Today we’re going to cover the software that would become Microsoft Office.
Microsoft Office was announced at COMDEX in 1988. The Suite contained Word, Excel, and PowerPoint. These are still the core applications included in Microsoft Office. But the history of Office didn’t start there.
Many of the innovations we use today began life at Xerox. And Word is no different. Microsoft Word began life as as Multi-Tool Word in 1981, when Charles Simonyi was hired away from Xerox PARC where he had worked on one of the earlier word processors, Bravo.
He brought in Richard Brodie, and by 1983, they would release it for DOS, simplifying the name to just Microsoft Word. They would port it to the Mac in 1985, shortly after the release of the iconic 1984 Macintosh. Being way more feature-rich than MacWrite, it was an instant success. 2.0 would come along in 1987, and they would be up to 5 by 1992. But Word for Windows came along in 1989, when Windows 3.0 dropped. So Word went from DOS to Mac to Windows.
Excel has a similar history. It began life as Multiplan in 1982 though. At the time, it was popular on CP/M and DOS but when Lotus 1-2-3 came along, it knocked everything out of the hearts and minds of users and Microsoft regrouped. Doug Klunder would be the Excel lead developer and Jabe Blumenthal would act as program manager. They would meet with Bill Gates and Simonyi and hammer out the look and feel and released Excel for the Mac in 1985. And Excel came to Windows in 1987. By Excel 5 in 1993, Microsoft would completely taken the spreadsheet market and suddenly Visual Basic for Applications (VBA) would play a huge role in automating tasks. Regrettably, then came macro viruses, but for more on those check out the episode on viruses. In fact, along the way, Microsoft would pick up a ton of talented developers including Bob Frankton a co-creator of the original spreadsheet, VisiCalc.
Powerpoint was an acquisition. It began life as Presenter at Forethought, a startup, in 1983. And Robert Gaskins, a former research manager from Bell Norther Research, would be brought in to get the product running on Windows 1. It would become PowerPoint when it was released for the Mac in 1987 and was wildly successful, selling out all of the copies from the first run.
But then Jeff Raikes from Microsoft started getting ready to build a new presentation tool. Bill Gates had initially thought it was a bad idea but eventually gave Raikes the go-ahead to buy Forethought and Microsoft PowerPoint was born.
And that catches up to that fateful day in 1988 when Bill Gates announced Office at COMDEX in Las Vegas, which at the time was a huge conference.
Then came the Internet. Microsoft Mail was released for the Mac in 1988 and bundled with Windows from 1991 and on. Microsoft also released a tool called Inbox. But then came Exchange, expanding beyond mail and into contacts, calendars, and eventually much more. Mail was really basic and for Exchange, Microsoft released Outlook, which was added to Office 97 and an installer was bundled with Windows Exchange Server.
Office Professional in that era included a database utility called Access. We’ve always had databases. But desktop databases had been dominated by Borland’s dBase and FoxPro up until 1992 when Microsoft Access began to chip away at their marketshare. Microsoft had been trying to get into that market since the mid-90s with R:Base and Omega, but when Access 2 dropped in 1994, people started to take notice and by the release of Office 95 Professional it could be purchased as part of a suite and integrated cleanly. I can still remember those mdb files and setting up data access objects and later ActiveX controls!
So the core Office components came together in 1988 and by 1995 the Office Suite was the dominant productivity suite on the market. It got better in 97. Except The Office Assistant, designed by Kevan Atteberry and lovingly referred to as Clippy. By 2000 Office became the de facto standard. Everything else had to integrate with Office. That continued in the major 2003 and 2007 releases. And the products just iterated to become better and better software.
And they continue to do that. But another major shift was on the way. A response to Google Apps, which had been released in 2006. The cloud was becoming a thing. And so Office 365 went into beta in 2010 and was launched in 2011. It includes the original suite, OneDrive, SharePoint, Teams for chatting with coworkers, Yammer for social networking, Skype for Business (although video can now be done in Teams), Outlook and Outlook online, and Publisher. As well as Publisher, InfoPath, and Access for Windows.
This Software + Services approach turned out to be a master-stroke. Microsoft was able to finally raise prices and earned well over a 10% boost to the Office segment in just a few years. The pricing for subscriptions over the term of what would have been a perpetual license was often 30% more. Yet, the Office 365 subscriptions kept getting more and more cool stuff. And by 2017 the subscriptions captured more revenue than the perpetual licenses. And a number of other services can be included with Office 365.
Another huge impact is the rapid disappearing act of on premises Exchange servers. Once upon a time small businesses would have an Exchange server and then as they grew, move that to a colocation facility, hire MCSE engineers (like me) to run them, and have an amplified cost increase in dealing with providing groupware. Moving that to Microsoft means that Microsoft can charge more, and the customer can get a net savings, even though the subscriptions cost more - because they don’t have to pay people to run those servers. OneDrive moves files off old filers, etc.
And the Office apps provided aren’t just for Windows and Mac. Pocket Office would come in 1996, for Windows CE. Microsoft would have Office apps for all of their mobile operating systems. And in 2009 we would get Office for Symbian. And then for iPhone in 2013 and iPad in 2014. Then for Android in 2015.
Today over 1 and a quarter billion people use Microsoft Office. In fact, not a lot of people have *not* used Office. Microsoft has undergone a resurgence in recent years and is more nimble and friendly than ever before. Many of the people that created these tools are still at Microsoft. Simonyi left Microsoft for a time. But they ended up buying his company later. During what we now refer to as the “lost decade” at Microsoft, I would always think of these humans. Microsoft would get dragged through the mud for this or that. But the engineers kept making software. And I’m really glad to see them back making world class APIs that do what we need them to do. And building good software on top of that.
But most importantly, they set the standard for what a word processor, spreadsheet, and presentation tool would look like for a generation. And the ubiquity the software obtained allowed for massive leaps in adoption and innovation. Until it didn’t. That’s when Google Apps came along, giving Microsoft a kick in the keister to put up or shut up. And boy did Microsoft answer.
So thank you to all of them. I probably never would have written my first book without their contributions to computing. And thank you listener, for tuning in, to this episode of the history of computing podcast. We are so lucky to have you. Have a great day.
Welcome to the History of Computing Podcast, where we explore the history of information technology. Because understanding the past prepares us to innovate the future! Today we’re going to look at one of the more underwhelming operating systems released: Windows 1.0. Doug Englebart released the NLS, or oN-Line System in 1968. It was expensive to build, practically impossible to replicate, and was only made possible by NASA and ARPA grants. But it introduced the world to the computer science research community to what would be modern video monitors, windowing systems, hypertext, and the mouse. Modern iterations of these are still with us today, as is a much more matured desktop metaphor. Some of his research team ended up at Xerox PARC and the Xerox Alto was released in 1973, building on many of the concepts and continuing to improve upon them. They sold about 2,000 Altos for around $32,000. As the components came down in price, Xerox tried to go a bit more mass market with the Xerox Star in 1981. They sold about 25,000 for about half the price. The windowing graphics got better, the number of users were growing, the number of developers were growing, and new options for components were showing up all over the place. Given that Xerox was a printing company, the desktop metaphor continued to evolve. Apple released the Lisa in 1983. They sold 10,000 for about $10,000. Again, the windowing system and desktop metaphor continued on and Apple quickly released the iconic Mac shortly thereafter, introducing much better windowing and a fully matured desktop metaphor, becoming the first computer considered mass market that was shipped with a graphical user interface. It was revolutionary and they sold 280,000 in the first year. The proliferation of computers in our daily lives and the impact on the economy was ready for the j-curve. And while IBM had shown up to compete in the PC market, they had just been leapfrogged by Apple. Jobs would be forced out of Apple the following year, though. By 1985, Microsoft had been making software for a long time. They had started out with BASIC for the Altair and had diversified, bringing BASIC to the Mac and releasing a DOS that could run on a number of platforms. And like many of those early software companies, it could have ended there. In a masterful stroke of business, Bill Gates ended up with their software on the IBM PCs that Apple had just basically made antiques - and they’d made plenty of cash off of doing so. But then Gates sees Visi On at COMDEX and it’s not surprise that the Microsoft version of a graphical user interface would look a bit like Visi, a bit like what Microsoft had seen from Xerox PARC on a visit in 1983, and of course, with elements that were brought in from the excellent work the original Mac team had made. And of course, not to take anything away from early Microsoft developers, they added many of their own innovations as well. Ultimately though, it was a 16-bit shell that allowed for multi-tasking and sat on top of the Microsoft DOS. Something that would continue on until the NT lineage of operating systems fully supplanted the original Windows line, which ended with Millineum Edition. Windows 1.0 was definitely a first try. IBM TopView had shipped that year as well. I’ve always considered it more of a windowing system, but it allowed multitasking and was object-oriented. It really looked more like a DOS menu system. But the Graphics Environment Manager or GEM had direct connections to Xerox PARC through Lee Lorenzen. It’s hard to imagine but at the time CP/M had been the dominant operating system and so GEM could sit on top of it or MS-DOS and was mostly found on Atari computers. That first public release was actually 1.01 and 1.02 would come 6 months later, adding internationalization with 1.03 continuing that trend. 1.04 would come in 1987 adding support for Via graphics and a PS/2 mouse. Windows 1 came with many of the same programs other vendors supplied, including a calculator, a clipboard viewer, a calendar, a pad for writing that still exists called Notepad, a painting tool, and a game that went by its original name of Reversi, but which we now call Othello. One important concept is that Windows was object-oriented. As with any large software project, it wouldn’t have been able to last as long as it did if it hadn’t of been. One simplistic explanation for this paradigm is that it had an API and there was a front-end that talked to the kernel through those APIs. Microsoft hadn’t been first to the party and when they got to the party they certainly weren’t the prettiest. But because the Mac OS wasn’t just a front-end that made calls to the back-end, Apple would be slow to add multi-tasking support, which came in their OS 5, in 1987. And they would be slow to adopt new technology thereafter, having to bring Steve Jobs back to Apple because they had no operating system of the future, after failed projects to build one. Windows 1.0 had executable files (or exe files) that could only be run in the Windowing system. It had virtual memory. It had device drivers so developers could write and compile binary programs that could communicate with the OS APIs, including with device drivers. One big difference - Bill Atkinson and Andy Hertzfeld spent a lot of time on frame buffers and moving pixels so they could have overlapping windows. The way Windows handled how a window appeared were in .ini (pronounced like any) files and that kind of thing couldn’t be done in a window manager without clipping, or leaving artifacts behind. And so it was that, by the time I was in college, I was taught by a professor that Microsoft had stolen the GUI concept from Apple. But it was an evolution. Sure, Apple took it to the masses but before that, Xerox had borrowed parts from NLS and NLS had borrowed pointing devices from Whirlwind. And between Xerox and Microsoft, there had been IBM and GEM. Each evolved and added their own innovations. In fact, many of the actual developers hopped from company to company, spreading ideas and philosophies as they went. But Windows had shipped. And when Jobs called Bill Gates down to Cupertino, shouting that Gates had ripped off Apple, Gates responded with one of my favorite quotes in the history of computing: "I think it's more like we both had this rich neighbor named Xerox and I broke into his house to steal the TV set and found out that you had already stolen it." The thing I’ve always thought was missing from that Bill Gates quote is that Xerox had a rich neighbor they stole the TV from first, called ARPA. And the US Government was cool with it - one of the main drivers of decades of crazy levels of prosperity filling their coffers with tax revenues. And so, the next version of Windows, Windows 2.0 would come in 1987. But Windows 1.0 would be supported by Microsoft for 16 years. No other operating system has been officially supported for so long. And by 1988 it was clear that Microsoft was going to win this fight. Apple filed a lawsuit claiming that Microsoft had borrowed a bit too much of their GUI. Apple had licensed some of the GUI elements to Microsoft and Apple identified over 200 things, some big, like title bars, that made up a copyrightable work. That desktop metaphor that Susan Kare and others on the original Mac team had painstakingly developed. Well, turns out that they live on in every OS because Judge Vaughn Walker on the Ninth Circuit threw out the lawsuit. And Microsoft would end up releasing Windows 3 in 1990, shipping on practically every PC built since. And so I’ll leave this story here. But we’ll do a dedicated episode for Windows 3 because it was that important. Thank you to all of the innovators who brought these tools to market and ultimately made our lives better. Each left their mark with increasingly small and useful enhancements to the original. We owe them so much no matter the platform we prefer. And thank you, listeners, for tuning in for this episode of the History of Computing Podcast. We are so lucky to have you.
Welcome to the History of Computing Podcast, where we explore the history of information technology. Because by understanding the past prepares us to innovate the future! Today we’re going to look at one of the more underwhelming operating systems released: Windows 1.0. In our previous episode, we covered Windows 1.0. Released in 1985, it was cute. Windows 2 came in 1987 and then Windows 3 came in 1990. While a war of GUIs had been predicted, it was clear by 1990 that Microsoft was winning this war. Windows 3.0 sold 10 million licenses. It was 5 megabytes fully installed and came on floppies. The crazy thing about Windows 3 is that it wasn’t really supposed to happen. IBM had emerged as a juggernaut in the PC industry, largely on the back of Microsoft DOS. Windows 1 and 2 were fine, but IBM seeing that Microsoft was getting too powerful would not run it on their computers. Instead, they began work on a new operating system called OS/2, which was initially released in 1987. But David Weise from the Windows team at Microsoft wanted to reboot the Windows project. He brought in Murray Sargent and the two started work in 1988. They added a debugger, Microsoft Word, Microsoft Excel, and Microsoft PowerPoint, and I’m pretty sure everyone knew they were on to something big. IBM found out and Microsoft placated them by saying it would kill Windows after they spent all this money on it. You could tell with the way they upgraded the UI, with how they made memory work so much better, and with the massive improvements to multitasking. Lies. They added File Manager, which would later evolve into File Explorer. They added the Control Panel which lives on to the modern era of Windows and they made it look more like the one in the Mac OS at the time. They added the Program Manager (or progman.exe), parts of which would go on to Windows Explorer and other parts which would form the Start Menu in the future. But it survived until XP Service Pack 2. They brought us up to 16 simultaneous colors and added support for graphics cards that could give us 256 colors. Pain was upgraded to Painbrush and they outsourced some of the graphics for the famed Microsoft Solitaire to Susan Kare. They also added macros using a program called Recorder, which Apple released the year before with Macro Maker. They raised the price from $100 to $149.95. And they sold 4 million copies in the first year, a huge success at the time. They added a protected mode for applications, which had supposedly been a huge reason IBM insisted on working on OS/2. One result of all of this was that IBM and Microsoft would stop developing together and Microsoft would release their branch, then called Windows NT, in 1991. NT had a new 32-bit API. The next year they would release Windows 3.1 and Windows for Workgroups 3.1, which would sell another 3 million copies. This was the first time I took Windows seriously and it was a great release. They replaced Reverse with the now-iconic Minesweeper. They added menuing customization. They removed Real Mode. They added support to launch programs using command.com. They brought in TrueType fonts and added Arial, Courier New, and the Times New Roman fonts. They added multimedia support. And amongst the most important additions, they added the Windows Registry, which still lives on today. That was faster that combing through a lot of .ini files for settings. The Workgroups version also added SMB file sharing and supported NetBIOS and IPX networking. The age of the Local Area Network, or LAN, was upon us. You could even install Winsock to get the weird TCP/IP protocol to work on Windows. Oh and remember that 32-bit API, you could install the Win32 add-on to get access to that. And because the browser wars would be starting up, by 1995 you could install Internet Explorer on 3.1. I remember 3.11 machines in the labs I managed in college and having to go computer to computer installing the browser on each. And installing Mosaic on the Macs. And later installing Netscape on both. I seem to remember that we had a few machines that ran Windows on top of CP/M successor Dr DOS. Nothing ever seemed to work right for them, especially the Internets. So… Where am I going with this episode? Windows 3 set Microsoft up to finally destroy CP/M, protect their market share from Microsoft and effectively take over the operating system, allowing them to focus on adjacencies like Internet and productivity tools. This ultimately made Bill Gates the richest man in business and set up a massive ride in personal computing. But by the time Windows 95 was announced, enough demand had been generated to sell 40 million copies. Compaq, Dell, Gateway, HP, and many others had cannibalized the IBM desktop business. Intel had AMD nipping at their heels. Mother board, power supply, and other components had become commodities. But somehow, Microsoft had gone from being the cutesy little maker of BASIC to owning the market share for Operating systems with NT, Windows 95, 98, Millenium, 2000, XP, 7, 8, 10, and it wasn’t until Google made Android and ChromeOS. They did it, not because they were technologically the best solution available. Although arguably the APIs in early Windows were better than any other available solution. And developing Windows NT alongside 95 and on once they saw there would be a need for a future OS was a master-stroke. There was a lot of subterfuge and guile. And there were a lot of people burned during the development but there’s a distinct chance that the dominance of a single operating system really gave the humans the ability to focus on a single OS to care about and an explosion in the number of software titles. Once that became a problem, and was stifling innovation, Steve Jobs was back at Apple, Android was on the rise, and Linux was always an alternative for the hacker-types and given a good market potential it’s likely that someone could have built a great windowing system on top of it. Oh wait, they did. Many times. So whether we’re Apple die-hards, Linux blow-hards, crusty old Unix grey beards, or maybe hanging on to our silly CP/M machines to write scripts on, we still owe Microsoft a big thanks. Without their innovations the business world might have been fragmented so much on the operating system side that we wouldn’t have gotten the productivity levels we needed out of apps. And so Windows 95 replaced Windows 3, and Windows 3 rode off into the sunset. But not before leaving behind a legacy of the first truly dominant OS. Thanks for everything, Microsoft, the good and the bad. And thanks to you, sweet listeners. It’s been a blast. You’re the best. Unlike Windows 1. Till next time, have a great day!
Welcome to the History of Computing Podcast, where we explore the history of information technology. Because understanding the past prepares us for the innovations of the future! Todays episode is going to be just a little bit unique. Or not unique as the case may be. Bill Gates sent a very important memo on May 26th, 1995. It’s so important because of how well it foreshadows what was about to happen with this weird thing called the Internet. So we’re going to simply provide the unaltered transcript and if you dig it, read a book or two of his. He is a surprisingly good writer. To: Executive Staff and direct reports From: Bill Gates Date: May 26, 1995 The Internet Tidal Wave Our vision for the last 20 years can be summarized in a succinct way. We saw that exponential improvements in computer capabilities would make great software quite valuable. Our response was to build an organization to deliver the best software products. In the next 20 years the improvement in computer power will be outpaced by the exponential improvements in communications networks. The combination of these elements will have a fundamental impact on work, learning and play. Great software products will be crucial to delivering the benefits of these advances. Both the variety and volume of the software will increase. Most users of communications have not yet seen the price of communications come down significantly. Cable and phone networks are still depreciating networks built with old technology. Universal service monopolies and other government involvement around the world have kept communications costs high. Private networks and the Internet which are built using state of the art equipment have been the primary beneficiaries of the improved communications technology. The PC is just now starting to create additional demand that will drive a new wave of investment. A combination of expanded access to the Internet, ISDN, new broadband networks justified by video based applications and interconnections between each of these will bring low cost communication to most businesses and homes within the next decade. The Internet is at the forefront of all of this and developments on the Internet over the next several years will set the course of our industry for a long time to come. Perhaps you have already seen memos from me or others here about the importance of the Internet. I have gone through several stages of increasing my views of its importance. Now I assign the Internet the highest level of importance. In this memo I want to make clear that our focus on the Internet is crucial to every part of our business. The Internet is the most important single development to come along since the IBM PC was introduced in 1981. It is even more important than the arrival of the graphical user interface (GUI). The PC analogy is apt for many reasons. The PC wasn't perfect. Aspects of the PC were arbitrary or even poor. However a phenomena grew up around the IBM PC that made it a key element of everything that would happen for the next 15 years. Companies that tried to fight the PC standard often had good reasons for doing so but they failed because the phenomena overcame any weaknesses that resisters identified. The Internet Today The Internet's unique position arises from a number of elements. TCP/IP protocols that define its transport level support distributed computing and scale incredibly well. The Internet Engineering Task Force (IETF) has defined an evolutionary path that will avoid running into future problems even as eventually everyone on the planet connects up. The HTTP protocols that define HTML Web browsing are extremely simple and have allowed servers to handle incredible traffic reasonably well. All of the predictions about hypertext - made decades ago by pioneers like Ted Nelson - are coming true on the Web. Although other protocols on the Internet will continue to be used (FTP, Gopher, IRC, Telnet, SMTP, NNTP). HTML with extensions will be the standard that defines how information will be presented. Various extensions to HTML, including content enhancements like tables, and functionality enhancements like secure transactions, will be widely adopted in the near future. There will also be enhanced 3D presentations providing for virtual reality type shopping and socialization. Another unique aspect of the Internet is that because it buys communications lines on a commodity bid basis and because it is growing so fast, it is the only "public" network whose economics reflect the latest advances in communications technology. The price paid for corporations to connect to the Internet is determined by the size of your "on-ramp" to the Internet and not by how much you actually use your connection. Usage isn't even metered. It doesn't matter if you connect nearby or half way around the globe. This makes the marginal cost of extra usage essentially zero encouraging heavy usage. Most important is that the Internet has bootstrapped itself as a place to publish content. It has enough users that it is benefiting from the positive feedback loop of the more users it gets, the more content it gets, and the more content it gets, the more users it gets. I encourage everyone on the executive staff and their direct reports to use the Internet. I've attached an appendix, which Brian Flemming helped me pull together that shows some hot sites to try out. You can do this by either using the .HTM enclosure with any Internet browser or, if you have Word set up properly, you can navigate right from within this document. Of particular interest are the sites such as "YAHOO" which provide subject catalogs and searching. Also of interest are the ways our competitors are using their Websites to present their products. I think SUN, Netscape and Lotus do some things very well. Amazingly it is easier to find information on the Web than it is to find information on the Microsoft Corporate Network. This inversion where a public network solves a problem better than a private network is quite stunning. This inversion points out an opportunity for us in the corporate market. An important goal for the Office and Systems products is to focus on how our customers can create and publish information on their LANs. All work we do here can be leveraged into the HTTP/Web world. The strength of the Office and Windows businesses today gives us a chance to superset the Web. One critical issue is runtime/browser size and performance. Only when our Office - Windows solution has comparable performance to the Web will our extensions be worthwhile. I view this as the most important element of Office 96 and the next major release of Windows. One technical challenge facing the Internet is how to handle "real-time" content - specifically audio and video. The underlying technology of the Internet is a packet network which does not guarantee that data will move from one point to another at a guaranteed rate. The congestion on the network determines how quickly packets are sent. Audio can be delivered on the Internet today using several approaches. The classic approach is to simply transmit the audio file in its entirety before it is played. A second approach is to send enough of it to be fairly sure that you can keeping playing without having to pause. This is the approach Progressive Networks Real Audio (Rob Glaser's new company) uses. Three companies (Internet Voice Chat, Vocaltec, and Netphone) allow phone conversations across the Internet but the quality is worse than a normal phone call. For video, a protocol called CU-SeeMe from Cornell allows for video conferencing. It simply delivers as many frames per second as it sees the current network congestion can handle, so even at low resolution it is quite jerky. All of these "hacks" to provide video and audio will improve because the Internet will get faster and also because the software will improve. At some point in the next three years, protocol enhancements taking advantage of the ATM backbone being used for most of the Internet will provide "quality of service guarantees". This is a guarantee by every switch between you and your destination that enough bandwidth had been reserved to make sure you get your data as fast as you need it. Extensions to IP have already been proposed. This might be an opportunity for us to take the lead working with UUNET and others. Only with this improvement and an incredible amount of additional bandwidth and local connections will the Internet infrastructure deliver all of the promises of the full blown Information Highway. However, it is in the process of happening and all we can do is get involved and take advantage. I think that virtually every PC will be used to connect to the Internet and that the Internet will help keep PC purchasing very healthy for many years to come. PCs will connect to the Internet a variety of ways. A normal phone call using a 14.4k or 28.8k baud modem will be the most popular in the near future. An ISDN connection at 128kb will be very attractive as the connection costs from the RBOCs and the modem costs come down. I expect an explosion in ISDN usage for both Internet connection and point-to-point connections. Point-to-point allows for low latency which is very helpful for interactive games. ISDN point-to-point allows for simultaneous voice data which is a very attractive feature for sharing information. Example scenarios include planning a trip, discussing a contract, discussing a financial transaction like a bill or a purchase or taxes or getting support questions about your PC answered. Eventually you will be able to find the name of someone or a service you want to connect to on the Internet and rerouting your call to temporarily be a point-to-point connection will happen automatically. For example when you are browsing travel possibilities if you want to talk to someone with expertise on the area you are considering, you simply click on a button and the request will be sent to a server that keeps a list of available agents who can be working anywhere they like as long as they have a PC with ISDN. You will be reconnected and the agent will get all of the context of what you are looking at and your previous history of travel if the agency has a database. The reconnection approach will not be necessary once the network has quality of service guarantees. Another way to connect a PC will be to use a cable-modem that uses the coaxial cable normally used for analog TV transmission. Early cable systems will essentially turn the coax into an Ethernet so that everyone in the same neighborhood will share a LAN. The most difficult problem for cable systems is sending data from the PC back up the cable system (the "back channel"). Some cable companies will promote an approach where the cable is used to send data to the PC (the "forward channel") and a phone connection is used for the back channel. The data rate of the forward channel on a cable system should be better than ISDN. Eventually the cable operators will have to do a full upgrade to an ATM-based system using either all fiber or a combination of fiber and Coax - however, when the cable or phone companies will make this huge investment is completely unclear at this point. If these buildouts happen soon, then there will be a loose relationship between the Internet and these broadband systems. If they don't happen for some time, then these broadband systems could be an extension of the Internet with very few new standards to be set. I think the second scenario is very likely. Three of the biggest developments in the last five years have been the growth in CD titles, the growth in On-line usage, and the growth in the Internet. Each of these had to establish critical mass on their own. Now we see that these three are strongly related to each other and as they come together they will accelerate in popularity. The On-line services business and the Internet have merged. What I mean by this is that every On-line service has to simply be a place on the Internet with extra value added. MSN is not competing with the Internet although we will have to explain to content publishers and users why they should use MSN instead of just setting up their own Web server. We don't have a clear enough answer to this question today. For users who connect to the Internet some way other than paying us for the connection we will have to make MSN very, very inexpensive - perhaps free. The amount of free information available today on the Internet is quite amazing. Although there is room to use brand names and quality to differentiate from free content, this will not be easy and it puts a lot of pressure to figure out how to get advertiser funding. Even the CD-ROM business will be dramatically affected by the Internet. Encyclopedia Brittanica is offering their content on a subscription basis. Cinemania type information for all the latest movies is available for free on the Web including theater information and Quicktime movie trailers. Competition Our traditional competitors are just getting involved with the Internet. Novell is surprisingly absent given the importance of networking to their position however Frankenberg recognizes its importance and is driving them in that direction. Novell has recognized that a key missing element of the Internet is a good directory service. They are working with AT&T and other phone companies to use the Netware Directory Service to fill this role. This represents a major threat to us. Lotus is already shipping the Internotes Web Publisher which replicates Notes databases into HTML. Notes V4 includes secure Internet browsing in its server and client. IBM includes Internet connection through its network in OS/2 and promotes that as a key feature. Some competitors have a much deeper involvement in the Internet than Microsoft. All UNIX vendors are benefiting from the Internet since the default server is still a UNIX box and not Windows NT, particularly for high end demands, SUN has exploited this quite effectively. Many Web sites, including Paul Allen's ESPNET, put a SUN logo and link at the bottom of their home page in return for low cost hardware. Several universities have "Sunsites" named because they use donated SUN hardware. SUN's Java project involves turning an Internet client into a programmable framework. SUN is very involved in evolving the Internet to stay away from Microsoft. On the SUN Homepage you can find an interview of Scott McNealy by John Gage where Scott explains that if customers decide to give one product a high market share (Windows) that is not capitalism. SUN is promoting Sun Screen and HotJava with aggressive business ads promising that they will help companies make money. SGI has also been advertising their leadership on the Internet including servers and authoring tools. Their ads are very business focused. They are backing the 3D image standard, VRML, which will allow the Internet to support virtual reality type shopping, gaming, and socializing. Browsing the Web, you find almost no Microsoft file formats. After 10 hours of browsing, I had not seen a single Word .DOC, AVI file, Windows .EXE (other than content viewers), or other Microsoft file format. I did see a great number of Quicktime files. All of the movie studios use them to offer film trailers. Apple benefited by having TCP support before we did and is working hard to build a browser built from OpenDoc components. Apple will push for OpenDoc protocols to be used on the Internet, and is already offering good server configurations. Apple's strength in education gives them a much stronger presence on the Internet than their general market share would suggest. Another popular file format on the Internet is PDF, the short name for Adobe Acrobat files. Even the IRS offers tax forms in PDF format. The limitations of HTML make it impossible to create forms or other documents with rich layout and PDF has become the standard alternative. For now, Acrobat files are really only useful if you print them out, but Adobe is investing heavily in this technology and we may see this change soon. Acrobat and Quicktime are popular on the network because they are cross platform and the readers are free. Once a format gets established it is extremely difficult for another format to come along and even become equally popular. A new competitor "born" on the Internet is Netscape. Their browser is dominant, with 70% usage share, allowing them to determine which network extensions will catch on. They are pursuing a multi-platform strategy where they move the key API into the client to commoditize the underlying operating system. They have attracted a number of public network operators to use their platform to offer information and directory services. We have to match and beat their offerings including working with MCI, newspapers, and other who are considering their products. One scary possibility being discussed by Internet fans is whether they should get together and create something far less expensive than a PC which is powerful enough for Web browsing. This new platform would optimize for the datatypes on the Web. Gordon Bell and others approached Intel on this and decided Intel didn't care about a low cost device so they started suggesting that General Magic or another operating system with a non-Intel chip is the best solution. Next Steps In highlighting the importance of the Internet to our future I don't want to suggest that I am alone in seeing this. There is excellent work going on in many product groups. Over the last year, a number of people have championed embracing TCP/IP, hyperlinking, HTML, and building client, tools and servers that compete on the Internet. However, we still have a lot to do. I want every product plan to try and go overboard on Internet features. One element that will be crucial is coordinating our various activities. The challenge/opportunity of the Internet is a key reason behind the recent organization. Paul Maritz will lead the Platform group to define an integrated strategy that makes it clear that Windows machines are the best choice for the Internet. This will protect and grow our Windows asset. Nathan and Pete will lead the Applications and Content group to figure out how to make money providing applications and content for the Internet. This will protect our Office asset and grow our Office, Consumer, and MSN businesses. The work that was done in the Advanced Technology group will be extremely important as it is integrated in with our products. We must also invest in the Microsoft home page, so it will be clear how to find out about our various products. Today it's quite random what is on the home page and the quality of information is very low. If you look up speeches by me all you find are a few speeches over a year old. I believe the Internet will become our most important promotional vehicle and paying people to include links to our home pages will be a worthwhile way to spend advertising dollars. First we need to make sure that great information is available. One example is the demonstration files (Screencam format) that Lotus includes on all of their products organized by feature. I think a measurable part of our ad budget should focus on the Internet. Any information we create - white papers, data sheets, etc., should all be done on our Internet server. ITG needs to take a hard look at whether we should drop our leasing arrangements for data lines to some countries and simply rely on the Internet. The actions required for the Windows platform are quite broad. Pual Maritz is having an Internet retreat in June which will focus on coordinating these activities. Some critical steps are the following: 1. Server. BSD is working on offering the best Internet server as an integrated package. We need to understand how to make NT boxes the highest performance HTTP servers. Perhaps we should have a project with Compaq or someone else to focus on this. Our initial server will have good performance because it uses kernel level code to blast out a file. We need a clear story on whether a high volume Web site can use NT or not becaues SUN is viewed as the primary choice. Our plans for security need to be strengthened. Other Backoffice pieces like SMS and SQL server also need to stay out in front in working with the Internet. We need to figure out how OFS can help perhaps by allowing pages to be stored as objects and having properties added. Perhaps OFS can help with the challenge of maintaining Web structures. We need to establish distributed OLE as the protocol for Internet programming. Our server offerings need to beat what Netscape is doing including billing and security support. There will be substantial demand for high performance transaction servers. We need to make the media server work across the Internet as soon as we can as new protocols are established. A major opportunity/challenge is directory. If the features required for Internet directory are not in Cairo or easily addable without a major release we will miss the window to become the world standard in directory with serious consequences. Lotus, Novell, and AT&T will be working together to try and establish the Internet directory. Actually getting the content for our directory and popularizing it could be done in the MSN group. 2. Client. First we need to offer a decent client (O'Hare) that exploits Windows 95 shortcuts. However this alone won't get people to switch away from Netscape. We need to figure out how to integrate Blackbird, and help browsing into our Internet client. We have made the decision to provide Blackbird capabilities openly rather than tie them to MSN. However, the process of getting the size, speed, and integration good enough for the market needs works and coordination. We need to figure out additional features that will allows us to get ahead with Windows customers. We need to move all of our Internet value added from the Plus pack into Windows 95 itself as soon as we possible can with a major goal to get OEMs shipping our browser preinstalled. This follows directly from the plan to integrate the MSN and Internet clients. Another place for integration is to eliminate today's Help and replace it with the format our browser accepts including exploiting our unique extensions so there is another reason to use our browser. We need to determine how many browsers we promote. Today we have O'Hare, Blackbird, SPAM MediaView, Word, PowerPoint, Symettry, Help and many others. Without unification we will lose to Netscape/HotJava. Over time the shell and the browser will converge and support hierarchical/list/query viewing as well as document with links viewing. The former is the structured approach and the later allows for richer presentation. We need to establish OLE protocols as the way rich documents are shared on the Internet. I am sure the OpenDoc consortium will try and block this. 3. File sharing/Window sharing/Multi-user. We need to give away client code that encourages Windows specific protocols to be used across the Internet. It should be very easy to set up a server for file sharing across the Internet. Our PictureTel screen sharing client allowing Window sharing should work easily across the Internet. We should also consider whether to do something with the Citrix code that allows you to become a Windows NT user across the Network. It is different from the PictureTel approach because it isn't peer to peer. Instead it allows you to be a remote user on a shared NT system. By giving away the client code to support all of these scenarios, we can start to show that a Windows machine on the Internet is more valuable than an artitrary machine on the net. We have immense leverage because our Client and Server API story is very strong. Using VB or VC to write Internet applications which have their UI remoted is a very powerful advantage for NT servers. 4. Forms/Languages. We need to make it very easy to design a form that presents itself as an HTML page. Today the Common Gateway Interface (CGI) is used on Web servers to give forms 'behavior' but its quite difficult to work with. BSD is defining a somewhat better approach they call BGI. However we need to integrate all of this with our Forms3 strategy and our languages. If we make it easy to associate controls with fields then we get leverage out of all of the work we are doing on data binding controls. Efforts like Frontier software's work and SUN's Java are a major challenge to us. We need to figure out when it makes sense to download control code to the client including a security approach to avoid this being a virus hole. 5. Search engines. This is related to the client/server strategies. Verity has done good work with Notes, Netscape, AT&T and many others to get them to adopt their scalable technology that can deal with large text databases with very large numbers of queries against them. We need to come up with a strategy to bring together Office, Mediaview, Help, Cairo, and MSN. Access and Fox do not support text indexing as part of their queries today which is a major hole. Only when we have an integrated strategy will we be able to determine if our in-house efforts are adequate or to what degree we need to work with outside companies like Verity. 6. Formats. We need to make sure we output information from all of our products in both vanilla HTML form and in the extended forms that we promote. For example, any database reports should be navigable as hypertext documents. We need to decide how we are going to compete with Acrobat and Quicktime since right now we aren't challenging them. It may be worth investing in optimizing our file formats for these scenarios. What is our competitor to Acrobat? It was supposed to be a coordination of extended metafiles and Word but these plans are inadequate. The format issue spans the Platform and Applications groups. 7. Tools. Our disparate tools efforts need to be brought together. Everything needs to focus on a single integrated development environment that is extensible in a object oriented fashion. Tools should be architected as extensions to this framework. This means one common approach to repository/projects/source control. It means one approach to forms design. The environment has to support sophisticated viewing options like timelines and the advanced features SoftImage requires. Our work has been separated by independent focus on on-line versus CD-ROM and structured display versus animated displays. There are difficult technical issues to resolve. If we start by looking at the runtime piece (browser) I think this will guide us towards the right solution with the tools. The actions required for the Applications and Content group are also quite broad. Some critical steps are the following: 1. Office. Allowing for collaboration across the Internet and allowing people to publish in our file formats for both Mac and Windows with free readers is very important. This won't happen without specific evangelization. DAD has written some good documents about Internet features. Word could lose out to focused Internet tools if it doesn't become faster and more WYSIWYG for HTML. There is a critical strategy issue of whether Word as a container is strict superset of our DataDoc containers allowing our Forms strategy to embrace Word fully. 2. MSN. The merger of the On-line business and Internet business creates a major challenge for MSN. It can't just be the place to find Microsoft information on the Internet. It has to have scale and reputation that it is the best way to take advantage of the Internet because of the value added. A lot of the content we have been attracting to MSN will be available in equal or better form on the Internet so we need to consider focusing on areas where we can provide something that will go beyond what the Internet will offer over the next few years. Our plan to promote Blackbird broadly takes away one element that would have been unique to MSN. We need to strengthen the relationship between MSN and Exchange/Cairo for mail, security and directory. We need to determine a set of services that MSN leads in - money transfer, directory, and search engines. Our high-end server offerings may require a specific relationship with MSN. 3. Consumer. Consumer has done a lot of thinking about the use of on-line for its various titles. On-line is great for annuity revenue and eliminating the problems of limited shelf-space. However, it also lowers the barriers to entry and allows for an immense amount of free information. Unfortunately today an MSN user has to download a huge browser for every CD title making it more of a demo capability than something a lot of people will adopt. The Internet will assure a large audience for a broad range of titles. However the challenge of becoming a leader in any subject area in terms of quality, depth, and price will be far more brutal than today's CD market. For each category we are in we will have to decide if we can be #1 or #2 in that category or get out. A number of competitors will have natural advantages because of their non-electronic activities. 4. Broadband media applications. With the significant time before widescale iTV deployment we need to look hard at which applications can be delivered in an ISDN/Internet environment or in a Satellite PC environment. We need a strategy for big areas like directory, news, and shopping. We need to decide how to persue local information. The Cityscape project has a lot of promise but only with the right partners. 5. Electronic commerce. Key elements of electronic commerce including security and billing need to be integrated into our platform strategy. On-line allows us to take a new approach that should allow us to compete with Intuit and others. We need to think creatively about how to use the Internet/on-line world to enhance Money. Perhaps our Automatic teller machine project should be revived. Perhaps it makes sense to do a tax business that only operates on on-line. Perhaps we can establish the lowest cost way for people to do electronic bill paying. Perhaps we can team up with Quickbook competitors to provide integrated on-line offerings. Intuit has made a lot of progress in overseas markets during the last six months. All the financial institutions will find it very easy to buy the best Internet technology tools from us and others and get into this world without much technical expertise. The Future We enter this new era with some considerable strengths. Among them are our people and the broad acceptance of Windows and Office. I believe the work that has been done in Consumer, Cairo, Advanced Technology, MSN, and Research position us very well to lead. Our opportunity to take advantage of these investments is coming faster than I would have predicted. The electronic world requires all of the directory, security, linguistic and other technologies we have worked on. It requires us to do even more in these ares than we planning to. There will be a lot of uncertainty as we first embrace the Internet and then extend it. Since the Internet is changing so rapidly we will have to revise our strategies from time to time and have better inter-group communication than ever before. Our products will not be the only things changing. The way we distribute information and software as well as the way we communicate with and support customers will be changing. We have an opportunity to do a lot more with our resources. Information will be disseminated efficiently between us and our customers with less chance that the press miscommunicates our plans. Customers will come to our "home page" in unbelievable numbers and find out everything we want them to know. The next few years are going to be very exciting as we tackle these challenges are opportunities. The Internet is a tidal wave. It changes the rules. It is an incredible opportunity as well as incredible challenge I am looking forward to your input on how we can improve our strategy to continue our track record of incredible success. HyperLink Appendix Related reading, double click to open them On-line! (Microsoft LAN only, Internet Assistant is not required for this part): * "Gordon Bell on the Internet" email by Gordon Bell * "Affordable Computing: advertising subsidized hardware" by Nicholas Negroponie * "Brief Lecture Notes on VRML & Hot Java" email by William Barr * "Notes from a Lecture by Mark Andresson (Netscape)" email by William Barr * "Application Strategies for the World Wide Web" by Peter Pathe (Contains many more links!) Below is a hotlist of Internet Web sites you might find interesting. I've included it as an embedded .HTM file which should be readable by most Web Browsers. Double click it if you're using a Web Browser like O'Hare or Netscape. HotList.htm A second copy of these links is below as Word HTML links. To use these links, you must be running the World Internet Assistant, and be connected to the Web. Cool, Cool, Cool.. The Lycos Home Page Yahoo RealAudio Homepage HotWired - New Thinking for a New Medium Competitors Microsoft Corporation World-Wide-Web Server Welcome To Oracle Lotus on the Web Novell Inc. World Wide Web Home Page Symantec Corporation Home Page Borland Online Disney/Buena Vista Paramount Pictures Adobe Systems Incorporated Home Page MCI Sony Online Sports ESPNET SportsZone The Gate Cybersports Page The Sports Server Las Vegas Sports Page News CRAYON Mercury Center Home Page Travel/Entertainment ADDICTED TO NOISE CDnow The Internet Music Store Travel & Entertainment Network home page Virtual Tourist World Map C(?) Net Auto Dealernet Popular Mechanics
It's easy to think of Apple and Microsoft as bitter rivals, but that's not always the case. The two companies have a very complicated relationship, and a very long history. This connection goes all the way back to the 1970s and a product called Applesoft BASIC. It would become stock software on nearly every Apple II computer ever sold, it kept Apple competitive in the early home computer market, and it may have saved Microsoft from bankruptcy.
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Important dates in this episode:
1997: Bill Gates saves Apple from Bankruptcy
1976: Apple I hits shelves, Integer BASIC soon follows
1977: Apple II Released
1978: AppleSoft BASIC Ships
I recently got the chance to sit down and talk with Microsoft alumni Brad Chase. He was the product manager for Microsoft Works on the Macintosh, DOS 5, DOS 6, and the marketing lead for Windows 95 as well as much more. We talk about the Apple-Microsoft relationship, the groundbreaking launch of Windows 95, and what it takes to sell software.
Editing for this episode was handled by Franck, you can follow him on instagram: www.instagram.com/frc.audio/
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The IBM PC and MS-DOS, the iconic duo of the early 80s. The two are so interconnected that it's hard to mention one without the other. But in 1980 DOS wasn't IBM's first choice for their soon-to-be flagship hardware. IBM had wanted to license Gary Kildall's CP/M, but in a strange series of events the deal fell through. Legend states that Kildall lost the contract b was too busy flying his private plane to talk business with IBM, but is that true? Today we look at the development of CP/M, why it was a big deal, and why the PC ultimately shipped with Microsoft software.
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In this mini-episode we look at a strange event in Microsoft's early history and their first case of piracy. Along the way you will learn about the best advetrizing campaign in history: the MITS MOBILE Computer Caravan!
Important dates in this episode:
1976: 'Open Letter to Hobbyists' Written by Bill Gates
Today we are going to be traveling back to the late 1970s to take a look at the early days of the home computer. And specifically how Microsoft found a foothold at just the right time and place. And for Bill Gates and Paul Allen that would come in the form of BASIC.
Along the way we will cover the Altair 8800, vaporware, and how Bill Gates violated Harvard student conduct.
Important dates in this episode:
1974: Altari 8800 Released
1975: Microsoft BASIC Released
Microsoft went from a fledgeling purveyor of a BASIC for the Altair to a force to be reckoned with. The biggest growth hack was when they teamed up with IBM to usher in the rise of the personal computer. They released apps and an operating system and by licensing DOS to anyone (not just IBM) and then becoming the dominant OS they allowed clone makers to rise and thus broke the hold IBM had on the computing industry since the days the big 8 mainframe companies were referred to as “Snow White and the Seven Dwarfs.”
They were young and bold and grew fast. They were aggressive, taking on industry leaders in different segments, effectively putting CP/M out of business, taking out Lotus, VisiCalc, Novell, Netscape, `and many, many other companies.
Windows 95 and Microsoft Office helped the personal computer become ubiquitous in homes and offices. The team knew about the technical debt they were accruing in order to grow fast. So they began work on projects that would become Windows NT and that kernel would evolve into Windows 2000, phasing out the legacy operating systems. They released Windows Server, Microsoft Exchange, Flight Simulators, maps, and seemed for a time to be poised to take over the world. They even seemed to be about to conquer the weird new smart phone world.
And then something strange happened. They entered into what we can now call a lost decade. Actually there’s nothing strange about it. This happens to nearly every company.
Innovation dropped off. Releases of Windows got buggy. The market share of their mobile operating system fell away. Apple and Android basically took the market away entirely. They let Google take the search market and after they failed to buy Yahoo! they released an uninspired Bing. The MSN subscriptions that once competed with AOL fell away. Google Docs came and was a breath of fresh air. Windows Servers started moving into cloud solutions where Box or Dropbox were replacing filers and Sharepoint became a difficult story to tell.
They copied features from other companies. But were followers - not leaders. And the stock barely moved for a decade, while Apple more than doubled the market cap of Microsoft for a time. What exactly happened here? Some have blamed Steve Ballmer, who replaced Bill Gates who had led the company since 1975 and if we want to include Traf-O-Data - since 1972.
They grew fast and by Y2K there were memes about how rich Bill Gates was. Then a lot changed over the next decade. Windows XP was released in 2001, the same year the first Xbox was released. They launched the Windows Mobile operating system in 2003, planning to continue the whole “rule the operating system” approach. Vista comes along in 2007. Bill Gates retires in 2008. Later that year, Google launches Chrome - which would eat market share away from Microsoft over time. Windows 7 launches in 2009. Microsoft releases Bing in 2009 and Azure in 2010. The Windows phone comes in 2010 as well, and they would buy Skype for $8.5 billion dollars the next year. The tablet Microsoft Surface coming in 2012, the same year the iPad was released.
And yet, there were market forces operating to work against what Microsoft was doing. Google had come roaring out of the dot com bubble bursting and proved how money could be made with search. Yahoo! was slow to respond. As Google’s aspirations became clear by 2008, Ballmer moved to buy them for $20 billion eventually growing the bid to nearly $45 billion - a move that was thwarted but helped to take the attention of the Yahoo! team away from the idea of making money. That was the same year Android and Chrome was released. Meanwhile, Apple released the iPhone in 2007 and were shipping the 3G in 2008, taking the mobile market by storm. By 2010, slow sales of the Windows phone were already spelling the end for Ballmer.
Microsoft had launched Windows CE in 1996, held the smaller Handheld PC market for a time. They took over and owned the operating system market for personal computers and productivity software. They were able to seize a weakened and lumbering IBM to do so. And yet they turned into that lumbering juggernaut of a company. All those products and all the revenues being generated, Microsoft looked unstoppable by the end of the millennium. Then they got big. Like really big. And organizations can be big and stay lean - but they weren’t.
Leaders fought leaders, programmers fled, and the fiefdoms caused them to be slow to jump into new opportunities. Bill Gates had been an intense leader - but the Department of Justice filed an anti-trust case against Microsoft and between that and just managing hyper-growth along the way they lost a focus on customers and instead focused inward. And so by all accounts, the lost decade began in 2001. Vista was supposed to ship in 2003 but pushed all the way back to 2007. Bing was a dud, losing billions out of the gate. By 2011 Google released Chrome OS - an operating system that was basically a web browser bootstrapped on Linux and effectively what Netscape founder Marc Andreesen foreshadowed in a Time piece in the early days of the browser wars.
Kurt Eichenwald of Vanity Fair wrote an article called MICROSOFT’S LOST DECADE in 2012, looking at what led to the lost decade. He pointed out the arrogance and the products that, even though they were initially developed at Microsoft, would be launched by others first. It was Bill Gates who turned down releasing the ebook, which would evolve into the tablet. The article explained that moving timelines around pushed developing new products back in the list of priorities. The Windows and Office divisions were making so much money for the company that they had all the power to make the decisions - even when the industry was moving in another direction.
The original employees got rich when the company went public and much of the spunk left with them. The focus shifted to pushing up the stock price. Ballmer is infamously not a product guy and he became the president of the company in 1998 and moved to CEO in 2000. But Gates stayed on in product. As we see with companies when their stock price starts to fall, the finger pointing begins. Cost cutting begins. The more talented developers can work anywhere - and so companies like Amazon, Google, and Apple were able to fill their ranks with great developers.
When organizations in a larger organization argue, new bureaucracies get formed. Those slow things down by replacing common sense with process. That is good to a point. Like really good to a point. Measure twice, cut once. Maybe even measure three times and cut once. But software doesn’t get built by committees, it gets built by humans. The closer engineers are to humans the more empathy will go into the code. We can almost feel it when we use tools that developers don’t fully understand. And further, developers write less code when they’re in more meetings. Some are good but when there are tiers of supervisors and managers and directors and VPs and Jr and Sr of each, their need to justify their existence leads to more meetings.
The Vanity Fair piece also points out that times changed. He called the earlier employees “young hotshots from the 1980s” who by then were later career professionals and as personal computers became pervasive the way people use them changed. And a generation of people who grew up with computers now interacted with them differently. People were increasingly always online. Managers who don’t understand their users need to release control of products to those who do.
They made the Zune 5 years after the iPod was released and had lit a fire at Apple. Less than two months later, Apple released the iPhone and the Zune was dead in the water, never eclipsing over 5 percent of the market and finally being discontinued in 2012. Ballmer had predicted that all of these Apple products would fail and in a quote from a source in the Vanity Fair article, a former manager at Microsoft said “he is hopelessly out of touch with reality or not listening to the tech staff around him”.
One aspect the article doesn’t go into is the sheer number of products Microsoft was producing. They were competing with practically every big name in technology, from Apple to Oracle to Google to Facebook to Amazon to Salesforce. They’d gobbled up so many companies to compete in so many spaces that it was hard to say what Microsoft really was - and yet the Windows and Office divisions made the lions’ share of the money. They thought they needed to own every part of the ecosystem when Apple went a different route and opened a store to entice developers to go direct to market, making more margin with no acquisition cost to build a great ecosystem.
The Vanity Fair piece ends with a cue from the Steve Jobs biography and to sum it up, Jobs said that Microsoft ended up being run by sales people because they moved the revenue needle - just as he watched it happen with Sculley at Apple. Jobs went on to say Microsoft would continue the course as long as Ballmer was at the helm. Back when they couldn’t ship Vista they were a 60,000 person company. By 2011 when the Steve Jobs biography was published, they were at 90,000 and had just rebounded from layoffs.
By the end of 2012, the iPhone had overtaken Microsoft in sales. Steve Ballmer left as the CEO of Microsoft in 2014 and Satya Nadella replaces him. Under his leadership, half the company would be moved into research later that year. Nadella wrote a book about his experience turning things around called Hit Refresh. Just as the book Microsoft Rebooted told the story of how Ballmer was going to turn things around in 2004 - except Hit Refresh was actually a pretty good book.
And the things seemed to work. The stock price had risen a little in 2014 but since then it’s shot up six times what it was. And all of the pivots to a more cloud-oriented company and many other moves seem to have been started under Ballmer’s regime, just as the bloated company they became started under the Gates regime. Each arguably did what was needed at the time. Let’s not forget the dot com bubble burst at the beginning of the Ballmer era and he had the 2008 financial crises. There be dragons that are micro-economic forces outside anyones control.
But Nadella ran R&D and cloud offerings. He emphasized research - which means innovation. He changed the mission statement to “empower every person and every organization on the planet to achieve more.” He laid out a few strategies, to reinvent productivity and collaboration, power those with Microsoft’s cloud platform, and expand on Windows and gaming. And all of those things have been gangbusters ever since. They bought Mojang in 2014 and so are now the makers of Minecraft. They bought LinkedIn. They finally got Skype better integrated with the company so Teams could compete more effectively with Slack.
Here’s the thing. I knew a lot of people who worked, and many who still work at Microsoft during that Lost Decade. And I think every one of them is really just top-notch. Looking at things as they’re unfolding you just see a weekly “patch Tuesday” increment. Everyone wanted to innovate - wanted to be their best self. And across every company we look at in this podcast, nearly every one has had to go through a phase of a lost few years or lost decade. The ones who don’t pull through can never turn the tide on culture and innovation. The two are linked.
A bloated company with more layers of management inspires a sense of controlling managers who stifle innovation. At face value, the micro-aggressions seem plausible, especially to those younger in their career. We hear phrases like “we need to justify or analyze the market for each expense/initiative” and that’s true or you become a Xerox PARC or Digital Research where so many innovations never get to market effectively. We hear phrases like “we’re too big to do things like that any more” and yup, people running amuck can be dangerous - turns out move fast and break things doesn’t always work out.
We hear “that requires approval” or “I’m their bosses bosses boss” or “you need to be a team player and run this by other leaders” or “we need more process” or “we need a center of excellence for that because too many teams are doing their own thing” or “we need to have routine meetings about this” or “how does that connect to the corporate strategy” or “we’re a public company now so no” or “we don’t have the resources to think about moon shots” or “we need a new committee for that” or “who said you could do that” and all of these taken as isolated comments would be fine here or there. But the aggregate of so many micro-aggressions comes from a place of control, often stemming from fear of change or being left behind and they come at the cost of innovation.
Charles Simonyi didn’t leave Xerox PARC and go to Microsoft to write Microsoft Word to become a cog in a wheel that’s focused on revenue and not changing the world. Microsoft simply got out-innovated due to being crushed under the weight of too many layers of management and so overly exerting control over those capable of building cool stuff. I’ve watched those who stayed be allowed speak publicly again, engage with communities, take feedback, be humble, admit mistakes, and humanize the company. It’s a privilege to get to work with them and I’ve seen results like a change to a graphAPI endpoint one night when I needed a new piece of data.
They aren’t running amuck. They are precise, targeted, and allowed to do what needs to be done. And it’s amazing how a chief molds the way a senior leadership team acts and they mold the way directors direct and they mold the way managers manage and down the line. An aspect of culture is a mission - another is values - and another is behaviors, which make up the culture. And these days I gotta’ say I’m glad to have witnessed a turnaround like they’ve had and every time I talk to a leader or an individual contributor at Microsoft I’m glad to feel their culture coming through.
So here’s where I’d like to leave this. We can all help shape a great culture. Leaders aren’t the only ones who have an impact. We can all innovate. An innovative company isn’t one that builds a great innovative product (although that helps) but instead one who becomes an unstoppable force due to lots of small innovations at every level of the organization. Where are we allowing politics or a need for control and over-centralization stifle others? Let’s change that.