Thumbing through a month-old magazine, I chanced upon one of the most remarkable paragraphs I have seen in my 20 years of following the IT industry.
It said: "Justice officials argued that Microsoft's power was impregnable because consumers were so dependent on Windows. Gates exclaimed, 'You give me any seat at the table' -- he mentioned Linux, an upstart operating system, and Java, a computer language created by Sun Microsystems, a Microsoft foe -- 'and I can blow away Microsoft.' If his competitors had half a brain, he was suggesting, Microsoft would be toast."
Now we can probably all agree that this statement gives new meaning to the word impolitic -- just imagine how Messrs Balmer, Maritz et al might react. But we can never really know whether this was just a regrettable example of executive trash talk, blurted out in a moment of pique, or whether this is something Bill Gates truly believes. Either way, it certainly makes for an interesting intellectual proposition, one that Microsoft's competitors might do well to ponder.
Although at first glance Gates' claim might seem preposterous, the historical evidence actually argues otherwise.
The strategic errors of competitors have been a huge part of the Microsoft story -- for example, IBM's licensing of MS-DOS; Apple's refusal to unbundle its graphical interface software; the petty, self-defeating rivalries within the Unix community; the numerous blunders of Lotus, WordPerfect, Novell and many others.
I have always believed that even Microsoft's all-out assault upon Netscape could have been effectively countered. All Netscape had to do was align itself with a rich technology partner such as IBM, Oracle or Sun so that it could maintain its once-formidable browser market lead, while still matching Microsoft's giveaway pricing and aggressive distribution strategy. Instead, Netscape chose to become an enterprise-software company, alienating the very partners it needed. The results were predictable.
This brings us to today's game, where there are essentially four new players -- three betting on software, one on hardware.
The software group includes the entire open-source movement led by Linux; Sun's efforts with Java, Jini and its recently acquired office software maker, Star Division; and the whole Web services crowd, which includes AOL, Yahoo and many others.
Joining these three are the non-PC, non-Windows hardware vendors with their PDAs, set-top boxes, Web appliances, smart phones and whatever comes next.
If Gates were to cash in his Microsoft chips and decide to play any of these hands, could he really win again? Whose hand would he choose? Conversely, which seat would Scott McNealy really prefer, his or Gates'? Obviously, we will never really know. But we do know that, although long-term planning often seems obsolete in today's fast-moving IT industry, actual company strategy remains as vital as ever.
Industry executives and analysts often mistakenly talk about strategy as if it were some kind of chess match. But in chess you have just two opponents, each with identical resources, and with luck playing a minimal role. The real world is much more like a poker game, with multiple players trying to make the best of whatever hand fortune has dealt them. In our industry, Bill Gates owns the table until someone proves otherwise. And as they say on TV: if you can do it, it ain't bragging.