Portfolio of Strategies in the Internet: Lessons from Bill Gates.Part 1

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I had some major misunderstandings about Microsoft’s Windows strategy. After some research I realized even more what a genius Bill Gates is. (Even though I might disapprove of some of MS’s policies, but that is besides the point.)

In one sentence Bill Gate’s strategy for Operating Systems can be called Portfolio of Strategies.

It was 1987, and MS-DOS was challenged by more graphical and intuitive Operating Systems. And Microsoft was still a $346 million minnow. The then giants were already eying the OS market in various ways:

1. IBM was building a multitasking OS/2 system.
2. AT&T in collaboration with Sun Microsystem and Xerox was making its own user friendly OS.
3. HP in collaboration Digital Equipment was building its own version of UNIX Operating system.
4. Apple already had a highly graphical OS, and it kept out-innovating Microsoft.

To say that odds were stacked against Microsoft would be an understatement.

Apparently Bill Gates had two options: Either bet on Windows, or exit the OS market.

He chose neither.And at the risk of being unpopular with Wall Street(which judged Gate’s strategy as confused and fickle), he took a totally different path.

He pursued six strategies at the same time:

1. He continued to invest in MS-DOS. It still had a large user base who were cautious to switch to a new    Operating System.
2. Did a joint venture with IBM on OS/2.
3. Made joint efforts with At&T on UNIX OS.
4. Bought major stakes in Santa Cruz Operation: the then largest seller of UNIX system on PCs.(Recent investment in Facebook comes to mind)
5. Continued to build applications despite severe strain on resources.(Its forays into mobile in recent years can be seen in similar light)
6. Majorly invested on Windows.

MS multithreaded the strategy to build a Portfolio of Strategies and watched which one took off and then put more resources into it. The winner was of course Windows. Microsoft still follows this strategy of Portfolio of Strategies.And despite the brickbats, it still is a giant.

Internet makes it much easier to follow a Portfolio of Strategies. It is getting easier and easier to deploy lightweight apps and test various business technologies in innovative ways which was unthinkable in pre-internet times. The analysis of market is getting synonymous with actively interacting with the market.How can you apply Portfolio of Strategies to leverage on the internet? We will see in the next post.

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• Nov. 10, 1983: Gates Opens Windows a Bit Early (wired.com)
• The First Windows Review Ever [Retromodo] (i.gizmodo.com)

Related Posts:

• February 8, 2009 -- Portfolio of Strategies in the Internet: Lessons from Bill Gates.Part 2

Tags: Apple, Bill Gate, IBM, Microsoft, Microsoft Windows, Operating system, Sun Microsystem, Windows