On Bill Gates’s ‘Greatest Mistake Ever’

Monday, 15 July 2019

Speaking of Microsoft and mobile, this story caught my eye a few weeks ago:

Microsoft co-founder Bill Gates has been reflecting on his time at the company when crucial decisions were made over its mobile operating system. During a recent interview at Village Global, a venture capital firm, Gates revealed his “greatest mistake ever” was Microsoft missing the Android opportunity:

“In the software world, particularly for platforms, these are winner-take-all markets. So the greatest mistake ever is whatever mismanagement I engaged in that caused Microsoft not to be what Android is. That is, Android is the standard non-Apple phone platform. That was a natural thing for Microsoft to win. It really is winner take all. If you’re there with half as many apps or 90 percent as many apps, you’re on your way to complete doom. There’s room for exactly one non-Apple operating system and what’s that worth? $400 billion that would be transferred from company G to company M.”

A lot of the response to this has focused — correctly — on the antitrust implications of Gates’s “winner takes all” acknowledgement. Nilay Patel had a strong take: “Bill Gates Accidentally Makes the Case to Regulate the Hell Out of Platform Companies”.¹

But I’m fascinated by the way he phrased the opportunity that Google seized with Android: to be “the standard non-Apple phone platform”. It’s just assumed in his thinking that the iPhone would have been the iPhone no matter what. Historically, that sounds bananas coming out of Bill Gates’s mouth.

You can make a strong case, too, that Apple might not have survived its 1996-97 nadir without Microsoft’s support. I’ve always felt the $150 million investment in Apple that Microsoft made in 1997 was overrated. It just wasn’t that much money, even for Apple at that time.² It was symbolic theater — and it worked. The value for Apple wasn’t the money itself but the public show of confidence from Microsoft — the message that Microsoft was supporting Apple, not trying to crush them.

But the real benefit for Apple — the factor that I think truly helped save the company — was securing a promise that Microsoft would continue to work on Office for Mac for at least another five years. And it wasn’t just token “support” — Office 98 for Mac was a major update and truly improved the Mac-like-ness of the apps. Here we are 22 years later and the Office for Mac apps are chart-toppers in the App Store.

I don’t think it’s hyperbole to argue that the Mac probably wouldn’t have survived without Office, and possibly without a good version of Office. And in 1997 Apple wouldn’t have survived if the Mac platform hadn’t made a resurgence. Apple’s own iWork suite — Pages, Numbers, Keynote — didn’t ship until 2005. Microsoft Office singlehandedly kept the Mac a credible platform for classic productivity apps for 8 years.

There were other third-party developers that Apple was dependent upon back then. Adobe certainly comes to mind — Apple needed the graphic design and illustration market, and that required (and still does require) Adobe’s pro apps. But it was never in Adobe’s interest not to continue supporting the Mac. If anything, it was in Adobe’s own interest to see the Mac thrive so that Adobe wouldn’t be dependent solely upon Microsoft and Windows.

Microsoft, of course, had some serious antitrust problems in the ’90s. If not for U.S. v. Microsoft, though, I wonder whether Gates would’ve chosen to drop Office for Mac and let Apple wither. I’m not saying anyone could have or should have predicted the iPhone and Apple’s dominance of mobile profits all the way back in 1997. Nobody really predicted what the iPhone would be in 2007, even. But if Microsoft had an inkling of what the iPhone would become, and where Android would come in and take over as, in Gates’s own words, “the standard non-Apple phone platform” by fast-following the iPhone’s basic all-display, all-multitouch design, maybe they’d have thought differently about helping Apple recover in 1997. With no Office 98, there might not have been an Apple to even make the iPhone in 2007. And with no iPhone in 2007 it’s impossible to say what the mobile phone state of the art would look like today. Without the iPhone, I think there’s a chance the mobile market would have continued on the same course it was on before the iPhone: dominated by crap software and BlackBerry-style hardware, with the carriers calling the shots. In that world, Microsoft might’ve had a chance.

If losing the mobile market to Android was Gates’s biggest mistake, you can argue it started when he agreed to support Apple and the Mac in 1997.