Microsoft Corp.'s (MSFT ) many critics will wonder what William H. Gates III is doing on a list of the greatest innovators of the last 75 years. The world's largest software company is often accused of piggybacking on the innovations of others rather than inventing itself. It's even accused of using its market clout to suppress creations from rivals.
Still, Gates deserves to be counted as a great American innovator -- just of a different sort. More than anyone else, he can be credited with turning the disorganized PC tribes of the late 1970s into today's huge industry. Gates was among the first to recognize that all sorts of companies and products would be created if a computer's operating system and all the other software programs were separated from the hardware. The insight liberated innovation. Anyone anywhere could concoct new technologies, not just the engineers working on a new computer. "That was a doozy," Gates says. "We allowed there to be massive innovation on the hardware side and massive innovation on the software side."
Just as crucial, Gates understood the importance of owning the dominant operating system in this emerging industry. His moment of truth came in the summer of 1980, when IBM (IBM ), in a rush to produce a PC quickly, was looking for another company to supply it with an operating system. Gates provided it and persuaded IBM to allow him to license the operating system to other computer makers, a move that both expanded the market exponentially and created a standardized platform for other companies to build upon. "He's always thinking about the competitive chess moves he has to make to make his products more successful," says Paul G. Allen, Gates's boyhood friend who founded Microsoft with him. "I don't know if anybody else back then had as broad a vision of what could be accomplished or that kind of competitive juice."
Over the years, Gates and his engineers packed more and more capabilities into Microsoft's software, including Web browsing and multimedia functions. Those moves prompted antitrust investigations on two continents. But they also made it easier for people to buy and use Microsoft's software.
Ultimately, it may be that the lives Gates changes most will be many who are unlikely to ever use a computer. With his unsurpassed riches, Gates has become one of the world's leading philanthropists. His foundation, with a $27 billion endowment, has given away $4.7 billion in the past four years. But rather than just throwing money at problems, Gates is using the same kind of insight and tenacity that made him a business success to address some of the world's most vexing health issues. He created one fund, for example, that gives pharmaceutical companies multimillion-dollar financial incentives to develop a malaria vaccine, for which there had been little reward.
Now 49, Gates is at the point in his life where his legacy is beginning to take shape. He's certain to be remembered for the billions he amassed on his way to becoming the world's wealthiest man. And he'll likely be lauded for the billions he has given away to charity. And his legacy of innovation? It might be overlooked, but no one has left a more indelible mark on the PC industry than Bill Gates.
By Jay Greene