Hard Drive - Bill Gates and the making of the Microsoft Empire 8

For my write-up from my reading of Hard Drive – Bill Gates and the making of the Microsoft Empire by James Wallace and Jim Erickson, I shall write about the following points in the book.

1. Microsoft was eager to leverage on the growth of the burgeoning Apple company from the sales of its newly developed computer, the Apple II, which had taken off, especially since it was the only computer licensed to run the extremely popular VisiCalc application program. The Apple II, however, had its own unique chip, the 6502,, and a proprietary operating system. Apple didn’t want anyone else to “clone” its computer. Microsoft faced a dilemma. Most of its programs and languages, comprising more than a quarter of a million bytes of code, had been developed for Intel’s 8080 chip and the CP/M operating system of Digital Research. Programs and applications written for CP/M, which had become an industry standard, would not work on the Apple operating system.

At page 158 – “Gates badly wanted a slice of the rapidly growing Apple software market. But it would be a major effort to translate all of Microsoft’s 8080 code into 6502 code. One day, while sitting in the back of a pickup truck in the company’s parking lot, Allen, brainstorming with Gates about the Apple problem, came up with an idea. Why not try a hardware solution to the software problem? His ingenious suggestion was to design an expansion card that could be plugged into the Apple to run programs and applications written for CP/M. With this card, Apple II users could run any of Microsoft’s programs written for the 8080 chip and Gary Kildall’s operating system.”

Microsoft decided to call the new product the SoftCard. The SoftCard was released in the summer of 1980. Allen had hoped Microsoft could sell 5,000 of the cards. It sold that many in a couple of months. By the end of the year, more than 25,000 had been snatched up by Apple II owners. In all, more than 100,000 were sold.

2. Gates turned to a friend for a key management job in the company when the Steve Wood decided to leave the company. In June 1980, he brought in Steve Ballmer as assistant to the president. Unlike the other professionals at Microsoft, Steve Ballmer knew a lot about business and not much about computers.

The son of Swiss immigrants, Ballmer grew up in Detroit, where his father worked for the Ford Motor Company. After getting his applied mathematics degree from Harvard, Ballmer worked for a couple years as assistant products manager at Proctor & Gamble before heading off to Standford’s business school. He had been there about a year when Gates called.

At Proctor & Gamble, Ballmer had become known for redesigning the company’s Duncan Hines cake mix box so that it sat on store shelves horizontally rather than vertically to grab more shelf space. Ballmer would later say that’s what he wanted to do at Microsoft – help Gates squeeze out the competition.

3. IBM wanted to create a personal computer to compete with the existing Apple II in the market. Lowe, director of the Boca Raton lab, was sent back to Florida with orders to do what ever had to be done to develop IBM’s own personal computer. He was to assemble a task force and bring back a prototype of IBM’s “Apple” in 30 days.

The task force agreed the new computer should be an “open architecture” system. In other words, critical components of the machines, such as the microprocessor, would come from existing technology in the market place and would not be proprietary like components in the Apple. It was decided that the machine’s software, including the vital operating system, would also come from an outside vendor. In the late July 1980, Jack Sams of IBM plced a call to Microsoft and asked to speak with Bill Gates.

At the second meeting, Gates and his team were asked to sign the non-disclosuree agreement, and after this formality they were then told what they already suspected: IBM had a top secret project underway to develop a personal computer.

It was there that Gates leveraged on the 16-bit 8086 chip that his company had developed which was faster than the 8-bit 8080 chip in the market to convince IBM to base its machines on the newer and faster chip. At the end of this meeting, Sams and his group returned to Boca Raton with a proposal for the development of a low-end, 16-bit business workstation. The venture was named Project Chess.

IBM has a different account on how the idea to use a 16-bit chip came about. Jack Sams says that the IBM group had already decided to use a 16-bit chip before Gates was contacted. But he said Gates was not told this at the second meeting, because of the IBM secrecy protocol, so Gates may well have believed he was making a recommendation that IBM acted on.