This is really a story of how Gates led Microsoft to its apex, ending in about 1992. It is well written and a good balance bewteen criticism, an explanation of the business model, and historical detail. The story is, to put it mildly, remarkable no matter what you think of MS and Gates.
While a student at Harvard in December, 1974, Bill Gates III and Paul Allen informed Ed Roberts by telephone that they had invented a BASIC computer language for the MITS Altair 8080, which was the first "personal computer" kit for hobbyists. Could they license it along with each Altair kit, Gates asked, to customers for a royalty fee? It was an audacious proposal, because not only had Gates and Allen invented no such thing, but they neither owned an Altair kit nor did they even know the technical specifications for the Intel 8080 chip. Skeptical of their claim, Roberts replied that whoever demonstrated a working BASIC would win the account: Gates and Allen were in competition, he told them, with 50 other "geeks" who already had made the same claim. Gates and Allen then hunkered down for 8 weeks to write the first BASIC for a microcomputer. The resulting "software", which immediately won over Roberts, was the first application of what would become Microsoft BASIC. Gates was 19.
As the company founders, Gates and Allen shared a vision that virtually every home and every office desk would eventually have a PC on them, all operating with their software. To run Microsoft full time, Gates dropped out of Harvard in January, 1977. Their business quickly expanded beyond the Altair as competing brands of personal computers emerged, including the Tandy from Radio Shack and the Apple II computer; they were also called upon to program BASIC into a number of other electronic devices. All along, Gates' goal was to gain market share, in effect setting the software standard for most, if not all, PC users. As a true believer who intimately knew the product, Gates was the principal salesman, while Allen concentrated on technical development.
During this formative period, Microsoft's corporate culture was established. Perhaps as a result of hiring many of his programmers straight out of university, Microsoft's offices (and later the campus in Redmond, Washington) took on the look and feel of a college campus, that is, an informal and a freewheeling intellectual atmosphere with "late hours, loud music, walls full of junk, anything goes dress, Coke, adrenaline, unbuttoned behavior." Employees tended to be very young with a programmer or engineering mentality; they designed their products for tech-savvy customers - male in their early 20s - like themselves, a kind of fellowship for computer adepts. Like Gates, they loved to play with and program electronic gadgets.
Microsoft hired the brightest programmers with demonstrated practical abilities. Employees were also expected to work extremely long hours as a team toward a common goal, not as strident individualists. Gates encouraged them to develop their entrepreneurial passions, forcefully advancing their own ideas of useful products for new markets. Overseeing it all was Gates, who gained the reputation of a harsh and challenging critic with a relentless drive for excellence, whether to beat the competition or out of fear of falling behind in such a fast-changing industry. As the sole remaining founder after Allen's departure in 1983, Gates remained deeply involved in both technical and business details as well as the general direction of company strategy. Nonetheless, as the principal revenue generators, Microsoft's product groups increasingly became the seats of decision-making power, in spite of Gates' active engagement.
At the end of 1979, Microsoft had $US 4 million in sales. Most of these revenues came from BASIC, which enabled programmers to create applications, such as word processing and accounting spread sheets. The level below BASIC and the other languages under development at Microsoft was the computer operating system, which performed the most elementary tasks required to run computers. With the prospect of providing software to IBM for the basic PC it was planning to market for a reasonable price, Gates and Allen began to acquire the rights to, and then develop, software for a computer operating system. Known later as DOS, it again set an industry standard that would enable Microsoft to efficiently develop languages and software applications in a single engineering environment rather than painstakingly customize them for a variety of incompatible operating systems. This would immensely simplify Microsoft's programming process as well as enhance its efficiency.
As Gates foresaw, this was a near-ideal position to occupy at the moment that the PC market was poised to grow explosively with the introduction of the inexpensive IBM PC, which was made of off-the-shelf components and hence easy to copy, or "clone". With the dual ownership of DOS and several major programming languages, Microsoft became one of the fastest growing companies in the world. By 1985, just prior to its IPO, on revenues of $US 140 million, Microsoft had a pre-tax profit margin of approximately 34%, no long-term debt, and cash reserves of $US 38 million. By 1987, the company surpassed Lotus to become the world's largest software vendor for PCs. Gates was on his way to become the richest man in the world, at least for a time.
However, the ownership of DOS and the programming languages would also, critics later claimed, confer an "unfair advantage" on the company. First, the Microsoft applications groups were accused to obtaining "inside information" from the operating systems group, which enabled them to design their products to function more quickly and smoothly than competitors could. Second, because each change in DOS required competitors to supply their latest products to Microsoft programmers to ensure compatibility, critics charged that this amounted to an inside peek into their strategy at the cutting edge of their capabilities. It was a symbiotic relationship that made many outside vendors - independent companies developing applications to run on Microsoft operating systems -uneasy and resentful. Third, DOS programmers were accused by rivals of inserting "hidden bugs" into the operating system in order to hinder the function of competing products, such as the Lotus spread sheet, damaging their competitive position and brand. The resulting negative publicity did a great deal of damage to the Microsoft brand, which began to be seen as the industry bully.
While Gates insisted that he had erected a "Chinese Wall" between Microsoft's applications division and its Operating System's Group, it was not enough to deter the Federal Trade Commission (FTC) from opening a probe into the company for anti-competitive practices that purportedly hurt consumers. By 1991, when the FTC probe became widely known, Microsoft controlled one-quarter of the applications market and dominated the operating systems market with Windows. There was speculation about the imminent breakup of Microsoft into separate companies for these markets, similar to the dismantlement of AT&T. For their part, defenders of Microsoft argued that it was winning because it was better and smarter, presenting its customers with superior products at bargain prices.
This a pretty much where the book stops, which badly dates it. Not only is the story of the anti-trust law suits left untold, but subsequent business developments - notably the internet - are not even mentioned. Thus, this is an excellent early history, but the reader must look elsewhere for more detail. Of the shelf of books on MS, in my opinion this is one of the best, and it was most useful to me for a research project. Recommended.