In 1987 it became clear to Microsoft that the future of their DOS Operating System for personal computers was limited. Eric D. Beinhocker describes how Microsoft used a portfolio of strategic experiments to determine its next generation Operating System. Rather than comprehensively analyze the situation and decide on the one best option, Microsoft recognized that the technological context at that time was too fluid to be certain of the best way to go. IBM, AT&T, Xerox, Sun Microsystems, Hewlett-Packard, Digital Equipment Corporation and Apple were all actively developing alternatives either individually or as part of a consortium. At the time, many of these companies had much greater market power and larger R&D budgets than Microsoft.
According to Beinhocker, Microsoft decided to explore six options through strategic experiments:
- Continue to invest in MS-DOS, its existing operating system.
- Strike an agreement to joint venture with IBM on IBM’s OS/2 operating system project.
- Commence discussions with various companies about joint venturing on the development of a Unix based operating system.
- Fast-track access to a Unix based alternative by acquiring a major share holding in Santa Cruz Operation, the largest seller of personal computer based Unix systems at the time.
- Continue to invest in the development of applications software, especially for the Apple MacIntosh. This provided a hedge against an Apple operating system becoming dominant.
- Invest heavily in the development of its own Windows operating system.
As we know now, the Windows experiment was the successful one but its success was by no means assured at the time. As Beinhocker summarizes:
Follow Us!