BN.com Gift Guide

Breaking Windows: How Bill Gates Fumbled the Future of Microsoft

( 1 )

Overview

The year is 1997, and despite the machinations of its rivals, Microsoft is master of the digital universe and the darling of corporate America. Windows and Office generate staggering profits, the company's share price is stratospheric, and Bill Gates is the preeminent icon of the information age. No outsider could guess what Gates knew -- that the most powerful threat to Microsoft's prized Windows platform came not from Sun or Netscape or AOL or even from the U.S. Department of ...
See more details below
Other sellers (Paperback)
  • All (12) from $1.99   
  • New (6) from $14.20   
  • Used (6) from $1.99   
Sending request ...

Overview

The year is 1997, and despite the machinations of its rivals, Microsoft is master of the digital universe and the darling of corporate America. Windows and Office generate staggering profits, the company's share price is stratospheric, and Bill Gates is the preeminent icon of the information age. No outsider could guess what Gates knew -- that the most powerful threat to Microsoft's prized Windows platform came not from Sun or Netscape or AOL or even from the U.S. Department of Justice, but from within the company's own ranks.

Breaking Windows tells the story of the battle for the soul of Microsoft that raged inside the company from 1997 to 2000 and continues to reverberate today. Drawing on hundreds of e-mails among Microsoft executives, trial testimony, and exclusive interviews with Gates and his chief lieutenants, Wall Street Journal reporter David Bank reveals the bitter maneuvering between what he calls Microsoft's "Windows hawks" and its "Internet doves." On one side were the fierce defenders of the hegemony of Windows, on the other those who championed a new way of doing business based on the Internet's "open standards." The reformers wanted to break free from the legacy of Windows and dare to compete on the merits of their software. At the center of this pitched battle stood Gates, the tactical genius who had created the company in his own image and who now accepts full responsibility for his fateful choices. "Every mistake you can lay at my feet," he told Bank, who takes him at his word -- offering the first critique of Gates's leadership not from the perspective of government prosecutors or envious software rivals but from inside the company itself.

Ambitious in scope and surprising in its conclusions, Breaking Windows contains sharply drawn portraits of key past and present executives, including Steve Ballmer, Jim Allchin, Brad Silverberg, Adam Bosworth, and Paul Maritz. Bank argues persuasively that the rifts within Microsoft underlie many of its recent troubles -- from the antitrust courtroom debacle to the exodus of many of the company's most talented employees to Gates's own fall from grace as a corporate leader and technology visionary. Yet even now, Bank contends, Gates could embrace the new rules of competition and restore Microsoft to leadership, perhaps ushering in a new era of openness and innovation.

Breaking Windows breaks new ground in its analysis of Microsoft's past and future business strategies. As Microsoft faces the waning importance of Windows, rallies behind XML, and confronts the open-source insurgency, the past Bank reveals is vital to understanding the future of this company and the still unfinished digital revolution it helped unleash.

Breaking Windows breaks new ground in its analysis of Microsoft's past and future business strategies. As Microsoft faces the waning importance of Windows, rallies behind XML, and confronts the open-source insurgency, the past Bank reveals is vital to understanding the future of this company and the still unfinished digital revolution it helped unleash.

Read More Show Less

Editorial Reviews

From Barnes & Noble
The U.S. v. Microsoft trial decided in 1999 was incontestably the most significant American antitrust case in more than quarter of a century. To this day, legal experts wrangle over the strategies and implications of this behemoth contest. Yet a far more interesting story bubbled beneath the mounds of transcripts and depositions, a story that Wall Street Journal correspondent David Bank here narrates with startling force. He argues that Microsoft went to court defending a flawed technology strategy that many of its own executives believed was unsound. He describes how fierce turf wars had already created an environment of distrust and bad communication inside the Seattle industry leader; explains how Bill Gates lost management control of the company he founded and what role Gates's old friend, Steve Ballmer, played in this takeover. Utilizing hundreds of interviews, Breaking Windows presents the evolution of a high-tech giant and the strong and stubborn personalities that shaped it with the vividness of a well-turned novel.
From the Publisher
Paul Andrews author of How the Web Was Won and coauthor of Gates Laced with formidable reporting and probing analysis, Breaking Windows dares to defy Gates, Ballmer & Co. with the proposition that a post-Windows Microsoft might be better for everyone — including Microsoft.

James Fallows author of Free Flight and Breaking the News I thought I had seen every possible account of the Microsoft drama, but David Bank's reporting adds a new and fascinating perspective. Connecting the internal struggles over Microsoft's direction to the company's external legal and market battles, he convincingly explains why Microsoft has run into difficulties — but may well return stronger than ever.

Walter S. Mossberg Personal Technology columnist, The Wall Street Journal This is the best book I've read on Microsoft as it exists today. It goes far beyond the well-worn accounts of the company's battles with the government to provide a fascinating tale of Microsoft's battles with itself — and with the future.

Lawrence Lessig Professor of Law, Stanford Law School and author of The Future of Ideas: The Fate of the Commons in a Connected World This is not just another Microsoft book. It is an extraordinary account of the struggle for the soul of perhaps the greatest company in American history. If Bank is right — and his argument is meticulous and powerful — then it also shows why the government can safely take its antitrust case and go home.

Kara Swisher author of aol.com Combining bold writing, clear-headed analysis, and the keen insight that comes only from many years of reporting, Breaking Windows finally makes sense of the company that many have written about but few have understood. If you can read only one book about Microsoft, this is the one to pick.

David Readerman Partner and Director of Software and Internet Strategy, Thomas Weisel Partners David Bank has broken new ground in uncovering the fault lines within the seemingly monolithic and golden Windows franchise. This is a fast-paced, enlightening read that exposes the inner workings of Microsoft. I recommend it for investors as a must-read.

Michael A. Cusumano Professor, MIT Sloan School of Management, and coauthor of Microsoft Secrets and Competing on Internet Time A truly riveting account, based on volumes of confidential e-mails and personal interviews, of one of the great internal corporate struggles in business history: the debate within Microsoft over how to deal with the Windows legacy in the face of the challenge presented by Internet technology. A must-read for anyone interested in how high-tech companies make strategy and deal with disruptive change.

Dave Winer Founder and CEO, UserLand Software, Inc. Microsoft has long appeared to be a well-oiled machine, moving in lock-step toward goals set by Bill Gates. In Breaking Windows, however, a different picture emerges. The agony inside and around Microsoft is the theme of Bank's fantastic book.

Library Journal
Wall Street Journal business writer Banks believes that the major story of Microsoft is not the public trial but rather the internal struggles between senior staff for the future of the software giant. Banks states that everyone in the industry has already bought into Gates's one great business idea: to provide high-volume, low-priced software, separate from hardware. Since introducing Windows, though, he hasn't had many successes. For much of the last decade, Gates has been trying to protect his Windows environment, while the net has changed software rules. Based on interviews with the participants, Wall Street Journal articles, and internal Microsoft documents released in the lengthy government antitrust trial, this is not just another biography of Gates. Rather, it is an exposure of how business strategy is developed and the consequences of the choices in the rapidly changing wired world. Clearly one of the better books on Gates and Microsoft, this is very strongly recommended for libraries serving undergraduate and graduate business, computer, and MIS programs and for public libraries where business strategy or company histories are popular. Patrick J. Brunet, Western Wisconsin Technical Coll., La Crosse Copyright 2001 Cahners Business Information.
Read More Show Less

Product Details

  • ISBN-13: 9781416573258
  • Publisher: Free Press
  • Publication date: 8/21/2007
  • Pages: 304
  • Product dimensions: 6.00 (w) x 9.00 (h) x 0.80 (d)

Meet the Author

David Bank, a staff reporter for The Wall Street Journal, has covered Microsoft since 1996. Previously, he was a technology and telecommunications writer for the San Jose Mercury News. His articles have appeared in Wired, Newsweek, and Out. A 1996 Nieman Fellow at Harvard University, he is a graduate of the Columbia University School of Journalism and the University of California at Santa Cruz. He and his partner live in Berkeley, California. This is his first book. Additional information can be found at www.breakingwindows.net.

Read More Show Less

Read an Excerpt

Prologue: The E-mail Trail

At a small party in downtown Seattle in the spring of 2000, Tod Nielsen was introduced to an affable young man who said he was a paralegal at a local law firm. Nielsen mentioned he worked at Microsoft.

"I know," the paralegal said. He was familiar with Nielsen's shifting assignments, his promotion to vice president, and his upbeat tone. "You have always seemed like a really nice guy."

"Excuse me," Nielsen said. "Have we met before?"

"No," the man explained. "But I'm the guy who reads your e-mail."

The paralegal was far from the only person reading Nielsen's e-mail, or that of dozens of Microsoft's midlevel managers and top executives. With the company's business practices under legal scrutiny for most of the past decade, the collection and review of the company's internal communications had become as routine as the specials in the employee cafeterias. Once a month or so, a company lawyer contacted Nielsen's assistant and arranged to arrive at a time when Nielsen would be out of his office. With a technician, the lawyer downloaded the e-mail archive from the hard disk drive of Nielsen's computer and copied any new Word files or PowerPoint presentations. Nielsen's hard copies of charts and presentations were taken down the hall to be photocopied and returned to his office. Nielsen could hardly tell anyone had been there. The drill was the same for all the key employees working on major projects, such as Windows, Office, Internet Explorer, and tools for outside software programmers.

Each round of newly collected documents was added to e-mail records copied straight from the caches on Microsoft's central computer servers. Each printout was stamped with an identification number and, in a bit of wishful thinking, the word Confidential. A courier delivered the documents to one of several outside law firms. There, the piles of paper were divided among dozens of paralegals, who over time developed familiarity with the people on their particular lists of Microsoft executives.

Paralegals spent their days reviewing the huge volume of everyday electronic correspondence that coursed through the networks of the world's largest software company. The bulk of the material was mundane. But if the subject matter appeared to be covered by any of the dozens of subpoenas and "civil investigative demands" issued in the legal actions against Microsoft, the documents were pulled for further review by lawyers. Under legal orders, Microsoft's attorneys then turned over the relevant material to prosecutors from the anti-trust division of the U.S. Department of Justice, or to lawyers for Sun Microsystems or the other companies waging private lawsuits against Microsoft. By introducing the e-mail into evidence in the courtroom, the opposing parties made the documents public, and later posted them on sites on the World Wide Web. On a smaller scale, a similar effort was underway at Microsoft's competitors, such as Sun, Oracle, Netscape, IBM, and AOL, in response to legal demands from both the government and Microsoft.

Most of Microsoft's e-mail was collected long before the most sensational snippets began to appear in the press. But even after they must have realized the potential ramifications, Microsoft employees continued their running dialogues in writing. The collecting of e-mail became part of the white noise of a day in the office at Microsoft and was easily forgotten. So were the pro forma warnings from the legal department advising against the use of incendiary language in written communications. And the company's defense lawyers dutifully continued to turn over the transcripts of these in-house dialogues, providing their legal adversaries with some of their most valuable evidence.

Beyond the damaging snippets, the record of internal communications provided an unprecedented glimpse into the strategic debates and internal decision-making processes of a company that had long restricted outside access to its insular corporate culture. The leader of the emerging information age was turned inside out by a powerful tool of that new age, electronic mail.


In the fall of 1998, a courier delivered three heavy boxes full of paper to the downtown San Francisco offices of the Wall Street Journal, where I was the reporter assigned to the Microsoft beat. A legal effort by the San Jose Mercury News and several trade publications had convinced the judge to unseal most of the evidence in the federal civil lawsuit against Microsoft by Sun Microsystems, filed in 1997, in which Sun charged Microsoft with violating the terms of its license to use Sun's heavily hyped Java software technology.

With my colleague, Don Clark, I took over a conference room and began tagging and sorting the photocopies of the e-mails and other documents. The most interesting parts, to us, had little to do with the specifics of the legal cases. We read each e-mail thread from the beginning, and tried to understand the often arcane technical discussions. It required considerable effort to sort out the players and the plots. But by arranging the documents in chronological order and constructing an organization chart, we began to assemble a picture of Microsoft's internal debates and personal rivalries. What emerged was a cast of characters, known by their e-mail screen names, who had played parts in a grand opera set in the dramatic early days of the digital revolution.

Some players were familiar. "Bradsi" was Brad Silverberg, the senior vice president who had delivered Windows 3.1 and Windows 95 before forming Microsoft's Internet division to wage the "browser war" against the upstart Netscape Communications. "Jimall" was Jim Allchin, now the head of Microsoft's Windows division and the champion of its new Windows 2000 operating system. "Paulma" was Paul Maritz, effectively the company's third-ranking executive and the one to whom both Silverberg and Allchin reported. "Steveb" was Steve Ballmer, then the head of Microsoft's sales force and later its CEO. Over much of the e-mail hovered the presence of "Billg," Bill Gates, Microsoft's chairman and cofounder, who had created a company that remained uniquely a projection of himself.

Other e-mails came from the ranks of programmers with whom reporters rarely came into contact. There was a February 1997 message, for example, from Andrew Layman, a member of Microsoft's own Java team, that concluded, "We appear to have a clash between what Bill says we should be doing and what we...are in fact doing." The response from his colleague Russ Arun: "Yup, there is a disconnect with Billg."

I had already gotten hints of such a conflict. In an interview earlier in 1998, Allchin had criticized the embrace of Java by others at Microsoft. He considered Java a flawed technology that handed an advantage to Sun. "Even at Microsoft, there were some people who drank the Java Kool-Aid," he told me. Separately, over dinner in Seattle, a midlevel Microsoft manager had described what he called a "come to Bill" meeting in the spring of 1997. The meeting stood out even among Microsoft's knock-down drag-out reviews: Gates had been merciless in lacerating the Java team for failing to pay sufficient attention to protecting Windows, the company's crown jewel.

"Why don't you just give up your options and join the Peace Corps?" my source quoted Gates as shouting. "Hasn't anybody here ever heard of Windows? Windows is what this company is about!"

Now, as I culled through the documents in the Java lawsuit, I came across a series of e-mails from March 1997 that appeared to refer to the internally infamous meeting. The leader of the Java team, Ben Slivka, or "Bens," was responding to a colleague who had tried to comfort him for the shellacking he had received from Gates.

"It is disappointing that Bill chooses to flame like that without giving me a chance to educate him," Slivka wrote back. "Bill is convinced my group is trying to kill Windows, and I clearly haven't said the right things to show him otherwise."

It was a rare crack in Microsoft's monolithic public image. With the climactic meeting as an anchor, I reconstructed the debate over Java and the future of Windows. Microsoft's Java efforts had foundered in part on technical grounds, but the e-mail record revealed a more fundamental split between Silverberg and Allchin, both members of the eight-man executive committee that steered the company's strategy. Allchin emerged as a hardcore "Windows hawk," fiercely protective of the revenue stream and competitive leverage Microsoft gained from Windows, its flagship product. Silverberg was the leader of Microsoft's "Internet doves," pushing the company to develop a new platform for software development in order to capture the new opportunities opened by the Internet.

Allchin prevailed. By the time the story appeared on the front page of the Wall Street Journal in February 1999, on the day Allchin took the witness stand in Microsoft's antitrust trial, he appeared to have been vindicated. Windows had become more wildly popular than ever, driven by ever-falling PC prices and the popularity of the Web. Through the end of that year, Microsoft's already staggering profit margins expanded and its stock market value soared even higher.

Allchin and Gates had only bought Windows some time. Over the next two years it became clear that Microsoft's internal splits underlay much of what happened — the courtroom debacle in the antitrust trial, the exodus of many of the company's most talented employees, and Gates's own fall from grace as a corporate leader and technology visionary.


By the spring of 2000, as the two-year antitrust trial neared its conclusion, the cycle of dialogue and disclosure had become a recursive loop. Microsoft's lawyers were collecting, reviewing, and turning over e-mails written during the course of the trial itself. The newly released e-mails revealed the state of affairs inside Microsoft in early 1999, not long after Allchin and other executives had testified.

The past was catching up with the present, most notably in a long e-mail exchange between Silverberg and Slivka that had taken place on a cold, cloudy Sunday afternoon in February 1999. Slivka, who had refused to talk with me for the article on the rivalry between the Windows hawks and the Internet doves, mentioned to Silverberg that he had agreed to have an off-the-record dinner now that my article had been published.

"Hmm, David Bank. He's not exactly on my Xmas card list right now," Silverberg wrote back. The article about the earlier battle hadn't helped his current position inside the company or his mood. After a long leave of absence, Silverberg was back at the company part time as a consultant to Ballmer. He was weighing Ballmer's offer to return full time to take command of all of Microsoft's consumer efforts. He thought the account made him appear soft on Sun, which he wasn't, and that his support for a new platform could appear as disloyalty to Windows. He didn't trust me, he said. Silverberg complained that I had disregarded the explanations he had provided in a lengthy off-the-record e-mail and that I had fallen for what he called the "superwhipped spin" fed to me by other Microsoft executives. "What I sent him was accurate," he wrote. "Yes, a little sanitized, but still accurate, and 100 times more accurate than what he got from Microsoft."

Slivka promised to be circumspect. "Sounds like I'll be having a coy little dinner with Mr. Bank," he said.

But Slivka and Silverberg were anything but circumspect in this e-mail exchange. Their dialogue made clear that in the two years since Gates's tirade at the Java strategy meeting, the divisions inside Microsoft had only grown deeper, the disenchantment more profound.

The spark was Slivka's analysis of the company's Internet strategy, which he had sent several days earlier to Gates and Ballmer as well as Silverberg. "I fear very deeply that trying to win the Internet using Windows is a losing strategy," he wrote. Slivka had the temerity to suggest Microsoft had fallen into what Harvard Business School professor Clayton Christensen described as the inability of even well-managed companies to embrace innovation that threatened their successful franchises. Christensen's 1997 book The Innovator's Dilemma had become a manifesto for many Microsoft employees.

Silverberg agreed. What followed was off-the-cuff, but represents one of the most explicit critiques ever of Gates's leadership of Microsoft. The criticism was all the more credible because it came not from the company's critics or competitors, but from one of its own most senior executives.

"I simply do not want to spend my life in meetings struggling with the internal issues, getting pissy mail from Billg," Silverberg wrote to Slivka. "Or hearing from people who want me to do unnatural and losing things to 'protect' Windows."

This e-mail exchange was released by Justice Department prosecutors in May 2000, attached to a brief prepared to bolster their claim that Microsoft could feasibly be split into two separate companies. Silverberg insisted he had meant no such thing and was embarrassed that his personal frustrations had been used to hurt the company. But once again, the e-mail was less interesting for its legal implications than for its confirmation of the dissatisfaction and division in Microsoft's executive ranks over the company's direction.

"I simply do not believe in the path the company is pursuing right now," Silverberg had written. "I think Steve [Ballmer] feels totally overwhelmed right now. He does not know how he's going to solve the problems and he doesn't know who he'll be able to count on."

In preparing this book, I found little enthusiasm at Microsoft for revisiting the internal debates that have so riven the company. The participants have, as they say, moved on. However, in the written record, they have left behind fascinating fragments that made it possible to reconstruct parts of the Microsoft story that otherwise might never have been told. It is Microsoft itself that provided the trail to follow.

Copyright © 2001 by David Bank

Read More Show Less

Table of Contents

Contents

Prologue: The E-mail Trail

  1. Track the Inevitable

    The Last Pajama Party

    Bedtime Story

    Dollars per Desktop

    Innovator's Dilemma

  2. Hawks and Doves

    Teams

    Embrace and Extend

    Counterreformation

  3. The Path Not Taken

    Stall

    Integration

    The Dance of Blind Reflex

    Comeback

  4. Citizen Gates

    Hardball

    Second Thoughts

    Out of Control

    Win, Place, or Show

    Forever Free

  5. Vicious Cycle

    Buddy Acts

    Coup d'Etat

    Half-measures

    Going South

  6. Monopolist's Dilemma

    Under the Radar

    Showdown

  7. Loosely Coupled

    Think Like Bill

    Letting

    Challenge and Response

Key Dates

Notes

Acknowledgments

Index

Read More Show Less

Preface

At a small party in downtown Seattle in the spring of 2000, Tod Nielsen was introduced to an affable young man who said he was a paralegal at a local law firm. Nielsen mentioned he worked at Microsoft.

"I know," the paralegal said. He was familiar with Nielsen's shifting assignments, his promotion to vice president, and his upbeat tone. "You have always seemed like a really nice guy."

"Excuse me," Nielsen said. "Have we met before?"

"No," the man explained. "But I'm the guy who reads your e-mail."

The paralegal was far from the only person reading Nielsen's e-mail, or that of dozens of Microsoft's midlevel managers and top executives. With the company's business practices under legal scrutiny for most of the past decade, the collection and review of the company's internal communications had become as routine as the specials in the employee cafeterias. Once a month or so, a company lawyer contacted Nielsen's assistant and arranged to arrive at a time when Nielsen would be out of his office. With a technician, the lawyer downloaded the e-mail archive from the hard disk drive of Nielsen's computer and copied any new Word files or PowerPoint presentations. Nielsen's hard copies of charts and presentations were taken down the hall to be photocopied and returned to his office. Nielsen could hardly tell anyone had been there. The drill was the same for all the key employees working on major projects, such as Windows, Office, Internet Explorer, and tools for outside software programmers.

Each round of newly collected documents was added to e-mail records copied straight from the caches on Microsoft's central computer servers. Each printout was stamped with an identification number and, in a bit of wishful thinking, the word Confidential. A courier delivered the documents to one of several outside law firms. There, the piles of paper were divided among dozens of paralegals, who over time developed familiarity with the people on their particular lists of Microsoft executives.

Paralegals spent their days reviewing the huge volume of everyday electronic correspondence that coursed through the networks of the world's largest software company. The bulk of the material was mundane. But if the subject matter appeared to be covered by any of the dozens of subpoenas and "civil investigative demands" issued in the legal actions against Microsoft, the documents were pulled for further review by lawyers. Under legal orders, Microsoft's attorneys then turned over the relevant material to prosecutors from the anti-trust division of the U.S. Department of Justice, or to lawyers for Sun Microsystems or the other companies waging private lawsuits against Microsoft. By introducing the e-mail into evidence in the courtroom, the opposing parties made the documents public, and later posted them on sites on the World Wide Web. On a smaller scale, a similar effort was underway at Microsoft's competitors, such as Sun, Oracle, Netscape, IBM, and AOL, in response to legal demands from both the government and Microsoft.

Most of Microsoft's e-mail was collected long before the most sensational snippets began to appear in the press. But even after they must have realized the potential ramifications, Microsoft employees continued their running dialogues in writing. The collecting of e-mail became part of the white noise of a day in the office at Microsoft and was easily forgotten. So were the pro forma warnings from the legal department advising against the use of incendiary language in written communications. And the company's defense lawyers dutifully continued to turn over the transcripts of these in-house dialogues, providing their legal adversaries with some of their most valuable evidence.

Beyond the damaging snippets, the record of internal communications provided an unprecedented glimpse into the strategic debates and internal decision-making processes of a company that had long restricted outside access to its insular corporate culture. The leader of the emerging information age was turned inside out by a powerful tool of that new age, electronic mail.


In the fall of 1998, a courier delivered three heavy boxes full of paper to the downtown San Francisco offices of the Wall Street Journal, where I was the reporter assigned to the Microsoft beat. A legal effort by the San Jose Mercury News and several trade publications had convinced the judge to unseal most of the evidence in the federal civil lawsuit against Microsoft by Sun Microsystems, filed in 1997, in which Sun charged Microsoft with violating the terms of its license to use Sun's heavily hyped Java software technology.

With my colleague, Don Clark, I took over a conference room and began tagging and sorting the photocopies of the e-mails and other documents. The most interesting parts, to us, had little to do with the specifics of the legal cases. We read each e-mail thread from the beginning, and tried to understand the often arcane technical discussions. It required considerable effort to sort out the players and the plots. But by arranging the documents in chronological order and constructing an organization chart, we began to assemble a picture of Microsoft's internal debates and personal rivalries. What emerged was a cast of characters, known by their e-mail screen names, who had played parts in a grand opera set in the dramatic early days of the digital revolution.

Some players were familiar. "Bradsi" was Brad Silverberg, the senior vice president who had delivered Windows 3.1 and Windows 95 before forming Microsoft's Internet division to wage the "browser war" against the upstart Netscape Communications. "Jimall" was Jim Allchin, now the head of Microsoft's Windows division and the champion of its new Windows 2000 operating system. "Paulma" was Paul Maritz, effectively the company's third-ranking executive and the one to whom both Silverberg and Allchin reported. "Steveb" was Steve Ballmer, then the head of Microsoft's sales force and later its CEO. Over much of the e-mail hovered the presence of "Billg," Bill Gates, Microsoft's chairman and cofounder, who had created a company that remained uniquely a projection of himself.

Other e-mails came from the ranks of programmers with whom reporters rarely came into contact. There was a February 1997 message, for example, from Andrew Layman, a member of Microsoft's own Java team, that concluded, "We appear to have a clash between what Bill says we should be doing and what we...are in fact doing." The response from his colleague Russ Arun: "Yup, there is a disconnect with Billg."

I had already gotten hints of such a conflict. In an interview earlier in 1998, Allchin had criticized the embrace of Java by others at Microsoft. He considered Java a flawed technology that handed an advantage to Sun. "Even at Microsoft, there were some people who drank the Java Kool-Aid," he told me. Separately, over dinner in Seattle, a midlevel Microsoft manager had described what he called a "come to Bill" meeting in the spring of 1997. The meeting stood out even among Microsoft's knock-down drag-out reviews: Gates had been merciless in lacerating the Java team for failing to pay sufficient attention to protecting Windows, the company's crown jewel.

"Why don't you just give up your options and join the Peace Corps?" my source quoted Gates as shouting. "Hasn't anybody here ever heard of Windows? Windows is what this company is about!"

Now, as I culled through the documents in the Java lawsuit, I came across a series of e-mails from March 1997 that appeared to refer to the internally infamous meeting. The leader of the Java team, Ben Slivka, or "Bens," was responding to a colleague who had tried to comfort him for the shellacking he had received from Gates.

"It is disappointing that Bill chooses to flame like that without giving me a chance to educate him," Slivka wrote back. "Bill is convinced my group is trying to kill Windows, and I clearly haven't said the right things to show him otherwise."

It was a rare crack in Microsoft's monolithic public image. With the climactic meeting as an anchor, I reconstructed the debate over Java and the future of Windows. Microsoft's Java efforts had foundered in part on technical grounds, but the e-mail record revealed a more fundamental split between Silverberg and Allchin, both members of the eight-man executive committee that steered the company's strategy. Allchin emerged as a hardcore "Windows hawk," fiercely protective of the revenue stream and competitive leverage Microsoft gained from Windows, its flagship product. Silverberg was the leader of Microsoft's "Internet doves," pushing the company to develop a new platform for software development in order to capture the new opportunities opened by the Internet.

Allchin prevailed. By the time the story appeared on the front page of the Wall Street Journal in February 1999, on the day Allchin took the witness stand in Microsoft's antitrust trial, he appeared to have been vindicated. Windows had become more wildly popular than ever, driven by ever-falling PC prices and the popularity of the Web. Through the end of that year, Microsoft's already staggering profit margins expanded and its stock market value soared even higher.

Allchin and Gates had only bought Windows some time. Over the next two years it became clear that Microsoft's internal splits underlay much of what happened -- the courtroom debacle in the antitrust trial, the exodus of many of the company's most talented employees, and Gates's own fall from grace as a corporate leader and technology visionary.


By the spring of 2000, as the two-year antitrust trial neared its conclusion, the cycle of dialogue and disclosure had become a recursive loop. Microsoft's lawyers were collecting, reviewing, and turning over e-mails written during the course of the trial itself. The newly released e-mails revealed the state of affairs inside Microsoft in early 1999, not long after Allchin and other executives had testified.

The past was catching up with the present, most notably in a long e-mail exchange between Silverberg and Slivka that had taken place on a cold, cloudy Sunday afternoon in February 1999. Slivka, who had refused to talk with me for the article on the rivalry between the Windows hawks and the Internet doves, mentioned to Silverberg that he had agreed to have an off-the-record dinner now that my article had been published.

"Hmm, David Bank. He's not exactly on my Xmas card list right now," Silverberg wrote back. The article about the earlier battle hadn't helped his current position inside the company or his mood. After a long leave of absence, Silverberg was back at the company part time as a consultant to Ballmer. He was weighing Ballmer's offer to return full time to take command of all of Microsoft's consumer efforts. He thought the account made him appear soft on Sun, which he wasn't, and that his support for a new platform could appear as disloyalty to Windows. He didn't trust me, he said. Silverberg complained that I had disregarded the explanations he had provided in a lengthy off-the-record e-mail and that I had fallen for what he called the "superwhipped spin" fed to me by other Microsoft executives. "What I sent him was accurate," he wrote. "Yes, a little sanitized, but still accurate, and 100 times more accurate than what he got from Microsoft."

Slivka promised to be circumspect. "Sounds like I'll be having a coy little dinner with Mr. Bank," he said.

But Slivka and Silverberg were anything but circumspect in this e-mail exchange. Their dialogue made clear that in the two years since Gates's tirade at the Java strategy meeting, the divisions inside Microsoft had only grown deeper, the disenchantment more profound.

The spark was Slivka's analysis of the company's Internet strategy, which he had sent several days earlier to Gates and Ballmer as well as Silverberg. "I fear very deeply that trying to win the Internet using Windows is a losing strategy," he wrote. Slivka had the temerity to suggest Microsoft had fallen into what Harvard Business School professor Clayton Christensen described as the inability of even well-managed companies to embrace innovation that threatened their successful franchises. Christensen's 1997 book The Innovator's Dilemma had become a manifesto for many Microsoft employees.

Silverberg agreed. What followed was off-the-cuff, but represents one of the most explicit critiques ever of Gates's leadership of Microsoft. The criticism was all the more credible because it came not from the company's critics or competitors, but from one of its own most senior executives.

"I simply do not want to spend my life in meetings struggling with the internal issues, getting pissy mail from Billg," Silverberg wrote to Slivka. "Or hearing from people who want me to do unnatural and losing things to 'protect' Windows."

This e-mail exchange was released by Justice Department prosecutors in May 2000, attached to a brief prepared to bolster their claim that Microsoft could feasibly be split into two separate companies. Silverberg insisted he had meant no such thing and was embarrassed that his personal frustrations had been used to hurt the company. But once again, the e-mail was less interesting for its legal implications than for its confirmation of the dissatisfaction and division in Microsoft's executive ranks over the company's direction.

"I simply do not believe in the path the company is pursuing right now," Silverberg had written. "I think Steve [Ballmer] feels totally overwhelmed right now. He does not know how he's going to solve the problems and he doesn't know who he'll be able to count on."

In preparing this book, I found little enthusiasm at Microsoft for revisiting the internal debates that have so riven the company. The participants have, as they say, moved on. However, in the written record, they have left behind fascinating fragments that made it possible to reconstruct parts of the Microsoft story that otherwise might never have been told. It is Microsoft itself that provided the trail to follow.

Copyright © 2001 by David Bank

Read More Show Less

Customer Reviews

Average Rating 5
( 1 )
Rating Distribution

5 Star

(1)

4 Star

(0)

3 Star

(0)

2 Star

(0)

1 Star

(0)

Your Rating:

Your Name: Create a Pen Name or

Barnes & Noble.com Review Rules

Our reader reviews allow you to share your comments on titles you liked, or didn't, with others. By submitting an online review, you are representing to Barnes & Noble.com that all information contained in your review is original and accurate in all respects, and that the submission of such content by you and the posting of such content by Barnes & Noble.com does not and will not violate the rights of any third party. Please follow the rules below to help ensure that your review can be posted.

Reviews by Our Customers Under the Age of 13

We highly value and respect everyone's opinion concerning the titles we offer. However, we cannot allow persons under the age of 13 to have accounts at BN.com or to post customer reviews. Please see our Terms of Use for more details.

What to exclude from your review:

Please do not write about reviews, commentary, or information posted on the product page. If you see any errors in the information on the product page, please send us an email.

Reviews should not contain any of the following:

  • - HTML tags, profanity, obscenities, vulgarities, or comments that defame anyone
  • - Time-sensitive information such as tour dates, signings, lectures, etc.
  • - Single-word reviews. Other people will read your review to discover why you liked or didn't like the title. Be descriptive.
  • - Comments focusing on the author or that may ruin the ending for others
  • - Phone numbers, addresses, URLs
  • - Pricing and availability information or alternative ordering information
  • - Advertisements or commercial solicitation

Reminder:

  • - By submitting a review, you grant to Barnes & Noble.com and its sublicensees the royalty-free, perpetual, irrevocable right and license to use the review in accordance with the Barnes & Noble.com Terms of Use.
  • - Barnes & Noble.com reserves the right not to post any review -- particularly those that do not follow the terms and conditions of these Rules. Barnes & Noble.com also reserves the right to remove any review at any time without notice.
  • - See Terms of Use for other conditions and disclaimers.
Search for Products You'd Like to Recommend

Recommend other products that relate to your review. Just search for them below and share!

Create a Pen Name

Your Pen Name is your unique identity on BN.com. It will appear on the reviews you write and other website activities. Your Pen Name cannot be edited, changed or deleted once submitted.

 
Your Pen Name can be any combination of alphanumeric characters (plus - and _), and must be at least two characters long.

Continue Anonymously

    If you find inappropriate content, please report it to Barnes & Noble
    Why is this product inappropriate?
    Comments (optional)