Bill Gates

by Jonathan Gatlin

  * * *

  Develop for it? I’ll piss on it.

  —BILL GATES, responding to a question about developing software

  for Steve Job’s NeXT technology in the mid-1990s, as reported by

  John Heilemann in the New Yorker

  * * *

  But there were danger signs even in these markets. At Yale University, for example, according to an article in the New York Times, seventy-five percent of the class of 1997 had been Macintosh users, but only twenty-five percent of the class of 2000 were when they entered the university in 1996. What’s more, in June of 1997, a letter to incoming freshmen advised that they purchase computers that were equipped with Intel microprocessors and Windows operating systems. “The University cannot guarantee support for Macintoshes beyond June 2000,” the letter bluntly stated. This letter developed into a small scandal when it was subsequently learned that the university had applied for a several million dollar research grant from Intel. Yale said there was no connection between the two events, but even so, the negative statements about the Macintosh drew many protests. Regardless of that particular situation, the drop in the number of Macintosh users was a sign of serious trouble for Apple.

  When Steve Jobs returned to Apple as an all-powerful “adviser,” he found that the company was planning another copyright infringement suit against Microsoft, this time in connection with Windows 95. Neither side really wanted another court battle like the one that had lasted from 1988 to 1992, but Amelio had asked for what Gates regarded as excessive terms to avoid a suit. Jobs quickly approached Gates about finding a way to settle the matter. Gates dispatched Greg Maffei, Microsoft’s chief financial officer, to deal with Jobs face-to-face. Negotiations went on during the last two weeks of July and into August of 1997. If there was to be a deal, Jobs wanted to announce it at the Macworld Expo to be held in Boston, Massachusetts, the second week of August. But a very tight lid was kept on the possibility of a deal. No one expected the announcement that Jobs was to make on Wednesday, August 6.

  * * *

  We think Apple makes a huge contribution to the computer industry.

  —BILL GATES, speaking to the Macworld Expo in Boston following

  the announcement of Microsoft’s $150 million investment in Apple

  * * *

  The hall in which the announcement was made was dominated by an enormous screen that, as numerous commentators pointed out, was eerily reminiscent of the screen used in the famous “1984” commercial that had launched the Macintosh. The scene became stranger still as the screen filled with the towering face of Bill Gates, joining in from Redmond, Washington, to share with Jobs the announcement that Microsoft was investing $150 million in Apple. The sixteen hundred die-hard Macintosh fans in the audience couldn’t believe what was happening. Moments earlier, they had given Jobs a rousing standing ovation when he walked on stage. Now they were booing and catcalling the image of Bill Gates. Their initial reaction suggested that they thought Jobs had made a deal with the Devil himself.

  As several members of that audience told the press afterwards, the Apple mythology had over the years turned Bill Gates into a figure inspiring both fear and loathing. And now he was on their side? But up on the screen that’s exactly what he was saying. The antagonistic crowd quickly realized that in fact this announcement might actually be Apple’s salvation. At the very least it would give the company a transfusion of cash—and even more important, credibility—that would prolong its life. And here they were booing the life-giving donor. What’s more, it occurred to them, Bill Gates could hear them booing, all the way out on the Pacific coast. This wasn’t a video they were looking up at but a two-way hookup. Applause began, and the crowd settled back to listen.

  * * *

  We want to let go of this notion that for Apple to win, Microsoft has to lose. We better treat Microsoft with a little gratitude.

  —STEVE JOBS, chiding the Macworld audience that jeered the live

  image of Bill Gates in Boston, 1997

  * * *

  “Understand,” Cathy Booth wrote in Time, “the idea of Jobs returning to Apple is something akin to that of Luke Skywalker returning to fight what, until last week, cultists regarded as the evil empire. Gates, by comparison, was perceived as a dweeb Darth Vader, the billionaire bad guy who usurped the idea of the Macintosh’s friendly point and click operating system for his now dominant Windows.”

  But by the next day the shock had worn off, and most Macintosh devotees were focusing on the good news. Apple stock had whizzed upward by 33 percent in the wake of the announcement, to $26.31. That was still only about one-tenth of the value of Microsoft stock, of course, but it was a vast improvement over what had been a long decline—one that had begun with the August 1995 release of Windows 95. Back then, Apple computers had held a 10.3 percent share of the market. They were now down to a 3.5 percent share. Many had predicted that the end was in sight for the company, but with Microsoft’s investment, it could now be said with some credibility that the company would find a way to survive. It wasn’t the amount of money that mattered, analysts almost unanimously agreed. After all, $150 million was nothing more than “loose change,” as some put it, to Microsoft, with its $9 billion in cash on hand. But it was a sign that Microsoft did not want to see Apple go under, and the fact that Microsoft was buying nonvoting stock meant that Bill Gates wasn’t going to be running Apple on the side.

  But as Steve Jobs spent the next day pointing out to reporters, the big news wasn’t the $150 million investment, anyway. The big news was that Microsoft was paying an undisclosed sum to Apple to close the books on Apple’s charges of copyright infringement. This was not a matter of Microsoft admitting it had done anything wrong, of course—it was simply getting a bitter disagreement that could cost both companies endless litigation fees, with all the bad publicity such suits entail, out of the way of future cooperation.

  * * *

  We at no time, in any way, have threatened to stop developing for the Macintosh. I don’t even understand what it would mean. It’s the most bizarre thing in the world. What would we get out of that. It’s a big revenue source. It’s a profitable business.

  —BILL GATES, in an interview with Time, dismissing a rumor leaked

  by Apple, 1995

  * * *

  The agreement between Apple and Microsoft had been front-page news, and the weekly magazines carried cover stories on the deal the following week. Steve Jobs was in the limelight as he hadn’t been since the early 1980s. The media focused on his part in the deal more than it did on Bill Gates. But even in the newsweeklies, there were already those who were suggesting that putting Steve Jobs out in front on this deal suited Bill Gates’s plans exactly. Newsweek’s Wall Street editor Allan Sloan had a full-page commentary titled “Bill does what’s good for Bill.” This wasn’t in itself a headline that would surprise anyone. But the subtitle for Sloan’s article read, “Microsoft needs Apple to ward off trustbusters.” According to this view, which was echoed in many quarters, for Gates to be seen as coming to Apple’s rescue buttressed his stand that Microsoft was not the industry villain but had the best interests of the overall advancement of computer technology at heart. The demise of Apple would only have raised an even greater outcry to the effect that Gates was a greedy monopolist on the scale of such earlier operators as John D. Rockefeller. For Gates to appear to come to Apple’s rescue would have the opposite effect. As detailed earlier, this strategy—if it was in fact central to Gates’s thinking in the first place—did not work. A little more than two months later, Attorney General Janet Reno would announce that the Justice Department was seeking a federal judge’s order to prevent Microsoft from “bundling” its Internet Explorer with Windows, a practice that the Justice Department found to be in violation of the 1995 consent agreement between Microsoft and the government.

  * * *

  Thank you for your support of this company. I think the world’s a better place for it.

&nb
sp; —STEVE JOBS to BILL GATES, via cell phone, the day before the big

  announcement, August 5, 1997

  * * *

  But in August commentators also pointed to another reason why the Apple deal was “good for Bill.” The sales of Macintosh software produced by Microsoft account for several times $150 million in income to Microsoft each year, even with a much weakened Macintosh market. Why not spend some money to keep that income flowing, commentators asked? It would be foolish to do otherwise. There were also suggestions that Microsoft, having bought its shares of Apple stock at around $16.50, according to Allan Sloan, stood to gain back a major part of its investment on the ensuing rise in the value of Apple stock. Sloan put the Microsoft paper profit for the two days following the deal at $90 million. But that was not simply a paper profit; it was an ephemeral one. Apple stock was soon down several points, and by mid-October it had dropped out of the twenties altogether.

  In the long run, what would happen to Apple would depend upon its own ability to streamline and innovate its business. Steve Jobs managed to install an almost entirely new board during the summer of 1997, including one of Bill Gates’s longtime antagonists, Larry Ellison of Oracle, who had floated the idea that he might buy Apple back in March of 1997. Ellison then backed off, serving to further undermine the tenure of Gil Amelio. John Heilemann reported in the New Yorker that the inclusion of Ellison on the board had given Microsoft considerable pause—“That took us some time to get comfortable with,” Microsoft’s Greg Maffei told Heilemann.

  Beyond getting a better board, there remained the major question of what new directions Apple should take in developing future products. One possibility was to create Rhapsody, an operating system for businesses, using the NeXT software originally developed by Jobs’s own company, with Apple development work. But Gates had always been dubious about NeXT and about Apple’s attempt to attract business customers who had never been enthusiastic about the Macintosh.

  * * *

  And we welcome Microsoft to the family of Apple investors. But more important than any of that, I think our goal was to normalize the relationships with Microsoft so we could get on with doing business together. As I said at Macworld, Apple plus Microsoft equals 100 percent of the desktop markets. There are no other players…. It’s not that Apple is going to become like Microsoft; they’re obviously going to continue to compete. But it’s crazy for the only two players in the desktop market not to be working together. It’s a little like Nixon going to China. It’s the right thing to do.

  —STEVE JOBS to Newsweek after the announcement of the new

  Apple/Microsoft alliance, August 1997

  * * *

  According to John Heilemann and other commentators, the Apple deal was particularly appealing to Gates because it would commit Apple to using Microsoft’s Internet Explorer on future Macintoshes, rather than the rival Internet browser developed earlier by Netscape. That Microsoft advantage could, of course, be scuttled by the Justice Department’s attack on the bundling of Internet Explorer. Heilemann notes that Gates also wanted to develop “his own version of Java, tailored to Windows.” Java, created by Sun Systems to run on all operating systems, is seen by many analysts as representing the future of the Internet. Heilemann says that the Microsoft/Apple deal “commits Apple, in effect, to helping Gates” develop a Java language for Windows. But that, too, may prove difficult. In October 1997, Sun filed a lawsuit to prevent Microsoft from doing so.

  Thus the eventual benefits of the new alliance between Microsoft and Apple remain in question for both companies. At the same time, the initial announcement of their renewed closeness provides a dramatic new twist to a relationship, sometimes beneficial and sometimes acrimonious, that goes back to the start of the PC revolution and involves the two names—Gates and Jobs—that have the most resonance with the general public in terms of the computer industry.

  CHAPTER SEVEN

  THE PERSONAL SIDE

  * * *

  Sometimes people ask me what field I’d be in if I were not in computers. I think I’d be working in biotechnology. I expect to see breathtaking advances in medicine over the next two decades, and biotechnology researchers and companies will be at the center of that progress. I’m a big believer in information technology and the way it is revolutionizing how people work, play, and learn. But it’s hard to argue that the emerging medical revolution, spearheaded by the biotechnology industry, is any less important to the future of humankind.

  —BILL GATES, 1996

  * * *

  The CEOs who run America’s most powerful companies are not usually well known to the general public. There are legendary names that linger from the past—Andrew Carnegie, John D. Rockefeller, Henry Ford—but only a few current names are recognized by ordinary Americans. Media moguls predominate, including Rupert Murdoch, Ted Turner, and Disney’s Michael Eisner. Every era has its publicity-seeking businessmen like Donald Trump, who contrive to be better known than they are important. But by and large, the heads of the companies that so greatly influence our daily lives manage to remain somewhat anonymous. They may get the occasional magazine cover, but they avoid the steady drumbeat of publicity that makes someone a household name. There are some people, like Lee Iacocca and Frank Purdue in the 1980s, who become so associated with their company’s products by appearing in television ads that it’s almost impossible to avoid knowing who they are. But few could tell you who now heads the Chrysler Corporation or a food producer like Hormel.

  Bill Gates is a special case. He is probably the most famous company head in the world today, but he doesn’t have the kind of outgoing, flamboyant personality associated with a Turner, Iacocca, or Purdue. Although he is capable of giving a speech at a computer convention that has people in the industry hanging on every word, he doesn’t achieve that end because of any particular oratorical or theatrical gift. He is very articulate, but his voice is somewhat high-pitched, and he is far from having a charismatic presence. He does have a sense of humor and a winning, rather boyish smile, which he uses to good effect when being interviewed by someone like David Frost, famous for his lengthy Nixon interviews. In both print and television interviews, Gates demonstrates a talent for explaining complicated ideas simply and clearly, making excellent use of anecdotes and references to well-known realities to explore the meaning of the emerging electronic world. But there is seldom the sense of someone giving a performance that marks a man like Lee Iacocca or Donald Trump. Bill Gates gets listened to chiefly because what he has to say is interesting and important.

  * * *

  I make it a point to read at least one newsweekly from cover to cover because it broadens my interests. If I read only what intrigues me, such as the science section and a subset of the business section, then I finish the magazine the same person I was before I started. So I read it all.

  —BILL GATES, 1995

  * * *

  For the general public, of course, there is another factor that goes beyond the fact that he is one of the primary leaders in changing the way the world works and plays: he is the richest man on the planet. Even a year or two ago there were a couple of Arab oil sheiks who were considered to be richer, but no longer. For the last two years, since the launch of Windows 95, Gates’s worth has been increasing by tens of millions of dollars a day, on average, with his total worth now estimated to be in excess of $35 billion. This is, of course, his worth on paper, since it is tied to his twenty-five percent share of Microsoft stock. If the stock goes down, so does his worth. No one knows what his cash worth is, and he’s not about to announce it.

  As moguls go, however, Bill Gates is not particularly secretive. He has always been willing to talk about his youth at the Lakeside School and Harvard, focusing on his discovery of the world of computers with his friend Paul Allen, but including stories about acting in Peter Shaffer’s Black Comedy at Lakeside and playing marathon poker games in the dormitory at Harvard. He doesn’t mind people knowing that he and Allen liv
ed for a long time mainly on Cokes and pizza, or that he slept under his desk on many occasions. There are those who have known him who say that, at least until recently, Gates was something of an overgrown boy, however rich and brilliant, and perhaps his willingness to talk about his youthful antics is in part a reflection of that. But many others find that aspect of him considerably more charming than the pretense on the part of many important people that they never had an adolescence.

  * * *

  I used to work all night in the office, but it’s been quite a while since I lived on catnaps. I like to get seven hours of sleep a night because that’s what I need to stay sharp and creative and upbeat.