William Henry Gates III, known familiarly as Bill, has strong claim to being, along with Steve Jobs (q.v.), the person most responsible, for good and ill, for making the computer the ubiquitous appliance it has become in the last several decades. As a result, he has become one of the world’s richest people, a position he achieved before he was 40 years old. In recent years, he has occupied the position of the richest person in the world several times, and the company he founded when he was barely 20 years old, the Microsoft Corporation, has similarly achieved world-dominating status, particularly in the technology realm, only challenged by Jobs’s Apple Corporation. Since giving up day-to-day control of Microsoft in 2006, Gates has devoted himself to overseeing the work of the charitable foundation he started with his wife Melinda in the mid-1990s, dispensing grants to combat disease in Africa, improving agriculture in the developing world, and reforming education in the United States. He has become an outspoken advocate encouraging the world’s wealthiest people to give away up to half of their wealth to philanthropy.
Gates has not achieved his status as the leading figure in the computer industry without attracting his share of public criticism, ranging from technical issues related to Microsoft products to his company’s business practices, which resulted in a multiyear antitrust suit brought by the U.S. Department of Justice and many states’ attorneys general in the late 1990s, and similar anti-monopolistic actions initiated by the European Union. Although the government’s claims against Microsoft were generally upheld in the trial court and on appeal, the company was not subjected to the extreme remedy of divestiture the government proposed and has continued to operate with minor changes, still the dominating force in software and applications for personal computers (garnering nearly 90% of the market, according to estimates from early 2011), although falling behind others in innovative products and services. Apple became the number one company in market capitalization on the strength of its iPhone, iPod, and iPad, and Google and Facebook have been the services or programs of the early 21st century that have eclipsed Microsoft’s efforts (although Microsoft paved the way for them).
Gates’s (and Microsoft’s) rise to dominance in the computer industry has become the stuff of legend. As a gifted and obsessive teenager, Gates was attracted to computer technology at his Seattle, Washington, private school, where he met an older student, Paul Allen, and formed a computer club, working on a time-shared mainframe computer. By the time Gates was a senior and Allen was in college, they had devised a registration system for the school, developed a traffic monitoring system, done some programming for a computer maker, and worked on a major power project for a contractor for the U.S. government (they had also run into trouble making unauthorized use of the school’s timeshare). Gates went off to Harvard and continued his computer work (in preference over his regular course work; he also participated in all-night high-stakes poker games) and Allen dropped out of the University of Washington to work for Honeywell Computer and to be near Bill in Massachusetts. In the fall of 1975, with more than a modicum of bravado, Gates and Allen undertook to provide a software program for the newly announced Altair 8800, marketed by a small New Mexico company as the first affordable kit home computer, even though the two did not have access to the machine. Using a simulator Allen devised on a minicomputer at Harvard, they spent weeks of nonstop work developing a version of BASIC, a computer language for beginners developed at Dartmouth College. When Allen flew to New Mexico and tested the program on the actual machine, he was perhaps as startled as the machine’s designers that the program actually worked. They signed a deal and Microsoft (or Micro-Soft, as it was originally styled) was born. Gates dropped out of Harvard and moved to Albuquerque. As personal computers from other manufacturers began to appear on the market, Allen and Gates and their then small cadre of friends and classmates were in a position to fill the need for programming languages and some other applications, especially as they had negotiated a nonexclusive contract with Altair’s manufacturer.
The company was not an overnight success by any means, but it did modestly well for a company run by two twenty-somethings and a ragtag band of followers living out of cheap apartments and subsisting on a diet of fast food and Coca-Cola. And they began to develop a high profile in the world of computer specialists, which brought them to the attention of executives at IBM who in the summer of 1980 were engaged in a top-secret project of getting into the personal computer business. Despite its vaunted reputation for dominance in the mainframe business, “Big Blue” had to go outside the company to find a suitable operating system for its projected PC. The only problem was that Microsoft (they had dropped the hyphen and moved to Seattle by this time) had been focusing largely on computer language programs and did not have an operating system. Gates put the IBM people in touch with Digital Research whose operating system CP/M was among the few on the market. When IBM failed to make a deal with Digital, they returned to Microsoft, and Gates and company in another moment of seemingly youthful daring (or hardheaded business opportunism) signed on to develop a system for them.
To meet IBM’s deadlines, Gates negotiated with another Seattle company for licensing rights to a clone of CP/M that it had developed called QDOS; modified to meet IBM’s specifications, this program became known as PC-DOS, or MS-DOS. Within a short time, IBM’s PCs had set the standard for the market even if they did not dominate it. MS-DOS, despite technical limitations, likewise became the de facto standard and did dominate the market; other operating systems, such as Digital’s CP/M, fell by the wayside in the flood of IBM clones that appeared in the mid- to late-1980s (Apple remained the major holdout using its own proprietary system). This position fueled the growth of the junior partner by unheard of sums, the company’s revenue soaring from a not immodest $2.9 million in 1979 (before DOS) to more than $1 billion a decade later; the junior partner soon outstripped IBM, which sold off its PC business in the early 2000s (in 2010 Microsoft had revenues of nearly $62.5 billion).
Key to the further growth was Microsoft’s development of Windows and its attendant integrated applications, like MS-Office. The development of Windows followed some of the same pattern as the development of Microsoft’s other products: a program idea borrowed from somewhere else, released when it was still far from perfect, and by dint of Microsoft’s position, dominating the market. The idea of a graphical user interface (GUI) was developed in the 1960s by Douglas Engelbart at the Stanford Research Institute and was later developed along with Engelbart’s other key idea, the computer mouse, by the Xerox’s Palo Alto Research Center (PARC). Both Steve Jobs and Bill Gates saw the prototypes for GUIs at PARC and Jobs and Gates agreed to collaborate on developing a similar system for a reasonably priced machine that Jobs was developing called the Macintosh.
While developing the system for Apple, Microsoft was also developing Windows for itself; the two competing systems appeared within a short time of each other with the Mac debuting first in early 1984 (with its famous Super Bowl commercial) and Windows in early 1985 (it had been announced almost two years earlier in a major PR campaign). In the opinion of many computer experts, the Mac was the superior system although Windows became the dominant seller primarily because Apple maintained proprietary control over its software and Microsoft licensed it to all comers. Windows went through several upgrades and iterations before it reached its dominant position, but even after eight or nine iterations it was still notoriously prone to malfunctions, error messages, and software viruses. Apple sued Microsoft for infringing the “look and feel” of its software, but lost its case. A decade later Microsoft rescued Apple by investing $150 million in the company.
The so-called Browser Wars of the 1990s were another example of Microsoft’s coming to dominate the market, but in this case it led to the major antitrust suit filed by the federal government. By the early 1990s, Microsoft was being investigated by the Federal Trade Commission for allegations of hard-nosed business practices that competitors believed lessened competition in the industry. A mid-1990s suit by the Department of Justice led to a consent decree in which Microsoft undertook to avoid “tying” one software product with another and to forswear exclusive contracts or sweetheart deals with equipment manufacturers and charging royalties per machine whether the manufacturer used the product or not. The agreement, however, permitted Microsoft to develop integrated products. The appearance of Netscape Navigator, a stand-alone software product for surfing the Internet, opened up the Internet for the first time to a mass user base—heralding a new direction in personal computing. Microsoft launched a crash development program for its own browser (using the code for Mosaic, the original browser software from which Netscape derived, as a basis). Appearing as an icon in the Windows environment, and essentially given away for free, Microsoft’s browser, Internet Explorer, became the dominant product in the field, while Netscape had to depend on paid downloads to attract buyers. Netscape, along with Sun Microsystems, lobbied the Justice Department to bring suit against Microsoft for violating the antitrust laws by using its position to eliminate competition. The government agreed and the case went to trial in 1998 when both sides refused to consider a settlement. The company maintained that Internet Explorer was integrated into Windows and was an essential element in its operation, as permitted by the consent decree, and that they were the victims of anticompetitive actions by their rivals; the Justice Department argued that Explorer was illegally tied to Windows and that Microsoft had used its market position to stifle competition and wanted to make an example of Microsoft.
The trial was marked by several legal innovations introduced by the judge, Thomas Penfield Jackson, but also by the videotaped deposition of Bill Gates that showed him as an evasive and uncooperative witness. The government’s lead attorney, David Boies, undermined most of Microsoft’s witnesses. Especially damaging to Microsoft was a videotaped demonstration that the company produced designed to show how removing Internet Explorer from Windows was a difficult and cumbersome process and slowed down Windows, which Boies revealed as being faked. The judge ruled in favor of the government on most issues and ordered the extreme remedy of breaking up the company into separate entities—one developing and selling operating systems and the other applications. Although an appeals court generally supported the trial court’s findings, it held that Judge Jackson had acted improperly in some aspects of the trial and appointed a new judge to oversee the case who encouraged a settlement. A change in the ideological orientation of the Justice Department after the ascendancy of George W. Bush as president in 2001 allowed Microsoft to emerge somewhat bloodied in reputation but intact (but the antimonopoly action of the European Union against Microsoft resulted in a financial penalty of nearly 500 million euros; private suits brought by Microsoft’s competitors resulted in the company paying nearly $6 billion in out-of-court settlements).
Until his public humiliation in the deposition tape, Bill Gates had acquired a reputation as a smart, indeed brilliant, hard-driving, take-no-prisoners CEO, a visionary not only in developing technology but also in running a business. To many observers, he was Microsoft even when the company expanded to include many thousands of employees (Allen left the day-to-day work in the company in 1983 following treatment for Hodgkin’s disease; Steve Ballmer, a Harvard friend, joined the company on the business side in the 1980s and became CEO in the early 2000s). Despite (or perhaps because of) his extreme youth when he started Microsoft, he was a relentless boss, using a combination of intimidation and cajolery to push his employees to achieve his goals. Famously argumentative, he became known for his profanity-laced put-downs of ideas he found less than engaging (“That’s the stupidest [expletive] idea I’ve ever heard,” a favorite put-down used also by his rival Steve Jobs). On the other hand, he was also open to new ideas as long as the proposer could stand up and make his case.
William Henry “Bill” Gates III was born in Seattle to William H. Gates Jr., an attorney, and Mary Maxwell Gates, the second child of three. Bill’s father was actually William H. Gates III but he changed it to William H. Jr., when he went into the Army in World War II. Mary came from a banking family and taught school. They sent their son to a private preparatory school, Lakeside, where, in the eighth grade, Bill encountered the computer terminal that the school Mothers Club had bought from proceeds of a rummage sale and wrote his first computer program. Graduating in 1973 with SAT scores of 1590 (out of possible 1600), he went on to Harvard where computers began to take up as much of his time as classes. In his sophomore year, he devised an algorithm that solved a complicated math problem no one else had been able to. Harvard computer scientists sat up and took notice. But by the fall of 1975, Gates had left Harvard and moved to Albuquerque, New Mexico, to join Paul Allen, take on the Altair project, and start their own computer software company, Microsoft. He never went back to Harvard.
For most of Microsoft’s rise to prominence through the 1980s, Gates was as hard on himself as he was on his employees. Gates would routinely work 12 to 16 hour days, often seven days a week, sleeping in his office, never taking a vacation of longer than a few days. He was prone to eating junk food and for recreation he would drive his sports cars at high speed. Notably frugal in the early years, he became more free-spending as he got older, building a $100 million estate that is the state of the art in electronic controls and spending $30 million to acquire Codex Leicester, a notebook manuscript of Leonardo da Vinci. He had several romantic relationships but did not marry until 1994 when he married Melinda French, a manager in the company. They now have three children. Extremely reticent in the public spotlight in his early years, except to tout his company products, Gates became the subject of much gossip and speculation, even feeding paranoid fantasies (some offered in jest) as to his plans to dominate the world. On the other hand, his key products came in for much competitive ribbing from Apple in a series of humorous commercials in which the PC (and its operating system) was personified by comedian John Hodgman (who has a superficial resemblance to Gates) as a smug but slightly slow-witted corporate type in contrast to actor Justin Long’s cool embodiment of the Mac.
In recent years, Gates has matured into a senior statesman and philanthropist, appearing in public and on television interviews to address his campaigns to foster medical research on AIDS and malaria and to address issues of educational improvement in the United States and global warming. One of his closest friends, aside from his wife, is billionaire investor Warren Buffett, who pledged to give a substantial portion of his wealth to the Gates Foundation under the condition that the foundation match his annual contribution and spend it within the year, and together they have campaigned to make large scale more common among billionaire executives. Although some of his views on education reform have been criticized by public education advocates and the motivation for some of his campaigns in the developing world have been questioned as public relations efforts, Gates’s philanthropic work was recognized when he was named along with his wife Melinda and rock star activist Bono as Time magazine’s Persons of the Year in 2005.
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