Bill Gates on Technology and Strategy

Over the past few days, I had the great pleasure to savor a 1989 speech by Bill Gates to the Computer Science Club of the University of Waterloo. My previous exposure to Bill Gates’ thought had been rather disappointing — Business @ The Speed of Thought has to be one of the emptiest collections of cliches ever written — so I tuned in mainly for the nostalgia.

Little did I know that I was in for 93 minutes of brilliance.

Bill Gates speech in 1989 reveals two things: he is an expert at technology and an expert at strategy, both theoretical and applied. Except for the parts of his speech which deals with the specific environment of the late 1980s, most of Gates’ technological statements are timeless. Listening him to talk about his vision for programming I kept having to tell myself that .Net wouldn’t be released for another 14 years. Likewise, listening him to how he structures teams at Microsoft, and how he forms goals and sets release schedules, I kept being reminded of Chet Richards’ Certain to Win: The Strategy of John Boyd, Applied to Business.

The grand view of Gates’ ability is emphasized through his repitition of a near-disasterous decision. At the time, Microsoft and IBM were collaborating on a new operating system called (with typical IBM finesse) OS/2 (short of Operating System / 2). The relationship would collapse the very next year. IBM and Microsoft have very different operating philosophies, and Microsoft assisting in building and promoting IBM’s “successor” to Windows was in retrospect unimaginably dangerous. It was as if Queen Elizabeth I had supplied timber and workers to build the Spanish Armada.

Of course, like in that war, it didn’t matter.

IBM’s islamic, top-down, one-true-way philosophy was outclassed by Microsoft’s theory of embrace and extend. Just as the British defeated the Armada, not because of luck but because of the Spanish inability to change in respond to changing events, Microsoft defeated IBM because of International Business Machine’s inability to change in respond to changing event. On paper IBM had the advantages

  • Man power
  • Hordes of cash
  • Business Contacts
  • Experience (IBM had previously been outmaneuvred by Microsoft in the release of DOS)

But Microsoft had a unity of purpose, iterative design, and flexibility. IBM had none of these.

Within half a decade, the war was essentially over. IBM released the last commercial version of OS/2 in 1996. The overwhelming power & success of Microsoft Windows, by contrast, needs no elaboration.

5 thoughts on “Bill Gates on Technology and Strategy”

  1. Dan,

    I'll have to ponder some more over your observations here. I currently consult a number of marketing teams on the server side of Microsoft and my impressions over the past couple of years differ from yours here. Rather than possessing any kind of strategic élan, Microsoft's approach seems to be to leverage time and money (attrition) to build second-rate products into serious competitors. The Platform Products & Services Division seems to led by Grant, not Lee.

  2. Dexter,

    While the “old Microsoft” seems to survive in bits and pieces — nearly everything about .Net and its development is impressive, for example — MS has appeared to rely on brute strength for many projects.

    In his 1989 tallk, Bill Gates mentioned that only one project at Microsoft (OS/2, which was done in conjunction with IBM) had more than ten engineers on it. DOS, Excel, Powerpoint, and every other program he mentioned was done by small teams.

    Anyone care to guess the size of the Vista Team? Or the Word 2007 team?

    The advantage of brute force is that (a) Microsoft has a lot of force (b) it doesn't require that much attention to human resources.

    The Microsoft of 2007 looks a lot like the IBM of 1987.

    I wonder how much of this is because of Steve Ballmer. (I don't know.)

  3. Dan,

    I found Gates' speech more of a mixed bag than you. He CLEARLY employed the “embrace and extend” philosophy with relation to the Mac GUI. It was fun to hear him brag that only HIS guys could build a real app for the 128K Mac.

    On the other hand, before long the Word team mushroomed to hundreds of people, and by, say, 1993, the only significant application team with less than 10 developers was the Excel team.

    He also completely missed the disruptive innovation of LINUX. He fully expected a major corporation to own that space. And while he mentioned hypertext as important, the entire concept of open system with no corporate owner was nowhere in his mindspace.

    I hate to say it, but Bill became a “man with a hammer” with respect to the fact that some standards would NOT be owned by a corporation. Will “embrace and extend” work in every context? I don't know. [I feel like Linus Van Pelt saying “if” with respect to the Great Pumpkin just now]

  4. “MS has appeared to rely on brute strength for many projects.”

    Sorry dan, but I call on this one.

    By the way, before I answer the P=NP conumdrum, you have yet to answer my Master Key software program. You get what you give.

    Taylor

  5. Mike,

    Hmmm.. Perhaps Microsoft is a bit like Nazi Germany, executing a perfect invasion of France and then immediately proceeding to forget nearly every lesson in a woebegone invasion of Russia.

    Nonetheless, Microsoft succeeding in driving out commercial competitors — the UNIX companies are in disarray, Apple/Next are in a small (if profitable) ghetto, and even OS/2 was kept at bay by Microsoft DOS until the recent conquest of the PC by Windows NT/XP/Vista.

    Microsoft's current competition comes from the open source movement, which also operates on a version of embrace & extend. It's notable that nearly every popular open source program is an extension, of one way or another, of a previous program

    MINIX + GNU -> Linux
    NCSA HTTPd -> Apache
    Netscape Communicator -> Mozilla
    StarOffice -> OpenOffice

    Microsoft's ability to corner the low-cost computer market by being the cheapest supplier of products is gone, because of open source and free software. Perhaps Microsoft will evolve into something like a pharmaceutical company, inventing highly profitable solutions that it has for a time, until the generics catch up…

    Of course, declining companies can always rely on lawsuits. Bill Gates in 1989 mentioned Apple's ludicrous case, and Microsoft is resorting to that sort of thing now [1].

    PS: Where do you have your numbers from? I am interested in the history of personal computers & software, so I think I'd like to read your source too. 🙂

    Taylor,

    “Master Key software program”? What are you talking about? (A serious question.)

    Also, mere “calling” isn't a legitimate form of discourse. If you disagree, please say why.

    [1] http://www.groklaw.net/articlebasic.php?story=20041118224916429

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