Sunday, June 10, 2007

Battle of the Bands? Gates vs. Jobs

'Two of the Luckiest Guys on the Planet': Steve Jobs and Bill Gates Trade Memories, Not Barbs, In Rare Joint Appearance

Wall Street Journal June 1, 2007; Page B1

CARLSBAD, Calif. -- Among the many barbs that Steve Jobs and Bill Gates have traded over the years, perhaps none was as cutting as when the Apple Inc. CEO said that Microsoft Corp. had "no taste" in a 1990s documentary. Embedded in that short remark were the vast differences between the two men and between their companies. Though they worked closely together in the early days of the personal computer industry, they soon diverged. Mr. Jobs built his fame as the father of elegant and tasteful consumer products such as the Macintosh computer and iPod music player. Mr. Gates earned a fortune building software for the general-purpose utility PC for businesses and homes, functional but arguably unexciting by comparison.

So it was especially significant that in a rare joint appearance at The Wall Street Journal's D: All Things Digital conference here this week, Mr. Gates said he'd "give a lot to have Steve's taste.... The way he does things is just different, and I think it's magical." In an exchange marked more by respect than rivalry, Mr. Jobs acknowledged Mr. Gates's role as a software pioneer and pointed to the deep history the two men have as the catalysts of an industry revolution that brought cheap, easy-to-use computers to the masses.

Still, the two companies and their leaders are a study in contrasts. Microsoft has outdone Apple on scale, using its Windows operating system to forge a dominance in PC software that towers over the single-digit market share held by Apple's Mac line of computers. But in recent years, Apple has punched back in an emerging area of digital consumer electronics, creating a runaway hit with its iPod player. There, Apple is the giant and Microsoft a mere challenger.

Questioned on stage by Walt Mossberg and Kara Swisher, Messrs. Gates, 51 years old, and Jobs, 52, reflected on the future of digital technology as well as the past. Excerpts:

Ms. Swisher: There's been a lot of mano-a-mano/catfight kind of thing in the blogs and the press, but what do you think each other has contributed to the computer and technology industry?

Mr. Jobs: Bill built the first software company in the industry before anybody really knew what a software company was, and that was huge. And the business model they ended up pursuing turned out to be the one that worked really well for the industry. A lot of other things you could say, but that's the high-order bit.

Mr. Gates: First, I want to clarify: I'm not Fake Steve Jobs [an anonymous blogger who writes a spoof diary].

Bill Gates and Steve Jobs appear together on stage at WSJ's D Conference to discuss their contribution to the computing industry. Here are highlights of their conversation with Walt Mossberg.
What Steve's done is quite phenomenal. If you look back to 1977, that Apple II computer, the idea that it would be a mass-market machine, that this could be an incredible empowering phenomenon: Apple pursued that dream.

Steve gave a speech once where he talked about [how] we build the products that we want to use ourselves. He's really pursued that with incredible taste and elegance, and his ability to always come around and figure out where that next bet should be has been phenomenal.

Mr. Mossberg: I don't think most people know that there was actually some Microsoft software in that Apple II computer. How did that occur?

Mr. Jobs: My partner, this guy named Steve Wozniak. Brilliant, brilliant guy. He writes this BASIC [computer programming language] that is, like, the best BASIC on the planet. It does stuff that no other BASIC's ever done. It's perfect in every way, except for one thing, which is it's just fixed point. It's not floating point [which is better for complex math]. And, we're begging Woz to make this floating point and he just never does it.... So, you know, Microsoft had this very popular, really good floating point BASIC [so] we ended up going to them and saying, "Help."

Mr. Mossberg: And how much [did Apple pay]?

Mr. Gates: Oh, it was $31,000.... I flew out to Apple, I spent two days there getting the cassette. The cassette tapes were the main ways that people stored things at the time. And, you know, that was fun.

I think the most fun is later when we worked together [on the Mac].... We had really bet our future on the Macintosh being successful.

Mr. Jobs: What's hard to remember now is that Microsoft wasn't in the applications business then. They took a big bet on the Mac because this is how they got into the apps business. Lotus dominated the apps business on the PC back then.

Ms. Swisher: Moving forward, after [Microsoft] grew more and more strong, what did you think was going to happen to Apple after the disasters that occurred after Steve left?

Mr. Gates: Well, Apple hung in the balance. We continued to do Macintosh software. Excel, which Steve and I introduced together in New York City, went on and did very well. But Apple just wasn't differentiating itself well enough from the higher volume platform.... The product line just didn't evolve as fast -- Steve wasn't there -- as it needed to. And we were actually negotiating a deal to invest and make some commitments and things with Gil Amelio [Apple's CEO in the 1990s].... I was calling him up on the weekend and next thing I knew, Steve called me up and said, "Don't worry about that negotiation with Gil Amelio. You can just talk to me now." And I said, "Wow!"

Mr. Jobs: Gil was a nice guy, but he had a saying. He said, "Apple is like a ship with a hole in the bottom leaking water, and my job is to get the ship pointed in the right direction."

Mr. Mossberg: In 1997, Windows was going great guns. Windows 95 really was an enormous leap.... Steve, you said you had decided that it was destructive to have this competition with Microsoft. Now, obviously, Apple was in a lot of trouble, and I presume that there was some tactical or strategic reason for that, as well as just wanting to be a nice guy, right?

Mr. Jobs: Apple was in very serious trouble. And what was really clear was that if the game was a zero-sum game where for Apple to win, Microsoft had to lose, then Apple was going to lose. A lot of people's heads were in that place at Apple and in the customer base because Apple had invented a lot of this stuff and Microsoft was being successful and Apple wasn't and there was jealousy and this and that.

But it was clear that you didn't have to play that game because Apple didn't have to beat Microsoft. Apple had to remember who Apple was because they'd forgotten who Apple was.... So I called Bill up and we tried to patch things up.

Mr. Gates: And since that time, we've had a team that's fairly dedicated to doing the Mac applications, and that's worked out very well.

Ms. Swisher: Do you look at yourselves as rivals now, as the landscape has evolved? We watch the commercials.... Although I have to confess I like PC guy.

Mr. Jobs: The art of those commercials is not to be mean, but it's actually for the guys to like each other. Thanks. PC guy is great. Got a big heart.

Mr. Gates: His mother loves him.

Mr. Mossberg: How often is Apple on your radar screen at Microsoft in a business sense?

Mr. Gates: Well, they're on the radar screen as an opportunity. In a few cases like the Zune, if you go over to that group, they think of Apple as a competitor. They love the fact that Apple's created a gigantic market, and they're going to try and come in and contribute something to that.

Mr. Jobs: And we love them because they're all customers.... The big secret about Apple, of course, is that Apple views itself as a software company.... We don't have a belief that the Mac is going to take over 80% of the PC market. You know, we're really happy when our market share goes up a point, and we love that and we work real hard at it. But Apple's fundamentally a software company, and there's not a lot of us left and Microsoft's one of them.

Mr. Mossberg: There is a certain school of thought that this is all migrating to the [Internet], and you'll need a fairly light piece of hardware that won't have to have all that investment -- all the kinds of stuff you guys have done throughout your careers. So as much as people might think of you as rivals, one way to think of you is the two guys....

Mr. Jobs: We're both dinosaurs?

Mr. Mossberg: No, seriously.... In five years, is the personal computer still going to be the linchpin of all this stuff?

Mr. Gates: The mainstream is always under attack. The thing that people don't realize is that you're going to have rich local functionality. It's a question of using that local richness together with the richness that's elsewhere.

Mr. Mossberg: What would you each imagine that you would carry as your principal [device] in five years?

Mr. Gates: I don't think you'll have one device. I think you'll have a full-screen device that you can carry around, and you'll do dramatically more reading off of that.... I believe in the tablet form factor. I think you'll have voice. I think you'll have ink. You'll have some way of having a hardware keyboard and some settings for that. .... You'll have your living room, which is your 10-foot experience, and that's connected up to the Internet, and there you'll have gaming and entertainment, and there's a lot of experimentation in terms of what content looks like in that world. And then in your den, you'll have something a lot like you have at your desk at work. You know, the view is that every horizontal and vertical surface will have a projector so you can put information [on it]. Your desk can be a surface [where] you can sit and manipulate things.

Mr. Jobs: The PC has proved to be very resilient because, as Bill said earlier, I mean the death of the personal computer has been predicted every few years.... This general purpose device is going to continue to be with us and morph with us, whether it's a tablet or a notebook or a big curved desktop you have at your house. So I think that'll be something that most people have, at least in this society. In others, maybe not, but certainly in this one.

But then there's an explosion that's starting to happen in what you call post-PC devices. You can call the iPod one of them.... And I think that category of devices is going to continue to be very innovative, and we're going to see lots of them.

Mr. Mossberg: So what are the core functions of the device formerly known as the cellphone? The pocket device.

Mr. Gates: How quickly all these things that have been somewhat specialized -- the navigation device, the digital wallet, the phone, the camera, the video camera -- come together it's hard to chart out. But eventually, you'll be able to pick something that has the capability to do every one of those things.

Mr. Mossberg: Five years from now, what's going to be on that pocket device?

Mr. Jobs: I don't know. And the reason I don't know is because I wouldn't have thought that there would have been maps on it five years ago, but something comes along, gets really popular, people love it, get used to it, you want it on there.

People are inventing things constantly and I think the art of it is balancing what's on there and what's not on there. Clearly, most things you carry with you are communications devices. You want to do some entertainment with them as well, but they're primarily communications devices and that's what they're going to be.

Question from the audience: Bill, even your harshest critic would have to admit that your philanthropy work is planet-shaking, incredible and could be, if you make it, a second act so amazing that it would dwarf what you've actually done at Microsoft. If you had to choose a legacy, what would it be? And Steve, do you look at Bill and think, gee, that guy is so lucky he had a company so rich with talent that he didn't have to personally come in every day and save it, and I wish I had the opportunity?

Mr. Gates: The most important work I got a chance to be involved in, no matter what I do, is the personal computer. That's what I grew up with, in my teens, my 20s, my 30s. I even knew not to get married until later because I was so obsessed with it. That's my life's work. And it's lucky for me that some of the skills and resources that I was able to develop through those experiences can be applied to the benefit of the people who haven't had technology, including medicine, working for them. So it's an incredible blessing to have two things like that. But if you look inside my brain, it's filled with software and the magic of software and the belief in software, and that's not going to change.

Mr. Jobs: I think the world's a better place because Bill realized that his goal isn't to be the richest guy in the cemetery. That's a good thing, and so he's doing a lot of good with the money that he made.

I'm sure Bill was like me in this way. I mean, I grew up fairly middle class, lower middle class, and I never really cared much about money. And Apple was so successful early on in life that I was very lucky that I didn't have to care about money then. And so I've been able to focus on work and then, later on, my family. And I sort of look at us as two of the luckiest guys on the planet because we found what we loved to do and we were at the right place at the right time and we've gotten to go to work every day with super bright people for 30 years and do what we love doing.

I don't think about legacy much. I just think about being able to get up every day and go in and hang around these great people and hopefully create something that other people will love as much as we do. And if we can do that, that's great.

Question from the audience: You approached the same opportunity so very differently. What did you learn about running your own business that you wished you had thought of sooner or thought of first by watching the other guy?

Mr. Gates: I'd give a lot to have Steve's taste -- in terms of intuitive taste, both for people and products. We sat in Mac product reviews where there were questions about software choices, how things would be done, that I viewed as an engineering question -- that's just how my mind works. And I'd see Steve make the decision based on a sense of people and product that is even hard for me to explain. The way he does things is just different, and I think it's magical.

Mr. Jobs: Because Woz and I started the company based on doing the whole banana, we weren't so good at partnering with people. And, you know, actually, the funny thing is, Microsoft's one of the few companies we were able to partner with that actually worked for both companies. And we weren't so good at that, where Bill and Microsoft were really good at it because they didn't make the whole thing in the early days, and they learned how to partner with people really well.

And I think if Apple could have had a little more of that in its DNA, it would have served it extremely well. And I don't think Apple learned that until a few decades later.

Ms. Swisher: What's the greatest misunderstanding in your relationship and about each other?

Mr. Jobs: We've kept our marriage secret for over a decade now.

[Laughter and applause.]

Mr. Gates: It's been fun to work together. I actually kind of miss some of the people who aren't around anymore. You know, people come and go in this industry. It's nice when somebody sticks around and they have some context of all the things that have worked and not worked.

Mr. Jobs: When Bill and I first met each other and worked together in the early days, generally, we were both the youngest guys in the room, right? I'm about six months older than he is, but roughly the same age. And now when we're working at our respective companies, I'm the oldest guy in the room most of the time. . . . I think of most things in life as either a Bob Dylan or a Beatles song, but there's that one line in that one Beatles song, "you and I have memories longer than the road that stretches out ahead." And that's clearly true here.

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