For Apple refugees, a sense of d?j? vu

It is no small irony that WebTV was founded by a group of disciples from Apple Computer, the original archrival of Microsoft.

Apple has long been known to encourage innovative thinking, and that's precisely what led Mac-heads Perlman, Leak and Goldman to create WebTV in hopes of leading the computer industry into its next brave new world: television.

"I think those roots of changing the world, of using software to have fun but make things better, is really what brought us here," Leak said. "Television is the mass-market device in the world, and if you look at where people expect to get multimedia and have that experience, you will find television there."

But just as the Macintosh was overshadowed by Windows computers, the Apple-inspired dreams of WebTV have been eclipsed by Microsoft's vision of interactive television. The irony continues today, as WebTV is criticized for providing poor service, losing its focus to corporate politics, and sharing many of the general sins its parent company has been accused of for years.

Critics see Microsoft's handling of WebTV--and its role in the progress of interactive television as a whole--as a metaphor for the way large corporations subsume smaller, often more agile and creative organizations. And like the Orwellian theme of Apple's famed "1984" advertising campaign, once-altruistic employees say Microsoft's corporate ways smothered the energy that sustained the early life of WebTV.

"Obviously, it was an Apple-based culture vs. Microsoft," said one former WebTV executive who had worked at Apple. "It was tough to deal with their regimentation."

Nevertheless, sources say WebTV's original leaders cannot escape responsibility for significant problems that beset the company well before it began receiving directives from Microsoft headquarters in Redmond. The "Apple mentality" that the co-founders brought with them also had its downside for some executives, who equated the Apple heritage with disarray and lack of a unified direction. More than one former executive said Goldman's group was dubbed "Camp Run-Amok" for its disorganization.

Goldman, who fully acknowledges that he has been strongly influenced by Apple's culture, says he recognizes its weaknesses. But, like Leak, his recollections of his experiences there are tinged with nostalgia.

"In a way it's very bad because Apple really was chaotic, and there was no management at all. And the good side was for young people like Bruce and myself. You could find a place and really own it; no one would tell you what to do," Goldman said. "I mean nothing at Apple--nothing--came from the top. There were a lot of great people who really had the passion and the energy and loved what they were doing and just made great things."

Today, the philosophy that pervades WebTV and the rest of the Microsoft South campus is distinctly Redmondian. "At Microsoft, people measure each other on how much revenue their business generates and how much profit it generates. And it's the culture: technology with a business," Leak said. "So I think we've learned a lot from that."

That sober perspective is a far cry from the start-up days at WebTV. As it became a leader in the so-called convergence market that was to combine the personal computer with the TV set, the company attracted droves of driven, talented people--many of them hoping to create a technology outside the realm of Microsoft-dominated computing.

The company was tracked closely by a broad range of parties, from software engineers to techno-philosophers who saw the unassuming device as a cornerstone of the Information Age. Although many other attempts at two-way television had been made, WebTV represented a new generation of companies seeking to meld the computer and the TV set as the Internet became a mainstream medium.

"This was a huge thing, an awesome undertaking," said another early employee who came from Apple and worked at WebTV before and after Microsoft took over. "Like an ice skater who makes it all look so easy and then falls on your keister once in awhile."

Like others, this employee was skeptical of Microsoft but tried to keep an open mind, committed to the interactive TV mission. Everyone at the company knew that it was only a matter of time before WebTV needed more resources to achieve its highly ambitious goals, so why not align with the world's most powerful software company?

At first, Microsoft said all the right things, praising the staff that had built WebTV and promising to continue supporting the use of Macs. But then things started to change.

"We all had Macs and were Mac users. Most of our engineers were from Apple," the former WebTV employee said. "It's a small thing, but you soon found that you couldn't get into the internal Microsoft site and had to use (Internet Explorer). In six or seven months, we had our Macs replaced with PCs."

Microsoft also made its presence known in ways that went well beyond computer hardware and into the area of content. In one often-recounted incident, sources say the company fired 30 people who had been hired to produce programming for WebTV subscribers, including a magazine called "Explore" that offered original content and guides to news, sports, games and other areas of the Web.

Then, sources say, management decided that it had made a mistake and tried to hire all of them back. Needless to say, the offer wasn't welcomed by all. And even those who did agree to return said the experience did not exactly inspire confidence in the company.

"I was assured I'd get a phone call by the end of the day with an offer. Three weeks later, I heard nothing," one former producer said. "I finally got hired later for a freelance job, and they told me I might as well sit at my old desk.

"I checked my voice mail, which hadn't been turned off. The point person who was supposed to get back to me about the first job had called me at my cube, where I was no longer working at the time. He sat about 12 feet away and had to have heard the phone ringing when he called."

Leak said he did not recall the producer dismissal but said content was never a primary focus for WebTV. Moreover, he and Goldman defend Microsoft's influence over the company, saying that it provided a kind of maturity that helped WebTV grow beyond its adolescent stages.

"For the first few years, we were like the independent film producers, and we wanted to get awards because the eclectic group really liked us. But it wasn't the mass market, really," Goldman said. "And you can imagine, Microsoft's expectations are very high. What we originally would have thought of as a huge success, Microsoft would not look on it as a success."

Goldman knows this well. Just days after he spoke with News.com, sources say Microsoft essentially removed Goldman from his position of leading the WebTV "platform" group, which was developing Microsoft TV software to be used in AT&T and other cable boxes.

"Goldman promised the cable platform team that they'd receive family vacations to Hawaii if they finished their work this summer. The promise was made one year ago," one source said, adding that some departing employees have cited the promise in their exit interviews. "Goldman couldn't deliver, the platform is really late, and Microsoft is now apologizing to valued employees who canceled their family vacations to work ridiculous hours on an understaffed team."

Microsoft denies the management change was precipitated by any delays in Microsoft TV. Instead, Goldman decided to head up a small group investigating interactive TV offerings within Microsoft's ".Net" initiative as the projects with AT&T were wrapping up, according to Ed Graczyk, director of marketing communications for Microsoft's TV group.

"The state of the software had no effect on the management change," Graczyk said, denying that Goldman was demoted because of the repeated delays. "It was essentially a lateral move."

Maybe so, but others say the delays had not escaped the attention of Microsoft's chairman himself. "Bill G. was pissed, especially since he has publicly said this is the year of interactive TV," said another source familiar with Microsoft's various cable deals.

Microsoft is often portrayed as late to the interactive TV game, having tried to catch up quickly by purchasing WebTV. But Gates has always kept an eye on television, knowing that it was only a matter of time before he needed to enter that fray with full force.

"The interactive revolution seemed to be stalled," Gates wrote in his 1995 book, "The Road Ahead," alluding to failed efforts earlier in the decade by Time Warner, Bell Atlantic and Japan's Nippon Telegraph and Telephone. "Then, almost overnight, the Internet answered the questions that hung over the industry. It became clear that the interactive network would be built first around the personal computer and later around the TV, which would itself become more like a PC."

"The (WebTV) acquisition was driven by Bill (Gates) and Craig Mundie, who have been the principals behind interactive TV," a former Microsoft executive said. "They had a vision for what WebTV could be and were very excited about it."

Less clear, however, were the details of how Microsoft intended to execute that strategy. "Microsoft never had a clear vision for WebTV, other than to keep it out of the hands of competitors," another former executive said.

That obsession with competition was indeed a motivating force for the merger, as it is in all things at Microsoft. If it had one goal for buying WebTV, it was to install Windows software in the boxes--part of an overarching goal to extend the operating system beyond personal computers, a market it had already saturated. That would also keep rival Sun Microsystems' Java technology out of the devices.

Microsoft had planned to use a "stripped-down" version of its PC operating system known as Windows CE to work with the limited computing power of WebTV's set-top boxes. But those who worked on the project said the software wasn't stripped enough.

"Getting Windows CE to work was a huge priority," said one former WebTV executive who worked on the project. "Publicly, executives were saying that Java was too large to fit on WebTV. But Windows CE is much fatter than Java. We were setting ourselves up for so much failure."

Go to: Microsoft TV: Not ready for prime time