The Innovators

by Walter Isaacson

  The deal was similar to the one Gates had made with MITS, when he retained the right to license BASIC to other computer makers as well. That approach allowed Microsoft’s BASIC and then, more important, its operating system to become an industry standard, one that Microsoft controlled. “In fact, our tagline in our ad had been ‘We set the standard,’ ” Gates recalled with a laugh. “But when we did in fact set the standard, our antitrust lawyer told us to get rid of that. It’s one of those slogans you can use only when it’s not true.”IV101

  Gates boasted to his mother about the importance of his deal with IBM, hoping that it would prove that he had been right to drop out of Harvard. Mary Gates happened to be on the board of the United Way with IBM’s president John Opel, who was about to take over from Frank Cary as CEO. One day she was flying with Opel on his plane to a meeting, and she mentioned the connection. “Oh, my little boy’s doing this project, he’s actually working with your company.” Opel seemed unaware of Microsoft. So when she came back, she warned Bill, “Look, I mentioned your project and how you dropped out of school and all this stuff to Opel, and he doesn’t know who you are, so maybe your project’s not as important as you think.” A few weeks later, the Boca Raton executives went to IBM headquarters to brief Opel on their progress. “We have a dependency on Intel for the chip, and Sears and ComputerLand are going to do the distribution,” the team leader explained. “But probably our biggest dependency is actually a pretty small software company up in Seattle run by a guy named Bill Gates.” To which Opel responded, “Oh, you mean Mary Gates’s son? Oh, yeah, she’s great.”102

  * * *

  Producing all the software for IBM was a struggle, as Gates predicted, but the ragtag Microsoft crew worked around the clock for nine months to get it done. For one last time, Gates and Allen were a team again, sitting side by side through the night, coding with the shared intensity they had displayed at Lakeside and Harvard. “The one tiff Paul and I had was when he wanted to go see a space shuttle launch and I didn’t, because we were late,” said Gates. Allen ended up going. “It was the first one,” he said. “And we flew back right after the launch. We weren’t gone even 36 hours.”

  By writing the operating system, the two of them helped determine the look and feel of the personal computer. “Paul and I decided every stupid little thing about the PC,” Gates said. “The keyboard layout, how the cassette port worked, how the sound port worked, how the graphics port worked.”103 The result reflected, alas, Gates’s nerdy design taste. Other than causing a cohort of users to learn where the backslash key was, there was little good that could be said about human-machine interfaces that relied on prompts such as “c:>” and files with clunky names such as AUTOEXEC.BAT and CONFIG.SYS.

  Years later, at an event at Harvard, the private equity investor David Rubenstein asked Gates why he had saddled the world with the Control+Alt+Delete startup sequence: “Why, when I want to turn on my software and computer, do I need to have three fingers? Whose idea was that?” Gates began to explain that IBM’s keyboard designers had failed to provide an easy way to signal the hardware to bring up the operating system, then he stopped himself and sheepishly smiled. “It was a mistake,” he admitted.104 Hard-core coders sometimes forget that simplicity is the soul of beauty.

  The IBM PC was unveiled, with a list price of $1,565, at New York’s Waldorf Astoria in August 1981. Gates and his team were not invited to the event. “The weirdest thing of all,” Gates said, “was when we asked to come to the big official launch, IBM denied us.”105 In IBM’s thinking, Microsoft was merely a vendor.

  Gates got the last laugh. Thanks to the deal he made, Microsoft was able to turn the IBM PC and its clones into interchangeable commodities that would be reduced to competing on price and doomed to having tiny profit margins. In an interview appearing in the first issue of PC magazine a few months later, Gates pointed out that soon all personal computers would be using the same standardized microprocessors. “Hardware in effect will become a lot less interesting,” he said. “The total job will be in the software.”106

  THE GRAPHICAL USER INTERFACE

  Steve Jobs and his team at Apple bought a new IBM PC as soon as it came out. They wanted to check out what the competition looked like. The consensus was, to use Jobs’s phrase, “It sucked.” This was not simply a reflection of Jobs’s instinctive arrogance, although it was partly that. It was a reaction to the fact that the machine, with its surly c:> prompts and boxy design, was boring. It didn’t occur to Jobs that corporate technology managers might not be yearning for excitement at the office and knew they couldn’t get in trouble for choosing a boring brand like IBM over a plucky one like Apple. Bill Gates happened to be at Apple headquarters for a meeting on the day that the IBM PC was announced. “They didn’t seem to care,” he said. “It took them a year to realize what had happened.”107

  Jobs was aroused by competition, especially when he thought it sucked. He saw himself as an enlightened Zen warrior, fighting the forces of ugliness and evil. He had Apple take out an ad in the Wall Street Journal, which he helped to write. The headline: “Welcome, IBM. Seriously.”

  One reason Jobs was dismissive was that he had already seen the future and was embarked on inventing it. On visits to Xerox PARC, he was shown many of the ideas that Alan Kay, Doug Engelbart, and their colleagues had developed, most notably the graphical user interface (GUI, pronounced GOO-ee), which featured a desktop metaphor with windows, icons, and a mouse that served as a pointer. The creativity of the Xerox PARC team combined with the design and marketing genius of Jobs would make the GUI the next great leap in facilitating the human-machine interaction that Bush, Licklider, and Engelbart had envisioned.

  Jobs’s two main visits with his team to Xerox PARC were in December 1979. Jef Raskin, an Apple engineer who was designing a friendly computer that would eventually become the Macintosh, had already seen what Xerox was doing and wanted to convince Jobs to look into it. One problem was that Jobs found Raskin insufferable—the technical terminology he used for Raskin was “a shithead who sucks”—but eventually Jobs made the pilgrimage. He had worked out a deal with Xerox that allowed the Apple folks to study the technology in return for allowing Xerox to make a million-dollar investment in Apple.

  Jobs was certainly not the first outsider to see what Xerox PARC had wrought. Its researchers had given hundreds of demonstrations to visitors, and they had already distributed more than a thousand Xerox Altos, the expensive computer developed by Lampson, Thacker, and Kay that used a graphical user interface and other PARC innovations. But Jobs was the first to become obsessed with the idea of incorporating PARC’s interface ideas into a simple, inexpensive, personal computer. Once again, the greatest innovation would come not from the people who created the breakthroughs but from the people who applied them usefully.

  On Jobs’s first visit, the Xerox PARC engineers, led by Adele Goldberg, who worked with Alan Kay, were reserved. They did not show Jobs much. But he threw a tantrum—“Let’s stop this bullshit!” he kept shouting—and finally was given, at the behest of Xerox’s top management, a fuller show. Jobs bounced around the room as his engineers studied each pixel on the screen. “You’re sitting on a goldmine,” he shouted. “I can’t believe Xerox is not taking advantage of this.”

  There were three major innovations on display. The first was Ethernet, the technologies developed by Bob Metcalfe for creating local area networks. Like Gates and other pioneers of personal computers, Jobs was not very interested—certainly not as interested as he should have been—in networking technology. He was focused on the ability of computers to empower individuals rather than to facilitate collaboration. The second innovation was object-oriented programming. That, likewise, did not grab Jobs, who was not a programmer.

  What caught his attention was the graphical user interface featuring a desktop metaphor that was as intuitive and friendly as a neighborhood playground. It had cute icons for documents and folders and other things you migh
t want, including a trash can, and a mouse-controlled cursor that made them easy to click. Not only did Jobs love it, but he could see ways to improve it, make it simpler and more elegant.

  The GUI was made possible by bitmapping, another innovation pioneered at Xerox PARC. Until then, most computers, including the Apple II, would merely generate numerals or letters on the screen, usually in a ghastly green against a black background. Bitmapping allowed each and every pixel on the screen to be controlled by the computer—turned off or on and in any color. That permitted all sorts of wonderful displays, fonts, designs, and graphics. With his feel for design, familiarity with fonts, and love of calligraphy, Jobs was blown away by bitmapping. “It was like a veil being lifted from my eyes,” he recalled. “I could see what the future of computing was destined to be.”

  As Jobs drove back to Apple’s office in Cupertino, at a speed that would have awed even Gates, he told his colleague Bill Atkinson that they had to incorporate—and improve upon—Xerox’s graphical interface in future Apple computers, such as the forthcoming Lisa and Macintosh. “This is it!” he shouted. “We’ve got to do it!” It was a way to bring computers to the people.108

  Later, when he was challenged about pilfering Xerox’s ideas, Jobs quoted Picasso: “Good artists copy, great artists steal.” He added, “And we have always been shameless about stealing great ideas.” He also crowed that Xerox had fumbled its idea. “They were copier-heads who had no clue about what a computer could do,” he said of Xerox’s management. “They just grabbed defeat from the greatest victory in the computer industry. Xerox could have owned the entire computer industry.”109

  In fact, neither explanation does Jobs and Apple justice. As the case of the forgotten Iowa inventor John Atanasoff shows, conception is just the first step. What really matters is execution. Jobs and his team took Xerox’s ideas, improved them, implemented them, and marketed them. Xerox had the chance to do that, and they in fact tried to, with a machine called the Xerox Star. It was clunky and kludgy and costly, and it flopped. The Apple team simplified the mouse so it had only one button, gave it the power to move documents and other items around the screen, allowed file extensions to be changed just by dragging a document and “dropping” it into a folder, created pull-down menus, and allowed the illusion of documents piling on top of each other and overlapping.

  Apple launched Lisa in January 1983 and then, more successfully, Macintosh a year later. Jobs knew when he unveiled the Mac that it would propel the personal computer revolution by being a machine that was friendly enough to take home. At the dramatic product launch, he walked across a dark stage to pull the new computer out of a cloth bag. The theme from Chariots of Fire began to play, and the word MACINTOSH scrolled horizontally across the screen, then underneath it the words insanely great! appeared in elegant script, as if being slowly written by hand. There was a moment of awed silence in the auditorium, then a few gasps. Most had never seen, or even imagined, something so spectacular. The screen then flicked through displays of different fonts, documents, charts, drawings, a chess game, spreadsheet, and a rendering of Jobs with a thought bubble containing a Macintosh by his head. The ovation lasted for five minutes.110

  The Macintosh launch was accompanied by a memorable ad, “1984,” that showed a young heroine outracing the authoritarian police to throw a hammer into a screen, destroying Big Brother. It was Jobs the rebel taking on IBM. And Apple now had an advantage: it had perfected and implemented a graphical user interface, the great new leap in human-machine interaction, while IBM and its operating system supplier Microsoft were still using curt command lines with c:> prompts.

  WINDOWS

  In the early 1980s, before the introduction of the Macintosh, Microsoft had a good relationship with Apple. In fact, on the day that IBM launched its PC in August 1981, Gates was visiting Jobs at Apple, which was a regular occurrence since Microsoft was making most of its revenue writing software for the Apple II. Gates was still the supplicant in the relationship. In 1981 Apple had $334 million in revenue, compared to Microsoft’s $15 million. Jobs wanted Microsoft to write new versions of its software for the Macintosh, which was still a secret development project. So at their August 1981 meeting, he confided his plans to Gates.

  Gates thought that the idea of the Macintosh—an inexpensive computer for the masses with a simple graphical user interface—sounded, as he put it, “super neat.” He was willing, indeed eager, to have Microsoft write application software for it. So he invited Jobs up to Seattle. In his presentation there to the Microsoft engineers, Jobs was at his charismatic best. With a bit of metaphorical license, he spun his vision of a factory in California that would take in sand, the raw material of silicon, and churn out an “information appliance” that was so simple it would need no manual. The Microsoft folks code-named the project “Sand.” They even reverse-engineered it into an acronym: Steve’s Amazing New Device.111

  Jobs had one major worry about Microsoft: he didn’t want it to copy the graphical user interface. With his feel for what would wow average consumers, he knew that the desktop metaphor with point-and-click navigation would be, if done right, the breakthrough that would make computers truly personal. At a design conference in Aspen in 1981, he waxed eloquently about how friendly computer screens would become by using “metaphors that people already understand such as that of documents on a desktop.” His fear that Gates would steal the idea was somewhat ironic, since Jobs himself had filched the concept from Xerox. But to Jobs’s way of thinking, he had made a business deal for the rights to appropriate Xerox’s idea. Plus he had improved it.

  So Jobs wrote into his contract with Microsoft a clause that he believed would give Apple at least a year’s head start in having a graphical user interface. It decreed that for a certain period Microsoft would not produce for any company other than Apple any software that “utilizes a mouse or tracking ball” or had a point-and-click graphical interface. But Jobs’s reality distortion field got the better of him. Because he was so intent on getting Macintosh on the market by late 1982, he became convinced that it would happen. So he agreed that the prohibition would last until the end of 1983. As it turned out, Macintosh did not ship until January 1984.

  In September 1981 Microsoft secretly began designing a new operating system, intended to replace DOS, based on the desktop metaphor with windows, icons, mouse, and pointer. It hired from Xerox PARC Charles Simonyi, a software engineer who had worked alongside Alan Kay in creating graphical programs for the Xerox Alto. In February 1982 the Seattle Times ran a picture of Gates and Allen that, as a sharp-eyed reader may have noted, had a whiteboard in the background with a few sketches and the words Window manager on top. By that summer, just as Jobs began to realize that the release date for the Macintosh would slip until at least late 1983, he became paranoid. His fears were heightened when his close pal Andy Hertzfeld, an engineer on the Macintosh team, reported that his contact at Microsoft had begun asking detailed questions about how bitmapping was executed. “I told Steve that I suspected that Microsoft was going to clone the Mac,” Hertzfeld recalled.112

  Jobs’s fears were realized in November 1983, two months before the Macintosh was launched, when Gates held a press conference at the Palace Hotel in Manhattan. He announced that Microsoft was developing a new operating system that would be available for IBM PCs and their clones, featuring a graphical user interface. It would be called Windows.

  Gates was within his rights. His restrictive agreement with Apple expired at the end of 1983, and Microsoft did not plan to ship Windows until well after that. (As it turned out, Microsoft took so long to finish even a shoddy version 1.0 that Windows would not end up shipping until November 1985.) Nevertheless, Jobs was livid, which was not a pretty sight. “Get Gates down here immediately,” he ordered one of his managers. Gates complied, but he was unintimidated. “He called me down to get pissed off at me,” Gates recalled. “I went down to Cupertino, like a command performance. I told him, ‘We’re doing Window
s.’ I said to him, ‘We’re betting our company on graphics interface.’ ” In a conference room filled with awed Apple employees, Jobs shouted back, “You’re ripping us off! I trusted you, and now you’re stealing from us!”113 Gates had a habit of getting calmer and cooler whenever Jobs worked himself into a frenzy. At the end of Jobs’s tirade, Gates looked at him and, in his squeaky voice, replied with what became a classic zinger: “Well, Steve, I think there’s more than one way of looking at it. 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.”114

  Jobs remained angry and resentful for the rest of his life. “They just ripped us off completely, because Gates has no shame,” he said almost thirty years later, shortly before he died. Upon hearing this, Gates responded, “If he believes that, he really has entered into one of his own reality distortion fields.”115

  The courts ended up ruling that Gates was legally correct. A decision by a federal appeals court noted that “GUIs were developed as a user-friendly way for ordinary mortals to communicate with the Apple computer . . . based on a desktop metaphor with windows, icons and pull-down menus which can be manipulated on the screen with a hand-held device called a mouse.” But it ruled, “Apple cannot get patent-like protection for the idea of a graphical user interface, or the idea of a desktop metaphor.” Protecting a look-and-feel innovation was almost impossible.