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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.'"
"out flying a plane" is just urban legend. Go find some of Gary's intervies for the truth on the subject.
But i agree, there was a lot of luck involved, and a but of underhanded backroom deals.
---- Booth was a patriot ----
It was all three.
Microsoft repeatedly used this tactic.
1) Pretend to work with another company
2) Steal the good ideas from that company
3) For bonus points, if possible make the next product from that company suck.
4) Profit!
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Microsoft outright stole some products (Stac comes to mind)-- after they LOST in court, then they bought the company on the stock market.
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However, they worked like demons on their own stuff too. Microsoft worked hard- very hard. It competed very hard (frequently on the edge of legality and sometimes past it). It cheated, scammed, lied, stole.
But it also polished better than ANYONE. Microsoft made things that were arcane and difficult into automatic and easy things.
And it supported (and supports) its customers extremely well. The two times that I called for customer support, they pulled out all stops to support me (a sound card problem with 5 senior engineers, a level 1 and level 2 support on the line- and by god they figured it out after 3-4 hours on the phone). When my business went through the recent DST thing, we had multiple microsoft people on site verifying everything- holding regular meetings. None of our other vendors did that.
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I've compared M$ to an evil parent that wants the best for you as long as you stay home and never go out on your own.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
There are two "secrets" to Microsoft's success:
1. Microsoft had the luck to work in an exploding market while it was still in its infancy.
2. Microsoft had the shrewdness (or ruthlessness, perhaps) to continue leveraging the advantage conferred by secret 1 for the decades to follow.
Everything else is just Gates' PR people trying to make history be kind to Gates, in spite of the fact that he raped the personal computer industry of profits and innovation during his tenure.
IBM handed Microsoft a monopoly on the OS for their new PC "toy".
Bill Gates & Co then hired people who knew how to exploit that monopoly.
Yes, their competitors made mistakes. So did Microsoft.
Microsoft Bob.
Microsoft Blackbird.
Etc.
The difference being that Microsoft had their monopoly to fall back on when their other attempts failed. Their competitors did not.
Bill is going for the "humble" bit now. But that's not how it happened.
I used to provide engineering consulting services for a specialty repair contractor. Since there were a lot of "big boys" who were already well-established doing what he did, he opted (with my help) to take on more "risky" jobs that the established contractors wouldn't touch because they were, well, "too risky."
He soon got a reputation for being, not just a good contractor who got the work done on time and on budget, but a "go-to guy" who would succeed where others wouldn't even try. And soon, he was getting even the "bread-and-butter" jobs instead of the established firms because of "brand familiarity."
In the end, you gotta deliver. Microsoft might be the Great Satan, but they have a lot of satisfied customers you don't hear from, who got stuck on their stuff, and swore by it.
Like Harry Beckwith says in his book "Selling The Invisible": Your main competition isn't a company or a salesman or a technology, it's the "status quo."
Any technology distinguishable from magic is insufficiently advanced.
This I think is a good example of where a better SALES organization wins out.
The problem with software is that there are exit barriers. Once you've bought
a system you are somewhat commited to it. This is what leads to grannies to
think that they need msoffice for their old word documents.
That sort of thing doesn't NEED innovation. All you really need to do is to
not eggregiously piss off your captive audience. That is a much lower bar.
He points to Lotus and whines about lack of innovation. I'd really like to
know exactly what innovations that microsoft have made that are relevant
to their customers and Lotus product.
I really don't see it.
I might as well be running a pre-hegemony copy of smartsuite for all the
actual "innovation" that goes on with this stuff.
Ultimately, he's trying to frame non-technical successes in technical
terms to deflect from the fact that his stuff really isn't all that
great from a technology point of view.
A Pirate and a Puritan look the same on a balance sheet.
Like Steve Jobs said at D5 (http://d5.allthingsd.com/20070531/d5-gates-jobs-transcript/):
"Well, you know, Bill built the first software company in the industry and I think he built the first software company before anybody really in our industry knew what a software company was, except for these guys. And that was huge. That was really huge. And the business model that they ended up pursuing turned out to be the one that worked really well, you know, for the industry..."
So there are two important things, they were focused on software only, and they adapted the correct business model to be focused on software (able to make quick, temporary alliances with many factions).
Basically, it can be summed down to being an agile, nimble competitor. Which has no resemblance to what they've become.
Yes to that specific case and I agree with what you are saying, but the general process repeats itself over and over in business and technology.
Facebook? Give me a break -- look at the prior art of Friendster and even Myspace. When Facebook was being started at Harvard I thought it would not take off because of the current dominant players.
Google? Anybody old enough to remember when Altavista was the king of search? We used to always use that engine in college.
AIM? Remember ICQ? Ntalk? Otalk?
Original ideas are few, and even Gates admits he was not very original with his ideas in many, many interviews, but he did implement them well, er... market them well, and protected his monopoly with a vengeance.
Slashdotter, ID #101. UIDs are in binary, right?
Microsoft succeded the same way McDonald's did---sell a bland, familiar, mediocre product in huge volumes at a low-ish but profitable price (this worked for PCs because it's bundled; home users would not have actually paid for Windows). Really, there's no big secret here. The same model works very well for Wal-Mart and Ikea too. It's hard to get those obnoxiously-high volumes if you try to sell on quality and overall value.
I think this is part of Vista's problem. It's still low to mediocre quality, but no longer bland and familiar. It's like McDonald's suddenly trying to get people to buy $12 steaks.
Today's Sesame Street was brought to you by the number e.
Apple actually licensed the GUI patents from Xerox. They didn't steal anything.
Microsoft's success came from a complete lack of ethics.
While companies tried to compete on a level and ethical playing field, Microsoft was dirty dealing them. Stealing their work, poisoning business relationships, intentionally disrupting their businesses, etc.
I can't think of one, that's right, not one product of theirs that won on its own merit. Their whole office suite wouldn't be anything if they didn't create back doors in Windows and DOS for them. Windows wouldn't be anything if they did not poison relations between the likes of Xerox and DRI. DOS would have had competition from DRI if they didn't embed bogus warning messages in their applications. FUD is the modus operandi of Microsoft and how they "succeed."
They took illegal and unethical advantage of every piece of software they ever sold. Every last piece of their software works against every other software ISV.
Those they couldn't beat, they put out of business by dumping "free" versions on the market. Netscape anyone?
But i agree, there was a lot of luck involved, and a but of underhanded backroom deals.
Right, luck in terms of timing, but this quote really bothers me:
"Most of our competitors were very poorly run"
The initial competitors were IBM and Apple, both are alive and well. Remember, that Microsoft got their start by buying some crap inhouse developed OS called DOS, and convinced IBM to put it on their PCs (before they even bought the software). Round two was when IBM had a deal with MS with the OS/2 project, and Microsoft completely backstabbed them with Windows 95.
Those were the two biggest "successes" of MS.
Let me fix that for you: Apple was so far behind Microsoft in the application business in the late 80s and early 90s that they just limped along while Microsoft snagged the desktop. People buy PCs to run applications, not operating systems.
Most of you don't even remember how hard they had to fight to convince companies to write software for their newfangled windowing system when everyone was perfectly happy with DOS. Gates is being disingenuous when he says his competitors were "poorly run", the real reason is that his competitors (including IBM who saw the PC as a toy) didn't have his vision and drive to (as he said back in the 80s) place a computer in every home. People like Mitch Kapor didn't see any value whatsoever in graphical environments - after all he was selling 1-2-3 hand over fist to companies still running DOS. He paid dearly for that. And once Microsoft controlled the desktop, they could do anything they wanted, which eventually would get them into trouble.
The reality is that no one saw it, except Gates. One could argue that Apple saw it (or wanted it), but they were too busy trying to dick around with the hardware and their OS was always an afterthought. The first "real" PC I ever had was a souped-up Zeos Pantera 486 with 16MB of RAM, a Diamond Stealth64 sporting an amazing 4MB of VRAM, a SCSI card with a 105MB HDD on top and - get this - a gynormous 17-inch monitor. I paid close to $6K back then for that. Today I can put together something that is for all purposes a super computer compared to that, for about $600. The reason for that is and always has been Microsoft Windows.
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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.
Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws-Plato
I'm not implying that it couldn't have happened some other way, just that in this case, that's the way it happened.
Think for a second how the PC hardware world would look like today if Apple had gotten a hold on the desktop before Microsoft. That PC you're running Linux on would probably cost three times as much, or more likely wouldn't even exist.
The widespread use of Windows was what ended up commoditizing PC hardware.
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Mr Kapor claims that Microsoft "took advantage" of its position in controlling the operating system to make life hard for independent software developers like Lotus.
When these criticisms are put to Mr Gates, he says he finds it "ironic" that he could be accused of such a thing when Microsoft had "evangelised" its software to other companies, begging them "please write software for our platform".
I was at Lotus from '83 to '93, and I distinctly remember Microsoft visits, begging us to target our apps for their next OS: OS/2. While Excel for Windows was almost certainly already in development.
Let's look at some of Microsoft's early competitors and the dumb decisions they made. Ironically, though, for each and every point I list, you can see that Microsoft has learned all the dumb answers of its competitors.
1. CP/M, ultimately crushed by DOS. Microsoft basically gave DOS away to every OEM there was, while CP/M stuck to its higher priced format. Now, Linux is making inroads on Microsoft because its free, whereas Microsoft is increasingly a stickler for Windows licensing.
2. Borland vs Microsoft. Borland struck an early lead in Microsoft in tools by making a Pascal that was better than DOS BASIC, and then, by making a C++ that was better than Microsoft's. But, Microsoft came up with VB, whose scripting style made it easier to work with than Borland's Pascal, and negated the advantages of Borland C++, and then, for C++, Microsoft's Visual C++'s 2.0 was hands down a better IDE than Borland's C++ IDE was.
Now, Microsoft is losing tools mindshare to Linux, because, interpreted languages such as Python, Ruby and Perl / PHP are easier to do quick and dirty RAD style web apps with, while Microsoft's own offerings are getting increasingly complicated... and Microsoft's letting their own C++ product languish while the GNU compiler keeps getting better and better, and Linux IDE's such as KDevelop actually now surpass Visual Studio for C++ development. Microsoft needs to realize that the .NET one platform fits all approach is ultimately a loser, but, we Linux fans hope they don't realize it until it is too late!
3. Borland vs Microsoft Round 2. Borland's Quattro Pro was an early favorite over Excel, but Excel wound up carrying the day just through a sheer weight of features. But the really telling battle came when Borland bought Ashton Tate, and Microsoft bought a tiny company that made an Ashton Tate clone called FoxPro. FoxPro was, way, way faster than dBASE and Borland was late with its dBASE anyway. Microsoft would later seal the deal with MS Access, which was easier for quick and dirty database projects than either xBASE product.
Now, Microsoft's own office products are late, and Open Office continues to make inroads. Nobody has really answered Access yet, but... MySQL has quietly dominated the enterprise for quick and dirty databases in the same sort of way Access snuck into the desktop.
4. Microsoft vs IBM. Oh, let's see, how did IBM screw up OS/2, let me count the ways. IBM wanted to tie OS/2 to PS/2 offerings... IBM's OS/2 marketing was hamfisted whereas Microsoft basically let everyone copy Windows like the plague... whereas Microsoft wanted Windows to run on all sorts of PCs... Windows wasn't "as good", but it did have a better message queue than OS/2 and didn't require users to throw away DOS completely at a time when that mattered...
Nowadays, Microsoft is the company that ties Windows to specific hardware, whereas Linux runs on just about everything. While Microsoft still has a stranglehold on PCs, in every other kind of computer out there, from cell phones to digital control devices to routers and set top boxes, Linux actually has a growing presence. And, ironically, if you want to write for POWER Linux, IBM will be more than happy to set you up with an account at an IBM data center... what will Microsoft do, hmmmm?
4. Microsoft vs Apple, round 1. Windows color, Macintosh, black and white. Woops... but even today, we can see Linux rolling out with better and better eye candy and graphic effects. When Vista first threatened integrated 3d graphics ala OS/X, Linux people could have almost panicked, yet, they rolled up their sleeves and by the time Vista arrived, Compviz was here and many Linux desktops actually look better than Windows. Can you say Ubuntu?
5. Openness. Microsoft came to being in a day when Microsoft's level of documentation gave it a more open feel over what software bundled by hardware makers would give. While we think of Microsoft as being hard nosed and closed today, 20 years ago, they were
This is my sig.
Offering a product people want to buy, at a cheaper price than their competitors. Those bastards.