Microsoft made mark, but maybe not the one it intended

Largess praised

innovations questioned

April 29, 2000|By Michael Stroh and Amanda J. Crawford | Michael Stroh and Amanda J. Crawford,SUN STAFF

Forget the Microsoft trial for a moment.

Close your eyes and imagine a world without the software giant and monopolist.

No matter how you feel about the software company or its founder, Bill Gates, you'll have to acknowledge this: A world without Microsoft would be a different world indeed.

Or would it?

Experts say the U.S. economy, the software industry and the emerging realm of cyberspace bear the indelible imprint of Gates and his 30,000 employees.

In Washington state, where Microsoft is based, the company's impact has been enormous, said Dick Conway, a Seattle-based economist.

"Microsoft has attracted a sizable software industry here, companies that not only work for Microsoft but that want to be close to the technology that Microsoft is developing," he said.

From March 1999 to last month, 23,400 jobs were added in the local economy, he said. About one-quarter of those were in the software industry.

But the impact of the industry there is more significant: Conway estimates that for every job in the software industry, a job in another industry is created when a software worker eats out, grabs a cappuccino or buys a new Lexus.

"Right now this town has the look and feel of money," he said.

Conway said he sees the economic impact of the software industry in the things being built in the area: new stadiums, symphony halls, upscale retail development and condominiums.

More jobs also mean more money for the government through taxes. He estimates high-paid employees in the software industry pay two to three times more taxes than other residents.

On the national level, Gates and Microsoft co-founder Paul Allen have been credited with helping the government wipe out the federal budget deficit. Robert Willens, a tax and accounting analyst at Lehman Brothers, estimated that the two paid more than $1 billion in capital gains tax on the sale of 66 million shares of Microsoft stock a few years ago.

Microsoft also gives a lot away. In the last fiscal year, the company donated $25 million in cash and $79 million worth of software to schools, libraries and nonprofit organizations. And that doesn't include the millions handed out by the Bill and Melinda Gates Foundation. Or the taxes paid by Gates and other company millionaires -- or by the company.

Few people dispute the impact of Microsoft money, but in the world of technology, the company's contributions are more hotly debated. Microsoft's dominance on the desktop with Windows -- and before that MS-DOS -- has been the root of many of its legal troubles. But it also has been the company's largest contribution to the world of computing.

Not because the operating system is so good or easy to use. But because it has prevented some of the nasty standards wars that have impeded other industries.

Think about the most famous case from the early days of video cassette recorders -- Beta vs. VHS.

"I think people forget that a lot of the growth of the software industry and acceleration of the Web was due to Microsoft," said Paul Andrews, Seattle author of "How the Web Was Won: Microsoft From Windows to the Web."

Andrews said that by embedding common Internet protocols into every copy of Windows, Microsoft made it easier for people to get online and do things such as send e-mail."Standards do create progress," Andrews said. "Before the IBM PC and Microsoft DOS, we had a real mess."

But not everybody sees it this way.

"Some might argue that the World Wide Web might have happened sooner if people hadn't been concerned about making their PCs work on a network," said Carl Howe, research director with Forrester Inc. in Cambridge, Mass.

Howe said he can easily envision a world without Microsoft.

"I think technology would be a lot simpler," he said. "Before PCs took hold, people were working very hard at ease of use."

But even in a world without Microsoft, we still might be right where we are today.

"In the beginning of 1981, there were a number of companies that could have emerged to be as important as Microsoft," said Nicholas Economides, a professor of economics at New York University's Stern School of Business. "If it wasn't for Microsoft dominating the market, it would have been someone else."

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