Last modified: October 3, 1997 7:55 PM PDT
Gates: Why is Windows so cheap?
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So you distinguish that you're not opening up Win32 APIs from what Sun is doing because you don't promote it as an open standard?
Well, "open" is one of the most abused words in the world. Remember, Unix is open and it locks you in more than any other environment. So the word open is a tricky word. Everything seems to improve when you put the word open in front of it. True open now, because open has been abused so much, you've got to stick "true" in front of "open" now.
Is Win32 open? Hey, go down to the bookstore and count the number of books that you can buy that document the Win32 interfaces. How much do you have to pay me when you do a Win32 application? When do you have to tell me? You never tell me, you never pay me. What about Nintendo? They decide when you can do it. They charge you for the thing. So there's many dimensions...I don't pretend that when I do a new version of Windows that everybody gets an equal vote. The Windows is a trademark of Microsoft. It is not a standard in the W3C sense, but it is open in many senses of the word.
Is it OK if desktop software operating systems are one thing [and] the Web is another thing because of the pervasive nature of it and the content is going everywhere. Is it OK on a Web browser to use things that are not standard?
That haven't gone through the full?...It's up to buyers to decide. There's a lot of things in a Web browser, like the user interface, that never will be standardized. So is it OK to innovate the user interface of a Web browser?
Only in free countries is that allowed. How about making a Web browser faster? Oh my god, now this is a problem! So yes, innovation is still OK. We do have things like VHTML that are not yet official standards. I don't know of any browser out there that restricts itself to things that are official standards. Maybe IE 1.0...we should go back and look. And it might be the only browser that does that because Netscape, all their old versions had that layered thing that was rejected. So they don't meet that test.
Let's give you a scenario. DOJ [The Department of Justice] decides that bundling IE with Windows is anticompetitive and orders you to unbundle. What's the game plan? We assume you guys have thought this through, that at some point DOJ could make us eat it.
It's not a hypothetical that I'm going to respond to. The basic idea of...you know, operating systems, we're going to keep innovating in operating systems. We spend a billion dollars a year just innovating on operating systems. And people are asking for a lot of stuff. Take TCP/IP stacks--they didn't used to be part of the operating system. You used to go out and pay money. And there were 11 companies that were in the business of selling you TCP/IP stacks. Now this was ugly. Some interoperated with some, they hadn't done DHCP [Dynamic Host Configuration Protocol], it wasn't optimized. So what did we do? We listened to our customers and they said "This is screwy. Put a good TCP/IP stack in the operating system." We did, we integrated that in. That's called innovation.
Now those companies, some of them took their good engineering and chose to do value-added products on top of that or to go into new product areas. That's what happened in the marketplace. And all these issues are just well-known. There's no uncertainty of any kind about whether you're allowed to innovate and put new features in operating systems. There are cases over 20 years old about IBM innovating in its operating systems and being told "Yes, you are allowed to put more things into the operating system." And it's not some narrow definition. Did we put Notepad in the operating system? Yes, we did. Did we put Paint in the operating system? Yes, we did. We create new versions of Windows and we decide what's in those products. And we have total latitude of what we want to do in terms of innovative products there.
In this case, users said to us, "We want to get onto the Internet. We not only want to browse, we want to do email, we want to do whiteboard sharing, collaboration...we want to do that in a simple way where we just buy a Windows PC and it's there. And we know that it works and Microsoft provides all of its support services for us." We heard customers asked for that. We delivered to that.
If somebody said in the future you're not allowed to innovate in operating systems, that you're not allowed to put things in customers ask for, I think that will be a sad day. But not just for Microsoft. I think it will be a sad day for technology, and it would be like if they told the car companies, "No, you can't put headlights on because, hey, there's a guy who wants to sell headlights as a separate thing. Radios--you can't put those in."
What about Office to Windows? People are asking...
If I could put Office in and sell it for exactly the same price I sell it in today? I'm perfectly allowed to do that. Now that, to me as a businessman, sounds like a way of throwing away $5 billion a year. And so I personally haven't gotten too excited about it, but my lawyers would have absolutely no problem with it. It would be economically dumb.
Now, if I try to raise the price of Windows, then that just makes it easier for people to compete with me in operating systems. The question you should be asking yourself is why do we keep the price of Windows so low? That's what you have to ask yourself. Only when you understand that will you understand Microsoft.
But on the issue of OS, you have over 80 percent of the market?
Why do we keep the price so low? Think about it.
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