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Farewell Bill Gates

Posted on 12 May 2008 at 12:38

Gates didn't invent the PC software business, but has undoubtedly been a champion in its fight against piracy. He would never have invented open source.

MITS lasted until 1979, when Microsoft moved to the Seattle area, creating languages and porting them to a variety of PCs. From there, it expanded into operating systems, applications, books, mice, keyboards and more. In the early days, Gates is said to have reviewed every line of code and rewritten things he didn't like. Clearly, he set the technical direction for the company. However, he soon acquired a partner in Steve Ballmer, a buddy from Harvard.

Ballmer had finished his degree and worked for Proctor & Gamble on such hi-tech gadgets as the Coldsnap Freezer Dessert Maker. To get him to join the tiny Microsoft as "assistant to the president" in 1980, Gates had to pay Ballmer $50,000 a year, and hand over 5-10% of the company. That's why Ballmer is worth a cool $15 billion today.

This caused resentment among the staff, some of whom had worked under Gates' tight-fisted regime since Albuquerque. The company was run by programmers for programmers, and this guy wasn't a programmer! With hindsight, however, it could be the smartest appointment Gates ever made.

Slow start

As a company, Microsoft made slow progress initially, going from three employees in 1975 to 40 in 1980. Even after Ballmer joined, it took another five years to reach 1,001 staff, and annual sales in 1985 were still only $140 million. By comparison, after Google's first decade, it had 10,674 staff and revenues of $10.6 billion.

Part of Microsoft's problem was that it was beholden to IBM. When in 1980 Microsoft did a deal to supply IBM with PC-DOS for its new personal computer, Big Blue was one of the world's biggest corporations. Its main concern was that Microsoft might be too small, too fragile a company to deal with, although being "Mary Gates' boy" helped. As recorded in the book Blue Magic, IBM's investigating team reported that: "Bill Gates may look like a kid but he doesn't act like one. He is, without a doubt, brilliant at developing software and programming languages. He's smart and he knows it - but he's not a smart aleck. We like him. We can work with him."

IBM bought Gates' BASIC for its PC, and when IBM failed to do a deal with Digital Research for its CP/M operating system, he provided PC-DOS as a substitute for a small one-off charge. The actual deal was that Microsoft would "convert SPD-DOS to act as the machine's operating system", as Blue Magic puts it, because the base code was coming from another small local company, Seattle Computer Products. What IBM didn't appreciate was that this piddling little company was going to take over IBM's rightful monopoly of the PC industry.

Gates thought the next operating system after DOS would be Unix, and Microsoft popularised its own version, Xenix. IBM wouldn't have it. In search of independence, Gates committed Microsoft to writing applications for Apple's Mac, telling Business Week in 1984: "The next generation of interesting software will be done on the Macintosh, not the IBM PC." Gates even tried to get Apple to license Mac OS to make it an industry standard, which would have created a bigger market for Microsoft's Mac apps, such as Word and Excel. Apple refused, but Gates and others were already creating Mac-like systems for the IBM PC. Digital Research had GEM; Microsoft's was called Windows.

Still, throughout the 1980s, IBM was Microsoft's major customer and the customer was always right. The book Gates, by Stephen Manes and Paul Andrews, reveals that "doing things The IBM Way for OS/2 came to be known by the acronym BOGU - Bend Over and Grease Up - and was symbolised by the jar of Vaseline a group of programmers gave Ballmer for one less-than-happy birthday". In the foreword to the OS/2 Programmer's Guide, Gates wrote: "I believe OS/2 is destined to be the most important operating system, and possibly program, of all time."