His Way

Bill says Microsoft just wants to make good software. So how will it end up owning Sinatra tunes?

Go ahead and hate Bill Gates, if you want. But hate him for the right reasons.

Don’t hate him for his clunky software. Don’t hate him for his unimaginable wealth (largely on paper anyway). Don’t hate him for what he is (a bore). Hate Gates because he can’t help himself. He must squash his rivals, intimidate his allies, and treat his customers with a mixture of affection and resentment. Hate the system that produced him and that won’t let him rest until the perverse logic of the information age plays out. Hate Bill Gates for what he will become—not the quintessential robber baron, but a 21st-century Wizard of Oz. We need not grasp the technicalities of software to decode his future. We need only consult a formula as low-tech as a cake mix: Take some garden-variety insights into the future of electronic commerce, mix in some immutable truths about human nature, stir briskly, and—presto!—the arc of Gates’ life comes into view.

What drives him? Is it greed? Lust for power? Vanity? Pure genius? These questions overshoot the mark. His compulsions are less grand, his talents too elusive, to justify rarefied riddles. At bottom, Gates is a postmodern P.T. Barnum, a master at educating the great unwashed about their latent desires for computers. But Gates is no puppeteer. Like Henry Ford, who tried to put a car in every driveway, he is a slave to the mass audience. Mammon is pulling his strings.

“One size fits all”—this maxim sums up Gates’ deepest belief. Though derided by elitists, the standardization of the personal computer has always been the source of its ubiquity. Gates saw this even as a fledgling student at Harvard. Envisioning a computer on everyone’s desk, he earned his reputation as a rebel with a keyboard by dropping out of college. Then he stood the crypto-hippie PC culture on its head by becoming the first to insist on payment for his programs and to equate copying software with theft.

Two decades later, Gates utterly dominates desktop software. Why not declare himself a winner and call it quits? In my many conversations with Gates this past decade, he’s never shown even a glimpse of slowing down. The marriage of electronics and communications is making it possible to compute on the run, anywhere, anytime, and for any purpose. This new landscape—some call it cyberspace, others prefer the less glitzy term “electronic commerce”—has forced Gates to expand his sights. His prime directive is now something like this: If you exist, I make money.

Take this literally. For Gates to prosper in the next century, every move you make, every step you take, will earn him money. Lots of it.

For this to be true requires no grand conspiracy, only the logic of digital electronics and Gates’ capacity to straddle its breathtaking expanse. At 42, he is young enough to outlast his older rivals and wealthy enough to outmaneuver the upstarts nipping at his heels. While he owns little content, his experience as a definer of software standards puts him in a better position than anyone else to control the package in which information is delivered. At a time when information is separating from its traditional physical shell, whoever controls the delivery package will control the lion’s share of the profits.

Until now, information was virtually identical to its husk. The value of The Sun Also Rises was realized only in its paper form. Kind of Blue, the classic Miles Davis recording, was peddled as a piece of vinyl. What happens when the information can be retrieved instantly, wirelessly, and without further need for storage? What happens when it doesn’t exist at all except at the point of consumption?

Consider one possible outcome of this trend: Imagine it is 2025, and you are shopping for a new stereo system. For little more than the cost of an old rig, you can buy one outfitted with the latest Microsoft Music operating system. Instead of requiring an expensive library of CDs, the Microsoft model frees you from actually owning any recorded music. The machine lets you download any tune in the massive Sony/Columbia library (oh, forgot to mention that Microsoft bought Sony in 2010) by calling out its name. You gleefully shout, “Sinatra, ‘My Way,'” and grin when Frank’s voice booms out.

In today’s lingo, Microsoft Music would be a service, a kind of custom radio on demand. For each airplay, Microsoft would impose a tiny charge, keeping track of the charges with its spreadsheet software and automatically withdrawing payment from your bank account. Conceivably, Gates could assemble the information he would need to launch Microsoft Music by forging partnerships with owners of recorded music. But since his service would ultimately destroy demand for the artifact—the record, CD, or whatever the music moguls come up with next—content owners probably won’t let Gates lay his hands on their booty. Sooner or later, Gates will have no choice but to buy the rights to music, books, movies—you name it, he’ll need to merge it into his software.

Now a disclaimer. I have a vested interest in seeing Gates as a Disney, a Time Warner, or a Dow Jones. In the six years I covered Microsoft for a daily newspaper, I repeatedly needled Gates by suggesting that he would inevitably become the greatest acquisitor in human history. He protested against this loudly, never deviating from his party line: He is a builder, not a buyer. He simply wants to provide tools to help manage information and entertainment products created by others. He says that when he moves into content, such as his Encarta CD encyclopedia, he builds products from scratch.

Yet Gates is famous for contradicting himself; unlike many lesser tycoons, he would rather be right than consistent. If he says he’ll never do something, you can figure that before long it will become his first option. So beware when he protests too much. If the Web offers any lesson, it is that the boundary between tools and content is disappearing. In order to dominate one, you must dominate both.

In the end, Bill Gates must buy himself a whole new set of toys. He will buy so many companies, in so many seemingly disparate industries, that his critics today will pine for the time when he was merely the king of software.

Again, this will not flow from greed, but from deep technical shifts that even Gates, with all his power, must bend to. Technology is making it possible to mediate all of human experience through a computer, from shopping to education to sex. Never mind that these computers may masquerade as CD players, cell phones, dashboards, or even electronic chips embedded in the body. No matter what they look like, they’ll all handle information in essentially the same way. Books, movies, music, the temperature in your bedroom, the groceries you buy—all this information will exist in a single digital format: the world as a string of ones and zeros decipherable by an electronic machine.

This mass digitization has huge implications for capitalism. Under the lash of computerization, five big industries (computers, communications, publishing, electronic hardware, and entertainment) are collapsing into one. This is the mother of all business trends, and it gives Gates an unmatched chance to expand his influence. Even if he wanted to stay in his software cocoon, he cannot. The emergence of a digital mega-industry means Gates must diversify or die.

Even then, Gates remains vulnerable to the same improbable process that allowed his own company to slay IBM in the 1980s. One need look no further than the ascension of Netscape. Gates failed to grasp the importance of the Web until Netscape had nearly won the game. Chastened by having to claw his way into Web software, which he now dominates, Gates is unlikely to make this mistake again. Still, Microsoft’s very size means Gates must always worry that he can’t see his toes anymore because his stomach is so large.

To illustrate this risk, consider the dashboard of your car. When it is transformed into a computer outfitted with maps, tourist information, and perhaps even movies, software programs will be written to manage all the buzz in the front seat. When the toaster talks, it will need a software interface. When the cell phone takes dictation, it will require a sophisticated program. If any or all of this software becomes popular, someone will decide to use it on a desktop or home computer, because it will serve the same person, after all. In other words, these programs will invade Gates’ turf.

Better, Gates knows, to beat his rivals to the punch.

So what does Gates need? The answer is clear: ownership on a scale heretofore unknown in history. That he will likely use his assets not for malevolent ends but to abet the human weakness for endless self-amusement should in no way reduce our concern. This suggests that the costs of confronting Gates head-on will be high. It is fashionable to argue that if the government can just build a fence around Gates, lay down a series of Keep Out signs, then it will defuse the incendiary situation arising from his power. Ralph Nader may apply the same hoary tactics against Microsoft that he used against General Motors, but he won’t have nearly the same success (and not just because Gates is more likely to embrace him than surveil him). Technology won’t permit fence building, around Gates or any other digital baron. It isn’t enough to keep Gates from, say, controlling the Web, because in the end the Web may only be a way station to an unknown destination. If neither the government nor the public can divine that destination, then surely Gates has the room he needs to make the biggest score of his life.

G. Pascal Zachary is the author of Showstopper!, which looks at the making of Windows NT and Microsoft’s innovation culture.


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