reisert@mast.enet.dec.com (Jim Reisert) (06/21/91)
Microsoft - Gates, in memo, warns of attack and defeat by rivals
{The Wall Street Journal, 19-Jun-91, p. B8}
Mr. Gates' state of mind is evident in a memo he wrote in April to his top
executives in which he said that some of his worst fears were coming true:
"Our nightmare - IBM 'attacking' us in system software, Novell 'defeating' us
in networking and more agile, customer-oriented applications competitors
getting their Windows act together - is a reality." The memo was obtained by
the San Jose (Calif.) Mercury News, which quoted from it in a story published
in its editions yesterday. The authenticity of the memo was independently
confirmed by Microsoft. ... Though Mr. Gates publicly insists he still has
plans for OS/2, an alternative piece of the software that IBM and Microsoft
formally are jointly developing and Mr. Gates once heralded as the standard of
the future, he indicates he has relegated OS/2 to oblivion. "Our strategy for
the '90s is Windows - one evolving architecture, a couple of implementations.
Everything we do should focus on making Windows more successful," Mr. Gates
wrote, according to the San Jose Mercury News. That position angers IBM, which
paid Microsoft huge amounts of money over the years to lead OS/2 development.
Frustrated with Microsoft's stance, IBM began directly pushing OS/2. The split
has had unintended benefits, writes Mr. Gates, who complains that the
partnership with IBM forced Microsoft to accept "poor code, poor design and
other overhead." Ironically, in his memo, Mr. Gates instructs his senior staff
to refrain from publicly criticizing IBM, advising that they "not attack IBM
as a company, and even out public 'attacks' on [IBM's] OS/2 will be very
professional." Mr. Gates, known for playing hardball with both rivals and
allies alike, makes it clear that such restraint is self-serving. "Eventually
we need to have at least a neutral relationship with IBM," he writes. "For the
next 24 months it may be fairly cold. We can emerge as a better and stronger
company where people won't just say we are the standard because IBM chose us."
Among other observations, Mr. Gates writes:
-- Losing the legal battle with Apple Computer Inc., which is fighting in
court to prove Microsoft copied some key features of Apple's Macintosh
software for its own Windows program could be "disastrous."
-- The current Federal Trade Commission investigation into allegations of
unfair business practices by Microsoft "will use up even more executive staff
time than the Apple lawsuit has. However, I know we don't get unfair
advantages. I hope we can quickly educate the FTC on our business."
-- Microsoft isn't doing an adequate job responding to customer inquiries
about its products. "The number of customers who get a bad impression because
of this must be in the millions world-wide."
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James J. Reisert Internet: reisert@mast.enet.dec.com
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