Bill Gates
1955–

Cofounder and chairman, Microsoft Corporation

Born: October 28, 1955, in Seattle, Washington.

Education: Attended Harvard University, 1973–1975.

Family: Son of William Henry Gates II (attorney) and Mary Maxwell (teacher); married Melinda French (Microsoft manager), January 1, 1994; children: three.

Career: Lakeside Programming Group, 1968–1969, founder; Traf-O-Data, 1970–1973, founder; Microsoft Corporation, 1975–, founder and chairman; 1975–2000, CEO; 1992–1998, president.

Awards: U.S. National Medal of Technology, 1993; Chief Executive of the Year, Chief Executive, 1994; President's Medal of Leadership Award, New York Institute of Technology, 1995; Louis Braille Gold Medal, Canadian National Institute for the Blind, 2002; Knight Commander of the Order of the British Empire, 2004.

Publications: The Road Ahead (with Nathan Myhrvold and Peter Rinearson), 1995; Business @ the Speed of Thought, 1999.

Address: Microsoft Corporation, 1 Microsoft Way, Building 8, North O, Redmond, Washington 98052-6399; http://www.microsoft.com.

■ William Henry Gates III cofounded the Microsoft Corporation in 1975, built his software company into the one of the most successful businesses in the world, and established himself in the process as the world's richest man. Although Bill Gates started Microsoft as a small business based on a single innovative software program that he had helped to develop, his real genius was his business acumen. As the long-time CEO of Microsoft, Gates was able to borrow and integrate other computer programmers' innovations and sell them to a new and rapidly expanding home computer market. In 1985, 10 years after Microsoft was founded, it had $140 million in revenue, which grew to $28 billion by 2002. One of the pioneers of home computing, Gates proved himself to be a technological visionary and software applications guru. According to industry analysts, he also demonstrated that he was a shrewd marketing strategist as well as an aggressive corporate leader.

A PRECOCIOUS PIONEER

Gates grew up in a prosperous area of Seattle, Washington, with his parents and two sisters. The son of a lawyer and a schoolteacher, Gates attended a public grade school and then the Lakeside School, a private college preparatory institution. It was at Lakeside that he first became interested in the relatively new field of computer programming, met his friend and future business partner Paul Allen, and developed his first computer software program at the age of 13.

In 1968 the Lakeside School was still purchasing computer time on a machine owned by General Electric, as computers were extremely expensive in the late 1960s. Gates and his friends from Lakeside became fascinated with the machines and formed the Lakeside Programmers Group to try to make money in the computer field. The Programmers Group primarily earned its founders free computing time on machines owned by a company in Seattle. Gates and Allen then formed a company that they called Traf-O-Data. They put together a small computer for measuring traffic flow and made about $20,000. The company remained in business until Gates and Allen graduated from high school. Although Gates was interested in computers, he enrolled at Harvard University with the intention of becoming a lawyer like his father. By the time he was a sophomore in 1975, however, Gates was more interested in computers and electronics than in his pre-law studies.

What became the Microsoft Corporation grew out of two college undergraduates' bluff and bravado. Gates's old friend Allen showed him an advertisement for a kit to build a home computer. The two called the computer's manufacturer, MITS, saying that Gates had taken a primary computer language called BASIC and adapted it for the machine. When MITS expressed interest, Gates and Allen ignored their studies and spent the next four weeks frantically working on turning their boast into reality. In an interview in Money, Gates later recalled, "One little mistake would have meant the program wouldn't have run. The first time we tried it was at MITS, and it came home without a glitch" (July 1986).

Having written the first computer language for a personal computer, Gates and Allen established the Microsoft Corporation in 1975. The name "Microsoft" was formed from the words "microcomputer" and "software." Gates then dropped out of Harvard in 1976 and focused on building the new business. He believed that there was a market for computer software and that the market was going to expand rapidly as affordable computers were developed for home use.

RIGHT PLACE—RIGHT TIME

Although Gates rightfully earned credit for building one of the fastest-growing and most profitable companies ever established, Microsoft started out on a shaky foundation. Gates and Allen had sold their first commercially developed software for $3,000 and royalties. Before long, however, Microsoft found itself unable to cover its overhead. Even though Gates and Allen received royalties, their software was also pirated by computer hackers. This piracy led Gates to write an "Open Letter to Hobbyists," which said that computer software should not be copied by the then relatively small computer community without the developer's permission. Gates also recognized at this point in time that the future of computer software lay in owning a standard software package to be used on most computers.

By the late 1970s the computing giant IBM had plans for marketing a personal computer for home use. They approached Microsoft to develop the standard operating system for their home computer models. Gates and Allen then went out and purchased for $50,000 an operating system called Q-Dos, which had been developed by Seattle Computer. Q-Dos was compatible with the Intel processor that IBM intended to use. The two then adapted the Q-Dos system and presented it to IBM. Money magazine quoted Gates as recalling, "We bet all our resources on that system" (July 1986).

Gates had learned well his early lessons in the software business. He insisted that IBM make Microsoft the exclusive software licensee for their home computers, meaning that all IBM products would have Microsoft operating systems. Furthermore, Gates negotiated a contract that allowed Microsoft to retain the right to manufacture and license the software, which he and Allen had named MS-DOS, to other manufacturers. Because there were three other operating systems for microprocessors at that time, Gates didn't own the sole industry standard. But he was well on his way. He and Allen made MS-DOS the most attractive system to computer manufacturers because Microsoft offered a flat-fee license rather than a per-unit contract. Gates and Allen also encouraged software developers to create programs that would broaden their system's capabilities. Their strategy was a huge success because manufacturers initially saved money. In addition, the software developers had an easier job designing such single applications as word processing for use on computers made by other manufacturers.

These negotiations demonstrated that Gates was willing to defer immediate earnings for much greater future profits. His plan was based on building a mass of users for Microsoft products, which would mean the company would own the industry standard. Once Gates's company owned the standard, it could then revert to selling its software at per-unit prices rather than general licenses.

While the contract with IBM placed Microsoft on its way to legendary business growth, it also established a precedent for what some considered Gates's unsavory business practices. When he and Allen had approached Seattle Computer, the software's original developer, they omitted to mention that they were in negotiations with IBM to develop their operating system. Seattle Computer later sued Microsoft on the grounds that it had hidden its relationship with IBM in order to purchase Seattle's system at what turned out to be a bargain-basement price. The two companies came to an out-of-court settlement without Gates or Microsoft admitting to any guilt or duplicity in the original purchase.

MARKETING TRUMPS CHALLENGERS

Paul Allen, who had been serving as Microsoft's head of research and new product development, left the company in 1982 after being diagnosed with Hodgkin's disease. The following year, Gates faced a major challenge to Microsoft's domination of operating systems for home computers when a company called VisiCorp developed a mouse-driven computer system with a user interface based on graphics rather than the keyboard-based and text-driven system of MS-DOS. Gates quickly recognized that VisiCorp's system would be the wave of the future because it was much easier for technologically unsophisticated people to use. Even though Microsoft did not have such a system in the works at that point, Gates started an advertising campaign with an announcement at the Plaza Hotel in New York City that a new Microsoft operating system with graphical user interface (GUI) would soon be marketed. This next-generation system was to be called "Windows."

Gates's announcement was a bluff; the truth was that Microsoft was nowhere near developing such a system. But the marketing ploy worked because people preferred to wait for a system designed to be compatible with their existing Microsoft products rather than undergo the trouble and expense of installing an entirely new operating system. Furthermore, Windows allowed users to avoid buying new software applications to replace the DOS-compatible programs they currently owned. Windows 1.0 was finally released in 1985. That same year Microsoft reported $140 million in revenue, including $46.6 million from overseas users.

Microsoft's growth continued to be relatively smooth in spite of several challenges, in part because the fiscally conservative Gates had financed most of the company's expansion entirely from its earnings. This cautious approach to financing, however, did not reflect an unwillingness to take risks. In January 1986 Gates launched an ambitious long-term project to develop a new data storage system based on a compact disk, or CD-ROM, that could hold any type of computer file, including music and visual files. In March of that same year, he took the company public. His 40 percent ownership of Microsoft shares made his net worth $390 million by June 1986.

Gates had effectively cornered the market for operating software for the vast majority of personal computers (PCs) as well as developing a wide range of other popular programs. He effectively became a billionaire in March 1987, when his company's stock rose to $90.75 per share, up from $21.50 per share when the company went public. Brian O'Reilly commented a few months later in Fortune, "[Gates] apparently has made more money than anyone else his age, ever, in any business" (October 12, 1987).

GATES SWITCHES GEARS

Industry analysts had praised Gates for guiding his company on a path of growth that saw its revenue stream increasing by more than 50 percent per year in a extremely competitive, even cutthroat, market. They credited much of this success to Gates's ability to capitalize early and effectively on industry trends and his willingness to take risks on such fledgling technologies as Microsoft's CD-ROM-based software packages, which became industry standards. Furthermore, Gates had organized the company's structure so that it worked concurrently on all phases of a software product's business cycle from development to distribution. Larry Michels, an early software developer, told Mary Jo Foley of Electronic Business, "Other software vendors have modeled themselves after the hardware business. Microsoft created its own model of how to do business" (August 15, 1988).

Although Gates had established himself as a visionary, he did not always hit the mark. For years he had paid little attention to the business potential of the Internet, which led him to say later that he regretted not having focused more closely on Microsoft's capabilities for e-mail and networking. In 1995, however, he did an about-face and began to redirect the company's efforts in this area. His success was measured by the fact that Microsoft's Internet Explorer Web browser had become the industry leader by 2000. Gates's success in developing a competitive Internet browser, as well as coming out on top of the desktop-database and office-suite wars of the 1990s, proved that he had formed a company nimble enough to jump into a market that others were developing and take the lead away from the competition.

In 1998 Gates announced a new phase in Microsoft's expansion that would allow him to concentrate his energies on strategy and product development. At the same time the company funneled larger amounts of money into improving customer support and feedback. Gates planned to direct the company's work in such areas as intelligent telephones and television, as well as the integration of such new computer input techniques as speech, vision, and handwriting. Although Windows had already gone through several upgrades, Gates wanted to continue improving its ease of use and reliability. To free himself up for this work, he stepped down as president, a position he had held since 1992, but remained Microsoft's chairman and CEO.

SHOWDOWN WITH THE GOVERNMENT

Microsoft earned $19.75 billion in revenue during the fiscal year 1999. Bill Gates had become an icon not only in the computer and business worlds but also in the eyes of the general public. His ghostwritten book The Road Ahead, which outlined his vision of the future, topped many best-seller lists for more than three months. In spite of Gates's financial and literary success, however, he found himself facing his biggest challenge yet as the 1990s came to an end.

The challenge came this time from the United States government rather than from Microsoft's competitors. Gates and Microsoft had come under increasing scrutiny for unfair business practices from the time of the court case that followed Microsoft's purchase of the Q-Dos operating system from Seattle Computer in 1980. In 1993 the U.S. Justice Department began an investigation into Microsoft's contracts with other computer manufacturers that led to an agreement from Gates in 1994 to eliminate some of Microsoft's restrictions on the use of its products by other software makers. In 1997, however, the Justice Department sued Microsoft for forcing computer makers to sell its Internet browser as a condition of using the Windows system—a de facto violation of the 1994 consent decree. In December 1997 a U.S. district judge issued a preliminary injunction forcing Microsoft to temporarily stop requiring manufactures who sold Windows 95 "or any successor [program]" to install its Internet Explorer.

Microsoft appealed the injunction, but the following year the Justice Department and 20 state attorneys general sued Microsoft, charging that it illegally thwarted competition to protect and extend its software monopoly. Although Microsoft won its initial appeal in 1998 to reverse the 1997 decision, Gates soon found himself being questioned for 30 hours over a three-day period in a videotaped deposition for the upcoming antitrust trial. The government finally rested its case on January 13, 1999, and the Microsoft defense team ended its case on February 26. The final oral arguments from each side were presented on September 21, 1999.

After the judge presented his findings of fact on the case on November 5, Gates issued a response disagreeing with many of the findings that went against Microsoft. In a statement released to the press as reported by Court TV Online, Gates noted, "Microsoft competes vigorously and fairly. Microsoft is committed to resolving this case in a fair and a factual manner, while ensuring that the principles of consumer benefits and innovation are protected" (November 6, 1999).

U.S. District Judge Thomas Penfield Jackson ruled in June 2000 that Microsoft was a monopoly which had illegally exploited the dominance of Windows, at that point installed on over 95 percent of the world's personal computers. Judge Jackson then ordered Microsoft to be broken up into several smaller companies. It was the most severe antitrust ruling since the breakup of AT&T in 1984. Jackson's decision was reversed on appeal, however, and the company received a far less severe punishment directed toward restricting some of its business practices. In spite of this relatively favorable outcome, however, Gates continued to battle competitors in American courtrooms over Microsoft's business practices. In addition, he found himself subjected to litigation in Europe, where Microsoft was once again accused of exploiting its monopoly of Windows to control other computer-related industries, including media-player and server software companies.

Despite the controversy over whether Gates had created a company that used its dominance of the desktop computer system to obtain unfair control of newer computer-related markets, Microsoft continued to prosper. Gates stepped down as CEO in 2000 but kept his position as chairman of Microsoft as well as its chief software architect. In 2004 he doubled the company's research and development budget to $6.8 billion and began pushing a new Windows personal computer operating system code-named Longhorn.

MANAGEMENT STYLE: WORKAHOLIC

Although Gates was long known as a "boy wonder" in the computer and business worlds, his management style was anything but immature. As was noted in a BBC News article, "Gates has come to be known for his aggressive business tactics and confrontational style of management" (January 26, 2004). Although he was considered a charismatic leader within his own company, he was also extremely tough—he fired Microsoft's first company president after only 11 months on the job.

An intense businessman who typically put in 16-hour days and took only two three-day vacations in the first five years after establishing the corporation, Gates was demanding and strong-willed about implementing his vision. Coworkers, clients, and industry analysts also remarked, however, that he did not surround himself with yes-sayers but was more than willing to change his mind if someone convinced him of a better alternative. Analysts also observed that one of the keys to Gates's success was his ability to focus on the fundamentals of the business while keeping office politics or his own ego from getting in the way. "Most of what I do is leading," Gates once said in Electronic Business. "Managing applies to the people who work directly for me" (August 15, 1988).

Gates was known from the beginning of his career as the epitome of a hard-driving businessman respected by his allies and feared by his competitors. It was his vision that guided Microsoft's immense success. In addition, Gates had an uncanny ability to tackle both the managerial and technical sides of Microsoft's operations. He was especially noted for his success as a marketing strategist who priced his products for the mass market rather than computer specialists. In 1999 the Journal of Business Strategy listed Gates among a handful of people who had the greatest influence on business strategy over the last century.

Gates also had his fair share of critics. In addition to accusations of predatory and possibly illegal business practices, some analysts remarked that Gates did not really foster in-house product innovation but tended to focus his attention instead on blocking advances by other companies.

On the other hand, supporters of Gates's managerial style and business acumen pointed out that Microsoft continued to prosper even in the midst of the 2002 information technology slump, growing at 20 percent each quarter and posting a phenomenal 35 percent after-tax profit margin. Despite all his financial success, however, Gates remained a fiscal conservative. He was renowned for his penny-pinching traveling habits, demanding that his schedule be filled for the entire day when he was on the road promoting his company.

NO TIME TO REST

Gates was still the world's wealthiest person in early 2004, with a personal fortune estimated at $60.56 billion. He remained a hands-on leader at Microsoft, however, maintaining an active work schedule as the company's chairman and chief software architect. As noted by Ron Anderson in Network Computer, "… no doubt his presence [at the company] will make itself known well into the decades ahead" (October 2, 2000).

In addition to extending Microsoft's success, Gates also turned his attention to philanthropy, including the establishment of the Bill and Melinda Gates Foundation. Gates and his wife endowed the foundation with $24 billion to support philanthropic initiatives in the areas of global health and learning. For example, Gates made plans in February 2004 to donate $82.9 million for research to develop a new vaccine against tuberculosis. In addition to his duties at Microsoft and his efforts in philanthropy, Gates sat on the board of ICOS, a company that specialized in protein-based and small-molecule therapeutics.

See also entry on Microsoft Corporation in International Directory of Company Histories.

sources for further information

Anderson, Ron, "Top 10 Most Influential People: No. 2—Bill Gates," Network Computing, October 2, 2000, p. 51.

"Bill Gates' Response to Microsoft Decision," Court TV Online, November 6, 1999, http://www.courttv.com/archive/business/1999/1106/gates_ap.html.

Foley, Mary Jo, "Boy Wonder: Microsoft's Bill Gates," Electronic Business, August 15, 1988, p. 54.

"Interview: Bill Gates Opens Up," PC Magazine, February 24, 2004, N/A.

O'Reilly, Brian, "A Quartet of Hi-Tech Pioneers," Fortune, October 12, 1987, p. 148.

"Profile: Bill Gates," BBC News, January 26, 2004, http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/3428721.stm.

Schlender, Brent, "On the Road with Chairman Bill," Fortune, May 26, 1977, p. 72.

"Sir Bill and His Dragons—Past, Present, and Future—Microsoft," Economist (US), January 31, 2004, p. 68.

"Strategists of the Century," Journal of Business Strategy 20, no. 5 (September 1999), p. 27.

Tuhy, Carrie, Richard Eisenberg, and Greg Crouch, "Software's Old Man is 30," Money, July 1986, p. 54.

—David Petechuk

Gates, Bill

(1955-)
Microsoft Corporation

Overview

William Henry Gates III became known as "The King of Software" by designing and developing user–friendly software for the personal computer (PC). His innovations revolutionized the computer industry, enabling people without technological training to use PCs in both the workplace and the home. With his high school friend, Paul Allen, Bill Gates co–founded Microsoft Corporation, which he built into a multi–billion–dollar company.

Personal Life

William Henry Gates III was born October 28, 1955, in Seattle, Washington. His father, William Henry Gates, Jr., is a prominent Seattle attorney, and his mother, the late Mary Maxwell, was a schoolteacher, regent at the University of Washington, and chairperson of United Way International. He married Melinda French Gates, a Microsoft manager, in 1994. Together they have a daughter, Jennifer, born in April of 1996, and a son, Rory John, born in 1999.

In his leisure time, Gates enjoys reading, playing golf, and bridge. He has also written two books: The Road Ahead, published in 1995, covered his views on the future of the Internet; Business & the Speed of Thought, published in 1999, explored how digital technology can help solve business problems. Gates' competitive drive and fierce desire to win have made him a powerful force in business but have also consumed much of his personal life. In the six years between 1978 and 1984, he took a total of only two weeks vacation.

Gates developed an early interest in computer science in the seventh grade at Seattle's Lakeside School. There, Gates became acquainted with Paul Allen, a teenager with a similar interest in technology, who would eventually become one of his business partners. Gates entered Harvard University in 1973 to study pre–law. By 1975 Gates had decided to pursue a career in computer software and dropped out of Harvard.

Career Details

Gates' early experiences with computers included debugging (or eliminating errors from) programs for the Computer Center Corporation's PDP–10, helping computerize electric power grids for the Bonneville Power Administration, and—while still in high school—founding with Allen, a firm named Traf–On–Data. Their small company earned them $20,000 in fees for analyzing local traffic patterns.

While working with the Computer Center's PDP–10, Gates was responsible for what was probably the first computer virus, which is a program that copies itself into other programs and ruins data. Discovering that the machine was hooked up to a national network of computers called Cybernet, Gates invaded the network and installed a program on the main computer that sent itself to the rest of the network's computers; Cybernet crashed. When Gates was found out, he was severely reprimanded, causing him to stay away from computers for his entire junior year at Lakeside.

In January 1975, Allen showed Gates a cover story in the magazine Popular Mechanics about a $350 million microcomputer, the Altair, made by a firm Called MITS in New Mexico. When he saw the story, Gates knew he wanted to be in the forefront of computer software design. "What first got me so interested in software development, and eventually led to the founding of Microsoft, was the excitement I felt as a teenager when I realized that computers gave me feedback and information like a puzzle to be studied and solved," said Bill Gates.

Gates and Allen developed a BASIC interpreter for the Altair computer while they were still at Harvard. BASIC is a simple, interactive computer language designed in the 1960s and "interpreter" is a program that executes a source program by reading it one line at a time and performing operations immediately.

When Gates dropped out of Harvard in 1975, he ended his academic life and began his career in earnest as a software designer and entrepreneur. He went on to co–found Microsoft with Allen. The partners wrote programs for the early Apple and Commodore machines and expanded BASIC to run on microcomputers other than the Altair.

Gates' big opportunity arrived in 1980 when IBM approached him to help with their personal computer project, code named Project Chess. Gates created the Microsoft Disk Operating System, or MS–DOS, and its related applications can run on almost any IBM compatible PC. By the early 1990s, Microsoft had sold more than 100 million copies of MS–DOS, making the operating system the all–time leader in software sales.

Marketing savvy played a big part in Microsoft's success. Microsoft tripled its sales in the early 1990s with its successful Windows debut. Microsoft Network (MSN) was launched in 1994, Windows 95 was released in August 1995, and Windows 98 made its debut in June 1998. At first, while Microsoft was enjoying these successes, other companies were making inroads in the development of software for the World Wide Web (WWW). But in the fall of 1995, Gates realized that 20 million people were surfing the net without Microsoft software. An aggressive campaign was launched to raise Microsoft's stake in the Web. Staffing was increased, software was bought, and deals were cut—America Online (AOL) was given an icon in Windows 95 in exchange for using Microsoft's Internet Explorer as its principal Web browser. Windows 97 integrates its Internet Explorer browser and MSN into its Windows operating system, creating an active desktop. In 1998 Microsoft gained a significant hold on Web browsers, the NetAction consumer group reported. It found that four of the largest Internet service providers (ISP) distributed only Microsoft's Explorer.

By 1997 Microsoft recorded a net income of $3.4 billion. This made up 41 percent of the profits of the 10 largest publicly traded software companies. This period saw the roll out of Windows 95 and 98, major updates of the world's preeminent computer operating system, Windows. In the first three days of its release, Windows 98 sold more than 500,000 copies, matching the sales of Windows 95 in its debut.

In 1997 Gates entered the world of computer–driven multimedia when he began promoting CD–ROM technology. Gates envisioned the expansion of his business by combining PCs with the information reservoirs provided by CD–ROM and was soon marketing a number of multimedia products.

In addition, Gates invested $1 billion in the cable company Comcast in 1998 in an effort to persuade the cable industry to assist in developing faster connections using cable modems. That same year, Microsoft formed a group—the Cable Broadband Forum—with Intel, TCI, and Time Warner to promote cable modems. The company also invested $425 million to guarantee itself a 20 percent equity stake in the cable access venture, Road Runner. Gates has also invested in Teledesic, a company that plans to expand global two–way broadband telecommunications services through a system of low–orbit satellites.

Gates' strategy has been to leverage Microsoft's desktop operating system to dominate all software sales, from word processing to spreadsheets. Because most new PCs are equipped with the Windows operating system, Gates can place icons for Microsoft software packages on the desktops when a computer is purchased. Also, Microsoft's large cash reserves give it an advantage over its competitors. Microsoft can enter a new market or introduce a new package without needing to make a profit from the outset.

Microsoft's success, however, has brought scrutiny. In April 1995, when Microsoft attempted to make the biggest acquisition in the history of the software industry by purchasing Intuit, a maker of personal finance software, the antitrust division of the Department of Justice blocked the deal and Microsoft backed off. However, competitors continued to complain that Microsoft uses an existing monopoly to retard the development of new technology. It was the bundling of software, such as Web browsers with Windows 95 and 98, that prompted the Justice Department, along with 18 state attorneys general, to file an antitrust lawsuit against the company in 1998. A U.S. Court of Appeals panel ruled that Microsoft was free to bundle its software, but a subsequent finding of fact by Judge Thomas Penfield Jackson in November 1999 ruled that Microsoft was a monopoly. The ruling opened the possibility of numerous private suits being brought against the company by its competitors.

The Microsoft antitrust case made headlines through much of the last half of the 1990s. The U.S. Court of Appeals for the District of Columbia upheld the lower court's conclusion that Microsoft had violated antitrust laws. But, by a 7–0 vote, the appeals court ruled that a new judge would have to decide what penalty Microsoft should pay because Judge Jackson, who had spoken to the press regarding the case, had given the appearance of having a personal bias against the company.

Chronology: Bill Gates

1955: Born.

1972: Established Traf–On–Data firm.

1973: Developed BASIC computer program for MITS Altair.

1975: Co–founded Microsoft with Paul Allen.

1984: Sold 2 million copies of MS–DOS.

1987: Unveiled Windows software.

1989: Founded Corbis Corp.

1995: Offered the Windows 95 update.

1995: Published The Road Ahead.

1998: Became the world's wealthiest self–made man.

1999: Violated anti–trust regulations.

2000: Stepped down as Microsoft CEO; retained position as creative adviser.

2001: Settled anti–trust dispute.

The on–going negotiations climaxed in 2001. On November 2, 2001, Microsoft announced that it had struck a deal with the Justice Department. However, nine states refused to acknowledge the deal, which did little to revoke Microsoft's software monopoly and was considered by analysts as a slap on the wrist for Microsoft. California attorney general Bill Lockyer told Time, "We want real reform, not a fig leaf." When asked by Newsweek whether he admitted legal wrongdoing, Gates responded, "I accept that there have been legitimate concerns in reaching this agreement. We're acknowledging those concerns, we're agreeing to make changes, do things in a different way. A lot of this is very new territory, and yet there were concerns, and so new rules had to be created, and Microsoft has agreed to those rules." In August 2001, Gates reflected on antitrust issues for Microsoft to U.S. News & World Report, saying, "Remember when AOL tried to block Windows 95?. . . Would the world have been a better place if AOL had been able to block Windows 95? That's an exercise for the reader. Seriously, the whole PC industry was based on that advance."

Despite the distraction of the antitrust case, Microsoft continued to develop Windows, releasing Windows XP in the fall of 2001. The new version completely does away with the MS–DOS format. Windows CE, Microsoft's operating system for its hand–held computers also began to draw more notice, and Microsoft was able to begin chipping away at the dominant hand–held leaders, Palm and Handspring.

In January 2000, Gates announced his resignation as Microsoft CEO, naming longstanding associate Steven A. Ballmer to succeed him. Gates stated that this change represented his wish to focus his personal energies on new development as "chief software architect" of a new type of system encompassing large networks, PCs, and consumer electronic devices connected to the Internet.

Social and Economic Impact

In addition to sparking the PC revolution, Gates created new paradigms for how new products should be created and sold. Accompanying Gates' competitive drive is a fear of losing. A guiding force in Microsoft's economics is Gates' insistence that rather than incurring debt, Microsoft should have on hand enough cash to operate for a year without any revenues. Business associates have argued the point with him and succeeded to a certain extent in acquiring cash for investment in expansion and development; however, as of January 1997, Microsoft had $8 billion in cash and no long–term debt.

Microsoft employs around 40,000 people in 60 countries. A typical Microsoft employee is very intelligent but may only have little if any experience—much like Gates' own background. Employees are typically expected to put in whatever hours are necessary to solve problems and meet new product deadlines, and they become part of the "Microsoft culture." Yet Gates also invites challenge and confrontation to maintain flexibility, and he rewards employees who offer viable new ideas. As a student of business history, Gates came to believe that it is paramount for corporate executives to be sensitive to change in their industries and that they remain flexible in order to respond to change when necessary and to seize opportunities. In Hard Drive, James Wallace and Jim Erickson quoted Gates as saying, "I can do anything if I put my mind to it."

Microsoft's influence has spread to banking, retailing, entertainment, and the news. MSNBC debuted on July 15, 1996. This was a joint venture between Microsoft and General Electric's NBC, which offers a 24–hour cable–TV–news channel with a companion Web site. Gates envisions the merging of content and software and with this move has positioned Microsoft to be at the forefront. Real estate is another area that Gates became involved with in 1998, when Cliveden PLC of Britain, a luxury hotel and leisure club operator, agreed to be purchased by Destination USA, a group of U.S. investors, of which Gates owns 10 percent.

Gates also hopes to make Microsoft the number one software provider to China, the world's largest emerging software market. By training technicians at China's universities and centers, developing Chinese–language Windows operating systems, providing Chinese government ministries with PCs that use Windows and DOS, and by developing with Chinese researchers interactive TV and speech and handwriting recognition programs, Gates is laying the groundwork for enormous Microsoft sales.

Gates' other interests encompass medicine and the arts. In 1989 he started a company called Corbis, which owns the rights to 800,000 digitized images. The images are licensed by newspapers and magazines and published by them either in print or electronic form. He has also invested in Teledisc, which is working on a plan to provide worldwide, two–way broadband telecommunications service. Gates sits on the board of ICOS, a biotechnology company, and has invested in others in this field. He believes that, with the Internet, researchers will be able to communicate faster with each other, thus leading to more cures. Finding the best way to treat or prevent illness is important to Gates. He donated $1.5 million in 1998 to the International Aids Vaccine Scientific Blueprint project in the hope of developing a vaccine for Aids.

By late 1999, Gates' net worth was estimated at about $90 billion, making him by far the wealthiest self–made man in the world. Although his personal wealth had declined to about $59 billion by 2001, he remained the world's richest man. Despite criticism that he has done little with his fortune, Gates and his wife Melinda have endowed more than $24 billion for philanthropic causes. Of this amount, more than $2 billion has gone to global health initiatives, $500 million to improving learning opportunities, $200 million to community projects in the Pacific northwest, and $29 million to special projects and annual giving campaigns. In 1996 he and Ballmer donated $25 million to fund computer science work at Harvard University. In 1999 Gates donated $20 million toward the construction of a new computer science facility at Massachusetts Institute of Technology, to be designed by award–winning architect Frank Gehry. Also in 1999, Gates formed the Gates Millennium Scholars Program, which will provide $1 billion for qualified African–American, Hispanic, Native American, and Asian students to obtain undergraduate and graduate degrees in engineering, math, science, and education. The program plans to pay full educational costs through graduate school for qualified students who maintain a 3.0 cumulative average. African–American and Hispanic leaders have hailed the program as an important step in attracting minority students to these fields. In October 2001, Gates' foundation contributed more than $500 million toward wiring schools and libraries. Gates told the Economist, "I used to have the notion that I would wait until my 50s or 60s to put substantial resources into the foundation. . . . Seeing how urgent the needs are changed my time line."

Sources of Information

Contact at: Microsoft Corporation
1 Microsoft Way
Redmond, WA 98052
Business Phone: (425)882–8080
URL: http://www.microsoft.com

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"The Engineer of a Computer's Soul: Gates Talks." U.S. News & World Report, 20 August 2001.

"Gates and the States: Nine Attorneys General Settle with the Software Giant. Nine Soldier On. Has Microsoft Already Won?" Time, 19 November 2001.

Kerber, Ross. "Gates Donates $20M to MIT Computer Lab." Boston Globe, 14 April 1999.

Markoff, John, and Steve Lohr. "Microsoft Names a New Chief Executive." New York Times, 14 January 2000.

"Microsoft Stays Whole." Maclean's, 17 September 2001.

Rivera, Elaine. "Bill Gives Big: Mr. Microsoft Will Send 2,000 Minority Students to College." Time, 27 September 1999.

"Saint Bill." The Economist, 16 June 2001.

"An Unsettling Settlement: Microsoft." The Economist, 10 November 2001.

"We'll Move On." Newsweek, 12 November 2001.

"William H. Gates." Microsoft Corporation, 2001. Available at http://www.microsoft.com/billgates/bio.asp.

Bill Gates

Born: October 28, 1955
Seattle, Washington
Cofounder and chairman, Microsoft Corporation

The title "richest man in the world" suggests power and influence, along with vast wealth. Bill Gates, whose fortune is worth more than $30 billion, has all three. He also has intelligence. As a teenager, he taught himself how to program personal computers. As a young man, he realized the power personal computers would have to change modern society. His intelligence and determination helped him turn his company, Microsoft, into the world's largest software maker.

Gates, as the world's richest person, has given away billions of dollars to help the poor and fund medical research. That generosity, however, has not softened the hatred many people have for him. His critics say he is arrogant and mean, willing to break the law to strengthen his company. But even the critics realize Gates has a brilliant mind, and he has used it to make computers and digital information a part of everyday life.

"I'm an optimist. I believe in progress. I'd much rather be alive today than at any time in history.… The tools of the Industrial Age extended the capabilities of our muscles. The tools of the digital age extend the capabilities of our minds."

Young Businessman

William H. Gates III was born on October 28, 1955, in Seattle, Washington. His father William was a prominent Seattle attorney, while his mother Mary was a teacher who also worked for the community charitable organization United Way and served on the board of directors for several other groups. His parents' personal contacts helped Gates on several occasions as he built Microsoft.

In seventh grade, Gates attended a private school that had access to a computer—a rarity for the time. He wrote his first program when he was thirteen, creating a tic-tac-toe game. During the next few years, Gates and his friend Paul Allen learned all they could about computers and programming. In 1972, the young partners launched their own company, Traf-O-Data. Using a simple computer, they analyzed traffic information from the Seattle area and sold the results to several government agencies. Traf-O-Data made $20,000 in one year.

Gates took a break from his computer career to enter Harvard in September 1973, but a little more than a year later he and Allen were working on their BASIC program for the Altair 8800, a small computer sold as a kit. Gates wrote the actual code, or lines of instructions that make any software run. He worked on the code almost nonstop for four weeks, in between his classes. When MITS, the maker of the Altair, bought the program, Gates and Allen started another business, Microsoft.

A New Kind of Celebrity

The popularity of the Altair led other companies, including Apple, Commodore, and Tandy, to introduce home computers. Each of these companies used a version of Microsoft's BASIC. Gates also adapted the language to fit the needs of such companies as General Electric, Inc. (see entry) and Citibank. "Bill had a vision," a Microsoft employee told People in 1984. "It was that microcomputers will be important, and that software will be the most important part of microcomputers."

One of Bill Gates's earliest computer jobs was to create a program that would handle class scheduling for students. Gates wrote the program so that he ended up as the only boy in several classes filled with attractive girls.

The success of Microsoft's BASIC led to its first dealings with IBM, a late entry in the PC market. In 1981, Microsoft developed the operating system for the first IBM machine. Its success led to many imitators, or clones, which used the Microsoft Disc Operating System (MSDOS). MS-DOS became the preferred operating system, fueling Microsoft's growth. Gates then focused on developing new software programs and improving the company's operating system.

With the success of Microsoft, Gates became a business celebrity, touted for his youth and his skills. In 1984, People compared him to inventor Thomas Edison (1847-1931), calling Gates "part salesman and full-time genius." Gates was notorious for working sixteen hours a day, and demanding the same commitment from his employees.

The Height of Wealth and Power

In 1986, when Microsoft sold shares to the public, Gates's stocks were worth slightly more than $300 million. During the next five years, as the company continued to control the market and expand into business software, the value of the stock grew. By 1991, Gates was estimated to be the second richest person in the United States, worth an estimated $4.8 billion. The next year, he made news as he built a new home for about $50 million. It included a twenty-car garage, a sixty-foot swimming pool, and a library that holds ten thousand books. With his company, however, Gates was always conservative with money. Executives—including Gates—flew coach class on plane trips.

Over the years Bill Gates has become known for giving money to a variety of causes. In 1991, he gave $12 million to the University of Washington School of Medicine. His later charitable gifts included $25 million to support computer science studies at Harvard and $1 billion to help minority students attend college. He and his wife also started the Bill and Melinda Gates Foundation in 2000, which gives more than $1 billion each year to health and education organizations.

Known for a quick temper and a competitive streak, Gates had once said he wanted Microsoft to be as big in software as IBM was in computer hardware. By the early 1990s, he was on his way to that goal. In 1991, a competitor told Forbes, "Bill wants as much of the software industry as he can swallow. And he's got a very big appetite." Money and power, however, did not keep Gates from constantly exploring new ways to improve computers and the sharing of information. His personal life also did not slow him down. Gates married Melinda

Paul Allen: The "Forgotten" Cofounder of Microsoft

Almost from the beginning, Bill Gates took the lead in speaking for Microsoft, while cofounder Paul Allen stayed in the background. Allen left the company in 1983, and with his 40 percent share of Microsoft stock, went on to become one of the wealthiest people in the world. Some things, however, never change. Since leaving Microsoft, Allen has given very few interviews and chooses to stay out of the public eye.

Allen was born in 1953 in Seattle, Washington. Showing an early interest in science, he began teaching himself about computers at the Lakeside School, where he met Bill Gates. After high school, Allen enrolled at Washington State University. He was a student there when he and Gates formed Traf-O-Data in 1972. In 1973, Allen left school for good, taking a job at Honeywell in Washington, then transferring to a position in Boston. Allen's computer programming skills helped Gates write programs for the new Intel microprocessors. When they created the BASIC language for the Altair 8800, Allen made improvements to Gates's work, and some later company products were originally his idea.

During 1981, Allen was named executive vice president of Microsoft while Gates became the president and chairman. The next year, Allen developed cancer. He resigned in 1983, but remained on the company's board of directors. After his recovery, Allen started a new software firm, Asymetrix. He hoped it would be the first piece in his plan to build what he called "the wired world."

Unlike Microsoft, however, Asymetrix struggled to survive. By 1991, the company had just one product and sales were slow. Over the years, Allen made money by investing in other companies—such as AOL Time Warner and DreamWorks SKG (see entries)—but most of the ones he financed directly never met his expectations. One positive venture, however, was Starwave, which Allen started in 1992 and sold five years later for a $200 million profit. Toward the end of the 1990s, Allen began investing successfully in cable television and other "broadband" technologies, which can carry large amounts of digital information. His companies in this industry include Charter Communications and Digeo.

Outside of technology, Allen turned to sports, buying the Portland Trailblazers of the NBA and the Seattle Seahawks of the NFL. He also spent millions to build the Experience Music Project (EMP) in Seattle. Inspired by Allen's admiration for rock guitarist Jimi Hendrix (1942-1970), EMP is an interactive museum dedicated to popular music. Besides his many investments, Allen used his Microsoft money to build several homes, collect art, and buy his own Boeing 757 jet. He has also given generously to various charities.

French, a Microsoft employee, in 1994, in a ceremony that reportedly cost $1 million.

In 1995, Gates took time off from work to write a book, The Road Ahead, that offered some historical details on Microsoft and Gates's vision for the future of computing. Gates said he wrote The Road Ahead "as a travel guide for the forthcoming journey." Of course, Gates expected Microsoft to play a role in shaping that future. The same year, Time noted his status as the "richest self-made man on the planet" and "a global celebrity." His second book, Business @ the Speed of Thought, appeared in 1999.

The Trials of "Chairman Bill"

Gates's success definitely stirred jealousy in the computer world. Over the years, many articles and books have noted the rivalry between Gates and such corporate leaders as Steve Jobs of Apple Computer, Inc. (see entry) and Scott McNealy of Sun Microsystems. On the Internet, some sites criticize the power of Microsoft while others, such as Ihatebillgates.com and antigates.com, target Gates personally. The 1998 lawsuit against Microsoft gave the "Gates haters" even more reason to dislike the man and his company. The Justice Department used e-mails from Gates to suggest he lied or stretched the truth during his deposition. Time reported that a witness from the Netscape Communications Corporation (see entry) said Gates and his company used its "vast power … to cut off Netscape's air supply."

With its size and power Microsoft will likely remain a target for lawsuits and criticism. As the public face of a company both feared and loathed, Gates will also stir negative feelings. Still, he has never backed down from his goal of expanding Microsoft and finding new technologies. In 2001, he told U.S. News & World Report, "We're doing as much cool stuff today as we've ever been doing—I'd say more.… We get enthused about the new stuff we do."

For More Information

Books

Gates, Bill, with Collins Hemingway. Business @ the Speed of Thought. New York: Warner Books, 1999.

Gates, Bill, with Nathan Myhrvold and Peter Rinearson. The Road Ahead. New York: Viking, 1995.

Ichbiah, Daniel, and Susan L. Knepper. The Making of Microsoft. Rocklin, CA: Prima Publishing, 1991.

Rivlin, Gary. The Plot to Get Bill Gates. New York: Times Business, 1999.

Periodicals

Cone, Edward E "The Next Chapter." Forbes (April 6, 1987): p. 168.

"Demonizing Gates." Time (November 2, 1998).

"Dropping Out of Harvard Pays Off for a Computer Whiz Kid Who's Making Hard Cash from Software." People (January 2, 1984): p. 36.

Elmer-DeWitt, Philip. "Bill Gates." Time (December 25, 1995): p. 100.

"The Engineer of a Computer's Soul." U.S. News & World Report (August 20, 2001): p. 22.

Kirkpatrick, David. "Why We're Betting Billion on TV." Fortune (May 15, 2000): p. 249.

Moritz, Michael. "A Hard-core Technoid." Time (April 16, 1984): p. 62.

Pitta, Julie. "Bill Gates and the Billophiles." Forbes (September 8, 1997): p. 186.

. "Desperately Seeking Another Success." Forbes (July 4,1999): p. 47.

"The Prodigy with a Program for Success." U.S. News & World Report (July 21, 1986): p. 101.

Schlender, Brent. "On the Road with Chairman Bill." Fortune (May 26, 1997): p. 72.

Sherman, Statford. "Microsoft's Drive to Dominate Software." Fortune (January 23, 1984): p. 82.

"U.S. v. Microsoft: Timeline." Wired News. [On-line] http://www.wired.com/news/antitrust/0,1551,35212,00.html (accessed on August 16, 2002).

Wiegner, Kathleen K, and Julie Pitta. "Can Anyone Stop Bill Gates?" Forbes (April 1, 1991): p. 108.

Web Sites

Charter Communications. [On-line] http://www.chartercom (accessed on August 16, 2002).

Microsoft Corporation. [On-line] http://www.microsoft.com (accessed on August 16, 2002).

Gates, Bill

(1955-)
Microsoft Corporation

Overview

William Henry Gates III became known as "The King of Software" by designing and developing innovative software for the personal computer (PC), helping to make them the universally popular machines they are today. With his high school friend, Paul Allen, Bill Gates co-founded Microsoft Corporation, which he built into a multibillion-dollar company.

Personal Life

William Henry Gates III was born October 28, 1955, in Seattle, Washington. His father, William Henry Gates Jr., is a prominent Seattle attorney, and his mother, the late Mary Maxwell, was a school teacher, regent at the University of Washington and chairperson of the United Way International. He married Melinda French Gates, a Microsoft manager, in 1994. Together they have a daughter, Jennifer, born in April of 1996. In his leisure time Gates enjoys reading, playing golf, and bridge. Gates received $2.5 million in advance for his bestseller The Road Ahead. The book covers Gates's views on the future of the Internet.

Gates developed an early interest in computer science in the seventh grade at Seattle's Lakeside School. There Gates became acquainted with Paul Allen, a teenager with a similar interest in technology who would eventually become one of his business partners. Gates entered Harvard University in 1973 to study pre-law. By 1975, Gates had decided to pursue a career in computer software and dropped out of Harvard.

Career Details

Gates's early experiences with computers included debugging (or eliminating errors from) programs for the Computer Center Corporation's PDP-10, helping computerize electric power grids for the Bonneville Power Administration, and—while still in high school—founding with high school friend, Paul Allen, a firm named Traf-O-Data. Their small company earned them $20,000 in fees for analyzing local traffic patterns.

While working with the Computer Center's PDP-10, Gates was responsible for what was probably the first computer virus, which is a program that copies itself into other programs and ruins data. Discovering that the machine was hooked up to a national network of computers called Cybernet, Gates invaded the network and installed a program on the main computer that sent itself to the rest of the network's computers: Cybernet crashed. When Gates was found out, he was severely reprimanded, causing him to stay away from computers for his entire junior year at Lakeside.

In January of 1975 Allen showed Gates a cover story in the magazine Popular Mechanics about a $350 million microcomputer, the Altair, made by a firm Called MITS in New Mexico. When he saw the story, Gates knew he wanted to be in the forefront of computer software design. "What first got me so interested in software development, and eventually led to the founding of Microsoft, was the excitement I felt as a teenager when I realized that computers gave me feedback and information like a puzzle to be studied and solved," said Bill Gates (http://www.microsoft.com).

Gates and Allen first wrote a BASIC interpreter for the Altair computer. BASIC being a simple, interactive computer language designed in the 1960s and "interpreter" program that executes a source program by reading it one line at a time and performing operations immediately.

When Gates dropped out of Harvard in 1975, he ended his academic life and began his career in earnest as a software designer and entrepreneur. At this time, he and Allen became cofounders of Microsoft. They wrote programs for the early Apple and Commodore machines and expanded BASIC to run on microcomputers other than the Altair.

Gates's big opportunity arrived in 1980 when IBM approached him to help with their personal computer project, code named Project Chess. Gates created the Microsoft Disk Operating System, or MS-DOS, and its related applications can run on almost any IBM compatible PC. By the early 1990s, Microsoft had sold more than 100 million copies of MS-DOS, making the operating system the all-time leader in software sales.

Gates's other interests encompass medicine and the arts. In 1989 he started a company called Corbis. Corbis owns the rights to 800,000 digitized images. The images are licensed by newspapers and magazines and published by them either in print or electronic form. Another interest of his is biotechnology, because of the breakthroughs that have occurred using this technology. He believes that with the Internet, researchers will be able to communicate faster with each other, thus leading to more cures. Finding the best way to treat or prevent illness is important to Gates. He donated $1.5 million in 1998 to the International Aids Vaccine Scientific Blueprint project in the hope of developing a vaccine for Aids.

By the end of 1998, Gates was worth around $39 billion, making him the wealthiest self-made man in the entire world. In 1997, Microsoft recorded a net income of $3.4 billion. This made up 41 percent of the profits of the 10 largest publicly traded software companies. This period saw the roll out of Windows 95 and 98, major updates of the world's preeminent computer operating system, Windows. In the first three days of its release, Windows 98 sold more than 500,000 copies, matching the sales of Windows 95 in its debut.

Gates's competitive drive and fierce desire to win have made him a powerful force in business, but have also consumed much of his personal life. In the six years between 1978 and 1984 he took a total of only two weeks vacation.

Social and Economic Impact

Accompanying Gates's competitive drive is a fear of losing. A guiding force in Microsoft's economics is Gates's insistence that rather than incurring debt, Microsoft should have on hand enough cash to operate for a year without any revenues. Business associates have argued the point with him and succeeded to a certain extent in acquiring cash for investment in expansion and development; however, as of January 1997, Microsoft had $8 billion in cash and no long-term debt.

In 1987 Gates entered the world of computer-driven multimedia when he began promoting CD-ROM technology. Gates envisioned the expansion of his business by combining PCs with the information reservoirs provided by CD-ROM and was soon marketing a number of multimedia products.

In addition, Gates invested $1 billion in the cable company Comcast in 1998 in an effort to persuade the cable industry to assist in developing faster connections using cable modems. That same year, Microsoft formed the Cable Broadband Forum with Intel, TCI, and Time Warner to promote cable modems. The company also invested $425 million to guarantee itself a 20 percent equity stake in the cable access venture, Road Runner.

Microsoft employs around 20,000 people in 48 countries. A typical Microsoft employee is very intelligent, but may only have little if any experience—much like Gates's own background. Gates also invites challenge and confrontation to maintain flexibility. As a student of business history, Gates came to believe that it is paramount for corporate executives to be sensitive to change in their industries and that they remain flexible in order to respond to change when necessary and to seize opportunities. In Hard Drive, James Wallace and Jim Erickson quoted Gates as saying, "I can do anything if I put my mind to it."

Gates's strategy has been to leverage Microsoft's desktop operating system to dominate all software sales—from word processing to spreadsheets. Because most new PCs are equipped with the Windows operating system, Gates can place icons for Microsoft software packages on the desktops when a computer is purchased. Also, Microsoft's large cash reserves give it an advantage over its competitors. Microsoft can enter a new market or introduce a new package without needing to make a profit from the outset.

With these successes have come scrutiny. In April 1995, when Microsoft attempted to make the biggest acquisition in the history of the software industry by purchasing Intuit, a maker of personal-finance software, the antitrust division of the Department of Justice blocked the deal and Microsoft backed off. However, competitors continue to complain that Microsoft uses an existing monopoly to retard the development of new technology. It was the bundling of software, such as Web browsers with Windows 95 and 98 that prompted the Justice Department to file an antitrust lawsuit against the company in 1998. A U.S. Court of Appeals panel ruled that Microsoft was free to bundle its software, but a court date was set for September 1998 to determine the final ruling.

Microsoft tripled its sales in the early 1990s with its successful Windows debut. Microsoft Network (MSN) was launched in 1994, Windows 95 was released in August 1995, and Windows 98 made its debut in June 1998. At first, while Microsoft was enjoying these successes, other companies were making inroads in the development of software for the World Wide Web (WWW). But in the fall of 1995, Gates realized that 20 million people were surfing the net without Microsoft software. An aggressive campaign was launched to raise Microsoft's stake in the Web. Staffing was increased, software was bought, and deals were cut—America Online (AOL) was given an icon in Windows 95 in exchange for using Microsoft's Internet Explorer as its principal web browser. Windows 97 integrates its Internet Explorer browser and MSN into its Windows operating system, creating an active desktop. In 1998, Microsoft gained a significant hold on Web browsers, the NetAction consumer group reported. It found that four of the largest Internet service providers (ISP) distributed only Microsoft's Explorer.

Chronology: Bill Gates

1955: Born.

1972: Established Traft-O-Data firm.

1973: Developed BASIC computer program for MITS Altair.

1975: Cofounded Microsoft with Paul Allen.

1984: Sold 2 million copies of MS-DOS.

1987: Unveiled Windows software.

1989: Founded Corbis Corp.

1995: Offered the Windows 95 update.

1995: Published The Road Ahead.

1998: Becomes the world's wealthiest self-made man.

Microsoft's influence is spreading to banking, retailing, entertainment, and the news. MSNBC debuted on July 15, 1996. This is a joint venture between Microsoft and General Electric's NBC, which offers a 24-hour cable-TV-news channel with a companion Web site. Gates envisions the merging of content and software and with this move has positioned Microsoft to be at the forefront. Real estate is another area that Gates became involved with in 1998, when Cliveden PLC of the UK, a luxury hotel and leisure club operator, agreed to be purchased by Destination USA, a group of US investors, of which Gates owns 10 percent.

Gates also envisions Microsoft as being the number one software provider to China, the world's largest emerging software market. By training technicians at China's universities and centers, developing Chinese-language Windows operating systems, providing Chinese government ministries with PCs that use Windows and DOS, and by developing with Chinese researchers interactive TV and speech and handwriting recognition programs, Gates is laying the groundwork for enormous Microsoft sales.

Sources of Information

Contact at: Microsoft Corporation
1 Microsoft Way
Redmond, WA 98052
Business Phone: (425)882-8080

Bibliography

"Citizen Gates." Economist , 23 November 1996.

"The Future of Microsoft." Economist, 22 May 1993.

Manes, Stephen, and Paul Andrews. Gates. New York: Doubleday, 1993.

"Microsoft's Long March." Business Week, 24 June 1996.

Newsweek, 27 November 1995.

The New Yorker, 10 January 1994.

The New York Times, 3 January 1994.

Rebello, Kathy. "Inside Microsoft." Business Week, 15 July 1996.

Slater, Robert. Portraits in Silcon. Cambridge MA: MIT Press, 1987.

Time, 25 December 1995.

Wallace, James, and Jim Erickson. Hard Drive. Wiley, 1992.

William Henry Gates III

Microsoft cofounder and Chief Executive Officer William (Bill) H. Gates III (born 1955) became the wealthiest man in America and one of the most influential personalities on the ever evolving information superhighway and computer industry.

William (Bill) Henry Gates III became the most famous businessman in recent history. His supreme accomplishment was to design and develop innovative software for the personal computer, making PC's universally popular machines. In user friendly language, communicating with computers is a matter of "translating" a person's native language into the codes that a computer understands. The easier this translation is to make, the easier it is to work with the computer and the more accessible and widely used the computer becomes. Gates' gift for software design, as well as his skills in business, made Microsoft, the company he cofounded with a high school friend in Richmond, Washington, a multi billion-dollar empire.

Love of Computer Technology

Gates was born on October 28, 1955 in Seattle, Washington. He was the second child and only son of William Henry Gates Jr., a prominent Seattle attorney, and Mary Maxwell, a former school teacher. Gates had two siblings. His sister, Kristi, one year his senior, became his tax accountant. Libby, nine years his junior, lived in Seattle raising her two children. Although Gates' parents had a law career in mind for their son, he developed an early interest in computer science and began studying computers in the seventh grade at Seattle's Lakeside School. Lakeside was a private school chosen by Gates' parents in the hopes that it would be more challenging for their son's intellectual drive and insatiable curiosity. At Lakeside Gates became acquainted with Paul Allen, a classmate with similar interests in technology who would eventually become his business partner.

Gates' early experiences with computers included debugging (eliminating errors from) programs for the Computer Center Corporation's PDP-10, helping to computerize electric power grids for the Bonneville Power Administration, and founding with Allen a firm called Traf-O-Data while still in high school. Their small company earned them $20 thousand in fees for analyzing local traffic patterns.

While working with the Computer Center's PDP-10, Gates was responsible for what was probably the first computer virus, a program that copies itself into other programs and ruins data. Discovering that the machine was connected to a national network of computers called Cybernet, Gates invaded the network and installed a program on the main computer that sent itself to the rest of the network's computers and crashed. When Gates was found out, he was severely reprimanded and he kept away from computers for his entire junior year at Lakeside. Without the lure of computers, Gates made plans in 1970 for college and law school. But by 1971 he was back helping Allen write a class scheduling program for their school's computer.

The Article That Started It All

Gates entered Harvard University in 1973 and pursued his studies for the next year and a half. However, his life was to change in January of 1975 when Popular Mechanics carried a cover story on a $350 microcomputer, the Altair, made by a firm called MITS in New Mexico. When Allen excitedly showed him the story, Gates knew where he wanted to be: at the forefront of computer software design.

Gates and Allen first wrote a BASIC interpreter for the Altair computer. BASIC was a simple, interactive computer language designed in the 1960s. "Interpreter" describes a program that executes a source program by reading it one line at a time, performing operations one line at a time, and performing operations immediately. MITS, which encouraged and helped Gates and Allen, finally challenged them to bring their software in for a demonstration. Because they did not own an Altair (nor had they seen the 8080 micro processing chip that was at the heart of the machine), Gates had to write and test his BASIC interpreter on a simulator program which acted like the 8080. Nonetheless, their BASIC ran the first time it was tested at MITS.

Gates dropped out of Harvard in 1975, ending his academic life and beginning his career in earnest as a software designer and entrepreneur. At this time, Gates and Allen cofounded Microsoft. They wrote programs for the early Apple and Commodore machines and expanded BASIC to run on microcomputers other than the Altair. One of Gates' most significant opportunities arrived in 1980 when he was approached by IBM to help with their personal computer project, code name Project Chess. Eventually asked to design the operating system for the new machine, Gates developed the Microsoft Disk Operating System, or MS-DOS. Not only did he sell IBM on the new operating system, but he also convinced the computer giant to shed the veil of secrecy surrounding the specifications of its PC so that others could write software for the machine. The result was the proliferation of licenses for MS-DOS as software developers quickly moved to become compatible with IBM. Over two million copies of MS-DOS were sold by 1984. Because IMB's PC architecture was opened up by Gates, MS-DOS and its related applications can run on almost any IBM-compatible PC. By the early 1990s, Microsoft had sold more than 100 million copies of MS-DOS, making the operating system the all-time leader in software sales. For his achievements in science and technology, Gates received the Howard Vollum Award in 1984 by Reed College in Portland, Oregon.

In 1987 Gates entered the world of computer-driven multimedia when he began promoting CD-ROM technology. CD-ROM is an optical storage medium easily connected to a PC, and a CD-ROM disc has an incredibly larger capacity that can store encyclopedias, feature films, and complex interactive games. Gates hoped to expand his business by combining PCS with the information reservoirs provided by CD-ROM and was soon marketing a number of multimedia products.

Gates' competitive drive and fierce desire to win has made him a powerful force in business but has also consumed much of his personal life. In the six years between 1978 and 1984 he took a total of only two weeks vacation. In 1985 a popular magazine included him on their list of most eligible bachelors. His status did not change until New Year's day 1994 when he married Melinda French, a Microsoft manager, on the Hawaiian island of Lanai. The ceremony was held on the island's Challenge golf course and Gates kept it private by buying out the unused rooms at the local hotel and by hiring all of the helicopters in the area to keep photographers from using them. His fortune at the time of his marriage was estimated at close to seven billion dollars. By 1997 his worth was estimated at approximately $37 billion, earning him the "richest man in America" title.

In Hard Drive, James Wallace and Jim Erickson quote Gates as saying, "I can do anything if I put my mind to it." His ambition has made him the head of a robust, innovative software firm and the richest man in America.

The Future for Microsoft

Gates emits the same competitiveness, drive, ambition, and need to win that was present 21 years ago when he dropped out of Harvard to start Microsoft. But some of the players have changed. Allen left Microsoft to become one of the country's most successful hi-tech venture-capital investors and owner of the Portland Trail Blazers basketball team. However, he returned to serve on Microsoft's board. Gates considers Steve Ballmer, a former Harvard classmate, his best friend and closest advisor. He hired Ballmer away from Proctor & Gamble in 1980 with the lure of a $50 thousand a year salary and a share of the business. In an interview with Newsweek, Gates is quoted as saying, "I think it's a phenomenal business partnership … And within the company, everyone has understood that we work very closely together and have a very common view of where we want to go." Gates shared his vision for the future of Microsoft with Information Outlook. Gates said, "We're in four businesses today, and in ten years we'll be in the same four businesses; desktop operating systems, productivity applications, server software, and interactive content business." He believes that speech recognition, natural language understanding, automatic learning, flat screen displays, and optic fiber will have the greatest technological impacts on the industry over the next 15 years.

Many of Gates' detractors criticize him not just for his success, but because they feel he tries to unfairly and may be even illegally leverage his company's dominance of the desktop operating systems. Once Microsoft integrates its Internet browser, Explorer, and its Microsoft Network into its Windows Operating Systems, it will have the ultimate— Active Desktop—due out with Windows 97. Critics feel it will put all other entries at a disadvantage. "If improving a product based on customer input is willful maintenance of trying to stay in business and not have Netscape turn their browser into the most popular operating system, then I think that is what we are supposed to do," was Gates' response to his critics as quoted by Time.

Gates and his wife had their first child, Jennifer, in April of 1996. Although many describe Gates as cold, relentless, and impersonal, his friends find him more reflective since his marriage and the birth of his daughter. Further, he recognizes his overall contribution. While he appears a little less exhausting and more civil, friends say he still pushes hard and keeps score.

Gates expects to run Microsoft for at least the next ten years at which time he plans to retire and focus on giving his money away. His philanthropic endeavors have been guided by his interests. He has directed those efforts primarily toward educational sources such as schools and libraries.

Further Reading

Since 1981 business magazine articles have described aspects of Gates' career. Gates: How Microsoft's Mogul Reinvented an Industry—and Made Himself the Richest Man in America by Stephen Manes and Paul Andrews (1994) is an authoritative and detailed biography. Big Blues, The Unmaking of IBM by Paul Carroll (1993) favorably compares Gates' entrepreneurial approach to business to IBM's management by committee approach. "E-Mail From Bill" by John Seabrook, New Yorker magazine (January 10, 1994) provides insight to Gates' goals and personality. Architects of the Future, Microsoft Corporation 1993 Annual Report contains product descriptions and market share analysis along with income statements and a discussion of litigation and federal agencies' inquiries. PC Week provides updates on the latest Microsoft products.

For books about Bill Gates see: Encyclopedia of Computer Science, Van Nostrand Reinhold, 1993 p 519. Gates, Bill with Nathan Myhevrold and Peter Rinearson, The Road Ahead. Ichbiah, David and Susan L. Knepper, The Making of Microsoft, Prima, 1991. Manes, Stephen and Paul Andrews, Gates, Doubleday, 1993. Slater, Robert, Portraits in Silicon, MIT Press, 1987. Wallace, James and Jim Erickson, Hard Drive, Wiley, 1992.

For periodical articles about Bill Gates see: The Future of Microsoft. Economist, V327, May 22, 1993, pp. 25-27. Information Outlook, May 1997. National Review, January 27, 1997. New York Times, January 3, 1994. New Yorker, January 10, 1994, pp. 48-61. Newsweek, June 23, 1997. PC Magazine, March 25, 1997. Time, January 13, 1997. □