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Microsoft Businesses

Bill Gates Reveals Secret of Microsoft's Success 584

Posted by kdawson
from the polishing-the-legacy dept.
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.'"
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Bill Gates Reveals Secret of Microsoft's Success

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  • by Illbay (700081) on Friday June 20, 2008 @12:06PM (#23875239) Journal
    ..."Jolt" Cola after all.
  • by xmas2003 (739875) * on Friday June 20, 2008 @12:07PM (#23875245) Homepage
    While I think Gates' point about merging people with business and engineering experience is valid, there's always an element of luck involved - good thing for Microsoft that Gary Kildall was out flying his airplane when IBM came by.
    • by nurb432 (527695) on Friday June 20, 2008 @12:11PM (#23875301) Homepage Journal

      "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.

      • by khasim (1285) <brandioch.conner@gmail.com> on Friday June 20, 2008 @12:15PM (#23875383)

        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.

        • by LaughingCoder (914424) on Friday June 20, 2008 @12:28PM (#23875611)

          The difference being that Microsoft had their monopoly to fall back on when their other attempts failed.
          I knew this thread would fall into the trap of recursive "reasoning". Repeat after me, "a company cannot exploit its monopoly to become a monopoly". When they started they were a small scrappy company. Yes, there was luck involved, but they also had "the vision thing" going for them. MS viewed software as a viable business. They did not subscribe to the widely believed notion that software was just the necessary evil you bought from your hardware vendor to get your hardware to work. That vision led them to make decisions, like hiring business people and engineers, with the goal of building a long-term, sustainable business selling software that ran on *other* people's hardware. I am not saying they were the only ones to have such a view, nor even that they were the best. 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.
          • Repeat after me, "a company cannot exploit its monopoly to become a monopoly".

            No but they can be handed a monopoly (by another near monopoly).
            • by molarmass192 (608071) on Friday June 20, 2008 @01:15PM (#23876385) Homepage Journal
              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.
              • by westlake (615356) on Friday June 20, 2008 @05:08PM (#23879893)
                Not to mention that Bill always seems to forget that his mommy was on the board of the UnitedWay with IBM's then CEO.

                In 1979 Microsoft 8080 BASIC was the first microcomputer product to win the ICP Million Dollar Award.

                No one - no one - had to tell IBM in 1980 how far and how fast Microsoft had risen in the world of the eight bit micro.

                .

            • Re: (Score:3, Insightful)

              by drsmithy (35869)

              No but they can be handed a monopoly (by another near monopoly).

              And what monopoly were they "handed" ?

              • by Chris Mattern (191822) on Friday June 20, 2008 @01:47PM (#23876855)

                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).

                • by drsmithy (35869) <drsmithy&gmail,com> on Friday June 20, 2008 @02:08PM (#23877125)

                  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.

                  • by iserlohn (49556) on Friday June 20, 2008 @02:26PM (#23877355) Homepage

                    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.

                    • by Anonymous Coward on Friday June 20, 2008 @02:34PM (#23877439)

                      Yes, and CP/M and p-system were more expensive, and thus DOS became the dominant system.

                      Offering a product people want to buy, at a cheaper price than their competitors. Those bastards.

                    • 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.

                      So Microsoft offers the most desirable of three choices, based on multiple factors... cost among them... and they became, by customer choice, the overwhelming favorite. That makes them predatory at this point? And while MS was the favorite choice of PC users, PC's still weren't the goliath of the market yet.... until the mid-80's, the Apple II ruled the roost, and then the Macintosh arrived, and sold very respectably. The Amiga also provided a serious challenge. Microsoft had a technical monopoly of sorts, but it was on one platform... they had significant competition from other platforms all throughout the 80's. Microsoft didn't become truly dominant until the early 90's, when Windows 3.1 really began to popularize home computing, And they sealed it by knocking the ball out of the park with Windows 95. Then they started acting like a monopoly.

                      In the big money sector... business IT... Microsoft was still a bit player until the 90's, and they had to get their foot in the door by marketing Microsoft operating systems as "playing nice with others"... meaning, yes, you can run Windows as a workstation on your existing (and expensive) Unix and Novell servers.

                      Microsoft did become a monopoly, I grant you, but they were nowhere near one in the time frame you mention. They were, while profitable, still small fry in the early 80's, and made much of their money writing software for other platforms. Excel was a Macintosh product long before it was a Windows product.

                    • by SL Baur (19540) <steve@xemacs.org> on Friday June 20, 2008 @06:27PM (#23880633) Homepage Journal

                      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.

                  • Re: (Score:3, Interesting)

                    by mweather (1089505)

                    he IBM PC was available with 3 OS choices.
                    And it currently has even more OS choices. And Microsoft is still a monopoly.

                    To say nothing of how it is - by definition - impossible to be a monopoly in a "market" you created.
                    They didn't create any market they have ever competed in.
              • Re: (Score:3, Insightful)

                by Poltras (680608)
                Software OS monopoly over IBM's hardware monopoly. Thought it was pretty clear.
                • Re: (Score:3, Informative)

                  by drsmithy (35869)

                  Software OS monopoly over IBM's hardware monopoly. Thought it was pretty clear.

                  The IBM PC was sold with 3 different OS choices.

                  • Re: (Score:3, Informative)

                    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: (Score:3, Insightful)

                      by drsmithy (35869)

                      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.

                      No, it's because I'm not silly enough to use logic that dictates basically every single company in the world is a "monopoly", and any company choosing to sell their product cheaper is "abusing their monopoly".

              • Re: (Score:3, Informative)

                by Shotgun (30919)

                IBM PC compatible operating systems.

                Other companies tried to compete with far superior products, but had their contracts dry up when Microsoft enforced per-processor liscensing. If a company did choose to go with DR-DOS, MS would dump MS-DOS on the market at below market prices to lock out the competition.

            • by DerekLyons (302214) <(fairwater) (at) (gmail.com)> on Friday June 20, 2008 @02:29PM (#23877395) Homepage

              Repeat after me, "a company cannot exploit its monopoly to become a monopoly".
              No but they can be handed a monopoly (by another near monopoly).

              The problem is - that's still recursive logic. When the IBM PC debuted, IBM didn't have a monopoly on that market. No one did, as the market largely didn't exist. (To the extent it did, the monopoly on the PC belonged to Apple!)
               
              Nor did IBM's 'monopoly' of the PC market last long, as more than a few companies were quick off the mark to get their entries to market. So quickly and so successfully that IBM was all but knocked out of the ring within a couple of years.
          • 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 i

          • by Locutus (9039) on Friday June 20, 2008 @02:37PM (#23877479)

            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

        • Yes, their competitors made mistakes. So did Microsoft.

          Microsoft Bob.
          Microsoft Blackbird.
          Etc.

          And by Etc., you must mean Vista :)

      • by hackstraw (262471) on Friday June 20, 2008 @12:33PM (#23875697)

        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.

        • 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).
          If that's not "poorly run" I dunno what is. And we know what mistakes Apple made around that time.

          So I think Gates's remark pretty much stands. They got their break because of mistakes other did.

    • by Illbay (700081) on Friday June 20, 2008 @12:16PM (#23875403) Journal
      This is true for a good many businesses - although sometimes "luck" is in the eye of the beholder.


      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."

    • by jedidiah (1196) on Friday June 20, 2008 @12:18PM (#23875439) Homepage

      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.

      • Re: (Score:3, Insightful)

        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.

        Ummm...Excel?
      • Re: (Score:3, Insightful)

        by sm62704 (957197)

        OK, if you go through my comment history you'll see that I'm not just "not a Microsoft apologist" but that I hate their software and wish I wasn't forced to use it at work.

        But Lotus is a really bad example. I'm forced to use it, too, because somebody in the Chicago office sends us Lotus spreadsheets that I have to use to generate reports with.

        The default on install is to have have the suite auto-run fullscreen on machine startup. Google found the answer for that, and I managed to shut it off. But it loads u

      • Re: (Score:3, Insightful)

        by DerekLyons (302214)

        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.

        OLE, Office, and getting the dammed things to market on time and more-or-less functional.
    • Re: (Score:3, Interesting)

      by ScooterBill (599835)

      While the coup that Billy snagged back in the day was brilliant in hindsight, it was still a very very small financial score. What happened afterwards was a lot of luck and without a doubt a lot of good business sense. You don't have to love Microsoft to still be amazed is how far and fast they grew. Microsoft was so far behind Apple in the GUI business in the late 80s and yet they still own the market. That has to count for something, eh?

      • by dedazo (737510) on Friday June 20, 2008 @12:41PM (#23875811) Journal

        Microsoft was so far behind Apple in the GUI business in the late 80s and yet they still own the market.

        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.

        • by timeOday (582209) on Friday June 20, 2008 @01:17PM (#23876415)

          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.
          Insanity! That's like giving Henry Ford all the credit for the industrial revolution. Moore's law was stated in 1965 when Bill Gates was 10 years old. The truth is, without Microsoft, PCs today would be a bit better or a bit worse, there's no way of knowing for sure. But they would still be here. And sitting here typing this on my Linux PC (running X which also pre-dates Windows by a longshot), posting on the Internet (where MS was a latecomer because Gates' competing vision was distributing Encarta on CD-ROM), I see little to be thankful to Microsoft.
          • by dedazo (737510) on Friday June 20, 2008 @01:24PM (#23876519) Journal
            Without the massive adoption of Windows and the ease of use it introduced as opposed to character-based environments, companies like Intel would have had little incentive to sink the billions they did in R&D, which in turn created ecosystems for other companies like ATI and nVidia (going further back, 3Com, STB, Diamond, etc) to do the same. Not much money to be made on platforms that are not selling.

            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.

        • by Bombula (670389) on Friday June 20, 2008 @02:09PM (#23877145)
          It's pleasant to see an insightful Microsoft comment that isn't drenched in jealousy and loathing. Kudos on a good post.

          One thing that folks forget when condemning Microsoft as a Big Bad Monopoly is that technology industries - and PC hardware and software in particular - change constantly and by massive increments. What that implicitly means is that a great deal of innovation is required just to hold a fixed position in the market. In other industries where technology changes slowly, if at all, monopolies really do mean something quite different. De Beer's monopoly on diamonds or the Coke/Pepsi oligopoly on cola or a monopoly on pencils or whatever else are in fact a good deal more sinister than Microsoft's dominance of the OS and office productivity software markets.

          If you're a soft drink manufacturer, you have absolutely no hope of kick Coke's ass in the next adoption cycle, no hope of snatching some market share as users upgrade to 512MB carbonation accelerator cards or anything like that. A real monopoly is also a company that genuinely stagnates, that stifles innovation and change, that rests completely on its laurels and whose only merit is size - a company that could literally change nothing for years and still beat everyone else financially. Like it or not, those characteristics just don't describe Microsoft.

  • by Maxo-Texas (864189) on Friday June 20, 2008 @12:13PM (#23875335)

    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!

    ---

    Microsoft outright stole some products (Stac comes to mind)-- after they LOST in court, then they bought the company on the stock market.

    ---

    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.

    ---

    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.

    • Re: (Score:3, Insightful)

      by drsmithy (35869)

      Microsoft outright stole some products (Stac comes to mind)-- after they LOST in court, then they bought the company on the stock market.

      What ? Microsoft v Stac was about patents (and software patents are bad, remember ?). Further, Stac went on for several years afterwards (and were eventually killed - like all the similarly fragile "whole disk in a compressed volume" products - by plummeting hard disk prices.

  • Multiple Factors (Score:5, Insightful)

    by edwebdev (1304531) on Friday June 20, 2008 @12:13PM (#23875349)
    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.
  • by QuietLagoon (813062) on Friday June 20, 2008 @12:15PM (#23875363)
    ... leveraging and building upon the MS-DOS monopoly is the reason why Microsoft was successful.

    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.

  • by Otter (3800) on Friday June 20, 2008 @12:15PM (#23875379) Journal
    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.

    I'd be afraid to smoke what they apparently put in the crack pipes at Lotus, at least in the Notes division.

  • bolox (Score:3, Informative)

    by gTsiros (205624) on Friday June 20, 2008 @12:16PM (#23875401)

    microsoft was succesful because they care for *selling* a product rather than selling a *product*. that's why they wanted to sell their toy of an OS while IBM wanted to continue development.
    first to market
    first to resell their own product with a different paintjob.
    microsoft is succesful because that is what they targeted. selling. if they wanted to make great programs they would harvest every cutting edge algorithm relative to computing known to mankind .

  • Nothing new here (Score:3, Insightful)

    by kabocox (199019) on Friday June 20, 2008 @12:19PM (#23875453)

    Heck, people remember what they want to remember. He most likely thinks that's how it was... Not really it just sort of a happened, they lucked out and when they did they kept running with it. Most people won't admit that their success was luck based, or due to family money, or family/friend connections. They want to think its all because of their own hard work that they've got that nice house and car or richie rich fortune, and they also want others to think that as well.

    Nothing to see here. Rich guy got richer, and it now rewriting his history to fit his view point. It's a plot type that's happened lots in the past and will happen lots in the future.

  • Software company (Score:5, Interesting)

    by Anonymous Coward on Friday June 20, 2008 @12:21PM (#23875513)

    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.

  • McDonald's (Score:5, Insightful)

    by Zordak (123132) on Friday June 20, 2008 @12:25PM (#23875561) Homepage Journal

    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.

  • by 3seas (184403) on Friday June 20, 2008 @12:25PM (#23875563) Journal

    First and foremost MS is a marketing company. A company that realized early on, quantity is better then quality as it get you onto the consumers/businesses systems.
    Second they are a legal firm that applies a chess strategy of sacrifice the pawn to more the knight forward.
    Or in other words, what is the risk vs. payoff of breaking teh law?
    Third they are, by the court decisions of court around the world, a trust breaking law breaker, a company run in part with anti-trust law breaking tactics.
    Fourth, what development they do, it is with intent to dumb down the users and always leave them coming back for improvements but never really doing a complete job.

    "The way to be successful is to make people need you" which is achieved by consumer entrapment abuse.

    The reason for concern MS has had over open source and its halloween documents evidence is because Open Source, though not a freeing of the consumers is in fact a big step in that direction.
         

  • The secret is ... (Score:5, Insightful)

    by 140Mandak262Jamuna (970587) on Friday June 20, 2008 @12:27PM (#23875609) Journal
    Most business users confused interoperability with PC-compatibility. By the time the realized the folly of demanding compatibility with a closed proprietary standard instead of an open level playing field standard, MSFT was well entrenched and the vendor lock had been achieved.

    Moore's law helped hide how inefficient MSFT coding had become. The marginally legal and outright illegal activities of the business/sales units would not have had this much of success if the vendor lock had not been achieved.

    But deep at the core, the dominance of MSFT is because the ignorance of the user base rather than any brilliance of MSFT products.

  • The view from Lotus (Score:5, Interesting)

    by Zigurd (3528) on Friday June 20, 2008 @12:31PM (#23875657) Homepage

    I was a consultant at Lotus at the time Microsoft started winning in desktop applications.

    Bill Gates is essentially correct:

    1. Lotus did a much worse job of hiring in professional management and bridging the gap between software development and business.

    2. Lotus complicated their tools-set and architecture unnecessarily. This is one factor that killed 1-2-3. Lotus went straight from assembly code speedy to bloated and slow. Ironically, as this was happening, Jon Sachs wrote 1-2-3 C, a simple, fast, and very portable reference implementation.

    3. Lotus did a bad job with follow up products. Instead of launching and improving, they would launch, get disappointed, give up, do something else. Or, in the case of 1-2-3, they would overcomplicate. They had very innovative products - ones that could have changed spreadsheets in fundamental ways, and that would still be innovative today. But they did not know how to nurture these products.

    Microsoft faces a lot of the same problems now. Microsoft can't seem to make regular incremental improvements to key products, for example. But business isn't about being perfect. It is about being less bad than the other guy.

    • Re: (Score:3, Informative)

      by whoever57 (658626)

      While MS may have made the job harder from Lotus than their own internal developers (hiding part of the API from Lotus, etc.), Lotus also shot themselves in the foot.

      In my case, I had a spreadsheet which used a fairly complex macro to read in a text document and process it. This worked nicely in 1-2-3/DOS. Guess what -- it did not work in 1-2-3 for Windows. In my example, Lotus gave away the single compelling advantage that they had: compatibility.

  • by mlwmohawk (801821) on Friday June 20, 2008 @12:32PM (#23875683)

    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?

  • News to me! (Score:3, Informative)

    by BCW2 (168187) on Friday June 20, 2008 @12:33PM (#23875701) Journal
    "Claims by Microsoft that people were buying the software because it was good are pretty self-serving."

    I didn't know anyone intentionally bought M$ products. I thought they got shoved down everyones throat when they bought a new PC.

    Gates is a lousy programmer and a marketing genius.
  • by RaigetheFury (1000827) on Friday June 20, 2008 @12:43PM (#23875853)

    When I saw smart I mean it literally. Bill Gates saw the business world. The giants and players who could easily throw you around. The only way to truly compete is to offer something noone else had.

    Sure, he ganked the GUI from Steve Jobs, but understand that he ganked the concept... not the code. Bill Gates and his company had a TERRIFIC understanding of what the average user would want in an experience. They also understood what a company would want when making technical decisions at the time

    1) Will it do what we need it to do?
    2) Can we easily maintain it?
    3) Can our users learn to use it quickly and easily?
    4) Is it cost efficient?
    5) Does it "just work"?

    The answers to all of these ONLY Microsoft could say yes to. Apple lost in #3 and #4. Every single apple I used growing up was completely non-user friendly. Microsoft spent millions upon millions understanding what users want to be able to do and made multiple ways to do it to allow a user to choose how they like doing things.

    I hear a LOT of people complain about windows software but every single Office App, I've ever used has lived up to my expectations. In my 15 years in the IT industry I still feel that 90% of the problems are user error when it came to basic installs.

    The other 10% was comprised of plethora of wierd setups, odd configurations, and *gasp* bad coding.

    Don't get me wrong... Microsoft has written a lot of seriously wacked out code that has no business in production. But lets compare... to Lotus Notes. That thing is about as friendly as a porcupine with a machete. It's almost as bad as Groupwise. These people spend $1.99 at Big Lots on a book for "User Friendly" and "Tech Support Friendly".

    You might hate microsoft, but they took what every software company was lacking and built that into their business model. Bill Gates is a genius... a low down dirty scoundrel genius... but a genius none-the-less.

    • by bsDaemon (87307) on Friday June 20, 2008 @12:58PM (#23876103)

      I think you may very well be the only person I have ever seen state that Microsoft Windows "just works," or that Mac is unfriendly.

      Windows 9x was a piece of crap. 2000/XP are quite nice, though I am glad I don't administer them professionally.

      MacOS confused the shit out of me because it lacked a CLI of any note prior to OSX, but I wouldn't say that it was "unfriendly."

      But all the time I spent as a kid trying to get games to work on Windows 95, when they were made for Windows 95, "Just Works" is not something that I would use to label it then.

  • by presidenteloco (659168) on Friday June 20, 2008 @12:46PM (#23875913)

    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.

  • A lot of confusion (Score:4, Insightful)

    by debrain (29228) on Friday June 20, 2008 @01:04PM (#23876213) Journal

    A lot of people seem confused or misinformed about the history of Microsoft. I believe that Microsoft is a monopoly because they made a deal with IBM whereby when IBM sold a PC, Microsoft received royalties for MS-DOS. This contract, I hear, was an invention of Bill Gates Sr., a lawyer. The royalties were paid regardless of whether MS-DOS was actually on the machine, thus IBM could not sensibly sell PC's with alternative operating systems (i.e. PC-DOS, etc.).

    Thereafter they wielded this contractual monopoly over PC operating systems skillfully, a shining contrast when compared to their essentially bland programming output, and were responsible for a variety of anti-competitive practices over the years. I lament not having documented my observations of these practices, but embrace, extend, extinguish has been honed on many, many occasions from more brutal and subversive tactics such as looking for and intentionally breaking other companies' software (viz. Corel).

    Make no mistake, Microsoft's business strategies have been diligently locking in customers through proprietary formats and libraries, as diligently as they have been snuffing out any actual competition with the same. Their contributions to research, development, and technology are essentially non-existent, and virtually unheard of when compared to their revenue.

    They are not a development shop; I recall some absurd (but probably accurate) statistic that the cost to the economy due to lost productivity from things such as blue screens of death and the untenable Word interface amounting to the same cost as the September 11th, 2001 World Trade Center attacks, every hour. (This is not to mention the lost productivity to Solitaire) That's a false dichotomy, since who's to say that perfect (or at least working) software would result in ideal output, and it's much the same as saying the millions of songs downloaded each year amounts to trillions in lost revenue to the record companies. Nevertheless, I know that I prefer to waste my time on Slashdot, as opposed to rebooting my machine, or restarting a mangled list in a Word document.

  • by jrothwell97 (968062) <jonathan@@@notroswell...com> on Friday June 20, 2008 @01:13PM (#23876343) Homepage Journal

    ...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.

  • Actually... (Score:4, Informative)

    by Nom du Keyboard (633989) on Friday June 20, 2008 @01:19PM (#23876453)
    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.

  • I call bullshit (Score:5, Interesting)

    by RetiredMidn (441788) on Friday June 20, 2008 @01:27PM (#23876547) Homepage

    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.

  • office 97 (Score:3, Insightful)

    by madcat2c (1292296) on Friday June 20, 2008 @01:31PM (#23876589)
    Selling office 97 pro for $99 to the consumer, and licensing it to universities for $1 a copy is reaping HUGE benefits right now. An entire generation of people, college educated people, grew up with office 97 and now demand it at home and in the workplace.
  • 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

  • *yawn* (Score:5, Funny)

    by Tom (822) on Friday June 20, 2008 @01:59PM (#23877037) Homepage Journal

    Rich CEO says success of his company is due to his own smarts and foresight. News at 11:15 (we need the other 15 minutes for the dupe).

  • by Sparky9292 (320114) on Friday June 20, 2008 @02:22PM (#23877309)

    Microsoft's success can be pinpointed to one day in time when all of IBM's lawyers were at Gary Kildall's house. Gary was out screwing around in his Cessna that day and Dorothy basically freaked out during the negotiations for DOS. When Digital Research punted the IBM deal, that's when the phenominal $50,000 investment in Tim Patterson's DOS became Microsoft Legend.

    I'm not sure that Gates knew that IBM was going to pull parts off the shelf to slam together a PC, and I doubt he knew that clever reverse engineering of the ROM BIOS that Compaq would do would cause the Attack of The PC Clones to occur and the money bags to fall from the sky at Microsoft.

    If you ever read any Gates biography, documentaries etc, almost all literature dedicates a large amount to that particular point in time.

    Bob Cringley's PBS Triumph of the Nerds spends about 30 minutes of the documentary on this decision.
    Stephen Manes' Gates: How Microsoft's Mogul Reinvented an Industry--and Made Himself the Richest Man in America -- dedicates an entire chapter to this event.
    Even Noah Wiley's Pirates of Silicon Valley does a silly bullet time effect on this one moment.

  • by iliketrash (624051) on Friday June 20, 2008 @03:25PM (#23878367)

    Microsoft's business model, as we all know, has been to sell second-rate software to unsophisticated customers. But why did this succeed?

    I'm at an age when I can begin touting my age as a factor in making arguments, so here is my take on this. Some of us remember the "mainframe" days. My particular experience was working at Motorola's government electronics group during a time when there was a need to upgrade the (that's right, "the") engineering computer. Bids were taken, executives were wined and dined, and a Sperry Univac was bought (replacing a much-loved but very tired Honeywell model). The engineers were livid because the Univac sucked. I actually sat in a small, packed conference room with Sperry bigshots while we berated them on the problems with their computer. Not two years later, the Univac was dumped for---drum roll--an IBM. Engineers were pleased with the new machine.

    It was during this period that I first heard the mantra: "You can't be fired for buying IBM." Everyone knew it. It always remained a mystery what influence Sperry was able to exert, but there was always a suspicion of foul play in the decision to get the Univac.

    This period was approximately 1982-1984. An IBM PC showed up in my lab. Other small lab computers were showing up, such as HP and an excellent machine from Three Rivers Computer, which engineers were using for suspicious activities such as writing reports. Management became petrified, and a moratorium against the purchase of new personal computers was put into place. (i'm not kidding--I was on a committee to decide what to do about the "problem." One of the subjects we confronted was networking and Ethernet. The consensus of the committee was, Who the hell would ever need 10 Mbps?)

    The decision was made (around the time I left the company to return to graduate school). IBM PCs were the official choice of Motorola's government electronic group.

    This might sound like a trite explanation, but I have thought about it for many years. I truly believe that such a reasoning was behind much of the success of the IBM PC (and by IBM's decision to farm out the OS, Microsoft).

    "You can't be fired for buying IBM."

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