THE MICROSOFT PROVOCATEUR jya.com
This is the famous Ken Auletta profile of Nathan Myhrvold, from The New Yorker, May 12, 1997, pp. 66-77. Maybe somebody at Microsoft "got it" from the beginning. And maybe this article is one of Myhrvold's "Nixon dirty tricks". Or, maybe the Internet just didn't fit Bill's business model of the day. What do you think he is, Sal, a commie or something?
IN the early nineties, Myhrvold rarely mentioned the Internet. He might use the phrase "the Net" or "the information highway," but what he meant was interconnectivity itself--interactive TV, or connecting computers to others through what we have come to call intranets, or systems linking computers to on-line data banks. Myhrvold was deluging Gates with memos urging Microsoft to seek more alliances, and to prepare for a war with consumer-electronics companies.
At first, Microsoft more or less ignored the Internet. Gates and Myhrvold were sometimes baffled by this seemingly anarchic world. And in 1993, when Microsoft decided to build its own on-line service, the Microsoft Network, it was beset by false starts, name changes, and altered plans. Not that the Microsoft team wasn't aware of how fast the world was changing. By 1993, Microsoft had come to hold a more expansive view of who its potential adversaries might be. ...
What is striking today is that Myhrvold (and Microsoft) failed to envision how the Internet, particularly the World WideWeb, would provide just that sort of synergy. In fact, the Internet was not mentioned in Myhrvold's "roadkill"discourse; his "information highway" was defined not as a single universe (the Internet) but as a series of separateplanets, with each, Myhrvold hoped, reliant on Microsoft software. ...
THERE are many theories about why Microsoft executives were late to fully comprehend the Internet. "They live in aworld of their own, breathing nothing but their own fumes," says John Perry Barlow, a writer for Wired and other publications, and a former lyricist for the Grateful Dead. Perhaps Microsoft missed out because the company was thriving, or because its reliance on internal E-mail to communicate walled it off. Furthermore, key executives like Myhrvold and Gates were in their thirties--a decade removed from people like Marc Andreesen, Netscape's chief programmer, and the college generation that helped to popularize the Internet. It also infuriated Myhrvold and Microsoft that the Internet was free. They saw it as a flower-child culture that disdained profits and copyrights--and
Microsoft.
Yet by early 1994 the Internet had become what Gates would describe to Business Week as "an underlying rumble." The rumble grew louder when Gates's technical assistant, Steven Sinofsky, visited Cornell on a recruiting trip that February. Business Week recounted that a snowstorm closed the local airport and Sinofsky was forced to return to the campus, where he discovered that students were dependent on the Internet for their E-mail and their course lists. Sinofsky reacted like Columbus setting foot in the New World--and championed the Internet when he returned to Redmond.
At Microsoft's semi-annual management retreat that April, Gates began to steer the software giant toward the Internet, telling his executives that they must invest more in it. Still, the interactivity that Microsoft talked more about was interactive TV. In May, the company announced the development of an interactive-TV server, called Tiger, but did not focus on developing a browser for the Internet, as Netscape would. Microsoft was also preoccupied with a four-year probe by the Justice Department and the Federal Trade Commission, which entailed endless depositions and turning over truckloads of documents as the company tried to prove that it was not guilty of monopolistic tactics. In July, Justice announced a consent decree in which Microsoft agreed to alter a few business practices.
The Internet alarm should have rung louder for Microsoft in October of 1994, when Netscape downloaded its browser on the Web--free. That month, Gates sent his executives a memo, headed " 'Sea Change' Brings Opportunity," that sought to identify trends that would affect his company graphical computing, "electronic communication with office
documents," and the advent of voice-activated commands. Gates did not, however, cite the Internet as a "sea change." In fact, in three single-spaced pages he mentioned the Internet twice, and then only in passing, when speaking of the growth, first, of private corporate networks (intranets), and then of"public networks (including Internet and online services)." If over the next two to three years Microsoft succeeded in getting the number of users of its "high end" software to twenty-four million customers, Gates wrote, and the "installed base" could be induced to upgrade regularly with new Microsoft products and enhancements that anticipated the "sea change," then Microsoft would continue to enjoy boundless growth.
Microsoft, however, was beginning to feel defensive about the Internet, as can be seen from a somewhat sour memorandum, "Impact of the Internet," that Myhrvold circulated on November 15, 1994. The memo, which ran to sixteen pages, started off with a bow to Steven Sinofsky's epiphany at Cornell: "The Internet is an example of a rare
and very potent phenomenon--the birth of a new platform." Then came the swipe: "The Internet ... has generated plenty of fear, loathing, excitement and above all--hype. Most of what you hear about the Internet is, in my opinion, quite misguided.... Perhaps the best place to start is with a definition of what the hell the Internet is." ...
Was the Internet competitive with the Microsoft Network? Myhrvold insisted that it was not, because "it is a transport
service," and Microsoft "had to use every and any form of transport." He shrugged off what he saw as the alien culture of the Net--"enforced by many opinionated people who are its self-appointed guardians."
The Net's combination of free content and sparse advertising led Myhrvold to be dubious--as he had been all along--of its commercial potential. "Nobody gets a vig on content on the Internet today," he wrote. "The question is whether this will remain true."
Although Myhrvold seemed ambivalent, he concluded his memo on an optimistic note. Since Internet users are P.C. users, "this is a huge advantage for Microsoft because these are the people that we know and serve today," he wrote. "This simple fact is not one that is widely appreciated. The distinct cultural aspects of the current Internet make a lot of people think that it will somehow be different, but it is very hard for me to see how it possibly could be." ...
By the end of May [1995], Gates, in another internal memo, was warning that the Internet was "the most important single development" in the computer business since the I.B.M. P.C., in 1981. He had, in short, drastically changed his notion of a Microsoft Network as a proprietary place: "The On-line services business and the Internet have merged. What I mean by this is that every On-line service has to simply be a place on the Internet with extra value added."
In the time period that the consent decree was negotiated, I think it's disingenuous beyond belief to say that Microsoft was secretly cooking up this plan for an integrated OS/Browser. MSN. "The Net". That was all this big Potemkin village effort when Bill really had his eye on the ball all the time. Sure. Tell it to the judge.
Cheers, Dan.
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