Resolve and Fortitude : Microsoft's ''SECRET POWER BROKER'' breaks his silence (44 page)

That same year Apple added insult to injury as she improved wireless streaming of audio, video, and photos with her Airplay online services. Internet Explorer finally became competition with a browser called Firefox. There were rumors that Google was working on her own version. MS’s contribution for ’05 was launching Xbox’ second version, while she missed buying Skype cheaply from eBay. The next year another innovative service for exchanging short phone messages was born in Twitter. MS missed out on buying YouTube—Google beat her to that. Instead, MS contributed a mediocre version of a barely revamped browser IE 7, making her tremendously volatile to any new seriously contrived entry.

Painfully experiencing her own weakness and outfoxed by competitors offering highly innovative online services, MS in 2005 finally acted by acquiring Groove Networks. Her CEO and founder Ray Ozzie was a well-known and highly respected software pioneer. He is the inventor of Notes,
57
which Lotus acquired and which was the alleged reason why, in ’95, IBM eventually bought that company lock stock and barrel. After a short stint with IBM, Ray founded Groove. Here with some seed money from MS he developed a new product allowing multiple users to work collaboratively on computer files simultaneously. For several years Bill had had his eye on him and through the Groove acquisition he finally succeeded luring him into MS. What bugged me a bit was the way he publicly expressed his feelings about working for my old company. Asked how he felt about being employed by MS, he answered it did not feel evil and was not inconsistent with his core beliefs! Coming from him the world sighed with relief.

Less than a year later Bill promoted him to Chief Software Architect, a mantle he had bestowed on himself six years earlier. Soon the industry was at buzz assuming that Bill’s time had finally come. A year later he indeed left the company, retaining to this day his chairman title. Hiring Ray was his last act to prepare MS for a less PC centric future. Let’s see if Ray was the resurrection and the light MS was hoping for or another fatal choice. Ray, who had been preaching for a long time the advantages of providing computing services in the cloud for a mobile society, seemed a great fit for turning MS around. Intellectually unmatched in a company relying on the continuance of Windows desktops, he did not disappoint. Shortly after his arrival in October of ’05 he published a study headlined “The Internet Services Disruption.” Inside I found a description of the historical aspect of the Internet revolution and the seamless and less complex user services MS needed to offer to stay in the game or better regain some magic. Bill had formulated a similar strategy years ago, yet the company had never acted with fortitude upon it. Who else than the ex-Chief Software Architect was to blame?

Looking at the ’06 company organization chart one can easily spot one reason for what I call MS’s failing grade. At least seven high powered people in the company were in charge of inventing and evaluating strategies. Too many cooks in a small kitchen? Some of them like David Vaskevitch, Craig Mundie and Eric Rudder were longer time employees and were either Steve’s boys or Bill’s boys. Part of the two inside mafias who for a longtime had nurtured disagreements about how to excel! As Ray Ozzie entered the fray in ’05 he found a very difficult state of affairs to deal with. Remember he was a thinker and tinkerer with an acute sense for simple software novelties. At the time he considered himself a mercenary fulfilling an engagement that had been part of selling Groove to MS. As an outsider he had been put in an awkward situation to work through and with every sub-culture MS possessed. He soon found out that his above mentioned memo did not cause immediate traction. (It was rumored to be written by Bill with Ray only editing it—who knows.) On the other hand, a newly created small sized development team led by him charged forward, advancing and realizing the propagated vision he wanted the rest of the company to believe and follow.

Before his efforts eventually bore fruit MS had to endure more pain. In ’07 Apple introduced a nicely designed very capable cell phone—calling it iPhone. Far superior to any other phone of that time, it took the market by storm. Ten years earlier, when I was still around, MS had entered the same market licensing Windows CE to mobile phone manufacturers but still had nothing to show for. Her phone vendors had let her down and the development team lacked the resolve and perseverance to improve the product sufficiently to get it recognized and win design-ins.

At the end of ’08 Google finally launched her own browser christened Chrome. It took MS four months to respond with IE 8. While vastly improved over its former version, the geeks nevertheless loved Google’s speedier and leaner version much better and after a decade of nearly unchallenged leadership there was a lot of agony in store for MS. In its first year, Google’s Chrome won nearly 20 percent usage market share and has increased it ever since.

Responding to Google’s search engine crusade, MS tried three times before she got it somehow right. First an MSN search was offered, then with Ray Ozzie’s influence Windows Live Search followed, and finally in ’09 the Bing search engine appeared. While it lacked Google’s finesse and bells and whistles in version one, it was good enough when combined with some cash payment to gain an alliance with floundering Yahoo. Today the product is feature- and speed wise pretty much on the same footing with Google’s offering. But this has come at a price, sucking six billion dollars out of the company just to be more or less an at par contender.

Windows 7 followed the same year, signaling to the world MS was getting serious yet again by delivering quality goods like this leaner, faster and rock-solid OS release—yet it still missed a tablet version. Adapted for cell phone use one year after, it allowed MS to build an alliance with Nokia and reenter that market with quite an impressive product. Two other vendors including Samsung followed suite. Together they conquered only 4 percent of the smartphone market. Hardly making a dent! Four month later Windows 7 was followed by the solid and streamlined Internet Explorer version 9, putting it finally back on par with competing browsers. In 2010 Apple stunned the IT world by announcing a computing tablet christened iPad, powered by an ARM CPU. This was Apple’s second entry in this category after her ’93 tablet, called Newton, had miserably flopped. While MS and her OEMs had more or less given up on this category by 2005, Apple had seized the opportunity by taking advantage of vastly improved ARM technology. State of the art miniaturized semiconductor components and the availability of new plastic materials allowed her to create a very powerful, slick and visually appealing product accompanied by a sexy and cool looking software interface.

Despite judging Apple’s tablet entrance a significant setback for MS, I conclude that after 2007 the company was seriously aiming to get her groves back. MS was still not considered cool enough for many but at least she was losing less ground. With Windows 8
ante portas
there is even more hope. By 2010, after having been five years with the company, Ray Ozzie was still unconvinced that MS was on a path to recovery. He expressed this on stage, contradicting Steve in a widely publicized dialogue and left MS one month later. For him, Google’s open source and free of charge Android and Chrome OSs guaranteed a better future. Today he is in the process of hiring programmers for an undisclosed product based on Google’s flagships. He might regret it this time around.

Reasons may be found in the departure of several other key MS execs. One is Jeff Raikes and the others are David Vaskevitch and Robbie Bach. With no more Bill-leaning girls or boys around, Steve’s authority was bolstered. Combine this with Bill’s decreasing interference leaving MS’s destiny mostly to her CEO, and you understand what has beyond doubt cleared up Steve’s command center. No doubt he won the power struggle manifesting his control. People now follow his orders to the letter There is one further indication for this. When comparing the current org structure on the top to the one existing in ’01, Steve has effectively cut his number of direct reports by two third. This could mean two things: more autonomy for the ones he appointed or more hierarchical command layers for the troops. The former might mean less micromanagement, the later could mean decision making will take longer. I, the ever hopeful, tend to believe it signals an attitude change and an expression of trust for his underlings because now he simply can—they are “his” guys.

Today the retreat of MS’s aging chairman seems nearly complete. How did this ever happen? When I met Bill first he was an energetic, imaginative and inspiring young man. I adored his uncanny ability to cut through the chaos and to the chase, attracting—undoubtedly with Steve’s help—excellent people while inspiring and directing them to get the right things done to propel the PC industry. With Bill cultivating the art of expressing paranoia over competitive threats, emphasized by his alter-ego and mouthpiece Steve, employees were kept on their toes in the early days. But as the company proceeded, the claims repeated themselves too often. Making a mountain out of a mole hill each time a paradigm shift could be vaguely spotted like a shooting star on the night sky signaled his intellectual pump was running dry—the pool shallow. Parading out the self-same scare tactics over and over became less credible and suggested he was in fact feeling genuinely threatened about losing power, visionary guru status or both.

The label “richest man in the world” had always counted less for him than being a recognized industry leader. The Feds stamping monopolist—the scarlet M—on his forehead was a monumental humiliation for him. His desire was to be honored as savior from proprietary IT chains and for causing a personal information appliance revolution for the masses. This was what was written on the revolutionary banner he held high. As he pursued his destiny with resolve and fortitude, unyielding counter forces awoke. Not willing to dance to his tune, the establishment felt threatened and pushed back hard. Struggling desperately and with perseverance to achieve his objectives and win the glory and the rewards he desired, he answered their fighting forces with extra lethal powers of his own, surrounding himself with acquaintances obsequiously applauding and buttressing his callous aim. They rubbed off on him and because failure was never an option for him personally, I spotted a megalomaniac trait. And so did the suspicious Feds who nailed him on the cross for relentlessly trying to achieve what they considered high-handed supremacy of the IT universe.

Jackson harshly opined he had developed a Napoleon complex. I disagree. Bill was neither short in stature nor did he have other handicaps to overcome. He was indeed shooting for the moon and having attained tremendous wealth and success—and therefore power—the humble and guilelessly ambitious person I had met years earlier transformed. Even the well-intending influence of his wife could not bring him back to earthbound reality.

Steve stayed humble. Unlike Bill, he was not an intellectual who would get drunk on his own ambitions and futuristic visions. Only numbers truly excited him. Customers summarily induced reality in him and so did harsh market responses. He knew and admitted to me the company should have demonstrated better industry leadership under him, sharply criticizing his own performance. Bill was less critical of himself, wanting to reign supreme while never admitting he had experienced his own Waterloo more than once. Only when handing the reins to Steve he indirectly confessed how much his reactor core had been impacted, and off he retreated into the intellectual realm of Chief Software Architect and philanthropist.

A man of simple genius or a man of character? While each of them exists, few possess both. Intellect does not breed conscience and conscience does not breed intellect. The men or women we admire for their intellect—we do not necessarily follow! Perhaps the company would have been better off if Bill would have left earlier rather than tangentially spending time saving his legacy and subsequently missing waves of new opportunities! I wish him all the luck in the world with his new endeavor focused on and supposedly solely filled with good deeds.

I met with Bill a last time in his office and then later in his house for a farewell party of all antitrust trial participants. While the latter was fun, talking to him in his office was intimate and rewarding. He thanked me for my hard work as we chatted about past episodes we had experienced and shared. He proudly mentioned the next version of Xbox would be able to function as a full blown PC. I could not believe what I heard and remembered what I had read in the WW II German army manual: “Great success requires boldness and daring, but good judgment must take precedence.”

In July of ’08 MS’s burned-out chief software architect took the next step and left for good, retaining his title as chairman. As described, he had miserably failed in guiding the company through the Internet and social network revolution of the last twelve years of his reign. Journalists have written he and Steve re-booted the company after the settlement was reached with the Feds; I disagree. Where are the leading edge and breakthrough software products MS was supposed to deliver? Bill’s focus was far less on MS’s well-being but increasingly on his charitable foundation, distraughtly evading a tainted image. No longer limping home from combat bloody and bruised. Victorious! Inside the company he was still liked, but striving for renewed popularity had gotten in the way of making the tough choices and surrounding himself with first class advisors who drew strength out of disagreements. A simple glance at what the company missed tells the story:

Yahoo!’s and eBay’s rises, Google’s search engine popularity, being number one in Internet advertising and music/video download revenues, the birth of Facebook, Twitter and YouTube, not beating Linux on the server side, losing ground to Oracle and SAP, Apple’s iPod, iPhone, and iPad emergence, the rise of Google’s Android powered phones and tablets, and Firefox’s and Chrome’s browser popularity to name not just a few.

When I left MS, the two primary and profit-generating businesses were Windows operating systems and Office productivity applications—sometimes labeled the Old Faithfuls. They are still the foundation MS is resting upon. Funds and talent necessary for entering new fields of competition were wasted as management failed to convert MS’s staggering and established impetus and tremendous R&D spending
58
into the next tech success story.