The Microsoft Way: The Real Story of How the Company Outsmarts Its Competition
By Randall E. Stross
Addison-Wesley; $25; 318 pages
Business writing bores me. It tends to be drier, less passionate, and less accurate than other forms of journalism. Business writers are generally outsiders looking in: They lack the access granted to political, sports, or even entertainment reporters, since few companies seek the kind of publicity the press wants to bestow upon them.
Sometimes, practitioners of the genre can rise above its limitations; but you can count on two fingers the number of books that have migrated from the business-aisle ghetto to the mainstream: Barbarians at the Gate and Den of Thieves. Barbarians succeeded because its writers, Bryan Burrough and John Helyar, weren’t seduced by the power of its subjects. They knew that the RJR Nabisco-leveraged buyout represented the nadir of that era’s financial engineering. They called a moron a moron, and damned the whole lot of them. Den of Thieves required even more intelligence work, as well as author James B. Stewart’s master touch at cutting through the multimillion-dollar public-relations campaign–still ongoing–that tried to make Michael Milken look like Albert Schweitzer pursued recklessly by jackbooted government thugs.
Unfortunately, Randall E. Stross’ The Microsoft Way, an inside look at the software giant that publishes this magazine, will not match the gold standard set by Barbarians and Thieves. The book succumbs to all the usual pitfalls of business writing. It shouldn’t have. Stross had unparalleled access to Microsoft executives, including the right to stroll through the campus without an apparatchik at his side. And the tale of Microsoft is certainly worth telling, if only because we can all learn from the successes of one of the world’s greatest companies.
To his credit, Stross does grasp what’s right at Microsoft: the hard-boiled meritocracy that makes rich those who contribute to it; Bill Gates’ prediction that consumers, not just large businesses, would jump at the chance to own computers; and his–and his company’s–driving desire to outsmart and outfox the competition. But Stross fails to see the larger context for Microsoft’s dominance, and we know that from the get-go, when he begins his book with a pretentious foreword that postulates the similarities between Henry Ford and Bill Gates, a comparison to which he alludes repeatedly over the next 239 pages.
I n fact, the flawed Ford-Gates analogy is a perfect metaphor for what’s wrong with Stross’ book. Ford’s genius lay in mass production, and in bringing down the cost of the product so that the consumer could afford to purchase a one-time luxury item. In the province of computing, that feat was accomplished not by Gates–who has never fought to reduce the price of computing power, lest his margins suffer unnecessarily–but by the boys at Intel, led by Gordon Moore, Andy Grove, and the late Robert Noyce–who, years before his death, joked with IBM execs that computers in the future would not only be more powerful than IBM mainframes, but would be smaller, and much, much cheaper.
A better comparison for Gates would have been John D. Rockefeller, who sought to monopolize the fuel that went into automobiles. Like MS-DOS or Windows 95, gasoline engines serve as the operating system of cars, and to be the dominant provider of the fuel for that operating system seems a lot more Gates-like.
This hits on the larger flaw of Stross’ analysis. Had the writer drawn the obvious parallels, he would have run the risk of endorsing the Justice Department’s case against the monopolist Microsoft, a case Stross spends almost the entire book debunking. Microsoft in TheMicrosoft Way is a benign, friendly company that succeeded in spite of itself. It dominated the software industry because its rivals were such lightweights and buffoons, and because it hired the smartest and brightest software writers. When it came up against serious competition, in the form of Intuit, it was just another bumbling competitor, hardly worth the Antitrust Division’s time. (To recap: The Justice Department vetoed Microsoft’s 1994 attempt to purchase Intuit, maker of the personal-finance program Quicken, on the grounds that it was anti-competitive–a bid to corner the personal-finance-software market.) Microsoft’s aborted purchase of Intuit, says Stross, shows not only that the company does not dominate, it can’t even shoot straight.
Stross could have written a fabulous book about how Microsoft’s meritocracy produced a perfect monopoly, out of sheer grit and the love bestowed upon its team of managers by America’s mutual funds (their fondness for Microsoft stock yielded a price that allowed the company, with its handsome stock-option compensation program, to hold on to its best, most talented players). He could have written about how severely that monopoly was soon to be tested by the Internet, and by its proselytizer, Netscape’s Marc Andreessen. Instead, Stross spends most of his time talking about Microsoft’s attempts to produce consumer-software CDs, which is only anecdotally interesting. (Intriguing, though, to learn that Microsoft only approached Funk & Wagnalls to collaborate on an encyclopedia CD-ROM after being turned down by a haughty EncyclopediaBritannica. Microsoft and Funk & Wagnalls’ Encarta is now the leading encyclopedia in the multimedia market, whereas Britannica is up for sale.) And Stross skips almost entirely over Microsoft’s chief strength, the operating systems of both personal computers (first MS-DOS and then Windows 95) and big corporate machines (Windows NT). Rather than find out how Microsoft produced Encarta, I would really like to know how Microsoft got every PC company to load its computers with Microsoft software and not that of other–at times, superior–operating systems (the conventional wisdom that Gates handed his systems’ standards out to everyone while his competitors kept their standards proprietary doesn’t begin to account for the enormity of Microsoft’s success).
D on’t get me wrong. I didn’t agree with the Justice Department’s suit for one minute. I don’t want a company to be punished simply because it dominates. Were it not for the monopolistic traits of both Intel and Microsoft, I believe that the Japanese would have had a choke hold on this industry and destroyed the comeback that America has enjoyed in the last 10 years. But if you come at the industry with the perspective of a Microsoft defense lawyer, as Stross does, you won’t ever learn–let alone be able to explain–why Microsoft succeeds the way it does.
Had Stross written his book next year, he would have had a whole new story line: how Microsoft was or was not able to translate its dominance in personal computers to the Internet. This phenomenon happened so quickly, like much in the computer industry, that Stross couldn’t incorporate it cogently. Somehow I got the feeling, when reading The Microsoft Way, that I was reading about the greatness of the French army and its Maginot line in 1939. Bill Gates may not be waking up in the middle of the night worried about whether Netscape has stormed the Ardennes on the way to Sedan, but I’m sure somebody at Microsoft is worried (probably Steve Ballmer, a college buddy of mine who would wake up in the middle of the night if he bothered to sleep), and is working on a devastating counterattack this very moment. Microsoft doesn’t seem like the kind of place that would fight new wars with old-war strategies, but it is insightful to see just how little of the Microsoft that Stross saw was focused on the Net, and how much was focused on old-fashioned software-delivery systems.
Maybe we’ll never know what really goes on inside Microsoft. The people I’ve worked with there, including my editors at Slate, certainly don’t seem to know. Whether that’s by design or disinformation on the part of their nonjournalist Microsoft bosses, I can’t tell. My conclusion after reading The Microsoft Way: Stross has plenty of company when it comes to those who are clueless about this huge capitalist success story.