Gates Book Offers a Study in Contrasts

        By JOEL BRINKLEY

              ASHINGTON -- Which is the real Bill Gates?

        Is it the author who insists, in his new book, "Business the Speed of Thought," that all interoffice
        communications should flow "over e-mail so workers can act on news with reflex-like speed" -- adding that
        meetings should not be "used to present information" because "it's more efficient to use e-mail"? 

        Or is it the witness who testified in the government's antitrust case against his
        company that he could not remember dozens of e-mail messages he wrote or
        received in recent years, dismissing one long internal message full of market data,
        by saying "I don't know what we're talking about" and "I mean, who knows?"

        Bill Gates, chairman of Microsoft Corp., never mentions the antitrust trial in the
        470-page book, which his publisher, Warner Books, a unit of Time Warner Inc.,
        will begin selling next week. It is a treatise on a favorite theme, the notion that just
        about every corporate problem can be helped if not solved with the right
        hardware and software, or "digital infrastructure."

        Gates speaks of a "digital nervous system" and "living the Web lifestyle" --
        phrases that many Microsoft employees repeat in conversation like the favored
        sayings of Chairman Mao. So it is probably true that the voluble, enthusiastic
        Gates selling his vision in this book more closely approximates the man than the
        guarded, argumentative and poorly informed defense witness.

        The difference might have proved damaging to Microsoft, since it could be perceived as undermining the
        credibility of Gates' testimony. But it appears that damage is already done. Judge Thomas Penfield Jackson,
        who is hearing the case in U.S. District Court, has already said he does not consider Gates an effective
        witness.

        While the antitrust suit being pressed by the federal government and 19 states is not alluded to even obliquely
        in this book, many of Gates' ideas and assertions do collide with parts of Microsoft's defense in court.

        For example, throughout the book, Gates describes how he has pushed Microsoft employees to do absolutely
        everything on line, practically banishing paper. He demanded a few years ago to be shown every paper form in
        use at Microsoft and then promptly banned most of them.

        "As this book goes to press," he writes, "we have reduced the number of paper forms from more than 1,000
        to a company-wide total of 60 forms."

        When the blueprint for an office building on Microsoft's campus could not be located immediately, Gates
        recalls, he insisted that every blueprint and related paper for every structure Microsoft owns be digitized and
        made available on line.

        He argues forcefully that a key to success is placing all sales and marketing data on a company's intranet so
        everyone can see and use it. "There's incredible value in letting everybody involved with a product, even the
        most junior team member, understand the history, the pricing. They should be seeing their sales numbers,
        expense breakdown, vendor and contractor costs and the status of major projects on line.

        "Knowing your numbers is a fundamental precept of business."

        How, then, to explain the testimony of a key Microsoft witness, Richard L. Schmalensee, dean of the Sloan
        School of Management at the Massachusetts Institute of Technology, when asked if he had made any attempt
        to determine from the company's records "how much of Microsoft's reported profits come from operating
        systems."

        Schmalensee answered: "I was surprised, but I will be honest with you, the state of Microsoft's internal
        accounting systems do not always rise to the level of sophistication one might expect from a firm as
        successful as it is. They record operating system sales by hand, on sheets of paper."

        Schmalensee may get an opportunity to address this seeming contradiction; he is expected to be one of the
        rebuttal witnesses Microsoft calls when the trial resumes next month.

        Gates does offer a detailed narrative of his company's long road to the Internet, a
        story that dovetails with Microsoft's presentations on the subject in court but that
        government lawyers dispute.

        "In 1993, we were not focused on the Internet," he writes. "It was a fifth or sixth
        priority." The only Internet presence at Microsoft then, he recalls, was a
        demonstration set up on a folding table in an office hallway, "with handwritten
        instructions" and cables held in place with duct tape.

        But several junior employees hectored him and other executives to pay attention, he
        writes; by the spring of 1994, after many meetings, he announced in an e-mail to his
        staff, "We are going to make a big bet on the Internet."

        Significantly, that was only two days after Netscape Communications Corp. had
        been founded. The government charges that a key motivation for Microsoft's Internet
        strategy was to undermine Netscape, the most important competitor in what was then
        an infant market. In particular, the government contends that Microsoft decided to bundle the Internet
        Explorer, its Web browser software, with the Windows operating system to gain competitive advantage.

        Part of Microsoft's current strategy to counter that charge is to stop using the word "browser." At Microsoft,
        it seems, the word is banned. Internet Explorer is not a browser at all, company executives say. It is a package
        of "Web browsing technologies" that is part of Windows.

        At Gates' deposition, government lawyers questioned him about this, asking, "Is there an effort on your part
        or, insofar as you are aware, on other people's parts, to change the way words are used" as a means of
        advancing Microsoft's case? He gave no clear answer.

        Occasionally executives do slip and utter the B word. Among them is Gates. On page 163, he notes that, after
        years of lagging in Internet software and services, "now we lead in several major Internet areas and have a
        growing number of people using our browser."