Remembering when Microsoft was scary

  • Share
  • Read Later

As Bill Gates makes the rounds promoting Microsoft’s new operating system and everybody yawns, it’s worth recalling just how scary and important his company seemed a decade ago.

Just to pluck a few examples from the 1990s pages of Fortune: Microsoft was going to extend its dominance from desktops to handhelds. It was going to take over the media, travel, and auto-retailing businesses. It was building a giant research operation to give it “a tighter grip over the future of computing.” Its software dominance was a textbook case of increasing returns, where “the bigger your installed base, the better off you are,” as economist Brian Arthur put it.

Microsoft’s huge installed base has made it better off: Its earnings for the last four quarters totaled almost $12 billion, up from $3.5 billion in 1997. But the company hasn’t taken over industry after industry, and in recent years it’s been repeatedly upstaged by Google and longtime doormat Apple. Gates now makes it onto the cover of Time as a philanthropist, not as the “Master of the Universe.” Microsoft is now a big, successful, well-managed company that still hasn’t entirely figured out its second act.

There’s a lesson in here for all you extrapolators out there (which is just about everybody; I certainly am one). Trends don’t continue forever. Dominant businesses don’t stay dominant forever (except maybe Exxon Mobil). The world is a charmingly (and sometimes not so charmingly) unpredictable place. Which means, of course, that Microsoft could become scary again any day now.

0 comments
Sort: Newest | Oldest