are coming down,
where you have to sell it and use it right now,
because if you wait later it's worthless.
Where Compaq led, others soon followed.
IBM was now facing dozens of rivals - soon to be
familiar names began to appear,
like Amstrad, AST and Dell.
It was getting spectacularly easy to build a clone.
You could get everything off the shelf, including
a guaranteed-virgin ROM BIOS chip.
Each new clonemaker, free of IBM's big overhead,
took another bite of the big blue business.
Well, they really hit with a vengeance in '85,
the prices were going down
on the competitive products had about 30%
every six months.
- Terror would be a good phrase.
Terror?
- Oh, of course. I mean we were able to sell
a lot of products
- but it was getting difficult to make money.
And where did every clone-maker buy his
operating system?
Microsoft, of course.
By the mid 80's it was boom time for Bill.
The teenage entrepreneur had predicted a PC on
every desk and in every home,
running Microsoft software, it was actually
coming true.
As Microsoft mushroomed there was no way that
Bill Gates could personally dominate
thousands of employees but that didn't stop him.
He still had a need to be both industry titan
and top programmer.
So he had to come up with a whole new corporate
culture for Microsoft.
He had to find a way to satisfy both his adolescent
need to dominate
and his adult need to inspire.
From the beginning, Microsoft recruited
straight out of college.
They chose people who had no experience of life
in other companies.
In time they'd be called Microserfs.
And so a lot of young, I say people, but mostly
it was young men,
who just were out of school saw him as this
incredible role model or leader,
almost a guru I guess.
And they could spend hours with him and he
valued their contributions
and there was just a wonderful camaraderie
that seemed to exist between all these
young men and Bill,
and this strength that he has and his will and his
desire to be the best
and to be the winner - he is just like a cult leader,
really.
As the frenzied 80's came to a close IBM reached
a watershed
they had created an open PC architecture that
anyone could copy.
This was intentional but IBM always thought their
inside track would keep them ahead.
Wrong.
IBM's glacial pace and high overhead put them at
a disadvantage to the leaner clone makers
everything was turning into a nightmare as IBM
lost its dominant market share.
So in a big gamble they staked their PC future
to a new system
a new line of computers with proprietary closed
hardware and their very own operating system.
It was war.
(Presentation)
- ...start planning for operating system 2 today...
IBM planned to steal the market from Gates with
a brand new operating system, called
- drum roll please -
OS/2.
IBM would design OS/2. Yet they asked Microsoft
to write the code.
Why would Microsoft help create what was
intended to be the instrument
of their own destruction?
Because Microsoft knew IBM was was the source
of their success
and they would tolerate almost anything
to stay close to Big Blue.
It was just part of, as we used to call it, the time
riding the bear.
You just had to try to stay on the bear's back and
the bear would twist and turn
and try to buck you and throw you, but darn,
we were going to ride the bear
because the bear was the biggest, the most
important you just had to be with the bear,
otherwise you would be under the bear in the
computer industry, and IBM was the bear,
and we were going to ride the back of the bear.
It's easy for people to forget how pervasive IBM's
influence over this industry was.
When you talked to people who've come in to the
industry recently
there's no way you can get that in to their,
in to their head,
that was the environment.
The relationship between IBM and Microsoft
was always a culture clash.
IBMers were buttoned-up organization men.
Microsoftees were