“Windows 2000,” I muttered as one of my computers fired up so my girlfriend could use it. “Must mean something about the number of bugs that’ll be discovered tomorrow.”
She told me she liked Windows and asked me why I hated Microsoft so much.
It’s been a while since I thought about that. She speculated that I was annoyed that Bill Gates is smarter than me. (Which he probably is, but aside from a couple more books in print, it hasn’t gotten him anything I don’t have that I want.) There’s more to it than that.
I’m still annoyed about the foundation Microsoft built its evil empire upon. In the ’70s, Microsoft was a languages company, and they specialized in the language Basic. Microsoft Basic wasn’t the best Basic on the market, but it was the standard. And when IBM decided it wanted to enter the personal computer market, IBM wanted Microsoft Basic because nobody would take them seriously if they didn’t. So they started talking to Microsoft.
IBM also wanted the CP/M operating system. CP/M wasn’t the best operating system either, but it was the standard. IBM was getting ready to negotiate with Gary Kildall, owner of Digital Research and primary author of the OS, and ran into snags. Gates’ account was that Kildall went flying and kept the IBM suits waiting and then refused to work with them. More likely, the free-spirited and rebellious Kildall didn’t want to sign all the NDAs IBM wanted him to sign.
Microsoft was, at the time, a CP/M subcontractor. Microsoft sold a plug-in board for Apple II computers that made them CP/M-compatible. So IBM approached Microsoft about re-selling CP/M. Microsoft couldn’t do it. And that bothered Gates.
But another Microsoft employee had a friend named Tim Patterson. Tim Patterson was an employee of Seattle Computer Products, a company that sold an 8086-based personal computer similar to the computer IBM was developing. CP/M was designed for computers based on the earlier 8080 and 8085 CPUs. Patterson, tired of waiting for a version of CP/M for the 8086, cloned it.
So Seattle Computer Products had something IBM wanted, and Microsoft was the only one who knew it. So Microsoft worked out a secret deal. For $50,000, they got Patterson and his operating system, which they then licensed to IBM. Patterson’s operating system became PC DOS 1.0.
Back in the mid-1990s, PC Magazine columnist John C. Dvorak wrote something curious about this operating system. He said he knew of an easter egg present in CP/M in the late 1970s that caused Kildall’s name and a copyright notice to be printed. Very early versions (presumably before the 1.0 release) of DOS had this same easter egg. This of course screams copyright violation.
Copyright violation or none, Kildall was enraged the first time he saw DOS 1.0 because it was little more than a second-rate copy of his life’s work. And while Digital Research easily could have taken on Microsoft (it was the bigger company at the time), the company didn’t stand a prayer in court against the mighty IBM. So the three companies made some secret deals. The big winner was Microsoft, who got to keep its (possibly illegal) operating system.
Digital Research eventually released CP/M-86, but since IBM sold CP/M-86 for $240 and DOS for $60, it’s easy to see which one gained marketshare, especially since the two systems weren’t completely compatible. Digital Research even added multiuser and multitasking abilities to it, but they were ignored. In 1988, DR-DOS was released. It was nearly 100% compatible with MS-DOS, faster, less expensive, and had more features. Microsoft strong-armed computer manufacturers into not using it and even put cryptic error messages in Windows to discourage the end users who had purchased DR-DOS as an upgrade from using it. During 1992, DR-DOS lost nearly 90% of its marketshare, declining from $15.5 million in sales in the first quarter to just $1.4 million in the fourth quarter.
Digital Research atrophied away and was eventually bought out by Novell in 1991. Novell, although the larger company, fared no better in the DOS battle. They released Novell DOS 7, based on DR-DOS, in 1993, but it was mostly ignored. Novell pulled it from the market within months. Novell eventually sold the remnants of Digital Research to Caldera Inc., who created a spinoff company with the primary purpose of suing Microsoft for predatory behavior that locked a potential competitor out of the marketplace.
Caldera and Microsoft settled out of court in January 2000. The exact terms were never disclosed.
Interestingly, even though it was its partnership with IBM that protected Microsoft from the wrath of Gary Kildall in 1981, Microsoft didn’t hesitate to backstab IBM when it got the chance. By 1982, clones of IBM’s PC were beginning to appear on the market. Microsoft sold the companies MS-DOS, and even developed a custom version of Basic for them that worked around a ROM compatibility issue. While there was nothing illegal about turning around and selling DOS to its partner’s competitors, it’s certainly nobody’s idea of a thank-you.
Microsoft’s predatory behavior in the 1980s and early ’90s wasn’t limited to DOS. History is littered with other operating systems that tried to take on DOS and Windows and lost: GeoWorks. BeOS. OS/2. GeoWorks was an early GUI programmed in assembly language by a bunch of former videogame programmers. It was lightning fast and multitasked, even on 10 MHz XTs and 286s. It was the most successful of the bunch in getting OEM deals, but you’ve probably never heard of it. OS/2 was a superfast and stable 32-bit operating system that ran DOS and Windows software as well as its own, a lot like Windows NT. By Gates’ own admission it was better than anything Microsoft had in the 1990s. But it never really took off, partly because of IBM’s terrible marketing, but partly because Microsoft’s strong-arm tactics kept even IBM’s PC division from shipping PCs with it much of the time. BeOS was a completely new operating system, written from scratch, that was highly regarded for its speed. It never got off the ground because Microsoft completely locked it out of new computer bundles.
Microsoft used its leverage in operating systems to help it gain ground in applications as well. In the 1980s, the market-leading spreadsheet was Lotus 1-2-3. There was an alleged saying inside Microsoft’s DOS development group: DOS ain’t done ’til Lotus won’t run. Each new DOS revision, from version 3 onward, broke third-party applications. Lotus 1-2-3, although once highly regarded, is a noncontender in today’s marketplace.
Once Windows came into being, things only got worse. Microsoft’s treatment of Netscape was deplorable. For all intents and purposes, Microsoft had a monopoly on operating systems by 1996, and Netscape had a monopoly on Web browsers. Netscape was a commercial product, sold in retail stores for about $40, but most of its distribution came through ISPs, who bought it at a reduced rate and provided it to their subscribers. Students could use it for free. Since the Web was becoming a killer app, Netscape had a booming business. Microsoft saw this as a threat to its Windows franchise, since Netscape ran well not only on Windows, but also on the Mac, OS/2 and on a number of flavors of Unix. So Microsoft started bunding Internet Explorer with Windows and offering it as a free download for those who already had Windows, or had an operating system other than Windows, such as Mac OS. In other industries, this is called tying or dumping, and it’s illegal. Netscape, once the darling of Wall Street, was bought for pennies on the dollar by AOL, and AOL-Time Warner is still trying to figure out what to do with it. Once Microsoft attained a monopoly on Web browsers, innovation in that space stopped. Internet Explorer has gotten a little bit faster and more standards compliant since IE4, but Microsoft hasn’t put any innovation in the browser for five years. Want popup blocking or tabs? You won’t find either in IE. All of the innovation in that space has come in browsers with a tiny piece of the market.
One could argue that consumers now get Web browsers for free, where they didn’t before. Except every new computer came with a Web browser, and most ISPs provided a browser when you signed up. So there were lots of ways to get a Web browser for free in the mid-’90s.
And when it came to the excesses of the dotcom era, Netscape was among the worst. But whether Netscape could have kept up its perks given its business model is irrelevant when a predator comes in and overnight renders unsalable the product that accounts for 90% of your revenue.
Allegations popped up again after Windows 95’s release that Win95 sabotoged competitors’ office software, such as WordPerfect and Lotus 1-2-3. Within a couple of years, Microsoft Office was a virtual monopoly, with Lotus SmartSuite existing almost exclusively as a budget throw-in with new PCs and WordPerfect Office being slightly more common on new PCs and an also-ran in the marketplace. It’s been five years since any compelling new feature has appeared in Microsoft Office. The most glaring example of this is spam filtering. Innovative e-mail clients today have some form of automatic spam filtering, either present or in development. Outlook doesn’t. “Microsoft Innovation” today means cartoon characters telling you how to indent paragraphs.
And the pricing hasn’t really come down either. When office suites first appeared in 1994, they cost around $500. A complete, non-upgrade retail copy of Microsoft Office XP still costs about $500.
Pricing hasn’t come down on Windows either. In the early 90s, the DOS/Windows bundle cost PC manufacturers about $75. Today, Windows XP Home costs PC manufacturers about $100. The justification is that Windows XP Home is more stable and has more features than Windows 3.1. Of course, the Pentium 4 is faster and less buggy than the original Pentium of 1994, but it costs a lot less. Neither chip can touch Windows’ 85% profit margin.
And when Microsoft wasn’t busy sabotaging competitors’ apps, it was raiding its personnel. Microsoft’s only really big rival in the languages business in the ’80s and early ’90s was Borland, a company founded by the flambouyant Phillippe Kahn. Gates had a nasty habit of raiding Borland’s staff and picking off their stars. It didn’t go both ways. If a Microsoft employee defected, the employee could expect a lawsuit.
Well, Kahn decided to play the game once. He warmed up to a Microsoft staffer whose talents he believed weren’t being fully utilized. The employee didn’t want to jump ship because Microsoft would sue him. Kahn said fine, let Microsoft sue, and Borland would pay whatever was necessary. So he defected. As expected, Gates was enraged and Microsoft sued.
Soon afterward, Kahn and his new hire were in an airport when a Hare Krishna solicited a donation. Kahn handed him $100 on the spot and told him there was a whole lot more in it for him if he’d deliver a message to Bill Gates: “Phillippe just gave us $100 for hot food because he suspects after this lawsuit, your employees are going to need it.”
He delivered the message. Gates wasn’t amused.
It was a bold, brash move. And I think it was pretty darn funny too. But smart? Not really. Borland’s glory days were pretty much over 10 years ago. For every star Borland could lure away, Microsoft could lure away three. Borland’s still in business today, which makes it fairly unique among companies that have taken on Microsoft head-on, but only after several reorganizations and major asset selloffs.
The only notable company that’s taken on Microsoft in the marketplace directly and won has been Intuit, the makers of Quicken. Microsoft even gave away its Quicken competitor, Microsoft Money, for a time, a la Internet Explorer, in an effort to gain market share. When that failed, Microsoft bought Intuit outright. The FTC stepped in and axed the deal.
The thanks Microsoft has given the world for making it the world’s largest software company has been to sell buggy software and do everything it could to force companies and individuals to buy upgrades every couple of years, even when existing software is adequate for the task. While hardware manufacturers scrape for tiny margins, Microsoft enjoys 85% profit margins on its product. But Microsoft mostly sits on its cash, or uses it to buy companies or products since it has a terrible track record of coming up with ideas on its own. The company has never paid dividends, so it’s not even all that much of a friend to its own investors.
For me, the question isn’t why I dislike Microsoft. The question for me is why Microsoft has any friends left.