Book Excerpt

From the Introduction — Microsoft 2.0: Welcome to the New (Post-Gatesian) Microsoft

“He [Bill Gates]’s kind of like the pope of our industry. And as the pope, he always draws a crowd and people follow every word he says. You either go to heaven or you don’t, if you have the Microsoft blessing.” — Gary Shapiro, chief executive of the Consumer Electronics Association, The Seattle Times, December 31, 2007

Microsoft is at a crossroads. But to me, crossroads isn’t synonymous with dead. I know not everyone agrees. Major Wall Street firms claim that the old gray Soft just ain’t what it used to be. Many are predicting that Microsoft might need to empty its huge cash coffers in order to compete with Google and other Web 2.0 companies. Cutting-edge technologists claim that Microsoft has lost its way and evolved into a company whose operating systems are loved only by “grandmas” (Programmer Paul Graham’s words, not mine).

Up until now, Microsoft was Bill Gates. The guy who stood up to the U.S. Department of Justice lawyers and insisted in his deposition that he didn’t know the meaning of the word “we.” The CEO famous for breaking the will of company employees during code reviews with a single dismissal. The college dropout who became the world’s richest and one of technology’s most powerful and feared leaders. Gates’ stamp was and is everywhere on Microsoft—from how other executives dress, part their hair, and rock in their chairs, to the “friends of Bill” management slate that traditionally has ruled the Redmondian roost.

When Gates founded Microsoft, the Internet was not something with which average users interacted the way they do today. Google didn’t yet exist. The PC software industry was largely a packaged-product (not a services) business. And no one had yet heard of Ajax or Google or open source. With the emergence of these new forces, many industry watchers have come to feel Microsoft was even slower than usual to understand and react to the new trends. Consequently, they characterized Microsoft as a has-been that would never be able to regain the same level of industry dominance it once enjoyed—even if it went so far as to try to buy a major Web 2.0 powerhouse like Yahoo. On the opposite end of the spectrum, others believed that Microsoft could never be toppled from its perch, simply because of its size and its monopolistic history.

I fall somewhere in between these extremes. I know that it often simply takes a strong competitor—and acknowledgement of it by the cautious Microsoft top brass—to galvanize the Redmond software maker. I know that Microsoft has no pretenses of following any kind of Google-like “Do No Evil” platform. After all, Microsoft didn’t get to the position in the tech business that it has enjoyed for the past couple of decades by being kind and equitable. “All’s fair in love and business” is Microsoft’s credo. And even if it’s not fair, if you can get away with it and it helps the bottom line, go for it, is Microsoft’s more likely motto.

I’ve spent just about all of my 25 years as a journalist watching and writing about Microsoft. I’ve never been interested in writing a book about the company, as I’m not one who spends a lot of time looking back. And who writes business books about the future?

Well, you’re holding in your hands an attempt to do just that.

This is a book about Microsoft’s next chapter. It’s going to be an upredictable one, as Microsoft’s bid to purchase of Yahoo earlier this year makes evident. In the not-too-distant future, many of the execs currently leading the Microsoft charge are likely to go their own way—especially if the company’s stock stays as stagnant as it has been over the past few years. Technology will continue to advance at a breakneck pace. Microsoft will forge deals of a size and scope it never previously envisioned in order to keep pace. The fear that the Redmond software juggernaut traditionally inspired will be replaced with the foolish (in my assessment, at least) tendency to count Microsoft out.

I can’t and won’t claim to possess a crystal ball, allowing me to predict flawlessly what Microsoft plans to do in the next few years … or even few months. But based on the many Microsoft executives, partners, customers, and competitors with whom I converse regularly, I feel I’m sitting in a good spot to make some fairly educated guesses.

This book, Microsoft 2.0, describes the Microsoft people, products, and strategies that I believe will be key for the next-gen Microsoft. I realize that my attempt to describe the future of the company’s handful of business units is a bit like that of the proverbial blind men who tried to describe an elephant. Just because you know the Windows trunk might look and feel like a snake, and the Office tusk, a spear, doesn’t mean you’ll be able to discern how the 80,000-employee-and-growing Microsoft is shaping up.

That said, there are some good clues out there, as to what Microsoft is likely to do next. Piecing them all together, you’ve got a reasonable, educated guess as to what Microsoft 2.0 will look like as it enters the next decade-plus. I hope my attempt to connect the dots helps the customers, partners, and other Microsoft-watchers out there make better informed decisions in 2008 and beyond.