Bill Gate cont

Bill Gates

William H. Gates III and His Giant Bill Gates, cofounder of the Microsoft
corporation, holds 30.7 percent of its stock making him one of the richest
people in the United States. He was the marketing and sales strategist behind
many of Microsoft's software deals. Their software became the industry standard
in the early 1980s and has just increased in distribution as the company has
grown, so much that the Federal government is suggesting that Microsoft has
violated Sherman and Clayton antitrust acts.

Bill Gates' first interest in computers began at Lakeside, a private school in
Seattle that Gates attended. There he wrote his "first software program when I
was thirteen years old. It was for playing tic-tac-toe"(Gates 1). It was at
Lakeside that Gates met Paul Allen, who later became cofounder with Gates of
Microsoft. There they became friends and "began to mess around with the
computer"(Gates 2). Back in the sixties and early seventies computer time was
expensive. "This is what drove me to the commercial side of the software
business"(Gates 12). Gates, Allen and a few others from Lakeside got entry-level
software programming jobs. One of Gates early programs that he likes to brag
about was written at this time. It was a program that scheduled classes for
students. "I surreptitiously added a few instructions and found myself nearly
the only guy in a class full of girls"(Gates 12).

In 1972 Intel released their first microprocessor chip: the 8008. Gates
attempted to write a version of BASIC (Beginner's All-purpose Symbolic
Instruction Code) for the new Intel chip, but the chip did not contain enough
transistors to handle it. Gates and Allen found a way to use the 8008 and
"started Traf-O-Data, a computer traffic analysis company"(Clayton 452) It
worked well however, marketing their new machine proved to be impossible. "No
one actually wanted to buy the machine, at least not from a couple
teenagers"(Gates 14). Gates and Allen had more less successful endeavors in
starting a software company. In 1974 Intel announced their new chip: the 8080.
The two college students sent off letters "to all the big computer companies,
offering to write them a version of BASIC for the new Intel chip. We got no
takers"(Gates 15).

While at Harvard, the cool thing to do was to slack off on classes for most of
the semester and try and see how well the student could do at the end. Steve
Ballmer and Gates "took a tough graduate- level economics course together-
Economics 2010. The professor allowed you to bet your whole grade on the final
if you choose"(Gates 40). They did that, did not do anything for the class all
semester, and studied and got A's. During one of these slack off periods, Gates
and Allen found a very small computer: the Altair 8800 "('Altair' was a
destination in a Star Trek episode)"(Gates 16). It had a few switches and lights
on the front that you could get to blink, but that was about all. This new chip
had great potential, but there was no way to program it. After five weeks of not
going to classes, not eating or sleeping regularly, their version of "BASIC was
written- and the world's first microcomputer software company was born. In time
we named it 'Microsoft'"(Gates 17).

Gates left Harvard on leave in 1975. Microsoft's big economic break came in 1980
when "IBM- the computer industry leader- asked Gates to develop an operating
system for its new personal computer"(Clayton 452). IBM usually did not use
external help in software design or hardware manufacture, but they wanted to
release the first personal computer in less than a year. "IBM had elected to
build its PC mainly from off-the-shelf components available to anyone. This made
a platform that was fundamentally open, which made it easy to copy"(Gates 47).
IBM bought the microprocessors from Intel and licensed the operating system from
Microsoft. Microsoft bought some work from another company in Seattle and hired
its top engineer, Tim Paterson. The system became known as the Microsoft Disk
Operating System, or MS-DOS.

Now because of the licensing agreement between IBM and Microsoft, IBM had no
control over Microsoft's distribution of its MS-DOS to other companies who
wanted to clone the IBM machine. This decision by IBM is still under great
debate. Many industry analysts argue that IBM should have waited for their own
software developers to develop an operating system or that IBM should have
purchased MS-DOS from Microsoft. However, from a more broad economic picture of
IBM's decision, it may have just turned out for the good of Microsoft, IBM and
the average computer user. Microsoft's "goal was not to make money directly from
IBM, but to profit from licensing MS- DOS to computer companies that wanted to
offer machines more or less compatible with the IBM PC"(Gates 49). By allowing
Microsoft to sell MS-DOS to other companies, this made IBM's PC the industry "de
facto" standard. With other companies scrambling to compete with IBM, Microsoft
licensed MS-DOS to these companies and fulfilled one of Microsoft's goals: "to
create the standard for the industry"(Jobs 50). Compaq Computer of Houston
"launched [the first] clone in 1982 and attained FORTUNE 500 status a scant four
years later"(Schlender 42). Hundreds of companies followed.

MS-DOS dominated the market much like VHS beat out Betamax and how early TV
sales boomed. The more people bought the product, the more companies produced it
and with the television, the more sets were sold, the more programming was
available. This was a main reason why Apple's Macintosh only controlled 9% of
the market(Schlender 40). "The PC story would be far different if Apple had
licensed its operating system software to other computer makers early on"(Cook
64). In effect, they had a monopoly on their own system and software. Their lack
of competition kept prices up and software selection down. Apple has just
recently licensed some Macintosh operating systems to other companies.

Microsoft has thrived on the ability to foresee and understand the computer
needs of the average user. After Microsoft made their name with MS-DOS, they
started work on a graphical based operating system much like Apple's Macintosh
computer. They called it Windows. Windows "swept the market"(Clayton 452). By
1993 it was selling over 1 million copies a month "and Microsoft operating
systems ran nearly 90 percent of the world's PC s"(Clayton). Microsoft had well
achieved their goal of creating the standard for the industry(Jobs 50). However,
because Microsoft enjoys a near monopoly, beginning in June of 1990, the
"Federal Trade Commission, which shares antitrust jurisdiction with the
Department of Justice, took the first crack, quietly opening an inquiry "(Cook
64). Many other software companies have "cheered"(Pain) the government and
offered a deluge of help. One of the big complaints of computer manufacturers is
that they "must agree to pay software royalties...for every computer they ship,
regardless of whether the computer is sold with any Microsoft software." It is
"an all or nothing deal"(Rohm 92). Steve Jobs, cofounder of Apple and founder of
Next, calls Microsoft the "'small orifice' through which every other company
must squeeze if it wants to participate in the PC market"(Schlender 41).

After two years of investigation, "commissioners were deadlocked on whether to
file an antitrust complaint"(Cook). However, antitrust chief Anne Bingaman
continued the process with a high-profile investigation. After collecting
information, conducting interviews, and talking to Gates, Microsoft signed an
agreement that would require Microsoft to make "minor changes in the way it
licenses DOS and Windows to computer manufacturers"(Cook). Federal District
Court Judge Stanley Sporkin rejected the proposed statement. Bingaman continued
the case. She hired Sam Miller, a trial lawyer from San Francisco law firm of
Morrison & Foerster. Miller was to head up litigation against Microsoft.

What will come of the lawsuit? If Microsoft agrees to the next settlement, it
will "level the playing field"(Rohm 94) or they could end up the next AT&T. It
is up to those in Washington and at Microsoft. If Microsoft looses, "instead of
just DOS with its huge share of the market, if you've got three or four
operating systems each having 25 or 30 percent of the market, you're going to
provide a lot more incentive for those people to predisclose or disclose
interface operations to everybody"(Rohm 94) said a lawyer for the case. The
operating system that works with all applications and other operating systems
wins. That is IBM and Apple's Taligent and OS/2's strategy.

Right now Bill Gates is building a multi million dollar water front home outside
of Seattle, equipped with all the technological luxuries that a few years ago
only science fiction writers could dream up, for he and his wife, Melinda French.
He has a 2.5 million dollar book deal that is selling now(Lyall 20). What is in
Gates future? He loves his work at Microsoft and continues to stay involved with
running the company. He has gotten with Craig McCaw and announced plans to
launch a 9 billion dollar satellite-communications by 2001. He is also working
with Sega, Time Warner and TCI just to name a few. As for his monopolistic image
in computer circles, only time will tell.

Bibliography

Cook, William J. U.S. News & World Report. "A Pain for Windows." Feb. 27,1995
p64-66

Clayton, Gary E. Ph.D. Economics Principles and Practices. New York:
Glencoe/McGraw-Hill 1995

Economist, The:The World This Week. March 26, 1994 p7

Economist, The: Business. January 22, 1994 p73

Fortune. June 28 1993

Gates, Bill. The Road Ahead. New York:Penguin Group 1995

Lyall, Sarah. Technos: "Are These Books, or What? CD-ROM and the Literary
Industry." Winter 1994 p20-23

Quittner, Joshua. The Seattle Times. Seattle, "Electronic Peek into the
Future."September 5, 1993 D1+

Rohm, Wendy Goldman. Wired:"Oh No, Mr. Bill!" April 1994. p90+

Schlender, Brenton R. Fortune. "Jobs and Gates Together." Aug. 26, 1991 p50+

Schlender, Brenton R. Fortune:"The Future of the PC." Aug 26, 1991, p40+