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Mine, All Mine Report on Bill Gates and Warren Buffet

Mine, All Mine Report on Bill Gates and Warren Buffet

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Published by: api-3740673 on Oct 15, 2008
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Monday, Jun. 05, 1995
By Philip Elmer-DeWitt

Ask Bill Gates, the founder and chairman of Microsoft, about something he wants to talk about-like a new software system or his upcoming railroad trip through China on Chairman Mao's train -- and he acts like the teenage boy that he still resembles. He grins. His voice breaks. He tucks his elbows into his lap and rocks back and forth as if to contain his excitement. But press Gates on a subject he doesn't want to talk about-like the charges of anticompetitive, and possibly illegal, business practices that have been turning up lately, like ex-girlfriends at a wedding party -- and he is liable to throw a tantrum. "I challenge your facts!" he shouts when confronted with a new but relatively minor allegation. "That's a lie! I mean, it's just not true. I never heard of any such thing. What a bunch of nonsense!"

It is a curiously revealing moment. All the more so when a company spokesman concedes a few days later that this particular charge -- that Microsoft required potential competitors to tell the company their product plans before they would be allowed to participate in a Microsoft developers' conference-is well documented.

Up until now, Gates has largely controlled the unfolding of his remarkable story. At 39, he seems to have achieved the information age's equivalent of the American Dream. Through intelligence, ruthlessness and hard work he dominates a technology so central to modern life that it touches nearly every office, school and desktop. He is very, very rich and so powerful that even his enemies are eager to cut deals with him. Now he wants more, a piece

of all the action-the bills people pay, the phone calls they make, the news they read, the TV they watch. But he may have reached that point in the arc of his success where the very qualities that raised him high could start to drag him down.

If Gates is feeling a little cranky these days, he has good reason. The Justice Department just derailed his $2 billion bid to acquire Intuit and its popular Quicken electronic-checkbook program a deal that would have helped realize Microsoft's ambition to make money from almost every commercial transaction in cyberspace. Another team of government lawyers is snooping around asking questions about Microsoft Network, the new online service he plans to launch in August. And an antitrust suit that has been hanging over his head for nearly five years -- and which he thought he had settled last summer -- is in legal limbo, held hostage by an ornery federal judge.

Despite the company's reputation as a juggernaut, Microsoft is running into some unexpected snags in the marketplace as well. Gates wants desperately to seize control of the so-called local area networks, where more and more corporate business is done. But the company is having trouble developing a product that can compete with Lotus Notes, which dominates the market for "groupware" (the software that helps people brainstorm over these networks). Novell's NetWare still controls two-thirds of the market for the software that runs the office systems, despite Microsoft's best efforts with Windows NT. And Microsoft's sql Server is still struggling to win customers from Oracle, which owns almost half the market for the critical database software that stores the corporate world's most important information.

Microsoft could even have difficulties in desktop computing -- a business that Gates helped nurture from a hobbyist's amusement into a $100 billion industry and that is running out of room for growth. Windows 95, a product Gates is counting on to lead his charge into online services and electronic commerce, has run into one delay after another. And now, less than three months before the program is scheduled to hit the stores, just when Gates was supposed to ride the tide of industry support behind what could very well be the next personal-computer software standard, he finds himself under attack on all sides:

-- From users, who complain that some of Microsoft's mainstay products, like the latest version of Word for the Mac, have become bloated and sluggish, and that the company's first attempt to create a more "social" kind of software (the much ballyhooed Bob) was too condescending.

-- From the computer press, which has long acted as Gates' head cheerleader (even more so since he became rich and famous) but now, seems to delight in reporting Microsoft's every delay, every bug and every legal setback.

-- From newly emboldened competitors, who have quietly complained for years about Microsoft's strong-arm business tactics and only in the past few months have begun putting those complaints on the record.

-- From government officials, who are concerned that Microsoft has developed a choke hold on a critical industry and who view with alarm the prospect of Microsoft's moving into banking, telecommunications, publishing and entertainment.

These issues came to a head in February, when the antitrust settlement Gates reached last July with Assistant Attorney General Anne Bingaman ran into a roadblock in the person of federal judge Stanley Sporkin. In a widely quoted decision, Judge Sporkin rejected the deal, agreeing with most observers, who believe it was too favorable to Microsoft. "It is clear to this court," he wrote, "that if it signs the decree presented to it, the message will be that Microsoft is so powerful that neither the market nor the government is capable of dealing with all of its monopolistic practices."

After Sporkin's ruling, things seemed to turn sour for Microsoft. In late April the Justice Department's antitrust division sued to prevent the company from consummating the merger with Intuit, a deal that would have been the biggest acquisition in software history. Microsoft was scheduled to fight the suit in court on June 26, but two weeks ago, the company announced that it was dropping the merger, perhaps hoping it would get the government off its back. It may be too late for that. Bingaman says her department has become a kind of "Microsoft complaint center," and her staff says it doesn't have the resources to pursue the leads it is getting. In one closely watched investigation, the Justice Department is reported to have assigned a team to look into Gates' plan to bundle software for Microsoft Network in every copy of Windows 95-a brilliant marketing ploy that could instantly make the company a key player, if not the key player, on the information highway.

Fueling the debate-and industry gossip mills-are fresh details of Microsoft's hard-nosed business dealings. In a new book called Startup (Houghton Mifflin; $22.95), for example, GO Corp. founder Jerry Kaplan tells how in 1989 his company, hoping to persuade Microsoft to write some software for GO's pen-based computer system, gave Gates and his developers a demonstration of how it worked. Microsoft said it wasn't interested. But two

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