who for several years has occupied the top
spot in
Forbes
magazine’sannual rankingof
thewealthiestpeople.Gates,ofcourse,owes
his estimated$50billion fortune toMicro-
soft Corporation, the company he founded
32 years ago, after he dropped out of Har-
vardUniversity.Rather thangivepeople the
idea that quitting school is the key to vast
wealth, analysts point toward the contract
that Gates negotiated to supply basic soft-
ware to International Business Machines
Corporation for theoriginal IBMPC.
If you want to challenge Gates for the
role of the globe’s most flush guy, Cohan
recommends you find a large, powerful
company that fails to comprehend the na-
tureof anopportunity. In this case, he says,
IBM thought the PC business would never
amount to much and that what opportu-
nity was there lay in selling hardware, not
software.
Gates’s deal required IBM to pay him a
royalty for everymachine shippedwith his
operating-system software.Andhewas free
to cut similar deals with other manufac-
turers of IBM-compatible PCs. Microsoft
benefited from profit margins as rich as
Webvan’s were bad — each copy of MS-
DOS cost pennies and sold for dollars. But
Gates’s most important asset was the way
he exploited IBM’s innocence. “Negotiating
the terms for the operating system,” Cohan
says, “was really thekey tohiswealth.”
CompaqComputer
Corporation
Of the countless computer
builders that have come and
gone since Gates inked that
golden deal, Compaq Com-
puter Corporation stands
out as one of the greatest.
Although it survives today only as part of
Hewlett-Packard Corporation, Compaq
was as vigorous and independent as they
comewhen it started in 1982. In fact,when
it racked up sales of more than $100mil-
lion during its first year in business, it was
named the fastest-growing start-up ever.
What propelled Compaq so quickly out
of the chute was the first genuinely IBM-
compatible PC that anyone other than Ar-
nold Schwarzenegger could move without
a wheelbarrow. “They came out with this
stuff that was portable,” Cohan says. “And
theywere really adding value.” For years, in
fact,Compaq’sportablesand, later, itsdesk-
tops, were considered equal to or superior
to IBM’s. TheHouston company’s ability to
speedily incorporate the latest technology
even meant that its wares sometimes sold
at a premium to Big Blue’s. But Compaq’s
theme essentially echoes Microsoft’s: Grab
a niche in a fast-growing business that has
beenneglectedby themarket leader.
Coca-Cola
It’s refreshing — pun intended
— toknow thata low-techprod-
uct like colored sugarwater can
beat even the glitziest offerings
of IBM andMicrosoft. Accord-
ing to annual rankings of the
world’s most valuable brands
(as compiled by the marketing agency In-
terbrand),Microsoft and IBM rank second
and third, respectively, behind Coca-Cola.
The beverage goliath’s brand was worth
62 AMERICANWAY
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