Gates Has Grand Plans for Microsoft
If you have a personal computer, chances are that Bill Gates and Microsoft Corp. are already a part of your life. But the 38-year-old billionaire and the company he runs want a bigger part--a much bigger part.
Gates and Microsoft are not content simply to provide programs to run on your PC. They want to send you movies and TV shows. They want to help educate your children. They want to be your catalogue retailer. They want to be your global telephone supplier. They even want to help you out with your rotisserie baseball league.
Gates, in fact, appears to be engaged in a hugely ambitious quest to become the preeminent force in a broad range of new technologies, a kind of John D. Rockefeller of the information age. His company is cutting deals left and right. In the last week alone, Gates has orchestrated two major alliances. On Wednesday, Microsoft announced a venture with Japan’s Nippon Telegraph & Telephone, the world’s second-largest telephone company.
And on Monday, Gates and cellular telephone titan Craig McCaw unveiled a grandiose project that they hope will lead to a $9-billion worldwide satellite telephone system.
These grand plans carry plenty of risks. There are lots of examples of world-beating companies--notably IBM and General Motors--stumbling when they stray from their core business. And though Microsoft’s position in the personal computer software business appears unassailable, growth in that business is slowing.
At the same time, there are many in the technology world and elsewhere who would like nothing more than to see Gates--whose $7 billion in personal wealth ranks him as the second-richest American--fail. Competitors allege that Microsoft engages in a variety of anti-competitive business practices, and the Justice Department is considering antitrust action against the company. Gates and Microsoft deny any wrongdoing.
Critics and supporters alike agree that in pursuing new ventures, Gates may be spreading his bets in hopes that he will be in the right place at the right time when new technologies become commercially viable.
“My take on this is Bill’s trying to buy himself some time,” said Terence J. Garnett, head of new media at Oracle Corp., which is hoping to beat out Microsoft for dominance in the computer software market.
Clearly, though, no one can doubt the scope of Gates’ ambition. He is a great admirer of legendary capitalists like Henry Ford--a favorite book is Alfred E. Sloan’s “My Years at General Motors.” He has already achieved a degree of celebrity reserved for a rare few in the business world. In the United States, only investor Warren Buffett has amassed greater personal wealth.
There are those who joked wistfully that Gates’ recent marriage to Microsoft executive Melinda French would slow down the aggressive entrepreneur. But that has not been the case. The Harvard University dropout who scrapped and toiled to build his company into a global powerhouse seems as driven as ever. Now he wants to conquer new territory.
Some say much of Gates’ success stems from a stroke of luck--IBM’s decision to use Microsoft software for the original IBM PC. And though it clearly took a lot more than luck to build Microsoft into the giant it is today, it may be Gates’ success or failure in navigating the murky waters of multimedia computing and interactive technology that determines his place in history books.
For the moment, Microsoft’s size, strength and ambitions are generating fear among the growing ranks of companies that want to stake a claim to the new information age. Microsoft’s ownership of the software that controls the basic functions of most personal computers has yielded enormous profits. Just as important, it has given Microsoft a huge advantage in producing basic business programs, such as spreadsheets and word processors.
So powerful has the company become that many of its rivals have concluded that they must join forces or die. That has led to a wave of mergers in recent months in the $7.3-billion-a-year computer software business. Combinations announced in the past few weeks alone include Wordperfect and Novell, Adobe and Aldus, and Electronic Arts and Broderbund.
But the idiosyncratic Gates is especially enamored of the hot new field of multimedia and interactive communications. Microsoft recently launched a major push into entertainment and educational software for the home, much of it using flashy CD-ROM technology.
That’s only the beginning. Microsoft aims to provide a range of consumer information services for personal computer users, the first of which will provide reams of baseball statistics for sports fanatics.
An even bigger prize will be providing information and entertainment via the television set. Microsoft has a deal with cable giant Tele-Communications Inc. to develop software for new interactive cable systems, which will allow consumers to order movies or browse through electronic shopping malls with their television remote controls.
And to have all its bases covered, Microsoft is also moving aggressively in the telephone world. The company confirmed this week that it has tried to negotiate a broad cooperation agreement with AT&T;, though the negotiations came to naught.
With Nippon Telegraph & Telephone, though, it was more successful. The two companies announced a plan to use NTT networks for software distribution, and steps to ensure that an advanced NTT facsimile service will be compatible with a new generation of office-equipment software called Microsoft At Work.
And then there was the announcement this week that Gates was joining with McCaw to build a $9-billion global satellite telephone system--a venture that many in the communications business believe will never get off the ground.
These efforts have stirred both anger and admiration in the business. Many rivals grumble that Microsoft is deliberately sowing confusion by announcing a lot of alliances that won’t result in products for years: Just the knowledge that Microsoft is pursuing a certain type of venture is often enough to scare competitors away.
But others believe that Microsoft has an important role to play in building the infrastructure for interactive multimedia. When it ventures into the realm of cable television and telephones, moreover, it is at least picking on players who have their own designs on information age leadership, such as AT&T;, the regional Bell telephone companies and cable industry giant Tele-Communications Inc. and its very aggressive chairman, John C. Malone. And Microsoft’s record in deal-making is hardly unblemished: An effort to establish interactive TV software standards through a consortium with Tele-Communications Inc. and Time Warner fell through.
“One of the biggest challenges for companies like Wordperfect and Lotus and Microsoft is that the 1980s are over,” said Ann Winblad, a Silicon Valley venture capitalist. “Bill has to adopt the mind-set of a venture capitalist. He has to take more risks.”
Microsoft has been criticized for not taking enough risks in the past, letting other firms dominate in growing areas such as databases and networking. Gates and his company are determined not to make that mistake again.
Times staff writer David Holley in Tokyo contributed to this story.
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