(A draft)



I have no interest in nor relations with neither Microsoft nor IBM. As a matter of fact, I always liked the consecutive versions of Microsoft Basic interpreter, while I disliked about every other Microsoft product like their Word, their assemblers, compilers, etc. (also, I have never used any spreadsheet, be it by Microsoft or by anybody else). In general I was not any fan of Microsoft, my attitude toward them was mildly negative.

IBM hardly existed in my mind at all. I liked their APL (A Programming Language created by Iverson), and the unpublished IBM APL tutorial, excellent! Otherwise I just knew that in the old days Amdahl main frames could perfectly substitute for IBM main frames, and were about three times faster, and nicer in general. IBM's first PC was slow and bad :-) It had open architecture though (so unlike IBM!), which was great!

The IBM-Microsoft Agreement

In the era of mainframe computers, software was but an add-on to hardware. It was the same even during the time of mini-computers. There were portable languages like FORTRAN and COBOL, so there were some signs of the future technological and business revolution but computer business was virtually a hardware business, and about 90% of it world wide was IBM.

Then came UNIX, a fantastic operating system, which had surprisingly little impact on the history of computers, at least business wise. And there came microcomputers, called later personal computers. Now in addition to the solid software which was bundled with the main frame hardware there mashroomed also the semi-professional and semi-hobby personal computer software.

Enter Microsoft. Paul Allen and Bill Gates had written a very nice Basic interpreter, started Microsoft, were selling Basic left and right, and soon Microsoft was considered to be a dynamic company, soon larger then a zillion of other start-ups and outfits. Bill Gates and Microsoft had the understanding that software was potentially as big business as hardware, or even larger.

The 8-bit personal computers took the world by storm, except for the communist world which was unable to deal with the freedom brought and required by the new direction. This kind of a new style was also alien to IBM--huge companies and communism have a lot in common.

Thus Microsoft, still a modest but dynamic company, was on its way up, and IBM faded away a lot, now it was very far from a dominating giant of the past just a few years earlier.

The next historical stage meant 16-bit personal computers. Now quite a miracle had happened. IBM woke up and decided to join the race. It did so in a very unlikely way. It created the Boca Raton completely independent division devoted to personal computers. This division was a total contradiction of what IBM was. As long as IBM let it be the Boca Raton operation was a huge success--so big in fact that for several years PC was a synonim of IBM PC (or IBM compatible). Despite the sceptics IBM overtook the early leaders of the personal computing like Radio Shack (Tandy Corporation), Apple, Commodore (and a bunch of others in the US and all over the Western world).

That was the first half of the IBM saving miracle. The other half was the deal between IBM and Microsoft. Microsoft became the only provider of the operating system, MS-DOS, followed by MS Windows, for IBM personal computers. It was not easy for IBM to find a company which would take the challenge. Microsoft was not the first one which IBM had approached.

As the result IBM flourished while Microsoft became one of the two greatest companies in the world of computer technology, the Lotus being for a while the other one. Thus for years people were talking how sweet deal it was for Microsoft. It was. So far so good. IBM did very well, and Microsoft did extremely well. A nice success story.

Recently however a friend of mine, sharp and knowledgeable about business, told me that the IBM-Microsoft agreement was a classical MISTAKE on the part of IBM, that's what they teach in the business schools, that's what the so-called experts say.

My friend is neither an IBM executive nor related to one, he doesn't have any special personal involvement with IBM. Furthermore, he himself is not working for any university business school, which depends on the alumni and big business donations for its existence. Thus why does he stubbornly insists that IBM has committed a "classical MISTAKE"?

Let's look at the situation:


  1. IBM was not paying any Microsoft salaries or for anything; it was not losing any money, not a penny. Microsoft was doing its work on its own.
  2. Thanks to the deal IBM was doing great, IBM computers were selling like potato.
  3. IBM stock owners were doing great. Not only that IBM stock was strong but stock owners also had a completely independent opportunity to buy Microsoft stock (if they felt inclined to do so). Everybody was gaining.
  4. IBM was able to employ more people, and on the top of it also Microsoft employed still more people (mainly software engineers to be precise :-).
  5. The situation was wonderful for the whole personal computer industry and for the public (this situation had created a loop which was feeding back the IBM business).


So why was the IBM-MS agreement a big MISTAKE (???), when most everybody had a good reason to be happy, especially IBM, which was doomed before the deal and Boca operation. Well, it was supposedly a mistake on the IBM part according to the business "Screw University" subculture (or "Screw U" for short--see "Screw U" book by XXX)--IBM didn't screw Microsoft, and even, in the eyes of the so-called experts, got screwed by Microsoft. As bad as such hostile mentality is there is still a worse and more fundamental component to it. But first let's look at the situation at the time some more.

IBM's first 16-bit computer was about the worst of them. It was not even a true 16-bit computer, it was 8/16, i.e. not much ahead of TRS-80 (Radio Shack computer), which was called an 8-bit computer. For instance Motorola 68000 was a true 16-bit processor chip, it had even a 16/32-bit architecture, it had a much better beautiful symmetric design. True, Motorola and others were a little late, and IBM soon (but not quite immediately) followed its poor version by AT personal computer, which this time was a true 16-bit. One can easily imagine that without the IBM-MS deal IBM would lose the battle.

On the other hand, along the "Screw University" thinking, one can claim, and rightly so (what a lousy victory) that IBM could have a much better deal. Much better for whom? Here is where one encounters the problem which is even more fundamental than the "Screw U" common business attitude. You can be what Soviets and similar intellectuals called an ordinary gray folk but you still think in terms of imperium. "Good/bad" is what is good/bad for increasing the power of imperium. In this case we are talking about the fading at the time giant IBM. Never mind that the industry and people would be worse off if IBM had more control, and Microsoft had less opportunities. Due to the IBM culture, a so-called better deal would automatically mean different style of everything. IBM was not a decentralised conglomerate which finances independent companies. IBM is an imperium. Success really means success of a relatively small bunch of IBM executives and similar. The so-called MISTAKE amounted to a lost chance for a bunch of executives to have still more power (at the expense of the rest of us). But my friend was taught at a prestigious business school that the IBM-Microsoft agreement was a MISTAKE, period. Don't you love words?

And still, there was this incredible independent IBM Boca Raton operation which has committed a lot of the so-called MISTAKES, which brought IBM an overwhelming success. IBM learned nothing because there is no such thing like a total notion of IBM or similar large scale social organisms. The supposed MISTAKES were corrected after a couple of years, and--as the results of those wonderful corrections--the Boca Raton operation went down the drain, together with the presence of IBM in the world of personal computing.

This world is nothing but chaos. Humans are not rational. They are not governed by rational thought. The human brain just serves a million year old survival instinct like we lived a million years ago, which means that our world (society) is hopelessly messy. Irrationally conditioned by their instinct humans (their brain) can rationalize everything (using high IQ intelligently sounding phrases) while understanding and explaining nothing. The messy design of the human brain can serve as a symbol.