Attenuating Innovation (AI)

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• There’s no doubt that the antitrust lawsuit was bad for Microsoft. We would have been more focused on creating the phone operating system so that instead of using Android today, you would be using Windows Mobile. If it hadn’t been for the antitrust case, Microsoft would have… You’re convinced? Oh we were so close. I was just too distracted. I screwed that up because of the distraction. We were just three months too late with a release that Motorola would have used on a phone, so yes, it’s a winner-take-all game, that is for sure. Now nobody here has ever heard of Windows Mobile, but oh well. That’s a few hundred billion here or there. This opinion is, to use a technical term favored by analysts, bullshit. Windows Mobile wasn’t three months late relative to Android; Windows Mobile launched as the Pocket PC 2000 operating system in, you guessed it, 2000, a full eight years before the first Android device hit the market.

• The issue with Windows Mobile was, first and foremost, Gates himself: in his view of the world the Windows-based PC was the center of a user’s computing life, and the phone a satellite; small wonder that Windows Mobile looked and operated like a shrunken-down version of Windows: there was a Start button, and Windows Mobile 2003, the first version to have the “Windows Mobile” name, even had the same Sonoma Valley wallpaper as Windows XP:

• Android, which originally looked like a Blackberry, had the benefit of copying the iPhone; the iPhone, in stark contrast to Windows Mobile, looked nothing like the Mac, despite sharing the same internals. Instead, Steve Jobs and company started with a new interface paradigm — multi-touch — and developed a user interface that was actually suited to a handheld device. Jobs — appropriately! — called it revolutionary.

• Fast forward four months from the iPhone introduction, and Jobs and Gates were together on stage for the D5 Conference, and Gates still didn’t get it; when Walt Mossberg asked him about what devices we would be using in five years, Gates still had a Windows device at the center:

• What is striking about this tally is the extent to which the totals and prominence align to the relative companies’ current position in the market. OpenAI has the lead, at least in terms of consumer and developer mindshare, and the company is deriving real revenue from ChatGPT; Anthropic is second, and has signed deals with both Google and Amazon.

• To rewind just a bit, last January I wrote AI and the Big Five, which posited that the initial wave of generative AI would largely benefit the dominant tech companies.

• In fact, in five years worldwide smartphone sales would total 700 million units, more than doubling the 348.7 million PCs that shipped that same year; yes, a lot of those smartphone sales went to people who already had PCs, but it was already apparent that for huge swathes of people — including in developed countries — the phone was the only device that you needed.

• The reason I don’t know is because I wouldn’t have thought that there would have been maps on it five years ago. But something comes along, gets really popular, people love it, get used to it, you want it on there. People are inventing things constantly and I think the art of it is balancing what’s on there and what’s not — it’s the editing function.

• Understand that people are inventing things — and not just technologies, but also use cases — constantly.

• “When you think of my technology, think of nuclear weapons,” you definitely get Washington’s attention

• It turns out you get more than that: on Monday the Biden administration released an Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. This Executive Order goes far beyond setting up a commission or study about AI, a field that is obviously still under rapid development; instead it goes straight to proscription.

• Apple is releasing ever more powerful devices, but still lacks a clear strategy; Amazon spent its last earnings call trying to convince investors that AI applications would come to their data, and talking up its partnership with Anthropic, OpenAI’s biggest competitor; Google has demonstrated great technology but has been slow to ship; Meta is pushing ahead with generative AI in its apps; and Microsoft is actually registering meaningful financial impact from its OpenAI partnership.