he learned.

[Locutus]

That only got them DOS but it got them into the monopoly position with DOS. From there, it was anti-competitive business moves by Balmer which took them to where they are today. The fact that they had the power to destroy companies by just putting names up on computer conference display boards( see book "StartUp" ) shows how powerful they were in the DOS days.

Couple that control of the market with billions in cash and you've got a company that no only is willing to destroy any competitor they feel is a treat, but they have the power and will to do so.

There was only a sliver in time where Microsoft could have missed the position they where handed by IBM. That was after Phoenix Technologies reverse engineered the IBM BIOS and clone manufacturers were asking Microsoft for versions of MS DOS for it. Even then, who else were the cloners going to ask for and OS since IBM already had the PC market for business computers? Back to CPM-86 and Digital Research?

Microsoft was gifted a monopoly by IBM and they chose to protect and leverage that monopoly position with anti-competitive business methods and crappy software.

Because we already know that Digital Research was run by someone who was competing on technical merit, it would likely be a far far better computing landscape today had Microsoft stuck with BASIC and DR gained the market position of dominant OS vendor in the 80s. Think about it. the 386 and 486 were 80s era CPUs but where 32bit. Microsoft released Windows 95 in late 1995 as a crappy 16/32bit OS which still relied on DOS under it for much of it code. 1995! There were UNIX version for the 386 and 486 doing full 32bit computing and real multi-tasking. There was OS/2 doing pre-emptive multi-tasking on those CPUs. Microsoft to this day differentiates between a client OS and a server OS and that is ridiculous. What year/millennium was it that the powerhouse that is Microsoft had a proper operating system for the masses? When did Windows 2000 ship? It took Microsoft almost 10 years later to get a moderately capable 32bit OS into the general populations computing systems.

Surely you give Microsoft too much credit for their position in the market. IMO

LoB

Re:Bill was handed a monopoly ... and he learned.

[Abcd1234]

So you're saying our only two possible options are returning to the 1800s, or tolerating unethical business practices?

Let me introduce you to a new term: false dichotomy.

Re:Thus the "handed" portion

[SL Baur]

Yes, and CP/M and p-system were more expensive, and thus DOS became the dominant system. That's not how it happened. They were released a half a year after IBM PCs were shipping. At first, you had a "choice" of O/S - PC DOS or ROM BASIC.

The headstart and the fact that 100% of PCs were running PC DOS by the time CP/M 86 and the UCSD P-System were released produced a natural result.

Of course, CP/M 86 was always a poor imitation of a 16 bit O/S pasted on top of an 8 bit system as was the UCSD P-System. So was PC-DOS, but it evolved over time. The UCSD P-System was limited to 64k even on m68k, so it never got over its limitations. Not that it matters. They never had a chance.

Disclaimer: I used to write UCSD P-System device drivers for pay.