Financial Journalist

Finance Week, Gerry O’Kane, 25 June 2008,

So, Farewell
Then Bill
Gates

Famous for
Being so rich
And
Having glasses

You have altered
My life forever
My blood pressure has
Never been the same since
But you couldn’t care less

Apologies to E.J. Thribb

By the end of June, the world’s richest man is going to step down as chairman of Microsoft. The reality is that had anyone met Bill Gates in the early days of Microsoft when it was in bed with IBM, they would have raised an eyebrow that he managed to sign a contract with Big Blue at all, let alone become the world’s richest man.

Not only that but he and his firm had moved from being seen as the rebels that had brought the corporate might of IBM to heel. How things change; now a company with annual revenues of $30 billion a year and with more anti-trust actions under its belt than an arms dealer, the fighter for the small chap has become the dictator of global personal computing.

I first met Bill in 1984 at some expensive hotel in central London. In those days I was a technology journalist and excited to meet the man behind DOS (disk operating system), then only three years old.

Boy, did I get a shock. Sitting tapping feet, hands clasped under arms while rocking backwards and forwards, he sat in the middle of the room on a dining chair and looked like he was going through cold turkey.

IBM had approached Gates in July 1980, with tentative marketing discussions about a ‘new personal computer’. Because IBM wanted to steal a march it wanted development finished in a year and the design would use industry-ready parts but required a disk operating system. Gates had advised them to go and see Digital Research, which had already designed one called CPM.

But it wasn’t to be. So hated was Big Blue in those days, kept afloat by the pervading phrase in the business that “No-one ever got fired for buying an IBM”, that boss of Digital Research, Gary Kildall, spent several hours flying above the Arizona desert while IBM executives sweated below awaiting a meeting and some sort of agreement. The apocryphal tale ended with IBM executives, shirts open and ties loosened, returning to Gates and begging for help.

“We had heard of a guy in Seattle who had designed his own 8086 operating system. He was called Tim Patterson, so we bought it and modified it,” said Gates, at the time. Few now recall that he was not the guy who invented the worlds first virtually ubiquitous operating system, but he knew a man who did.

In possibly his best move in corporate strategy, the IBM contract was based on royalties. IBM never owned the operating system and by the time it developed PS/2 and OS/2, everyone was hooked on PC and MS-DOS. And IBM had to pay a new licence fee for each version, Bill was taking baths in dollar notes.

While in 1984 Gates remained diplomatic saying about IBM “They are the most honest and straightforward company we deal with,” he quietly admitted that dealing with a large company could be frustrating and only personal contacts could help clarify IBM’s often ‘mysterious’ policies.

It was only later that I learned that internally at the time Microsoft’s dealings with IBM was called ‘Bogu’; bend over and grease up.

It wasn’t until about 1996 that I had another chance to meet Bill, when he decided to announce a deal with CNBC, the business cable network of the world’s largest broadcaster, NBC. How times had changed. Not only was he doing business with a company that was created to break the unions at NBC by its owners the global behemoth, General Electric, but he was wearing a suit.

I was working at CNBC, but regarded as a lowly hack, he swept on by only to mumble incoherently about ‘its all good’.

Over the years I had become disillusioned with Microsoft. The once baiter of the school playground bully, had become one itself. I had listened in amazement to its Asia Pacific boss tell me there was nothing wrong with Windows 95 at launch and that if it was wiping data from people’s disk drive it was because they didn’t install it correctly. When I pointed out that head or research at a well-known computer company had done the same and his hobby was creating mathematical algorithms to find a cure for cancer, I was then told it was flaw in some internal hard drives.

But it was never Microsoft’s fault.

When I relate the story of Gerry meeting Billy, my mate Harry just mumbles something about bloody computers, wishes he had Gates’ cash and extols the virtues of Excel. Mind you he’s coming up to the end of his finance director contract and has been busying himself building a pond about the size of Lake Windemere, so his grasp on reality is tenuous.

But the reality I never grasped in 1984, was that Gates was a genius at strategy, he could see the long-term. He was never the computer genius everyone thought.

He had good concepts, after all when he talked about a computer in every home in those days, everyone did think he was on smack. When he said the future was software, not hardware, Digital Equipment, IBM and HP laughed at him.

He saw opportunities, found people to do the grunt work and sliced up some excellent deals. He knew the key to winning was domination.

The one mistake he made was that he never saw the value of the internet, labelled Netscape a flash in the pan and now his firm is locked in combat with Google.

If you would like to read the original 1984 story it can be found; http://www.financial-journalist.co.uk/financial_journalist/?p=3