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than typical computer hardware could deliver at the time and there wasn’t an adequately large market. Bob died.
    —B ILL G ATES , 1997
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    The Macintosh was a different matter entirely. Microsoft’s reputation was such that Apple developed the Macintosh working closely with Gates’s company. Microsoft’s first graphical products, the word processor Microsoft Word and the spreadsheet Microsoft Excel, were created for the Macintosh.
    But Gates was also working with IBM to develop a new operating system called OS/2. The two companies ran into numerous problems on this project. Some were technical, some arose from the fact that IBM laboratories were spread out across the country, leading to product turf wars, and some were a matter of developmental vision. Chris Peters, a Microsoft vice president, clarifies one of the main problems with OS/2 in Microsoft Secrets , a book on how the company develops its products, written with a great deal of input from Microsoft executives by Michael A. Cusmano and Richard W. Selby: “OS/2 was an attempt where they tried to change things…they tried to make things 10 percent better but completely different, and nobody wanted 10 percent better. We have a rule of thumb that things have to be twice as good before they can be different, if you’re trying for consistency.”
    Gates became increasingly frustrated with the project, as did Nathan Myhrvold, the technical wizard who had joined Microsoft in 1986 when Gates bought his tiny company and hired its six-person staff. IBM, for its part, was annoyed with Gates’s attitude, and by 1989, the two companies decided to call a halt to their collaboration following the release of the first OS/2 product. Microsoft had already released its firsttwo Windows operating systems, in 1985 and 1987, but they had been commercial failures. The company then brought out Windows 3.0 in 1990, which overcame the 640K boundary of MS-DOS (a limitation in the amount of information that could be stored). Work was already under way on Windows 3.1, but Gates was taking an enormous risk, essentially “betting the company” on the eventual success of Windows 3.1. Without the IBM tie-in, Windows 3.1 had to be a major success. It was, becoming the standard for personal computers and swamping IBM’s latest version of OS/2.
     
     
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    T he rate of change of technology is faster today than ever before. Some of the big advances of the past, several generations would go by as it became popular—the telephone, even the TV set. Within the space of a single generation we’ll go from computers being something you can ignore very easily to the point where in most jobs, and to really be in touch, you’ll have to be comfortable with using it as a tool.
    —B ILL G ATES , 1995
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    Even as Windows 3.1 was being released in 1992, the final papers in the IBM/Microsoft divorce were at last being signed. Microsoft retained the rights to the NT (for New Technology) software it had developed. (This was used for allowing networks of PCs to work together, and would become increasingly important in the years ahead. It would be incorporated into Windows 95, and its successors would be crucial to Microsoft’s move into the corporate PC market in 1997.) IBM was given use of Windows code, but only until late 1993. And Microsoft was also given a royalty on OS/2 sales—which would prove to be small potatoes when Windows 3.1 took over the market. Microsoft did pay IBM a flat fee, reported to be in the neighborhood of $25 million, for the use of some IBM patents. But given the eventual success of Windows 3.1, it is clear in hindsight that Microsoft took IBM to the cleaners on this resolution of their partnership.
    The popularity of Windows 3.1 can be measured by the fact that it was installed on seventy million personal computers that already had been bought worldwide at the time of its 1992 introduction, and on ninety percent of the new computers bought between then and the August 1995