When Paul Allen and I founded Microsoft in 1975, we shared a common vision -- to develop affordable, accessible software that would help consumers everywhere own a computer. And we knew that to make this vision a reality, we would have to listen to consumers and spend every day improving our products. We could never have guessed that our dedication to giving consumers what they want would one day lead us into a confrontation with the Department of Justice and 20 state attorneys general.
I'm deeply disappointed that this has gone to litigation. We worked long and hard to avoid this outcome, which we believe will be bad not only for Microsoft, but for consumers, taxpayers and America's high-tech industry. We spent 10 days in serious discussions with the government, and offered substantive proposals that addressed their concerns. But we were unwilling to compromise a principle fundamental to the high-tech industry -- the freedom to design products with the innovative new features, functions and improvements consumers want.
While PC users and independent software developers tell us they want Microsoft's reliable, consistent Windows interface, the government wants us to give up the right to display that interface -- even once -- when people turn on their PC for the first time. While consumers want easy access to the Internet, the government claims it is illegal for Microsoft to offer them this, and says we should either hide Windows' integrated Internet Explorer technology from PC users or remove it altogether.
The government wants to force us to ship a browser made by a leading competitor, Netscape, with every copy of Windows -- a demand that would benefit only Netscape, not consumers. Such a demand is both unprecedented and unreasonable. It's like ordering Ford to sell autos fitted with Chrysler engines. Not only would these proposals undermine our ability to compete, they run counter to the way every industry has evolved over the years -- and, more importantly, to what consumers expect when they buy products.
Think back to 1981, when the first IBM PC hit the stores. It was a clunky-looking device with a monochrome screen, one floppy-disk drive and a scant 64,000 bytes of memory. Here, for only $1,595, was more computing power than most people had ever imagined would fit on a desktop. But what you could do with that first PC was very limited.
Consumers saw the PC's potential, and they started pushing IBM, Microsoft, Intel and myriad others to add more speed, more features, more everything. At first, many of those new features -- file sharing, fonts, memory management, network support, fax utilities, Web browsers -- were only available separately. But because consumers wanted everything in one easy-to-use box, each new feature gradually became a standard part of every PC. That's why your computer is now hundreds of times more powerful and functional than that first IBM PC -- and it doesn't need loads of extra software and peripherals to make it useful.
This evolutionary path is common to every thriving industry. Many of the standard features we now take for granted when we buy a car were once only available separately -- radios, air-conditioning, external mirrors, headrests, sunroofs. Likewise, radios became clock radios, then cassette clock radios, then CD cassette clock radios. Conventional ovens and microwaves are melding together. Many TV sets now incorporate videocassette recorders and stereo speakers; some can even browse the Web.
Driving all this are consumers -- the free market's taskmasters. Everything Microsoft does -- and everything our competitors do in the marketplace -- is driven by the goal of giving consumers innovative tools and products that will improve their lives. That is the only way we can remain competitive.
That's why we spend time and money every year researching and developing new products and new features. It's why we are working to develop software that will help computers interact with people more naturally -- computers that will be able to see, listen and learn. Consumers tell us they want an easier way to interact with their PCs than by typing on a keyboard. They want to talk to their PCs like they converse with each other. Such futuristic features won't be a standard part of your PC for several years. But if the government prevails, those features -- and many more like them -- may never reach your desktop, or will be more expensive and more difficult to use.
The government's proposals for how software products should be designed would hurt Microsoft, but they would hurt others more. They would deny independent software developers the ability to make use of the latest operating-system technology in their own products. And they would deny consumers the ability to buy innovative software that allows them, say, to download data from the Internet while they are using Microsoft Word or Intuit's Quicken. Some of our competitors don't think consumers should be allowed to benefit from such innovations. They don't want to compete in the marketplace; they want to compete in court.
The odd thing is that each of these competitors has prospered by constantly integrating new features into its products -- just as Microsoft. IBM, Apple, Sun and Novell have each integrated Internet technology into their operating systems, while Netscape aims to transform its Web browser into an alternative operating system by integrating it with other software. But because our operating system is -- for now -- the most popular, these competitors want to restrict us from innovating, while continuing to innovate themselves. They want to penalize us for being too good at giving consumers what they want.
Although Internet Explorer -- which has routinely beaten Netscape's Navigator browser in product reviews -- comes as an integral part of Windows, computer users can quickly and easily choose to use Navigator, which is only a couple of mouse-clicks away and is free. Currently more than half of computer users do choose Navigator. That's the free market at work.
Windows, too, has always been subject to the same free-market challenges. The first versions of Windows weren't popular with consumers. We had to add features they wanted. Next month we launch Windows 98, which will include even more innovations that consumers have told us they want -- the ability to watch television on their PC, more games support, full Web integration, greater reliability and speed, and so on. We know that if we don't continue to innovate, consumers will soon defect to other operating systems.
It's in defense of the right to innovate on behalf of consumers that Microsoft made the painful decision to endure a lawsuit. We simply don't think the government should get involved in product design. Moreover, we believe that both the law and consumers are on our side. Last week, in Microsoft's continuing dispute with the government over the integration of our Internet Explorer technology with Windows, a U.S. appeals court stated that the regulators "presented no evidence suggesting that Windows 98 was not an `integrated product,' " and added that barring the distribution of Windows 98 "would put judges and juries in the unwelcome position of designing computers."
Consumers, meanwhile, will pass judgment with their pocketbooks, just as they always have. That's what has made the PC industry so vibrant and inventive -- and America's economy the envy of the world.