Microsoft Co-founder Allen: Windows Phone Needs to Win

Microsoft co-founder Paul Allen's new memoir, "Idea Man," suggests Microsoft needs to conquer the smartphone and tablet arena or face the consequences.

Microsoft co-founder Paul Allen's new memoir, "Idea Man," is more than an account of the company's early days, or even a colorful portrayal of the executives-including Bill Gates and current CEO Steve Ballmer-who turned a tiny software startup into a tech-world behemoth: It's also full of advice for Microsoft as it battles Google and Apple in smartphones and tablets.

The early parts of "Idea Man" paint a portrait of a very young and extraordinarily driven Gates, balanced somewhat by Allen-who works hard throughout the narrative to downplay both his ambitions and strengths in areas like mathematics. After founding Microsoft in 1975, the two decided to develop a programming language, Altair BASIC, which would run on the MITS Altair 8800. From there, they worked relentlessly to make Microsoft a force in the then-nascent software industry.

That sort of startup mentality, Allen argues, is precisely what's missing from Microsoft today. "Complacency has taken its toll, most tellingly in the newest competitive areas of smartphones and tablets, like the iPad," he wrote. "History shows that you ignore emerging platforms at your peril, because one of them might make you irrelevant."

Indeed, the stakes involved are huge. "The new evolutionary species looming in the PC's rear-view mirror are mobile devices, epitomized by the smartphone, a computing platform in your pocket," he added. "Microsoft cannot afford to be an also-ran in the mobile platforms, which are rapidly becoming the principal delivery point for low- to medium-intensity computing and Web content consumption."

Meanwhile, Microsoft's rivals have managed to carve successful niches for themselves. "Apple and Google have beaten Microsoft to the mobile punch because they've been more alert in developing new and innovative platforms," he wrote, adding that the iPhone's seamless interoperability with other devices "can trump consumers' natural resistance to walled gardens and their predilection for choice."

That's in addition to Google, which has apparently "mastered Microsoft's old strategy of fast following for the mobile, Web-based era." Android's rapid upgrade cycle "plays to people's love of the new."

Allen believes that Microsoft, faced with that sort of competition, needs to overcome "the company's cultural drag" and quicken the pace of Windows Phone 7's software updates: "Microsoft needs a strategy to win: a quicker development cycle, a qualitatively better mobile operating system, and a secret sauce or two to set Windows smartphones apart."

For anyone who follows the evolution of Windows Phone, Allen's analysis won't exactly come as a surprise: Even Ballmer, at times, has publicly bemoaned Microsoft's position in the smartphone races. However, Allen's role as a Microsoft founder makes his opinion on the matter particularly auspicious.

While Allen devotes a portion of "Idea Man" to discussing the tech industry, the book's focus on Microsoft's startup days has drawn a good deal of the early buzz, fueled in part by an extensive prerelease excerpt in Vanity Fair. Despite Gates' and Allen's mutual love of programming, the early chapters describe tensions that soon developed between the two over the minutiae of running a company and its ultimate direction. Allen later accuses Gates and Ballmer-whom he describes as resembling "an operative for the N.K.V.D.," the Soviet agency responsible for Gulags and mass executions-of jockeying to reduce his stock holdings in the company.

"One evening in late December 1982," he wrote, "I heard Bill and Steve speaking heatedly in Bill's office and paused outside to listen in. It was easy to get the gist of the conversation. They were bemoaning my recent lack of production and discussing how they might dilute my Microsoft equity by issuing options to themselves and other shareholders."

Both Gates and Ballmer tried to patch things up, according to Allen's narrative. But the stresses involved in working for Microsoft-combined with battling cancer-eventually led Allen to resign from his post. Microsoft stock eventually made him a billionaire, and he used those funds to invest in a number of business ventures, including DreamWorks Animation and the Seattle Seahawks. In his view, though, Microsoft is still very much his baby-and like most fathers, he's frank with the advice.