Microsoft's future No. 5: The "Gates was right" scenario

Everyone thought Bill Gates had no vision. As it turns out, he did. And he got the last laugh

Bill Gates didn't see much of Steve Ballmer anymore, now that Bill was skipping most of the board meetings. But when they met they'd share a good laugh. After all, although things went pretty much according to plan, they never imagined the company would reach such a peak. Good ol' MSFT was now bigger, in terms of market cap, than any company in the U.S. If it weren't for the Chinese banks, they'd be kings of the world.

Not that it was easy to get where they were. Well, the technology was easy, all considered. Everything the company needed to dominate the "software business" (as Gates insisted on calling it; he never liked carving it up into "business" and "consumer," or "desktop" and "Web," or "installed" and "hosted," which had always prevented people from thinking clearly about it) was already in place by 2010. The trick had simply been to stay the course and let the "idiotic fads" -- SaaS, cloud computing, virtual desktop, superthin clients, business cloud, the rest -- run out of steam. What was that other one? Bill could never remember. "Oh yeah, Web 2.0. Google and Web 2.0! Jesus," he exclaimed in an interview.

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A decade after leaving the helm of Microsoft, Gates could now admit, in that told-you-so way of his, that those years had been painful for him. It was hard being criticized for being a technology laggard when in fact Microsoft's technology -- from the presentation layer to the back end -- was ahead of everyone. Well, almost everyone. As he told InfoWorld in an exclusive interview on the 10th anniversary of his departure as CEO:

But of course, who else had all the stuff we had? Larry Ellison? IBM? Steve Jobs, for crying out loud? Nobody! At least people know now that Google and Apple didn't matter. Blips. I kept saying it was about software-plus-services, and dammit, it was.

That was the key, our portfolio. Second to none. Back then, though, no one could see over their own desktops. Especially Wall Street. Windows and Office, Windows and Office, Windows and Office ... I can still hear them now. Sure, you couldn't dismiss Windows and Office -- still the most important software on the planet. They funded everything. But in those days, nobody gave us enough credit for all the stuff we built around the OS and apps -- the middleware, the communications, the rich media, the management and development tools. All the beautiful tools. And to have a lot of the neatest stuff, the really super stuff -- speech recognition, handwriting recognition, VoIP, the virtual reality -- written off as "Bill's adventures," that was hard to take. Wake up, people.

Couldn't they understand we would need it all? I mean, hello, we're working on the next generation of computing here. Wall Street, the press, the no-nothing analysts ... they have this mountain staring them in the face for 10 years, and the whole time all they can say is, "Where's your cloud? When are you going to put this in the cloud?" Well, here's your cloud, pal. You see it now, don't you? Yeah, a trillion-dollar cloud is hard to miss.

[ Gates was getting a little worked up, thinking back on it. Time to take a pill. --Ed.]

Of course, "cloud" isn't really the right word. That was the thing about software -- you could run it anywhere. On a client, or on a server, or on both at the same time -- what's the difference? Well, none of course. Same goes for operating systems and applications -- no difference, necessarily. People get stuck on the old concepts. Funny, back when we were pulling all the apps into the operating system, it was a crime. Ten years later, we've pulled the operating system into the applications (virtualization! now there's a word you never hear anymore), and no one blinks twice. And what's the difference? Not much. Idiots.

OK, sure, there's one huge difference. That's the whole point. Now that the OS travels with the apps, Office runs everywhere -- handhelds, laptops, desktops, wherever you like, even on Linux. Boy, did that one blow their minds. Almost as big as the shock we created when we rolled the OS (and everything else) into Office and killed the Windows brand. But like Steve and I agreed, if you're not running Office, then you don't need Windows. And as long as your software streams from, then we don't care where it lands. Run it on Linux or even a Mac, if you can still find one.

Hard to believe there was a time when people thought they would run serious apps in a Web browser. I guess maybe they thought they would have to. Gotta admit, we were really milking that Windows and Office cow. Still, Google apps? In a Web browser? I love the way Ballmer put it that one time, during that meeting with Jerry Wang and Yahoo. Running an app in a Web browser is like living without a penis. Exactly. Boy, I wonder what Jerry Wang is doing these days. Idiot.

Well, Steve and I can laugh now. Steve did a super job of keeping the train on the tracks. Like I told him when I stepped down, keep doing what you're doing. All the important pieces are in place. Keep hiring the best engineers, and make sure we've got our hands in all the important stuff. But don't give the engineers too much control. Engineers always want to be first, and that's the one sure way to kill our business. The shift to "on demand" is going to happen, but not how people think. It's still the software market. We own it today, and we'll own it tomorrow. Let's not be in too much of a hurry.

Yeah, everything worked out just fine. Soon as the Chinese banks hit a rough patch, we'll be No. 1. Even now, why can't people see that software is bigger than money? Anyhow, Steve was smart to hire all of those business guys. They really held the course. I'd much rather spend time with engineers than the MBAs -- I just had to get out of there. But you gotta admit, engineers have no business sense. Engineers would put a kitchen in a skateboard if you'd let 'em. Idiots.

See what other futures may be in store for Microsoft:
Overview of Microsoft's post-Gates challenge
1. The "Borvell" scenario
2. The "slow decline" scenario
3. The "streaming" scenario
4. The "Oort services" scenario
5. The "Gates was right" scenario