The History and Size of Microsoft | ColdFusion

So, here we are again. Your picture has been on the cover of virtually every major news magazine, written up in all the papers, and for years and years it was Bill Gates, the boy wonder, the man America loves to admire, the man everybody wants to be. Now all your press is Bill Gates, the man everybody hates, everyone wants to gang up on. What happened? Well, I don't think it's accurate to say there's been a dramatic shift. Within our industry, we've been very successful and we've set a lot of strong standards, had a lot of great products, and it's a very competitive industry, and so you're seeing a lot of reaction to that. But in terms of the publicity and the broad acceptance of the direction we're taking, I think it's more positive now than it's ever been. What about the ability to separate what Bill Gates has done with Microsoft from what Bill Gates is? Do you think that there's a lot of stuff that falls over in the wrong direction, maybe? Well, I'm capable of separating them. That's the most important thing. The press, they're not very capable of that, but maybe that's not important to them. Are you worried about the FTC thing or concerned about it at this point? Well, any investigation like that can take a lot of time. The amount of paper we'll eventually send them will be millions and millions of pages, and since we've been talking to them, they've initiated investigations into three or four other companies in the industry, and so they're obviously learning a lot about the industry. It's not something we expect to change our business, but it is a distraction. Good. Now that we got that out of the way, let's go on to some fun stuff. Do you remember the first time you saw or used a computer? Do you remember your first instance? Sure. Tell me about it. Well, I was 13, and some money had been donated to get a time-sharing terminal. It was a General Electric computer at the other end. We had a teletype with a modem, and so people were trying to figure out how to use the thing, and myself and a friend, Paul Allen, got involved and started writing programs. Did you know then that that's where you wanted to go? Did you say, gee, this is where the world is going? Well, at a very young age, I was heavily involved for long periods, working day and night on the machine, writing programs, learning new things. I'd go through periods where I'd say, hey, this is computer stuff. Let's not do that for a little while. Then I'd go back into it. When I went to college at Harvard, I was still dealing with that. Am I going to work on this computer side, or maybe I'll just go be a work in economics or law and do what I thought of as a more normal pursuit? So I was always mixing back and forth. It wasn't really until I dropped out and started Microsoft that I declared where my focus would be. When you got that phone call from IBM, or however that finally transpired, where they said, you're it. We're going to use your system on our new personal computer. Did you have any sense that this was sort of day one of a revolution? Well, it really wasn't. You've got to understand, we'd been in business, and we were the first in the business, the largest in the business at that point in time. Our system software, our basic, was being used on virtually all the machines. When IBM first came to us, they had proposed an 8-bit machine, which wouldn't have had any impact at all. It was our suggestion that they take the opportunity to move up to a 16-bit machine, which kind of contradicted the purpose of the project, which was just to prove that IBM could get something done quickly. They didn't have a very big forecast for it. And we actually had more people working on the project throughout that project, even though we were a 30-person company, than IBM did. And it had to go through all these reviews, and they could cancel the product at any time. And particularly this idea of using a 16-bit processor, there was some real resistance, because it meant we had to write new things to get the work done. And so it had its ups and downs. Once it got done, we chose to use that as the model to go to other manufacturers and promote the idea of using our operating system and being compatible. And so we saw that as the beginning of true compatibility between these desktop machines. When you first got into it, when you first started Microsoft, what did you envision as the future of personal computing? Did you see a paperless office coming, a computer in every home, an information-powerful society? What were your views? Well, Paul Allen, my co-founder and I, wrote down that we see a computer on every desk and in every home. We saw the microprocessor, the chip that drives it, improving so rapidly that any access to information or processing of information would move into the PC, and it would be the tool of the information age. And so that general belief is what we've been moving towards these 15 years. Of those hopes and promises, which are the ones that you feel have best been delivered on, and which ones haven't been? Well, this is an industry where we talk a lot about ease of use and capabilities. And we still have a long ways to go to make these devices as easy as we'd like. People's curiosity about the machine and their willingness to learn things and help other users have been really essential to getting the tool to be used as broadly as it has. And it's been an industry with a lot of ups and downs. All of our early competitors went bankrupt. Most of the early hardware companies are gone. During the 15 years I've been in the business, the number of companies that have come and gone have been incredible. And it's because a lot of people didn't come up with the right products. They didn't transition to the new stages. And it means it's a confusing industry to follow. One of the things that's come out of the industry is vaporware. I understand that Ann Winblad actually coined the phrase, or gets credit for it. Why has this business really, almost more than anybody except maybe the electric car business, promised more than it delivered, or at least promised more on a date in terms of delivery? I mean, you've had it with Windows 3 in terms of the difference between when you said it was coming and when it finally came. No, I think you're confused. But that was announced and shipped on the same day. If you want to go back eight years to the initial Windows product, there's a case there, but not with Windows 3. But why has this sort of been endemic in the industry? Well, I think some of it reflects the great interest that users have in knowing when the personal computer is going to get better and more powerful. If you spend hours a day working with the tool, you like to give input into where it's going to go and see how it's going to change. So even when we don't announce products, like Windows 3 wasn't announced at all, you have a set of dedicated publications, or even the business press, going in and taking every testing release you put out, every rumor they can capture, and talking about that. So I think it's the level of interest that drives these things. Then I'm out of pre-announcement. And if you look in the last two or three years, we've done very, very little of that. Some people are still doing a lot. When somebody gets behind, like say, somebody didn't write Windows applications when Windows is taking off, then you get them saying, hey, wait for us. Wait for us. Our product's going to be great. And we have quite a lot of that right now. Sure, I couldn't imagine who you might have in mind. Despite your participation in the Advanced Computing Environment Initiative, you're really now the defender of the installed base. You're the champion of the 50 million DOS-based machines. And when guys like Apple and IBM get together and say, we're going to bring you something completely new, and you have to throw out everything you've got, you've sort of become the defender of these 50 million out there. Was that a role that you went after? Or has that just sort of happened? And how do you feel about that? I think the installed base is the defender of itself. The investment people have in learning applications and buying equipment and setting things up is so immense that if anybody puts themselves into the position of attacking that, I think they're making a mistake. The position of improving it, certainly we need lots of improvements. And so the real question is, who can do that job of preserving what's there and taking it forward? Because we have built the system software that's used in the vast majority of those machines. We're in a good position. For example, we provide a graphical interface. And we'll be providing a lot of things like handwriting and so-called object orientation as we move forward. So we're in a stronger position to preserve it. But if you listen to people's messages, they're all saying, they'll try and preserve it, too, because they know how critical it is. By almost every one of the studies I've seen, the Mac is still a lot easier to learn than any of the DOS machines. And some of the studies even say that it's still about half the time to learn applications on a Mac as window apps. That being the case, and I know you produce on both platforms, but that being the case, why don't we have a situation where if the Mac is so much easier to use, they've got 90% of the market, and the IBM and compatible's only 10% instead of the other way around? What happened that didn't make that happen? Well, first of all, it's just not true. To learn Excel on the PC and to learn Excel on the Macintosh, it's the same. Learning about cells and formulas and how you give commands, believe me, it's the same. So what you're saying is it just isn't correct. In terms of some of the initial system setup, the idea of having the system software pre-installed has always been an advantage for the Macintosh. That's why you see a lot of people building Windows into their systems now more and more. Clearly, the market prefers the DOS machines. They're the overwhelming favorites. And a lot of that has to do with this openness, the competition, where hundreds of manufacturers are trying to provide the fastest, the cheapest, the smallest type of machine and the flexibility that provides. And then because those machines are more popular, a lot more software. There's always been tons more software for the DOS machines than any other computer ever. And that makes a difference. If the package you want is only on the PC, you don't care about what's going on with any other computer. Let's talk a moment. One of the things we want to do with this show is paint some stuff with broad brush strokes and really look at what this has done for our society, our corporations, and so on. In the area of corporate productivity, the verdict still seems to be out. I mean, we know that people are doing more things than they could ever do before. But somehow, the productivity measures just don't seem to be reflecting it. Is that because the PCs aren't doing the job of productivity or because the PCs have so changed the environment that we're not measuring the right things yet? Well, it's always tough to measure, because when everybody's using PCs, the expectations of what you can get done go up. If you take our case, the way we use the electronic mail in Microsoft, the way we don't print out sales results anymore, I just sit at my desk and click and see the graphical presentation. I dive down in and get detail. There's no way we could run our company without these tools. There are some things yet to be done in terms of really helping lots of people work together and helping get that information so everybody just looks at the little icon, clicks it, and up comes what they're interested in. There's still some work going on integrating machines. Networking is a big challenge. But we will be delivering a lot of that. So the PC, its impact will be more noticeable in the years ahead. There's been a lot of discussion about the computer-literate society and whether computers are further distancing the haves and the have-nots from one another. Because, for example, a rich school district can go out and afford to buy an entire classroom of PCs or Apple IIs or whatever, while a poor district may have one for a classroom. Do you think that the computer, the pervasiveness of the computer, could actually help us fragment the society rather than bring it together by giving us two classes of people? Now instead of being rich and poor, it's going to be rich and computer-literate and poor and computer-illiterate? I definitely don't think that's the case. The PC has been expensive and only used in isolated cases. But as it becomes a very effective tool for educational use, I think you'll see it be used more broadly. Its impact has been limited because it still really isn't that great of an educational tool. As we get more titles, more information, then it'll be used more broadly. And in that sense, it's a leveling device. It means that a kid who's curious about something can sit down at that machine and go through and get answers and have it increase their interest rather than eliminate it. I mean, even in the workplace now, you get the situation of 10 years ago, Bill, you could walk into Kelly Girls, which is now Kelly Personnel, no longer sexist, and get a job doing temp work if you had typing skills. Now that's no longer sufficient. You've got to have computer skills. And somebody who was poor and may have learned a typing class in junior high school or high school might have been able to get that job 10 years ago and can't today. Well, the economy changes. I'm not sure what you're saying. All these temp agencies are extremely good at getting their people trained on the two most popular word processors, one of which is ours. And so they're able to go out and help people. We work with those temp agencies to make sure they're giving those courses to their people. And they do a great job of this stuff. They even take some of those training services and offer them to corporations to help train their people. Have you pondered some of the unintended consequences of the development of personal computers and computing in general as it sort of spread its way through society? Everything from, you know, do we now worry about VDT emissions to carpal tunnel syndrome? These are things that nobody ever thought about 15 years ago. Are there things that concern you today about how the computer, now that we've really been living with it for a while, is really affecting us? Well, I don't think those are things that I'm particularly focused on. I think the use of the computer as an educational tool is very interesting because it hasn't fulfilled its promise yet. And I think it can. I think it has that potential. And so we spend a lot of time investing in things that are going to make it more effective there. So there's certainly interesting issues in that area. What can you do today, what can anybody do today with a PC that just couldn't get done 10 years ago? I can walk over to my PC, tell my 20 top managers, you know, around the world in different countries how I've responded to new things going on in the market, competitive challenges, what it means to them, what I'm thinking. And within a couple minutes, there at their terminal is a complete description of it. They can edit it, forward it on to their people as they see appropriate. We can communicate and work together in a way that just was unimaginable. That's just one of so many things that the tool enables. Give me some of the others. I can take all of the documents I've created over a period of years and go back and look in for any phrase that I've used and see which documents were talking about that, call them up, print them out, you know, and reassess how my views have changed over time on a particular area. That kind of document filing just couldn't have been done any other way. And it's at our fingertips. I mean, this is a phrase we use. When I'm going to have a meeting with a product group to review what's going on, I sit there and I browse all the phone calls we've had from customers. We type in and log. And it's this huge database. And so I can just sit there and see what the top subjects are, go in and look at individual calls. And then when I go and sit down with a product group and say, how can we do this better? I'm up to speed on what the users are saying when they come in to make these calls. And it just makes product cycles, allows us to do so much better job than we could do without that tool. All right. To what extent has the computer essentially restructured corporations, organizations? And has information now become almost a new way of measuring capital? You either have the information or you don't. You're either information rich or poor. That's had a major impact on the way we all do business, hasn't it? Certainly it has. The amount of exchange organizational structures, that's hard to measure. I think we're going to see a lot more of that in the next 10 years than we have in the last 10, where you can collapse hierarchy. You can let people in different specializations, different geographies, work more closely together. You will see a lot of that, and it's very positive. Some businesses have always been pure information businesses. I mean, what's a bank? It has information about who to take credit risks on, and who has what money, and moving that around. And so those industries, the financial industries, things like reservations, industries that want to be very customer-oriented, have been the first to really adopt the technology and have it change their business, rather than just help them print out documents or do spreadsheets. What do you think that the industry hasn't delivered on? What did you expect to see out of personal computing that we don't have yet? Well, there's a lot of things having to do with ease of use that we could have done a better job on. All the things that I think are wrong, because this is what I come in and do every day, these are the things we're moving towards, building into the machine and doing right. And there have been some things like, can the phone and the PC work together, where what was done was poor, and it didn't succeed, it didn't deserve to succeed. But I see the possibility for doing better there. Is the PC something you would take into a meeting? The last thing I actually wrote all the code, a lot of the code myself, was a little portable computer, a RadioShack Model 100. And I thought people would end up taking those to meetings and having them to take notes. Well, it turned out having that keyboard there was kind of noisy and nerdy, and people didn't do it. So when you go to meetings, even the most computer literate are still walking in there with their tablets and taking notes. So now we're trying to change that. We're working on these handwriting machines that a lot of people are very enthusiastic about. And I think the main thing that the PC industry has to get better at is really getting the message out about what the machine can and can't do. It's a tough problem. It's such a powerful machine, and yet for the person just about to buy one, they need to know where it's helpful and where it's not. If we come back in 10 years, and hopefully we'll talk before 10 years from now, but if we were to come back in 10 years, what do you think we'll be doing with personal computers within the next 10 years that we're not doing today? Well, this whole idea of information at your fingertips will have advanced dramatically in that 10-year period. I mean, you'll come in here in my whiteboard that I write things on. Instead of being a whiteboard, it'll be a flat screen, and I can call up numbers, and I can hand write on it and have the computer recognize that. I'll have a little pointer. I can sit here and point at numbers I want more detail on. The computer as an educational device, I think, will be very significant. All the pictures and sounds and quizzing to make history or science very interesting to most of the students in the US will be there, that library. And so it can engage them, and they can see exactly what they want. The whole idea of communications, the speed of networking, wireless networking, will have advanced incredibly by then. And I even think in the home environment, we'll start to see the PC playing a significant role. We talked about IBM a little earlier. First, let me ask you, what's your take on the agreement between IBM and Apple? What do you think of that? Well, the key is that 10 years ago, a new structure of getting technology out to end users was adopted. It's a structure where the latest chip technology gets put into a box by lots of manufacturers and competitively shipped to them. And the latest software runs on all those boxes, so it can be priced very, very low, even though it's expensive to build. So that PC approach, let's call it, although IBM's contributed so much to it, it's very uncomfortable to them. Because whether it's the chip value added, or the software value added, or just the efficiency with which people are getting computing, it doesn't fit their business model, the cost structure that they have. And so in some ways, a lot of things we see IBM do are to move a little bit away from this current structure, which really is the triumph of the end user over the industry as a whole. The pace at which a new chip gets announced that two weeks after it's ready, 100 people say they were the first to have the machine, I go down to warehouse and buy it for some small discount, that's technology moving right out to that end user. And these technologies have never improved so quickly, whether it's chips or software, which are the two technologies. And that's a challenge to the old computer industry. People are always amazed when they move applications down onto these PC networks, how great the development tools are, and how easy that is for them. And yet that hardware is so much less expensive than what they would have worked with in the past. And so it's a time of challenge for all the old computer companies, some of which you've seen fading quite a bit. Now IBM is the strongest and the most important of those, so it will continue to play an important role, but it has to completely change itself. Do you think anybody had any idea ten years ago when they first said, you know, we're going to bring this box out, what the impact would be on the computer industry itself, on the kind of shakeout that would follow? I can guarantee you they didn't. I mean, the debates we always ran back then were, OK, let's not put too many features in because they had a product called the Data Master for small business, and let's not do this because they have the DisplayWriter, which was for word processing. And this small group I worked with didn't have the Office Mission. It was another group in an Austin, Texas laboratory, and there were battles with them. So the forecast, the way the thing was planned, it's just a miracle the thing got a 16-bit processor and the disk at all because a few of the guys on the team really supported the idea of making this a more powerful machine. OK. This is going to be an interesting. I've got to tell you something. My boss was over in London for the Economic Summit, and he was telling the ABC execs who were all gathered over there that we're doing this special show on August 11.