Bill Gates

Every year I set aside at least one "think week" to get away and update
myself on the latest technical developments -- reading PhD theses, using
competitive products, reading books, newsletters and anything I can get
my hands on. Several valuable thoughts have come out of these retreats
(tables for Word, outlining in Excel, treating DOS as more of an asset),
however the complexity of the industry and its techology means that a lot
of my time is spent just trying to keep up rather than coming up with new
product ideas. It is no longer possible for any person, even our "architects",
to understand everything that is going on. Networking, processors, linguistics,
multimedia, development tools, and user interfaces are just a subset of the
technologies that will affect Microsoft. My role is to understand enough
to set direction. I enjoy these weeks a great deal -- not because I get
away from the issues of running Microsoft but rather because I get to think 
more clearly about how to best lead the company away from problems and 
toward opportunities. A lot of people choose things for me to read. By
the end of the week I make an effort to synthesize the best ideas and make 
our technical strategy clear.
[...]
Recently a long time employee mentioned that we seem to have more challenges
facing us now than ever before. Although I agree that it feels that way
I can say with confidence that it has felt that way every year for the
last 15. We decided to pursue a broad product strategy from the very
beginning of the company and that means we have a lot of competitors.
[...]
RIGIDITY/PRICING: In the Autodesk memo, Walker talks about the short term
thinking that high profitability can generate. He cites specific examples 
such as a very conservative approach to giving out free software or a desire
to maintain fixed percentages for the wrong reasons. Microsoft priced DOS
even lower than we do today to help it get established. I wonder if we would
be as aggressive today. This is not a simplistic advocacy for just lowering
our prices -- our prices in the US are about where they should be. However
the price of success is that people fail to allow the kind of investments
that will lead to incredible profits in the future. For example we have 
gotten away without funding any internal or external research. Nathan is 
working with me to put together a lan that will end up costing $10M
per year about two years from now. I have no plan to reduce our spending
in some other category by $10M. Microsoft is good at investing in new 
subsidaries and even at investing in new products (database, mail, BBU,
networking). Most of our rigidity comes when we have a very profitable 
product and when the market changes. In these circumstances we should
spend more or charge less, but our systems locks us into staying the same and
losing share.
[...]
When the US Goverment DOD moves software procurement to a separate contract, 
the price per user of software will end up around 0. Why shouldn't some small
organization price their product at say $1M for the entire US Government for
all time? We would if we were small and hungry. Fortunately most organizations
don't force cheap software on their end users.

Another price concern that I have is that companies will eventually equip
all the employees that need software with a full complement of packages,
and our only revenue opportunity will be upgrades or ephermeral information.
although this problem is over five years away, I think it is important to
keep in mind. [Nathan: They've now moved to a subscription model for Microsoft Office.]