This David Takes Aim at Microsoft
Best known for his upset victory over Goliath, David was also a better-than-fair psalmist. Today, in California, he might instead write software. With a personal computer for a slingshot, he would surely aim at Microsoft.
What a difference a few millennia make. Far from being king, the David of our tale, Quarterdeck Office Systems, mainly tries to keep one step ahead of Microsoft’s thudding footfalls, lest the software juggernaut created by Bill Gates squash it like a bug.
Everybody likes a David and Goliath story. The trouble with this one is that Goliath is winning.
Quarterdeck’s respected co-founder and chief executive, Terry Myers, remains cheerful even though her company’s plunging stock price has cost her $35 million in paper losses, and she has wagered the farm on a single risky new program.
Yet reports of Quarterdeck’s demise are invariably exaggerated. In 1984, for example, the company made a splash with personal computer software that could run several programs at once, in adjustable windows on your screen. When IBM announced plans for a competing product called TopView, Quarterdeck’s sales collapsed and Myers had to borrow $20,000 from her mother to keep the business afloat.
Quarterdeck was still private then, and its venture-capitalist owners had accepted an offer from Gates to buy what was left. But after a visit, he lowered his bid, and the deal collapsed.
Thanks to nimble programming and acclaimed products, Quarterdeck went on to post staggering year-to-year sales and earnings increases right up until this year. And TopView was a dog.
“One of the interesting things about Quarterdeck,” says Stewart Alsop, editor-in-chief of the computer magazine InfoWorld, “is that nobody’s ever thought they had a future.”
In some ways, Quarterdeck is the quintessential California story, a software concern started by a couple of really bright people--the other was computer whiz Gary Pope, now executive vice president--who aren’t big on bureaucracy or baloney.
The dress code runs to jeans, and the modest offices are near the beach, but they’re cheap. Instead of the edifice complex that afflicts many growing businesses, Quarterdeck rattles around in seven separate rented structures. Myers and I monopolized a conference room one afternoon that staffers had hoped to use for an after-work game of Dungeons & Dragons.
But in other ways, Quarterdeck is highly unusual. It’s in Santa Monica rather than Silicon Valley. Its chief executive is a woman. And its fate has been to compete with Microsoft in the field of operating environments, which is a little like competing with the Pacific at wetness.
“They were playing in Microsoft’s back yard, and the giant came out and took their toys,” says Jesse Berst, who publishes a newsletter called Windows Watcher.
Quarterdeck and its investors have paid the price. Once as high as $26.875 a share, Quarterdeck closed Monday at $4.625, even though the company is cash-rich and debt-free.
Quarterdeck is still making money, but if you want to know why it may yet become another high-tech road kill, go look at some computers.
Buy an IBM-compatible PC and it will probably come with an operating system--allowing it to read programs and carry out instructions--called MS-DOS. MS stands for Microsoft. That PC is also likely to come with a graphic user interface--a colorful mask for inscrutable DOS--called Windows. That’s also made by Microsoft.
Just because Microsoft had annual revenue of $2.8 billion, don’t think Goliath is ignoring David (who had $48 million). On the contrary, Microsoft “makes it hard to use their stuff with Quarterdeck stuff,” says computer writer Robert X. Cringely, who raised hackles with his book “Accidental Empires,” about the founding nerds of Silicon Valley.
It’s important to understand that Windows allows you to use several software programs at once in a process called “multitasking,” which is all the rage now, and is surely the wave of the future.
“Our pain is, we had the strategic idea in the industry in 1982,” says Myers, who is 48. She adds: “We didn’t have the clout.”
Quarterdeck has some more recent pain. The company makes America’s No. 1 selling retail PC program, a sophisticated PC memory manager called QEMM. But MS-DOS now has a memory manager built in. It’s not as good, but it comes with the machine.
Quarterdeck also makes some deft windowing software--the family is known as DESQview--that allows multitasking even on relatively primitive computers. But Microsoft ships a million copies of Windows every month.
In an attempt to stay ahead of Microsoft, Quarterdeck has brought out a new windowing program called DESQview/X, which runs Windows and DOS programs. More important, it enables a personal computer user on a network to tap into other corporate computing “platforms,” such as UNIX. “Pretty neat,” says software analyst Bill Kesselring at Dataquest, a market research firm.
Unfortunately, says Cringely, “DESQview/X has been Quarterdeck’s big problem. It has taken at least a year longer than they thought to get to market.” It’s also a memory hog.
The delay could prove costly because next year Microsoft is coming out with Windows NT, a whole new operating system that does multitasking, replaces DOS and (Microsoft hopes) can even supplant UNIX.
Multiplatform network computing is the coming thing, and if Quarterdeck can establish itself in that market, it could make it. That won’t be easy, given Microsoft’s vast resources.
But to the glee of Microsoft-haters everywhere, Quarterdeck just won’t quit. What’s more, with Windows NT moving in on the network market, David may have gained some powerful allies in companies such as AT&T;, which is still behind UNIX. “Quarterdeck is in active alliances with some of the major anti-Microsoft parties in the business,” says Cringely, who believes that Quarterdeck’s future is bright but not necessarily independent.
Ann Windblad, a Silicon Valley venture capitalist, says Quarterdeck will be around in five years. It just won’t be another Goliath. “They’ve managed to be a real survivor,” she says.
Funny, that was one of David’s skills too.
