For most people, nightmares end with the dawn. For Bill
Gates, the hard-driving chairman of Microsoft Corp., who is known to keep pictures of his opponents in his office, they linger during the day as well.
In a "state of the company" memo written for his top staff, Mr. Gates said some of his worst fears for his billion-dollar software company -- normally seen as being on top of the world -- are coming true.
"Our nightmare -- IBM 'attacking' us in system software, Novell 'defeating' us in networking and more agile, customer-oriented applications competitors getting their Windows act together -- is a reality," Mr. Gates wrote.
But plucky in the face of those threats, Mr. Gates said Microsoft has a simple response to its competition -- the Windows software control program that has been a runaway success since its introduction last year.
"Just as DEC's strategy for the '80s was VAX, our strategy for the '90s is Windows -- one evolving architecture, a couple of implementations. Everything we do should focus on making Windows more successful," he wrote.
The memo, issued last month and obtained by the San Jose Mercury News, shows Mr. Gates not as the arrogant multibillionaire of legend but instead as a chief executive officer whose mind never strays far from threats to the Redmond, Wash., company he co-founded.
His attention runs to questions of long-term importance, such as the need to work with Japanese companies on software for digital consumer electronics. But he's also well-versed in industry minutiae, such as passing along rumors that Scotts Valley, Calif.-based Borland International Inc. will include a word-processing program in the upcoming Windows version of its Quattro Pro spreadsheet.
At the top of Mr. Gates' list of problems are two legal disputes the company is involved in -- a copyright suit brought by Apple Computer Inc., which has so far gone well for Microsoft, and a Federal Trade Commission antitrust inquiry.
"If the judge [in the Apple case] rules against us without making it clear what we have to change or asks us to eliminate something fundamental to all windowing systems (such as overlapping windows), it would be disastrous," he wrote.
He also wrote, "Certainly I take the FTC inquiry seriously, and I am sure it will use up even more executive staff time than the Apple lawsuit has. However, I know we don't get unfair advantages. I hope we can quickly educate the FTC on our business."
There was some blunt language reserved for International Business Machines Corp., with whom Microsoft has had a well-publicized dispute about future computer operating systems.
While working with IBM has forced Microsoft to accept "poor code, poor design and other overhead," Mr. Gates wrote that Microsoft "will not attack IBM as a company, and even our public 'attacks' on [IBM's] OS/2 will be very professional.
"Eventually we need to have at least a neutral relationship with IBM. For the next 24 months, it may be fairly cold. We can emerge as a better and stronger company where people won't just say we are the standard because IBM chose us."
But he admitted that Microsoft's greatest risk will be if IBM uses its connections at Fortune 500 companies to freeze it out.
Mr. Gates also conceded that Microsoft has had a difficult time in making good on its promise of catching up to Novell Inc., the industry's leading networking software company.
Mr. Gates also admitted that Microsoft's customer support record was bad. "The number of customers who get a bad impression because of this must be in the millions worldwide."
Microsoft-watchers who were shown the memo said it again revealed him to be on top of all aspects of his business.