‘Gates unplugged’ session sheds light on 1995 strategy
Notes from Intel meeting record views on IBM, Apple, Compaq, life the universe and everything
Bill Gates gave a wide-ranging briefing to Intel on 11 July 1995, and 15 pages of handwritten notes taken at the time by Steven McGeady have just been released by the court. They are entitled by McGeady "Gates unplugged" and reveal some interesting insights as to Gates' more private views at that time, a few weeks before the release of Windows 95. It is clear that several entrenched theories about Microsoft's strategy at the time will need to be revised. We have had our best stab at deciphering some of the more interesting notes. Gates evidently remembered well the day he had forked out $360 for the Intel 8008 chip that he and Paul Allen used for the Traf-O-Data car-counting device, since he told Intel: "I've written as much code for the 8008 as anything." Sidenote: it is believed that the chip was priced at $360 as a hint that the IBM/360 era was at an end. Gates offered a range of comments about the development and then-current state of the industry. It is "one of the great mysteries of the computer industry that Unix has not taken off", he mused. So far as IBM was concerned: "In the final analysis, [it was] unclear who divorced who... the press was a significant factor... IBM execs [were] just reading the newspaper... I don't understand IBM's strategy. $50 billion in revenue... nobody expects them to make money, so that's $50 billion to spend. They can destroy anything they want to. Having a common enemy creates some of the best relationships in our industry. If [IBM] ever spoke with one voice [they'd be dangerous]". Gates said he told Compaq, in the early days: "You just stand for 'clone', so go to 386." In 1995, he admitted: Compaq is an adversary... when you say a computer, we want them to think of Windows." Compaq is "proof that [Microsoft] is not good at predicting things... thought they were dead... All the things they're trying to do are dangerous... [they] own the shell." Apple: "Majority share in K-12, college, etc. niches... not 12 per cent of mass market. These [markets] are self-sustaining... will keep them a wild card and dangerous. Top of the list of Windows competition." Intel: "You're not a diversified company... it's scary." Novell: "A wounded bear... how will they come back? Frankenberg is a reasonable guy -- he's no Philippe Kahn." And, finally, Gates on Microsoft: "We're very market-share oriented, we'll do with prices what we need to [to] retain market share. "We're 'open'... but that's the most abused word in our industry." Resellers of Microsoft software should be aware of the writing on the wall so far as selling application upgrades are concerned. Gates foresaw the "on-demand download of demo and application upgrades... we're just a bits company -- our channel is the information highway... in the interim, we need a few more channels." And the truth about NT: "We blew it -- too big, too slow... Chicago [Windows 95] is our answer to OS/2." If only the latter remark were true... Gates is clearly concerned (or likes people to think he's concerned) about the dangers of success: "In this industry, you're dead before you know it -- need early-warning systems." Gates repeated a remark he had made immediately after Microsoft had signed the consent decree: "We haven't changed our business practices at all." Gates was concerned at the revelations contained in emails, however. He said that Microsoft "may change email retention policies". Gates finished his presentation by making some remarks about the DoJ: "If she [either Janet Reno, the attorney general, or Anne Bingaman, the deputy for antitrust] understood the presentation I just made... we'd have no problem... this business is unbelievably competitive." But Gates was completely wrong when he forecast that "this antitrust thing will blow over". ® Complete Register trial coverage
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