The Microsoft Way: The Real Story of How the Company Outsmarts its Competition. - book reviews

Washington Monthly, March, 1997 by Steve Lohr

By Randall E. Stross Addison-Wesley, $25

In February 1995, federal judge Stanley Sporkin rejected the antitrust settlement reached a year earlier by the Justice Department and the Microsoft Corporation. Judge Sporkin set aside the consent degree, saying it was a mere wrist-slap that did little to curb the big software maker's "monopolistic practices." His decision, Sporkin explained, was based on his own study of the issues, particularly his recent reading of Hard Drive, a book that dealt harshly with Microsoft.

Bill Gates and Microsoft's legal team were aghast that a federal judge would be swayed by a book written by a pair of Seattle newspaper reporters, and, indeed, Sporkin's ruling was eventually overturned. Yet ever since that unnerving episode, the young software dynamos in suburban Seattle must have longed for a sympathetic treatment that would present Microsoft's case--in particular, the case Microsoft would most like to see made is that antitrust watchdogs, the courts, competitors, and some economists should stop fretting, lean back, and just let the markets of the information age work their magic.

It is impossible to imagine a book doing so more forcefully than The Microsoft Way by Randall E. Stross. In the author's view, the arguments of Microsoft's rivals are nothing more than self-interested carping; the Justice Department's antitrust officials don't grasp how high-technology markets work; and Microsoft won its dominant role in the industry fair and square. And, he asks, where is the public policy issue when the price of Microsoft's products keep dropping?

These points are all--more or less--reasonable. The trouble with the book is that Stross makes them with such histrionic overkill that they undermine his case. The heavy breathing begins with his depiction of Microsoft as generally hated--as, in his terms, "the apparent apotheosis of crude, ruthless, business power" and later as "the handy villain" His book then becomes a "revisionist view" set against the misguided popular opinion of Microsoft as the epitome of corporate nastiness. Of course, Stross is a professor of business at San Jose State University and a fellow at the Center for East Asian Studies at Stanford University, so perhaps at the Silicon Valley dinner parties he attends people despise Microsoft. But the last time I looked, Microsoft was one of the most admired companies in America, and Bill Gates was a national hero. He may not be Michael Jordan, but all across the country, many bright kids today want to be like Bill.

Its ostensibly villainous reputation has certainly not hindered Microsoft in itS recruiting efforts. And indeed, Stross does an excellent job of describing the "learning culture" that has been crucial to Microsoft's becoming a great company. The formula: hire the smartest young people you can find, challenge them constantly, force them to take risks, recognize mistakes quickly, and then correct them.

Not content to merely describe, Stross veers off to all but suggest that any criticism of Microsoft is merely the misplaced resentment of the lesser beings who reside outside the Olympus of intellect in Redmond, Wash. "To talk about Microsoft and public antipathy is to lay bare our longstanding national ambivalence about intelligence," the author writes at one point. Later, he asserts, "Knowing of the public's unease about smarts, Microsoft has had to police itself to suppress any signs of arrogance concerning its reservoir of above-average minds" Right. If Stross had found a deep vein of modesty or self-deprecating humor in Redmond, that would have been a revelation.

The author's penchant for this kind of overwrought froth is a shame, because it gets in the way of what is often a cogent narrative. When Stross sets aside his soapbox, he has a good story to tell--the history of Microsoft's expansion since 1990. The best chapters are the ones on how the company first stumbled and then vanquished the traditional encyclopedia industry; its courtship and competition with personal-finance software maker Intuit; and its corporate overhaul to address the challenge posed by the Internet.

The evolution in thinking of Microsoft's top management, detailed in e-mail memos to which Stross was given access, is fascinating Much of it comes from Nathan Myhrvold, a playful astrophysicist-turned-software exec who now heads Microsoft's research and development unit. The Myhrvold memos mirror the man, articulate, thought-provoking, and irreverent (only the last characteristic is rare at Microsoft). In one missive, he urges the company to invest heavily in products and services for the successor to today's Internet--the so-called information highway, which promises to bring to home screens everything from movies to news to volumes from the world's great libraries at the tap of a button.

Microsoft certainly has the money to invest, Myhrvold pointed out in a March 1994 memo, noting that the company was sitting on a cash nest egg of $2.5 billion that was being added to at the rate of $100 million a month. Microsoft, he advised, should take the lead in building an empire on the information highway. The company's technical skills, he added, should provide another advantage. "J.P. Morgan didn't really have to understand the process of steel-making very deeply to create U.S. Steel," Myhrvold wrote. "Would-be Morgans of the information highway may find that there are plenty of technical gotchas which give folks like us the edge"