page 2 of 10
Goliath At Bay

Twenty years from now we will have broadband in homes, he explains, but until then middleband is the best you can expect. Indeed, in his presentation to the press the week after my visit, on December 7, he strangely declared “broadband is the holy grail, [but] it’s much further away than ever before.”

I ask about cable modems. But to Gates, cable modems are mere middleband: “Don’t get me wrong—you can do a lot in middleband. But cable is a shared medium. Cable modems are middleband. You get 10 megabits per second and share it with 500 homes and you are back to ISDN speeds.”

But, I protest, Netscape has a different view. It has joined with @Home (the Kleiner Perkins—TCI joint venture) to supply browsers and servers for a new scalably broadband Internet based on cable.

Gates’s voice reaches a new pitch. “I assure you Netscape has no relationship with @Home that Microsoft does not have. I didn’t spend three years talking with John Malone for nothing—three years with Bruce Ravenel [Tele-Communications Technology Ventures’ senior Vice-President and chief operating officer]. In the first place, browsers are trivial. We will have cable browsers. And we will have cable servers. We will do anything with @Home that Netscape does.” After all, TCI Technology Ventures invested $125 million in MSN (Microsoft Network).

So it went in the Redmond gloaming. I deeply admire Gates. The guts to leave Harvard at the end of his junior year and launch a new industry; the tenacity to build it into a planetary utility; the audacity and ingenuity of the original deal with IBM; the entrepreneurial confidence to cut loose from OS/2. The vision to be the only major software company to embrace Macintosh and save Apple by endowing the Mac with the leading GUI spreadsheet and word processor, Excel and Word, while at the same time gaining the graphics skills to create Windows. The bold challenge to Unix through Windows NT.

THERE IS NO DOUBT that Gates has been the exemplary business leader of our era. Compared with the leaders of IBM, heavy with “NIH” (not- invented-here) and degrees in business administration and finance, who could not even grasp the concept of sunk costs or the rule of self- cannibalization well enough to burke OS/2, who could not even see the huge opportunity to embrace the Mac OS, Gates is indeed a giant.

A week later, in an announcement emblazoned in Computerworld as “Capitulation,” Gates showed his superiority to the NIH syndrome at IBM. He declared that he was licensing Sun’s Java Internet animation language, in which he seemed suddenly to have discovered new virtues, and was essentially abandoning Microsoft Network as a proprietary paid service. It would serve as an attractive Internet entry point, open to all, with content and advertising prepared with anyone’s available software. Beyond that, Microsoft announced array of impressive-sounding new Internet products: Blackbird publication tools for the Net; Gibraltar Internet server products four times as fast as Netscape’s; Visual Basic as a scripting language for the Net already far easier and more familiar than Java; upgrades of current Word versions that allow direct creation of HTML documents; and an array of other announcements.

But all the brave talk, the best-selling book, the stilted TV appearances, the announcement of a news channel with NBC, the stream of new products, the bold embrace of an Internet strategy, the spread of Windows 95, could not disguise the rising confusion in Redmond.

All of a sudden, Gates seemed to have lost his bearings. The man who elbowed aside an on-air Connie Chung as if she were a bothersome gnat and shunned NBC as a nuisance, now was clutching the old network, of all things, as a source of news and investing in it, as if it had a future. It was as if old NBC with its Max Headrooms of smiling anchor faces and two-minute splashes of “news” could morph into an information resource simply by invoking the mantra “on the Internet.”

As in his long romance with Warren Buffett, Gates seemed to be reaching out to old money, power and prestige to bolster his company as it whirled in the vortex that he had described as the “Internet tidal wave.” It was as if he no longer trusted the PC to sustain his growth as an $8 billion revenue company, as if he needed sustenance from mass media.

With Netscape, Sun, @Home and other firms, Silicon Valley is in the ascendant again. But the software colossus is still losing ground on the road ahead, so Gates pivots on his peerless pinnacle simultaneously at the summit of the New York Times bestseller list and the Forbes 400 and looks back with a Macaulay Culkin smile from the cover of a book that is mostly news of yesterday.

Intel Outside?
Two weeks later, back in Silicon Valley from the Vale of Elah, I visit Goliath’s prime mover, Andrew Grove of Intel. With revenues more than twice as large as Microsoft’s and a price/earnings ratio less than half as high, and commanding the world’s most awesome manufacturing facilities for the world’s most complex and portentous product, Intel seems to stand on firmer foundations.

Grove opens the meeting with jokes about the “tunnel of death” that perpetually menaces his industry in the pages of the media. Ensconced in a small open cubicle on the fifth floor of the Robert Noyce headquarters in Santa Clara at the heart of Silicon Valley, with “Intel Inside” inscribed on the roof to enlighten the planes from nearby San Jose International Airport, Grove effervesces wit and irony and bonhomie where Gates seethed sarcasm and defensiveness.

With Grove, there is no longing for canonization by old money, no sell-sign craving for the sickly glamour of Hollywood and TV, no fashionable yearning for business in “content.” Grove grasps that the PC is the ascendant force in the global culture of capitalism and that the Internet consummates the PC. Nonetheless, asked about the possibility of the teleputer—the $500 Internet PC—freed from the coils of Wintel, he echoes Gates in a celebration of current PG culture that somehow misses the point.

Grove associates the teleputer with dumb or static appliances, from set-top boxes to PDAs, in the catalog of PC subspecies that emerged in hype as substitute PCs. Most of them sold a few hundred thousand units, and then expired. “The new device will be produced and it too will sell a few hundred thousand units. But not 10 million units,” he says.

[ back to top ] [ page | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 ]