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TIME: Almanac 1995
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1995-02-24
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<text id=94TT0367>
<title>
Apr. 04, 1994: Is Bill Gates Getting Too Powerful?
</title>
<history>
TIME--The Weekly Newsmagazine--1994
Apr. 04, 1994 Deep Water
</history>
<article>
<source>Time Magazine</source>
<hdr>
BUSINESS, Page 67
Is Bill Gates Getting Too Powerful?
</hdr>
<body>
<p>Microsoft's founder is branching out from software to global
telecommunications systems
</p>
<p>By Janice Castro--Reported by David S. Jackson/San Francisco and Suneel Ratan/Washington
</p>
<p> Plenty of technology wizards lie awake nights anxiously wondering
what Bill Gates is up to and how to grow up to be just like
him. Microsoft (fiscal 1993 revenues: $3.75 billion), the company
he heads, already owns the operating systems that run most of
the world's personal computers. But good computers are not enough
in the age of the information superhighway. As a result, many
of Gates' new rivals on this front are monitoring reports of
his latest ventures, wondering if Microsoft will invade their
territory. Last week, in a stunning series of moves, the tousled,
38-year-old Harvard dropout treated them to a waking nightmare
of activity:
</p>
<p>-- Teaming up with Craig McCaw, whose McCaw cellular-phone firm
is the largest in the U.S., Gates unveiled plans for Teledesic,
a $9 billion wireless global-communications network, linked
by 840 new satellites, that would deliver interactive video
and other data services beginning in the year 2001.
</p>
<p>-- While analysts were debating whether this global network was
feasible, Microsoft announced a deal with Japan's Nippon Telegraph
& Telephone, the world's second largest telephone company, to
design business applications for CD-ROM and facsimile machines.
</p>
<p>-- Meanwhile, Gates visited Beijing, where Chinese President
Jiang Zemin asked him to help China, one of the last great frontiers
of the knowledge economy, develop its information industry.
</p>
<p>-- Gates closed out the week by announcing a $152 million deal
with Mobile Telecommunication Technologies (Mtel), by far the
largest paging firm in the U.S., to develop a nationwide wireless
network for sending and receiving data from personal computers
and other devices.
</p>
<p> What is Gates up to? The same thing most communication entrepreneurs
are doing: looking for ways of shifting into the fast lane on
the information highway as it is built--except that when Gates
pulls alongside, others may be forced onto the shoulder. Within
10 years a handful of major firms are likely to dominate the
three major areas of the digital world. One group will provide
fiber-optic and satellite networks to carry entertainment, telephone
service, video teleconferencing and other communications. Another
will supply the programming. A third segment will furnish the
software that controls the so-called magic box that consumers
will use to access all these services.
</p>
<p> In anticipation of this era, software companies are teaming
up fast. In the past few weeks, Novell, a network-software leader,
has announced plans to buy WordPerfect, a top maker of word-processing
software; Adobe and Aldus, both publishing software firms, are
hooking up, as are Electronic Arts and Broderbund, makers of
games and educational software. Such mergers, of course, are
typical of the consolidation going on in the $7.3 billion computer-software
industry, where companies are attempting to strengthen their
competitive positions for the battles ahead. But even in this
context, Gates' sweeping ambition stands out. "The leadership
of Microsoft is the most aggressive in the industry," says Bill
Bluestein of Forrester Research, which studies the computer
industry. "They've been able to exploit their position as an
operating-system provider and propel the company into all sorts
of markets." Microsoft's tactics have often drawn fire from
its competitors, who have accused the company of engaging in
monopolistic schemes. The Justice Department is investigating
Microsoft.
</p>
<p> Gates demonstrated the scope of his goals once more last week
by taking on Motorola with his Teledesic proposal. Motorola
has announced plans for its own satellite-linked worldwide system,
through a new firm called Iridium. While Iridium is designed
for portable devices such as phones and hand-held computers,
Teledesic is intended for fixed locations, such as offices.
Both ventures will compete with the U.S. phone companies, which
are busily laying cable for a fiber-optic system costing at
least $100 billion that will carry video signals and data as
well as voice communications. Both systems will also require
a large number of satellites.
</p>
<p> The launching of Teledesic left some critics wondering whether
it is just another example of Gates' flexing Microsoft's muscle
to lock out the competition, in this case by moving to control
as large a share as possible of the limited supply of satellite
slots when the FCC auctions them later this year. Those slots
will only grow in value as the information highway is built.
Certainly Gates is hedging his bets. Microsoft is working on
development of the magic-box system. Its co-venture with Mtel
will position it in new delivery technologies. Up until now,
most people had assumed that Gates wanted to program the magic
box. At this rate, he may own it.
</p>
</body>
</article>
</text>