Bill Gates and Microsoft

Zusammenfassung

Bill Gates did not invent the personal computer, the operating system, or even the software business. What he did was understand, earlier and more clearly than almost anyone else, that software would be the most valuable thing in the computing industry — and then spend twenty-five years ensuring that Microsoft captured that value with a ferocity that eventually brought the United States government to sue him for monopoly abuse. The DOS deal with IBM in 1980 was not luck; it was a calculated bet that the IBM PC would define the market, and that whoever controlled the operating system would control everything built on top of it. He was right.

The First Program

William Henry Gates III was born on October 28, 1955, in Seattle, Washington, into an upper-middle-class family. His father was a prominent attorney; his mother served on the boards of major corporations and the University of Washington. The family could afford to send him to Lakeside School, a private school that, in 1968, leased time on a General Electric time-sharing computer for its students.

Gates was thirteen. He became immediately and obsessively interested, spending every hour he could at the terminal. He met Paul Allen, two years older, in the computer room. Together they exploited bugs in the time-sharing system to get free computer time, taught themselves BASIC and Fortran, and eventually offered to debug the school’s computer scheduling system in exchange for unlimited computer access.

By the time Gates left for Harvard in 1973, he had logged more programming hours than most professional programmers. At Harvard, he found the coursework unchallenging, spent most of his time playing poker and programming, and made no particular academic distinction. He did not graduate.

Albuquerque and the BASIC Gamble

In January 1975, Popular Electronics published a cover story on the Altair 8800, the first commercially available microcomputer kit. Gates and Allen saw the cover at a newsstand. Allen called Gates and said they needed to write a BASIC interpreter for the Altair immediately, before anyone else did.

They had not written the interpreter. They did not own an Altair. They had not asked the manufacturer, MITS, whether they wanted one. They called MITS anyway and told them they had a working BASIC. MITS was interested. Gates and Allen then spent eight weeks writing the interpreter from scratch, working from the Intel 8080 manual without ever having access to the actual Altair hardware. When they demonstrated it to MITS, it ran correctly on the first try.

Gates was nineteen. He dropped out of Harvard and moved to Albuquerque, New Mexico, where MITS was headquartered. He and Allen founded Microsoft — a compression of “microcomputer software” — in April 1975.

The MITS BASIC was a commercial success, and it established the crucial early pattern: Microsoft licensed the software, retaining ownership. Gates was unusually clear-eyed about licensing as a business model at a time when most hardware manufacturers regarded software as a giveaway. When, in 1976, he published an open letter to the hobbyist community condemning software piracy as theft, most hobbyists were incensed. Gates understood that the value was in the code.

The IBM Deal

In 1980, IBM was developing its first personal computer and needed an operating system. IBM’s preference was CP/M, the dominant PC operating system at the time, made by Digital Research. The CP/M negotiations collapsed — accounts differ on whether Digital Research’s founder Gary Kildall missed the meeting or whether IBM’s contract terms were unacceptable — and IBM came to Microsoft.

Gates and Allen did not have an operating system. Gates referred IBM to Digital Research again. When that fell through, Gates introduced IBM to Seattle Computer Products, which had developed QDOS (Quick and Dirty Operating System), a CP/M-compatible system for the Intel 8086. Microsoft bought the rights to QDOS for $50,000.

The critical move was what Gates negotiated with IBM: Microsoft retained the right to license the operating system — renamed MS-DOS — to other manufacturers. IBM received PC-DOS for its own machines, but Microsoft could sell MS-DOS to anyone making IBM-compatible computers.

This clause defined the next fifteen years of the technology industry.

The IBM Deal’s Logic

Gates bet that IBM’s design would be cloned. IBM had, unusually, built its PC with off-the-shelf components and an open architecture. When Compaq and hundreds of other manufacturers built IBM-compatible machines, they all needed MS-DOS. IBM had inadvertently paid Microsoft to build the toll booth on an open highway.

Windows and the GUI Wars

When Apple visited Microsoft in 1981 to discuss Microsoft’s software products for the upcoming Macintosh, Jobs showed Gates the Macintosh graphical interface. Gates immediately understood that the GUI was the future of personal computing.

Apple later accused Gates of stealing the Macintosh interface for Windows. Gates’s response became famous:

“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.”

Windows 1.0 shipped in November 1985 and was barely functional. Windows 2.0 was not much better. But Windows 3.0, released in May 1990, was successful — fast enough on 386 hardware, compatible with DOS software, and cheap compared to the Macintosh. Within two years, Windows 3.0 had sold ten million copies.

Windows 95, launched in August 1995 with a Rolling Stones soundtrack and massive public interest, was the moment Microsoft’s dominance became unchallengeable. The Start button, the taskbar, and plug-and-play hardware compatibility made Windows the computing environment for most of the world. Microsoft’s bundling of Internet Explorer with Windows — and later, making it essentially inseparable from the operating system — triggered the antitrust investigation that would consume the company for the rest of Gates’s tenure.

The Antitrust Case

In 1998, the United States Department of Justice, joined by twenty state attorneys general, filed an antitrust lawsuit against Microsoft. The core allegation was that Microsoft had used its Windows monopoly to crush Netscape and the browser market, threatening to “cut off Netscape’s air supply” by distributing Internet Explorer for free and integrating it with Windows.

The evidence was damaging. Internal emails showed Gates personally directing strategy to undermine Netscape and Java. His deposition — in which he answered questions with unusual literalism, challenged the definition of common words, and often appeared to be deliberately obstructive — was played in the courtroom and became a public embarrassment.

In 2000, Judge Thomas Penfield Jackson ruled that Microsoft had violated antitrust laws and ordered the company broken into two separate entities: an operating systems business and an applications business. The breakup order was overturned on appeal, and the case was eventually settled in 2001 with Microsoft agreeing to share its programming interfaces with third parties. The company was not broken up.

The Antitrust Legacy

The antitrust case consumed Microsoft’s management attention for years and is widely credited with creating the window in which Google was able to grow without Microsoft’s full focus. Whether the case itself prevented harm is debated; what is clear is that the discovery process produced the most detailed picture available of how a technology monopoly actually operated, and that picture was not flattering.

Philanthropy and the Second Act

Gates stepped down as Microsoft’s CEO in January 2000, handing the role to Steve Ballmer. He remained as chairman. In 2000, he and his wife Melinda established the Bill & Melinda Gates Foundation, the largest private charitable foundation in the world, initially capitalized with stock worth roughly $21 billion.

The foundation focused on global health — vaccines, malaria eradication, tuberculosis — and education reform. In 2010, Gates and Buffett founded the Giving Pledge, a commitment by the world’s wealthiest individuals to give away at least half their fortunes. By 2023, the pledge had been signed by more than 230 billionaires.

Gates resigned from Microsoft’s board in 2020. In 2021, Gates and Melinda divorced, with both retaining involvement in the foundation before Melinda resigned in 2024.

Dead End: Missing the Internet and Mobile

Gates’s great strategic failure was the initial dismissal of the internet. The 1995 memo “The Internet Tidal Wave” — in which Gates warned Microsoft’s executives that the internet was the most important development since the IBM PC and demanded that every Microsoft product be rethought around it — came after Netscape had already established its dominance of the browser market. Microsoft caught up in browsers by giving Internet Explorer away, but the pattern held: Microsoft consistently reacted to paradigm shifts rather than leading them.

In mobile, Microsoft’s failure was more complete. Windows CE, Pocket PC, and Windows Mobile all failed to achieve the combination of usability, developer ecosystem, and hardware integration that the iPhone demonstrated in 2007. By the time Steve Ballmer called the iPhone “the most expensive phone in the world” and predicted it would never get significant market share, Apple had already defined what a smartphone was supposed to be.

The mobile failure is covered in Dead End: Microsoft’s Mobile Failures.