The hegemony of its operating systems paid off in multiple ways for Microsoft. Early incarnations of its applications, like Word and Excel, had been designed from the bottom up to work with MS-DOS and then Windows, giving Microsoft an edge over other software companies like WordPerfect and Lotus, which also made productivity-oriented applications. In 1990, Gates had bundled all his productivity applications into a package called Microsoft Office. Sales of Office were so robust that other software developers were pushed even further to the side. By 1991, Microsoft was far and away the world’s dominant software company. And Bill was nowhere near done. He was about to steer Microsoft into a position so powerful that only the government could restrain the company.
All the success had transformed the public’s perception of Gates himself, of course. He had started the 1980s as something of a supplicant to IBM and Apple. Back then, Jobs was the rich face of the computer industry, his stake in the company he founded worth $256 million immediately after its IPO. When Microsoft went public in March 1986, Gates’s 45 percent in equity was worth $350 million. By the time of our interview, he had become the world’s youngest billionaire. Steve’s bank account, meanwhile, had plummeted while he scoured around unsuccessfully for another great new product. Now Bill ruled the roost, while it was becoming increasingly difficult to forecast a future in which Steve Jobs would have any important role to play in the computer industry.
IN THEORY, the interview had the potential to be a fistfight. Both men had developed—and, in many ways, earned—serious reputations as prickly, cut-throat competitors.
Many people have forgotten what a difficult guy Bill Gates could be. In the years since his 2000 resignation as Microsoft’s CEO, as Gates has transformed himself into a global philanthropist, the public has seen a thoughtful, caring, and sharply focused elder statesman try to tackle enormously difficult public health and education problems. All those qualities (minus the “elder” part) were in place in 1991, but back then Bill was competing in the computer industry, not investing in a cure for malaria and prodding countries to attack AIDS, provide cleaner drinking water, and find ways to help farmers weather global warming. Gates was trying to execute a plan to make Windows ubiquitous, running on anything that could compute, and he lived in constant paranoia of leaving weak spots that would allow a competitor to pierce the shell he’d built around the industry. “That is the stupidest thing I’ve ever heard,” he would snap at coworkers whose business analysis failed to live up to his standards, and then drive his point home by shaking his head in exasperation and muttering, “That is so totally random.” Bill, with some justification, always thought he was the smartest guy in the room. He was willing to explain his rationale for a decision once, but pity those who needed a second recitation; that too could provoke a sarcastic outburst or, worse yet, a simmering passive-aggressive anger that would later reveal itself unexpectedly, in withering fashion.
In public, the two men had attacked each other regularly, even gleefully, and they would continue to do so for years. Steve cast Bill as a philistine with zero aesthetic sense and little originality. It was a view he’d hold throughout his life. Bill, he told me repeatedly, knew no other solution than throwing money and people at a problem, which was why Microsoft’s software was so convoluted and mediocre. (Steve conveniently ignored his own spendthrift ways at NeXT.) Bill bluntly painted Steve as a loser who had fallen from importance because of his own stupid decisions. He was relentless about NeXT’s insignificance. Later in the 1990s, when Jobs supported the Department of Justice’s effort to rein in the Microsoft monopoly, Gates repeatedly threw Steve in with the vast set of “losers” who “whined” about what he saw as his company’s deserved success.
But that Sunday in July they behaved themselves, with little friction and no open acknowledgment of the obvious disparity in their wealth and power. Steve was too proud to concede Bill’s preeminence. Bill was too well-behaved to gloat over Steve’s current woes. They accorded one another a certain level of respect. They understood each other’s strengths. With nothing at stake and the country’s leading business magazine there to pat them on the back, none of the negative sentiments flared.
Face-to-face on this Sunday afternoon, the slights—and there were a few—were couched. After Bill attacked John Sculley for wanting to license Apple’s operating system so other manufacturers could create Apple clones, Steve got a shot in at both Sculley and Gates. “I’m not interested in building a PC,” Steve said, criticizing the standardization that Bill had promulgated. “Tens of millions of people needlessly use a computer that is far less good than it should be.” That eventually led to the only outright insult, which they both found funny. Making the case that Microsoft’s dominance hindered innovation in the industry, Steve said, “In the MS-DOS world, there are hundreds of people making PCs.”
“Right,” said Bill.
“And there are hundreds of people making applications for those PCs.”
“Right.”
“But they all have to pass through this very small orifice called Microsoft to get to one another.”
“It’s a very large orifice,” Bill replied, leaning way back in his chair as he laughed. “I keep telling you it’s being extended.… It’s not even an orifice. We shouldn’t have used that term.”
“It’s been used before,” said Steve, grinning like a little kid.
“Which orifice?” Bill asked, grinning right back at Steve, before catching himself and leaning forward again. “Anyway …”
Bill was the steadier and more consistent of the two. His vision of the history of the industry was as assured as his sense of where it would go. “I wrote down in 1975, when I started the company,” he explained, casting his extraordinary foresight as nothing more than a simple vocalization of what should have been obvious to everyone, “that there were two focuses of technology in terms of building computers. One was chips, the other was software.” He went on to add, “My approach to the PC market has been the same from the beginning. The goals of Microsoft to create the standards for that machine have been the same from day one.” He didn’t apologize for any aspect of Microsoft’s success. He wouldn’t outright acknowledge its near monopoly, but he argued forcefully that standardization around his operating system and Intel’s chips benefited everyone. “Now the latest chip technology passes through to the consumer so fast and so efficiently,” he said. “When Intel comes up with a new microprocessor chip, a few weeks later two hundred PC companies have come up with a machine, and you can drive out to the computer warehouse and buy a machine. It’s the same if you take software. Because the volumes are so immense, incredible software that’s ten times as good as anything that was out even five years ago is available for essentially the same price. Even in strange categories you can choose from so much software.”
Given his uncertain position at the time, it wasn’t surprising that Steve was the more volatile participant. He was willing to admit a few mistakes, even allowing that Bill was correct in saying that Apple should have taken the IBM PC more seriously. Then he took that thought further. “The singular event that defined Apple’s place in the industry in the 1980s was actually not the Macintosh,” he announced. “That was a positive event. The negative event that defined Apple’s place was the Apple III. It was the first example I’d seen in my career of a product taking on a life of its own and developing way beyond what was necessary to satisfy customer demand. The project took eighteen months more than we’d planned and was overdesigned and cost a little too much. It’s interesting to speculate what would’ve happened if the Apple III had come out right, as a lean, mean upgrade to the Apple II that offered incremental features that made it more suitable for business. [Instead,] Apple left a real hole.” Later, he made clear that much of the blame could be laid at his feet: “One of the reasons that the Apple III had problems was that I grabbed some of the best people from that project to do research on how to turn what I saw at Xerox [PARC] into reality.”