Is it Micro? Is it Soft?

There are big companies and there are small. There are companies that are liked and companies hat are hated. And then there is Microsoft, which is neither micro nor soft. It is large yet small, liked yet hated. It is the curiosest company of them all.

The world over, there are people who hate Microsoft. It is a company built on lying, stealing, hype, vicious bullying and sheer lies; they say. It is claimed Microsoft is one of the most unethical, arrogant and ignorant companies with a take-no-prisoners attitude.

Yet, the world over, there are people whose lives have been changed (for the better) by Microsoft.  Access to computing, easy access to the web, tools for word processing, spreadsheets, graphics, and a host of nifty, affordable, integrated computing toys have been unleashed on the masses by Microsoft. In a way Microsoft, along with its close buddy Intel, has brought the magic of computers to the doorstep of ordinary mortals. Of course, the detractors say, that was just the luck of the draw. If Microsoft did not exist, the same would have happened, but with higher quality software and a better understanding of the end-user needs.

His father was an attorney and mother was a schoolteacher. At the age of 13 he discovered computer programming. In 1973 he enrolled in Harvard University. In 1974, legend has it, that a friend of his showed him a picture of a new, small, microcomputer called “Altair”, made by a company called MITS. Altair was nice, but it had no software. He called MITS and told them, he had written a very good BASIC interpreter for the Altair. MITS was quite interested and asked him to come over and show it off.

He had written no BASIC interpreter. In fact, the closest he had been to an Altair was the picture. So he and the friend set out to write one. The friend wrote a simulator that mimicked the Altair, on Harvard’s PDP-10 computer. He used the simulator to write the interpreter. Some people claimed that he in fact stole much of the code from another BASIC interpreter. In about two months time, they showed up at MITS with the program that had not even been tested on the Altair. The folks at MITS loaded up the interpreter on an Altair and it worked.

Soon thereafter, in 1975, without completing his degree, he left Harvard to form his own company. He is William (Bill) Gates III, one of he world’s richest men (net worth $50 billion). The company is of course Microsoft. The friend is Steve Balmer, currently CEO of Microsoft.

Microsoft today is one of the world’s largest companies in terms of market capitalization ($380 Billion). It ranks between number 1 and number 4 depending upon what its stock price is on a particular day. Hence it is really a huge company. However in terms of the number of employees, Microsoft is ranked 192, with about 40 thousand employees. On this scale it is not a big company. The world’s largest employer is probably the US Government (18 million) but amongst US companies, the largest employer is Wal Mart with 1.2 million employees. Even after slimming down, IBM beats Microsoft hollow with over 350 thousand employees.

Today Microsoft provides operating systems and productivity software for most of the world’s computers. It is estimated that about 90% of the desktop machines run Windows and 90% of all users use Microsoft Word. Various Unix-based systems and Apple share the rest of the 10%. Hence, Microsoft has a virtual monopoly on the operating systems and word processing markets. In addition to these products, Microsoft sells a huge amount of software (with good market share) and owns services, such as a cable TV channel (MSNBC), travel services (Expedia), Internet Access Provider (MSN), car dealership (Carpoint) and other subsidiaries.

This monopoly by Microsoft is the key point in the severe dislike of Microsoft. How Microsoft got to the dominant player, is a very long story. It started when Mr. Gates, bought the rights to a small operating system called CP/M from a struggling company, renamed it MS-DOS and licensed it to IBM for use in the IBM-PC. It was a brilliant move that generated untold riches for Gates and Microsoft.

Eventually the Apple Macintosh computer started becoming a popular alternative to the IBM-PC with its nicer graphical interface. Microsoft “stole” the Macintosh interface and built Windows. Windows ate Apple’s lunch. The Apple system was in many ways superior to Windows running on Intel hardware, but the cost was about twice at much. Apple refused to compete with Windows and Intel (also called WinTel) on price. Their system, Apple said was much superior and those who honored quality and innovation would use Apple. Yes, some became life-long admirers of Apple. The masses went to Windows, and Microsoft and Intel went laughing to the bank.

Soon thereafter IBM entered into a partnership with Microsoft to build a rather nice operating system called OS/2. Since Microsoft was essentially developing both Windows and OS/2, using gimmicks and feigning allegiance to OS/2 Microsoft killed OS/2. Microsoft ensured that Windows was always more attractive (easier to acquire, easier to use and cheaper) than OS/2. After the death of OS/2 Windows became the only game in town.

Every time Mr. Gates sneezed, roses bloomed around Microsoft. Life could not have been sweeter; the aura of success made everyone at Microsoft, oh so heady. Suddenly, in 1995, the “World Wide Web” appeared. This caught Microsoft unawares. They had no strategy to harness the web. They had no web software. Other people wrote software for Windows that made Windows worked with the web. The notable player here was Netscape. Even Mr. Gates is supposed to have remarked that the web was just a passing fad and Microsoft does not need to pay much attention to it. This is the only major wrong decision, Mr. Gates ever made.

While Microsoft snoozed in its bed of roses, the glory of the web bloomed and the browser from Netscape became the darling of the interactive computing world. Suddenly the sleeping giant awoke. Mr. Gates declared war on Netscape. Netscape has to go—kill Netscape.

All of Microsoft’s energies were then spent in developing “Internet Explorer” (or IE) the alternative to the Netscape browser. As Microsoft kept making IE better, the folks at Netscape made their browser even better, keeping ahead of Microsoft. Microsoft realized they would lose the cat and mouse game. So Microsoft brought out the big guns. IE, they said, would be free. IE would be given to anyone who wants it; IE would be “bundled” with all new computers running Windows and IE will be a part of Windows. If you have Windows, you got IE for free (or rather, you would get IE whether you liked it or not). Of course, everyone had Windows, and soon the market share of IE zoomed. Netscape went from a high-flying company to a bankrupt company. Who can sell software when the competition is giving it away for free?

Having won over Netscape Microsoft turned its attention to gobbling up companies or killing them off. If some company developed a nifty gadget for use with Windows, in the next upgrade Microsoft provided the same thing, but better integrated into Windows and for free. This strategy, called “bundling” has worked wonders for Microsoft at to the horrific demise of the real innovators.

In 1998 the US Government woke up to Microsoft’s busting techniques. “What?” the government cried, “Microsoft killed Netscape by giving away things that Netscape was attempting to sell? That must be illegal”. Yes, it is sort of illegal, under the Sherman Anti Trust laws (laws that ban monopolies). So Microsoft was charged and the now famous Microsoft anti-trust lawsuit started. Eventually, in 1999 the government found Microsoft guilty and ordered then broken up into two companies. Microsoft appealed and won a reversal on a technicality. Judge Penfield Jackson, who had ordered the break up of Microsoft had made severe derogatory remarks about Microsoft, during and after the trial. This showed, Judge Jackson was not impartial, but hated Microsoft. Hence the judgment was tainted.

The Microsoft saga continues. Over the years Microsoft has battled Sun over the Java programming language. Sun invented the immensely popular Java, and Microsoft’s want to bury it. They used the old trick—bundling Java. They bundled a version of Java incompatible with Sun’s version to woo people away from Sun’s Java to Microsoft’s version, taking control of Java specifications away from Sun. Sun sued and won. So did Java. Stories of such Microsoft shenanigans would fill volumes.

Last week, Microsoft announced the first un-bundling. Java will no longer be bundled with future Microsoft operating systems. That is funny! Ironically, the competition is calling this foul play. Now the popularity of Java is expected to slide and Microsoft may succeed in killing Java. As Alice would have said, it gets curioser and curioser.

Partha Dasgupta is on the faculty of the Computer Science and Engineering Department at Arizona State University in Tempe. His specializations are in the areas of Operating Systems, Cryptography and Networking. His homepage is at http://cactus.eas.asu.edu/partha.