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Assessing the pluses and minuses of the helmsmanship of Microsoft Corporation since its inception.
HaLF a Year has now passed since Bill Gates retired from his day-to-day position at Microsoft last June. Gates remains chairman of the board and still spends about one day a week at the company. But the media marked his departure as a major event, and rightly so. Gates built and led, for more than 30 years, one of the most successful technology companies in history, and Microsoft’s products touch nearly all of our lives every day. At the same time, Gates lives with the reputation that he was simply “lucky.” Gates and Paul Allen founded Microsoft in 1975 to make programming languages for a new PC that had yet to come to market. Gates later got the IBM contract to produce DOS in 1980–1981 after first turning it down because he did not make operating systems. At least part of his legacy stems from this good fortune, especially since IBM was not clever enough to control the rights to the operating system (nor the microprocessor design, which Intel controlled) that Gates then sold to clone producers. Another view is that Gates was primarily a talented “hacker,” with little or no management skills, and that Microsoft succeeded because of its growing market power stemming from DOS and then the Windows and Office monopolies.a
a The best account of Gates and Microsoft through the early 1990s is Stephen Manes and Paul Andrews, Gates: How Microsoft’s Mogul
There is much truth to the argument that Gates and Microsoft were in the right place at the right time, but that fact does not explain why they were able to exploit the opportunities that appeared. In 1995, Richard Selby and I wrote in Microsoft Secrets: “Bill Gates of Microsoft may be the shrewdest entrepreneur and the most underrated manager in American industry today.”b I still stand by this judgment, but now is a good time to reflect on what might be the ultimate legacy of Bill Gates.
On the positive side, Gates correctly
Reinvented an Industry—and Made Himself the Richest Man in America. Doubleday, New York, 1993.
b M.A. Cusumano and R.W. Selby, Microsoft Secrets. Free Press/Simon and Schuster, New York, 1995, 23.
foresaw the future when, in 1975, he dropped out of Harvard to co-found Microsoft based on the belief that every desktop would one day have a PC on it. He wanted those machines to run Microsoft software and he played a huge role in making this vision come true. Second, Gates recognized that hardware prices were decreasing and that most of the future value from computing would be in software. At the same time, he argued that users should pay for software so that programming could become a livelihood and software companies would have the money to invest in product development. The free software movement and the shift to servic-es-driven business models are complicating the software business today but this strategy served Microsoft remarkably well for three decades.
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