Bill still wants to be Steve

Bill Gates still wants to be Steve Jobs — even though Steve is dead.

How else can we explain why Chairman Bill (or rather, his trusty sidekick and CEO, Steve Ballmer) is opening a new Microsoft store today in Valley Fair, the same Silicon Valley mall as one of the earliest Apple stores — the store where the media go to take photos of people lining up to buy an iPhone.

Today’s opening marks the 12th Microsoft store. (With a decade-long head start, Apple now has more than 300.) In 2009, Microsoft bragged it would open up retail stores “right next to Apple,” and 6 miles away from Apple HQ certainly counts.

However, Microsoft is bribing people (or rather celebrities) to generate traffic at both ends of the age spectrum. On Thursday, the QB of the first decent 49er team, 55-year-old Joe Montana, is making a 5pm appearance. On Friday, the 30-something duo The Black Keys is performing a free concert (free to customers, not to Microsoft) while on Saturday one of the teen heartthrob Jonas Brothers is doing the same.

I don’t see the point, but then I’ve never seen a Microsoft store and (other than an office suite) haven’t used their products for a decade. However, after visiting the LA store, Greg Sandoval of CNET wrote:

Offering techies a stage to show off power points isn't a bad way to get people in the store.

Still, Microsoft has a long way to go before challenging Apple. Not only does Apple dominate in the number of stores, but some doubt whether Microsoft possesses Apple's sense of style or can create the same first-class shopping experience—even with all the mimicking. There's also this: consumers shop at Apple because for decades now they have loved Apple products.

Microsoft hasn't been anywhere near so successful at duplicating that kind of customer loyalty.

Some “experts” claim we should want our kids to emulate Bill and not Steve. I think Steve did a better job of understanding — and more importantly, anticipating — what excited people, while Bill produced credible incremental improvements funded by monopoly rents. Now Bill is semi-retired to count his money and (ala Carnegie and Rockefeller) burnish his reputation for posterity.

Apple sans Steve Jobs will eventually lose that élan. That’s little consolation to shareholders of Microsoft, who’ve watched Steve Ballmer (charitably) lead the company sideways since taking over as CEO.

The retail strategy that worked for Steve Jobs is not going to work for Steve Ballmer. Apple store’s worked because (as Elaine Misonzhnik put it) “The stores are experiential rather than simply a machine for moving goods.”

Sony failed at retail stores because their products failed to excite people. With the important exception of Kinect, Microsoft has also failed to excite people as customers slowly defect from its platform to the Mac, tablets, Android, the iPhone and other non-Windows platforms. Among the 4Ps, Microsoft needs to focus on product, not place.

A new year

July 1 is the new fiscal year for most state governments. Alas, unlike Will Rogers’ firm hope, we get all the government we pay for in California, and so there are lots of new laws. But one law stands out — in terms of newspaper, TV, web coverage and even freeway signs. To quote the LA Times,

Unless you have been living in a cave, you are probably aware that California's hands-free cellphone laws go into effect at midnight.

However, the big July 1 news is up north in Redmond. Again, unless you’ve been living in a cave, you’ve probably heard that the IT industry’s richest billionaire is no longer at the firm he founded 33 years ago.

Finally, InfoWorld’s quixotic quest to save Windows XP has failed, despite 200,000 signatures for its online petition FedEx’d to CEO Steve Ballmer.

Ballmer is the nice one?

On June 27, Chairman Bill Gates of Microsoft shifts from five days a week to one. It will be the end of a long era in the PC industry, and one of the longest continuous periods of leadership for an tech industry entrepreneur. Ken Olsen of DEC comes to mind, but like Scott McNealy of Sun, it didn‘t end well; I suppose Larry Ellison will hang on for a few more years, just for the bragging rights over his über-nemesis.

Thursday morning, the WSJ had a long article on the close (but occasionally testy) relationship between Gates and his Harvard poker buddy, Steve Ballmer. (Official copy here, unofficial copy here).

There were some interesting revelations (like an abandoned attempt to buy SAP in 2003) and some familiar stories (like the role of Ray Ozzie in taking over Gates’ technical leadership of Microsoft, or Microsoft killing NetDocs long before Google documents came along). But the big point was the difficulty of Gates letting go:

Eventually, in January 2000, he gave his chief executive title to Mr. Ballmer. Mr. Gates became Microsoft's "chief software architect," a new position that, in theory, was below that of Mr. Ballmer.

Soon, the two men clashed as Mr. Ballmer tried to assert himself in his new job. As the firm's iconic leader, Mr. Gates still held sway that wasn't tied to a title: In meetings Mr. Gates would interject with sarcasm, undermining Mr. Ballmer in front of other executives, Mr. Gates and other Microsoft executives say.
...
Mr. Gates concluded that it was he who needed to change most. "Steve is all about being on the team, and being committed to the mutual goals," Mr. Gates said. "So I had to figure out, what are my behaviors that don't reinforce that? What is it about sarcasm in a meeting?" he said. "Or just going, 'This is completely screwed up'?"

Mr. Ballmer says that, as the top executive, he had to learn when to override decisions and when to just "let things go," he said. "We got it figured out," he said.

Soon, Mr. Gates started to hold back negative comments in meetings. During one deliberation among the executives who reported directly to Mr. Ballmer, Mr. Gates deferred to Mr. Ballmer on an important decision, prompting Microsoft executives to silently glance at each other with surprise, recalls Microsoft Vice President Mich Matthews.

Normally industry foes think of Ballmer as the prince of darkness — as with his famous “Linux is a cancer” comment. However, the article specifically said Ballmer “worked to settle Microsoft’s many lawsuits, taking a more conciliatory line than Mr. Gates typically had.” That implies that Gates saw the lawsuits as a personal affront to his baby, while Ballmer saw resolving them as just another business problem.

While there were interesting revelations, most of it was about the former CEO, who (supposedly) will be letting go in three weeks. It wasn’t as though there were great intimate insights into what makes Ballmer or Ozzie tick.

The other interesting post is from my friend, Prof. Shane Greenstein of the Kellogg School. Shane has a regular column in IEEE Micro, has penned a two-part retrospective on the three decades of Gates’ tenure. The basic question is: was Gates smart or just lucky? Shane leans towards the latter, but comes down firmly on the side of those who see Microsoft as abusing its market power over the past decade.

Here is Shane’s conclusion:

There is one enormous irony in the long arc of Gates’ managerial career. His temperament, savvy, and intellectual breadth are qualities that would have made him an extraordinary serial entrepreneur, founding one organization after another. Yet, the road he traveled was quite different: continual employment at a single firm for over 30 years.

That ultimately led to new types of challenges in a corporate setting and the singular tragedy of Gates’ career. He tried to retain the unqualified self-serving approach that had worked so well for him as an entrepreneur, even when the actions of a dominant firm required a different touch.

This also came up during the panel discussion Monday — Microsoft’s impression of its dominance lagging the reality until it was forced by various courts to back down.

Microsoft still has persistence, so if it can convince industry (and government) that it’s tamed its ruthless streak, perhaps it still has a few good years in front of it.

Citizen Gates

On Sunday, Bill Gates delivered his final keynote at Consumer Electronics Show. He used to keynote COMDEX until it went belly up (in 2004) after 25 years. However, about a decade ago Gates made a second pilgrimage to Vegas to keynote CES, as Microsoft sought to cross over into more consumer technologies.

Most of Gates’ talk was on familiar themes of Microsoft technology everywhere. The major announcements by Chairman Bill and his staff were around content: NBC parnering with MSN to deliver on-demand Beijing Olympics coverage, as well as Disney and MGM movies available on Xbox Live. (Microsoft separately announced BT would deliver TV services via Xbox 360). They also explained a little more about the voice recognition partnership with Ford that’s been heavily advertised recently.

Even though Bill Gates is becoming non-executive chairman on July 1, it sounds like the company still has the same goal of total world domination — just without either of the founders. Steve Ballmer certainly seems capable of continuing this quixotic quest for another decade or so.

However, the most interesting thing about the keynote was the seven-minute video which purported to be an NBC news story on Bill’s last day at Microsoft. Narrated by NBC Nightly News anchor Brian Williams, it featured Gates being turned down in his post-retirement job search by U2’s Bono, Steven Spielberg, Hillary Clinton, Barrack Obama and some guy named Jon Stewart. It was moderately funny in an inside-the-industry way, but could have done without the laugh track (apparently the live CES reaction).

The farewell video is not available separately, but starts about 10 minutes into the overall Gates keynote which is posted to Microsoft’s website. Of course, it’s only available in one format (WMV), so us Mac types have to install the Flip4Mac QuickTime plugin to get it to work.

After July 1, Bill is going to spend full-time burnishing his image as a philanthropist. It certainly seems feasible — Andrew Carnegie did a world of good (not so sure about Rockefeller). Or is he just going to build a big house — like the nice one we visited last week built by Citizen Kane Hearst?

Still, it’s interesting that his two rivals and contemporaries, Steve Jobs and Eric Schmidt, are not retiring. Is it because it will take less time to burnish their respective images? Is it because they want to amass another $50 billion (each) to catch up with Chairman Bill? Or is it because they’re having more fun?

Chairman Bill not quite so rich

Several news outlets (258 according to News.Google.com) are reporting speculation that Bill Gates is no longer the richest man in the world. All the stories claiming Carlos Slim Helú now holds that honor quote one particular financial journalist in Mexico, Eduardo Garcia. As the AP (via the IHT) reported:

Slim controls Mexico’s largest fixed-line telephone company, Teléfonos de México, or Telmex, and owns other businesses in sectors from construction and music to restaurants and cigarettes. Garcia says Slim's current wealth represents nearly 8 percent of Mexico's total Gross Domestic Product.

In April, Forbes magazine reported that Slim had overtaken U.S. investor Warren Buffett to become the world's second-richest person, with holdings of US$53 billion (€39.6 billion).

But according to Garcia, Slim took over the No. 1 spot as early as late March, with a fortune surpassing Gates' by about US$1 billion (€740 million).

Garcia attributed Slim's latest rise to a 26.5 percent second-quarter bump in share prices for América Móvil SA, the largest wireless service provider in Latin America, which Slim controls. Garcia's estimate of Gates’ latest worth is based on a 5.7 percent rise in Microsoft shares during the same period.

Even Forbes — official scorekeeper for the world’s billionaires who ranked CSH #3 last fall — seems to give the report credence.

Now any personal wealth over $50 billion seems like a lot of money to me (but then I’ll never make it to $5 million, so what do I know?) Other than the symbolic value of being #1, Gates is still pretty rich.

I think the report also reminds us of the value of telephone quasi-monopolies — Telmex has a 90% share, while his faster-growing mobile business (América Móvil) has a 73% domestic market share and also is a contender in other Latin American markets. SBC AT&T only covers half the USA, but 10% of it would be worth $25 billion.

Slim has made some smart bets — buying Apple near the bottom in 1997 and getting a 6x return in a year. But then he was stupid (or, more likely, egotistical enough) to think he could turn around CompUSA. However, Warren Buffet bet on USAir and Bill Gates keeps losing billions on the Xbox, so nobody’s perfect.

Photo: Forbes magazine, October 2006.

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Bill Gates, man of the decade

Once upon a time, being named Time’s “Man of the Year” was a big deal in the U.S. (In some cases, the winner was “Woman of the Year” — as in 1936, 1975 and 1986 — but in a nod to political correctness, each man and woman got relabelled “person of the year” in 1999).

One of the ongoing controversies is that — since it began 1927 — the man/woman of the year was chosen as the one who “had the greatest impact on the news.” It’s hard to argue that names like Adolf Hitler (1938), Joseph Stalin (1939, 1942), and Ayatullah Khomeini (1979) didn’t have an impact on the news. There were also cover subjects who had both supporters and enemies, including every president from Roosevelt to the present.

I immediately thought of this duality — newsworthy whether good or bad — when, dashing through the library this afternoon, I saw the cover of the June 25 issue of Information Week. The cover illustration by Dale Stephanos deliberately evoked the package of stories about (as one headline put it) “Bill Gates’ Legacy: Tech Titan Or Tyrant?”

The good Gates story by John Foley began:

George Washington. Babe Ruth. Gandhi. Bill Gates? Say what you will about that bloated operating system Gates has been hawking for the past 25 years, history will show that Microsoft’s cofounder and chairman belongs among the world’s great champions and leaders. As he moves beyond Microsoft to throw his energies into philanthropy, Gates will be remembered as an inspiring technologist and brilliant businessman who jump-started the commercial software market and populated the world with nearly a half-billion PCs, unleashing a wave of personal creativity and productivity on a scale never before seen.

Gates’ postretirement biography will have its share of ugliness, too — a decade-long spat with the open source community, monopolistic business practices that culminated in a U.S. government-led antitrust trial, buggy software that was easily exploited — but those will be footnotes when all is said and done.

Meanwhile, colleague John Sloat emphasizes the flip side:

Certainly, Gates’ greatest legacy won’t be in terms of technological innovation. He didn’t invent the operating system, didn’t invent the word processor, didn’t invent the graphical user interface, and didn’t invent the Web browser. And neither did anyone else at Microsoft.

“Its genius has been in business and predation, not innovation,” wrote Supreme Court nominee Robert Bork and Kenneth Starr, the Whitewater prosecutor, in a Wall Street Journal editorial in July 2001. They were talking about Microsoft, but they might as well have been talking about Gates.

In addition to being brilliant, ruthless and filthy rich, Gates is a difficult person to briefly characterize. He created the idea of a mass market software industry. He crushed rivals through legal and other means. He will probably give more money to charity than anyone in world history.

I was appalled earlier this month when I read that some dim-bulb starlet put Gates on her “superhero team” (not that her other choices were much better). Gates is a tremendous success and an example of what a rich kid from Seattle can accomplish being in the right place at the right time, but I wouldn’t want him held up as a “hero” for young people.

But at the same time, any fair analysis of Gates would also have to consider the alternative. Would the world have been better off if IBM controlled PCs and delayed their adoption as substitutes for mainframes? Or if (as seems inevitable) there was an operating system monopoly — but instead of Gates, Gary Kildall or Ken Bowles had been the winner — would they have necessarily been any more benevolent despots?

The story of Bill Gates is a complex one. Among the most amusing aspects has been his ongoing rivalry with Steve Jobs, as captured in the made-for-TV movie Pirates of Silicon Valley. By the way, Gates has been on the cover of Time eight times from 1984 to 2005, including five times from 1995-1999. Jobs has only been featured five times — but he got there first, with his debut in February 1982.

If Gates sticks to his announced June 2008 retirement, Jobs may outlast him too. Whether or not the iPhone proves to be a success, I feel safe in predicting that a year from now the iPod will still be outselling the Zune.

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A few billion beats two years at Harvard

Thirty years late, this June Bill Gates is getting his undergraduate degree from Hahvahd. Except of course it’s an honorary degree he’ll get in exchange for being the commencement speaker.

This is the standard quid pro quo to attract commencement speaker. Of course, Gates has long ties to Harvard. During his 2+ at Harvard (1973-1975), he and classmate Paul Allen used the school’s PDP-10 to write the Basic interpreter that was Microsoft’s first product. They never paid Harvard for the computer time, but in 1996 Gates and classmate Steve Ballmer (A.B., Harvard, 1977) gave Harvard $25 million to build a new computer science building.

Since I became a college professor, I often get hassled by industry friends who say “look at Bill Gates, Steve Jobs and Michael Dell. Why does my kid need an education to succeed?” My own experience is somewhat consistent with that view, after 20+ years as an engineer and manager in software development without any coursework in computers (only an S.B. in meteorology).

My answer is in two parts. First, education increases human capital (teaches you something) and social capital (helps you make connections); that’s why people pay to get degrees. Second, from sitting on both sides of the recruitment table, normally someone who dropped out of college (or didn’t go to college but wants a professional-technical career) sends the signal that you don’t finish things, which is a bad signal to send.

Against this, there are rare times when the opportunity cost of staying in school is very high: Gates, Jobs, and Dell are testament to that, as were a number of entrepreneurs (many of them unsuccessful) during the dot-bomb era. But Steve Wozniak and went back to Berkeley and finished in 1986, while Sergey Brin and Larry Page remain on leave from the Stanford computer science Ph.D. program.

Hat tip to Todd Bishop and his invaluable Microsoft blog.

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