Misadventures with Bill

EVER SINCE HE relinquished the CEO job to Steve Ballmer, Bill Gates has been busy in the lab as chief software architect. At least that’s the cover story: Bill goes back to his roots, Steve handles the lawsuit; Bill builds consensus for his grand unification of Windows and the Internet, Steve handles the channel; Bill leads the XML revolution, Steve handles the open-source problem; Bill, Steve; Bill, Steve. …

Now comes word that both Bill and Steve may be witnesses in the resolution phase of the antitrust trial involving the nine nonsettling states. Analysts suggest Bill can’t do worse than his taped deposition, and competitors fear Enron has the Bush administration on the ropes and firmly in Microsoft’s grip. It’s a calculated risk — Gates won’t have to face David Boies again, he’ll just have to face the guy who beat Boies in the Florida recount battle.

So Bill the Builder has time to be Bill the Battler after all. Why would he spend all this time cultivating the image of the architect, only to chuck it all to take on a few measly states? The media can’t have it both ways — if the guy is so Machiavellian, then why expose himself to ridicule, legal jeopardy, and distraction from his mission?

Maybe it’s because Bill has come back from one of his think weeks and realized he’s in trouble — and in for the fight of his life. At the Demo conference last week in Phoenix, Microsoft found itself just one of many players. From robots and virtual 802.11 networks to CRM Web services and XML routers, pieces of Bill Gates’ dream are showing up — and not just from .Net but from some guy with 12 bucks’ worth of investment capital.

Take the robot from Evolution Robotics, which appeared after Sprint’s disastrous eSandy debut. eSandy was a pleasant virtual assistant who proved oblivious to the voice commands of her carbon-based demonstrator. Only when the program’s developer took over the headset in thickly accented English did eSandy’s real-time animated imagery respond to requests such as “Read my horoscope” and “What’s in the news?”

Then the ER (Evolution Robotics) robot rolled on stage. Whereas eSandy was cute but clueless, ER was a laptop strapped to a carry-on baggage gurney. Nothing much to look at, this guy was loaded for bear under the hood. When trained with a single picture of an object or person, the robot could recognize it in the real world, at virtually any angle or lighting condition. He/she/it read from a FrootLoops box, identified a $20 bill, and read the sentence, “Look, Spot has made a word,” from a children’s book held upside down and sideways from the robot’s color vision system. Developers can build custom behaviors with a $995 software toolkit (batteries and a gift certificate to Fry’s Electronics not included).

Contrast this with Microsoft’s perpetual semiannual rollout of its Tablet PC, with the same demonstration of editing and searching digital ink that we’ve seen at the past two Comdexes, Forum 2000, and the 1960 World’s Fair. True, the Tablet PC is the result of years of research in voice and handwriting recognition, but ER certainly held its own on the same stage.

Microsoft’s lead in Web services has eroded as well. The Web Services Interoperability Organization (WS-I) has moved BEA up to the front row alongside IBM and Microsoft, and Sun will have to join to avoid getting pushed permanently to the sidelines. Visual Studio .Net may be shipping, but .Net Server isn’t. And then there’s the question of normalizing all the Microsoft servers into a coherent product stream.

What happens when Exchange Server’s object store is swallowed by the Hailstorm API and then Yukon, the next-generation SQL Server? Or when BizTalk Server’s Visio-based orchestration UI and the various workflow tools get rolled up in Office .Net Professional, or whatever it’s called?

Meanwhile back at Demo, Juice Software is hijacking Excel and Word to deliver and update data from the corporate back end, Web sites, and syndicated content feeds. KnowNow and State Software hitch a ride on Internet Explorer and HTTP to open persistent connections between server and client, or eventually peer and peer. Dave Winer wraps the thrill and agony of Frontier’s creativity and complexity behind Radio’s placid browser interface.

After Bill Gates spends 20 years moving from OLE to Active Documents to Dynamic HTML to XML Web services, along comes some guy with $12 to ride in Microsoft’s slipstream. “Hey, nice browser. Thanks, Bill,” developers say.

Bill Gates is confronting his most formidable opponent: himself. In a world divided evenly between .Net and J2EE (Java 2 Enterprise Edition), he has to accept a 50-50 split. Sure, it’s half of a much bigger market. Sure, there’s a huge pot of gold when Office .Net bakes Groove’s peer services into real-time Hailstorm-enabled devices from desktop to Pocket PCs.

Bill is increasingly on the wrong side of the 80-20 rule. He can afford to essentially give away the development tools when he owns 80 percent of the developer mind share. But when his competitors cannibalize his Web services stack, free browser, and aging Office installed base to provide 80 percent of the functionality of .Net at 20 percent of the price, users can’t really tell the difference.

Bill’s in danger of commoditizing his crown jewels at the operating system layer, just as IBM did with PC compatibles. Wait a minute — now I get it. He’s just building a case for the trial. “Look, I build all this stuff, and here comes some guy with 12 bucks and my browser.”