Books Software

Impressions of “Breaking Windows: How Bill Gates Fumbled the Future of Microsoft,” by David Bank

I began reading Breaking Windows on a lark. Breaking Windows is a 20-year old book about how Bill Gates made poor decisions as a CEO. I thought it would be humorous to chuckle at the naive take of another time. Instead, this is one of the best books on Microsoft I read and better than any I have reviewed on this blog.

Breaking Windows is a documentary history focusing on written internal communication at Microsoft during the Microsoft Anti-Trust Trial. While the best examples of documentary history examine internal communications of both sides of a conflict (like Alistair Horne’s To Lose a Battle, about the Franco-German war of 1940) or even many sides of a confusing conflict (like Horne’s remarkable history of the fall of French Algeria, A Savage War of Peace), Breaking Windows is the best example of this I read when only documents from one side are available.

David Bank packs the message of the book in one passage. The context is the intersection of Microsoft’s defense against the Department of Justice (where the company insisted that Internet Explorer is deeply integrated with Windows); the company internally was deciding if that should be the case. The two men battling for Bill Gates’ attention and support were Windows-head Jim Allchin and Internet Explorer-head Brad Silverberg. Jim Allchin was arguing the Internet Explorer team should be subsumed into his engineering group and build products that were features of the Windows operating system. Meanwhile, Silverberg was arguing that it should be as loosely coupled with Windows as possible to allow it to compete in other operating systems (including older versions of Windows) as well as possible:

Allchin pursued his agenda of claiming control over Microsoft’s primary user interface, the key to the evolution of the platform. “On our current path, Internet Explorer 4 will not be very integrated into Windows,” he wrote. “The IE team is not focused on this problem, and I was requested to shut down m user interface/shell team. On our current path, I just don’t feel that Windows can win.”

I agree that making sure applications are primarily on Windows is something we have lost site [sic] of,” Gates wrote to Allchin. The notion that Microsoft should provide advanced features for other platforms besides Windows is a result of the “free lunch syndrome we have allowed to develop.”

Allchin’s e-mail message later became central to the government’s antitrust case. Allchin’s suggestion that Microsoft use technical integration to “tie” the Internet Explorer browser to Windows and use Windows’ market share and clout with PC makers to drive browser adoption were red flags for prosecutors looking for violations of the anti-tying provisions of the antitrust law.

The government’s interpretation of the e-mails largely ignores the context in which Allchin argued his position. The e-mails primarily illustrate corporate infighting, Microsoft-style. Allchin’s real agenda was to unify Microsoft’s marketing and technical approach around Windows and reestablish his NT effort as the center of Microsoft’s strategy. In particular, he wanted to eliminate the annoying dependencies he still had on Silverberg for technology pieces like the user interface shell.
Breaking Windows, pg. 71

It’s fascinating to compare the history that happened – Steve Ballmer’s years of leadership focused on Windows, followed by Satya Nadella’s more successful focus on internet-based services. I was astonished that this view of the future – now the present! – was held by the author two decades ago!

Windows was increasingly seen as old and fragile. The Windows group could have put a lot of people to work for a very long time doing everything to take advantage of the Internet to make Windows better, making customers happy and selling lots of software without touching the browser.

As a matter of code design, Microsoft could produce flexible, more modular code by making the Internet, not Windows, the center point of its design. Microsoft had won with interoperability before – the company’s pitch had always been that Windows worked with IBM mainframes, with Novell’s file servers, and with thousands of other programs. Now the Internet team was just extending that – Internet Explorer worked with other platforms, even if that in some cases undermined Windows’ advantage.
Breaking Windows, pg. 92

But Gates missed this. He also missed the nature of the internet threat. It was not that Netscape or AOL would succeed in building a rival platform. In particular, Microsoft and Silverberg’s IE team quickly defeated Netscape in the marketplace. And AOL did not try to create a new application platform. Rather, the advertising that was at the time seen as marginal would be the funding mechanism for Microsoft’s most sustained challenge: Google.

Gates was of two minds. He believed AOL’s corporate DNA would ultimately lead more in the direction of media than technology. Even After AOL acquired Netscape in 1998, Gates told Microsoft employees, “AOL doesn’t have it in their genes to attack us in the platform space.”

At other times, Gates warned that AOL was a potential competitor for all of Microsoft’s information management software since AOL already had a unique capability to run a huge amount of customer data through its massive servers.
Breaking Windows, pg. 106

Yet Gates firmly supported the Windows-first strategy, abandoning the high-growth internet arena to churn out increasing profitability over Windows. This decision would lead Microsoft to lose its de facto monopoly and becoming part of an oligarchy of tech giants, along with new rivals Google, Amazon, Facebook, and Microsoft’s old competitor, Apple. Yet even this fate required Microsoft to adopt Brad Silverberg’s internet-focused strategy. During the late stages of the tail end of the Gates strategy, in the dying days of the Ballmer years, it was speculated that Microsoft might be acquired and broken up by a competitor.

One phase was over, another was beginning. Microsoft had completed the Internet Day strategy Gates had announced twenty months earlier. Microsoft’s projections showed that the new version of IE would push the company’s market share versus Netscape’s Navigator above 50 percent. All that remained on the browser front was the mop-up operation.

As a result, Gates had decided to dismantle Silverberg’s Internet team that had brought the company to the brink of victory. The team, which since 1995 had operated on the frenetic pace “Internet time” with its own goals, marketing, and breakneck release schedule, would be merged into Allchin’s more deliberate Windows organization, which released new versions only every two years, if ever.
Breaking Windows, pg. 78

Gates’ focus on Windows was not just a strategic change. Gates’ choice led to a change in the composition of the workforce. Employees who desired to compete in high-growth areas did not do well at this new, WIndows-focused, competition-based Microsoft. Rather, as Gates shifted the company from an entrepreneurial to a (relative) cash cow mindset,

Before 1996, the entrepreneurs ruled at Microsoft,” Bosworth said. “it was paradise. It was a blast. All of us were very happy there.” His product, Access, has been a scrappy underdog taking on Borland and Ashton-Tate, at the time the leaders in the desktop database market. “Microsoft was filled with people who had to compete against entrenched winners and win. Many, many people were very happy to go out and compete. The organization was built for that.”
Breaking Windows, pg. 96

David Bank brings a valuable business focus to books about Microsoft. David explains Microsoft’s organizational, or product-against-product, nature better than any other I’ve encountered. Bank’s perspective gives depth to other histories of Microsoft. Renegades of the Empire is also set during the same period and also features Windows-head Jim Allchin. Beneath the Surface was the highpoint of the Windows-first strategy when Microsoft spent billions in hardware in its most significant effort to protect the fading Windows monopoly under Steve Ballmer. And Hit Refresh, by now-CEO Sayta Nadella, is an auto-hagiographical account of undoing Gates strategy. With his deep understanding of both Microsoft and an organization and the nature of the internet transformation, Bank tells this specific story in detail while providing the generational context of that story.

This was before Gates, for all his genius, badly mishandled the greatest set of crises the company has ever faced.

Microsoft was poorly served by Gates’ intransigent in the face of the company’s legal challenges. Bu this inability to avert the courtroom bloodbath was only part of his signal failure. He was equally stubborn in the face of the industry’s paradigm shift. When the two realms collided, Microsoft seemed to be pursuing a lose-lose solution, going down in flames, in Judge Jackson’s courtroom in defense of an outdated technology strategy.
Breaking Windows, pg. 154

Breaking Windows is not a hit job. By focusing on the documented discussions, David Bank demonstrates the legitimate hopes, fears, and personalities of critical insiders. This fairness makes the conclusion of the book more robust. Gates’ perspective is not characterized or over-simplified. Instead, Banks states Gates’ views, shares the implications, and predicts the near-disaster it later led.

As Gates saw it, Microsoft could continue to make money in its traditional businesses if the new Web services drove demand for Windows. In the long meetings that took place to hash out the new message, Gates unabashedly took the “Windows point of view,” as he called it. He resisted suggestions that Microsoft begin to leave Windows behind in order to embrace the new Web opportunity. Indeed, Windows was the key to those opportunities, he argued.

Creating services that would run equally well on every platform was not an interesting business proposition. Where were the revenues? The cross-platform approach limited the services to the “lowest common denominator” of features that would work everywhere without taking special advantage of Windows. On the other hand, Windows Only was clearly a nonstarter in the marketplace, which now demanded a level of interoperability. The Web was a bigger universe than Windows. If Microsoft limited itself only to Windows, someone would trump it with an all-Web strategy.
Breaking Windows, pg. 213

The only Microsoft books I read that rival this quality are two I did not review on my blog: Randall Stross’s The Microsoft Way and Fred Moody’s I Sing the Body Electronic. Both also capture the spirit and culture of the Redmond software giant. Stross writes how Microsoft behaves as a learning organization; Moody provides an embedded narrative within one product team. Bank gives a much-needed third perspective – what intra-Microsoft competition looks like inside the company.

To the best of my knowledge David Bank, this prophet and historian of the present, never wrote another book. He is currently the editor and CEO of Impact Alpha.

I read Breaking Windows: How Bill Gates Fumbled the Future of Microsoft in the paperback edition.

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