Bill Gates (8 page)

The acquisition of NeXT took place in December 1996, but the board soon after decided that Amelio was not the right person for Apple, and he departed in July of 1997. While searching for a new CEO, the board turned to Steve Jobs to informally oversee Apple in the interim. Jobs insisted that he did not want to once again head the company he had founded, but he did take a strong hand in developing a new strategy. Despite the company’s financial and developmental problems, it still had a number of strengths. The user-friendly Macintosh remained the computer of choice in the world of education, not only among students but also with educators themselves. In the first quarter of 1997, according to figures compiled by Dataquest, Apple’s share of computer sales to the U.S. education market were 29.6 percent, three times that of its closest competitor, Dell, at 9.6 percent, with several other companies close behind. Its graphic software also remained the favorite among computer graphic designers, with its presentation software hav
ing a 51.6 percent market share and its drawing and painting software a 43.9 percent share, according to PC Data. Its share of overall desktop publishing software was even higher in these markets, at 62.4 percent.

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.

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.

“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.

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.

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 cre
ate 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.

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.

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 ex
plaining 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.

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 lived 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.

Much has been made in the press of a certain physical sloppiness on the part of Gates, with references to perpetually smudged eyeglasses, a lack of attention to his wardrobe, and (in tones of coy horror) a disinclination to bathe as often as he might. But although he is clearly far from a fashion plate, he seems to have paid more attention to his physical appearance in recent years, and when giving speeches or making television appearances he is decently enough turned out. The press has also been fixated on his habits of rocking back and forth from the waist up when thinking or incessantly tapping his feet. On television interviews, there is some evidence of restless legs but very little in the way of rocking; instead there tends to be an upper body stiffness that suggests he is consciously controlling that tendency. It has been noted that his father has a habit of rocking, too, but in a much less pronounced way.

Interestingly, despite the media’s emphasis on Gates’s “geekiness,” some reporters have also suggested that in the past he has been something of a ladies’ man. The contradiction in terms is amusing, and below the surface what the press really seems to have been talking about was Gates’s unwillingness to get deeply involved with one woman during the period he was building Microsoft into a software empire. Whether it was his unwillingness or the fact that a man given to putting in eighteen-hour workdays is something less than a romantic ideal remains an open question.

According to many reports, he was involved in the early 1980s with a Seattle computer equipment salesperson
named Jill Bennett, who is quoted by James Wallace in
Overdrive
as saying, “Although he hides it well with his hard-core exterior, and certainly will not admit it, Bill’s feelings get hurt easily.” But Gates didn’t have much time for a serious relationship. He then took up with Ann Winblad, who built a software company from scratch in Minneapolis and then sold it for millions. They apparently had a great deal in common, although Winblad was five years older. Gates still wasn’t interested in marriage, and they broke up not long after he first met Melinda French in 1987. French had recently started working for Microsoft; she was nine years younger than Gates.

The relationship with Melinda French developed gradually, with a few on-again off-again patches, into the early 1990s, when Gates, according to various friends, began to indicate that he was seriously in love with her. It is known that both his parents, and especially his mother, Mary, were pushing Gates to get married. Several male friends who were already married and had children have said that Gates talked with them about what it means to be married when one’s work plays such a central place in one’s life. Many people who know Gates well have said that Melinda French was an exceptionally good match for him. Not only did she know the computer business well enough to keep up with his intellectual and business interests but perhaps even more important, she was also a strong, independent woman with interests of her own, who was already serving on the board of a Seattle theater company. She was, in that regard, like Bill Gates’s mother, a woman perfectly capable of occupying her own time in fruitful, even important, ways.

Although Gates had broken off romantically with Ann Winblad years earlier, they had remained extremely close
friends, and Bill Gates revealed to
Time
that he had consulted with Winblad before proposing to Melinda French. Winblad approved. And as if demonstrating her own strength and independence, Melinda French agreed that Gates could go on spending a week each year with Winblad at her cottage on North Carolina’s Outer Banks. This long-standing excursion is described by both Gates and Winblad as a chance to unwind and talk about the world. That this yearly rendezvous is so openly acknowledged lends credence to the idea that it is also completely above-board. What Melinda French Gates really thinks about it, however, is unknown; she does not give interviews, although she apparently has no problem with her husband’s discussing such subjects as the raising of their children when he is asked questions in interviews.

Both Gates and his good friend and fellow billionaire Warren Buffett have talked about how Gates proposed to French. Gates and French were returning from Palm Springs on a chartered jet, which Gates arranged to have land in Omaha, Nebraska. The reason was that Buffett owned a jewelry store there, and even though it was a Sunday night, he personally opened it up and helped the couple pick out an engagement ring. For a supposed “computer nerd,” this sounds more like a romantic plotline out of a Danielle Steel novel.

The proposal, and the bestowal of an engagement ring with an enormous diamond, took place on the final weekend of March in 1993. The bride-to-be was not just an anonymous Microsoft employee. Since being recruited in 1987, she had risen steadily through the middle-management ranks and was now a unit manager for the desktop publishing software known as Microsoft Publisher, in charge of nearly fifty employees. With her stock options, she had
become one of the twenty-five hundred Microsoft millionaires. During the engagement she went right on working, but it had been decided that she would not continue after the marriage. Although there was inevitably a great deal of press coverage when the engagement was announced two days after the special trip to Omaha—word had already spread through Microsoft in a deluge of e-mail—her friends and family followed her wishes and refused to give interviews. Even former neighbors in Seattle and in Dallas, where she had grown up, were asked to keep quiet, and with security considerations having been made explicit, almost all complied. The few people who were willing to talk to reporters were mostly friends of Bill Gates, and they universally touted the match as an excellent one.

The wedding took place nine months later on January 1, 1994, on the Hawaiian island of Lanai. Lanai is small, largely covered with former pineapple fields. It has only three thousand permanent residents, and its two plush, secluded resorts, built in 1990 and 1991, are favored by Hollywood stars who cherish their privacy. Gates rented all the rooms at both hotels, for security reasons, although many were not needed for the fewer than one hundred fifty guests. They included a number of Microsoft executives, headed by Steve Ballmer, who was best man, Paul Allen, close friends like Warren Buffett and former girlfriend Ann Winblad, and a single media luminary,
Washington Post
owner Katherine Graham, who was a longtime friend of the Gates family. Great effort had been taken to keep the wedding secret from the press, and although word leaked out in the last day or two before the wedding, the island was too cut off for the media to mount a paparazzi assault.

Most of the guests arrived several days before the Sat
urday of the ceremony. They were able to play golf on the island’s two courses, one designed by Jack Nicklaus, the other by Greg Norman. There were parties, gifts for the guests every day, a luau with fireworks. On New Year’s Eve, Bill Gates sprung a very special surprise on Melinda French as he casually introduced her favorite singer, Willie Nelson, who performed on the private beach of the Manele Bay Hotel where the Gates and French families were staying. According to James Wallace, the highlight of the evening came when Nelson sang, “I’ve got the money, honey, if you’ve got the time.”