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
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
 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.
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.
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+


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