YourCircleofCompetence 115CEO Jack Welch (discussed in Chapter 14), you will gain a good
sense of the company and how it operates. Indeed, Welch argues
that understanding GE is not a tall order at all, and after you read
Chapter 14, you may agree.
One thing that immediately jumps out at you is that GE got to
where it is through Welch’s declaration 20 years ago that the com-
pany woul dremain in any business only if it were the number one
or number two player in that business. Businesses that did not
achieve that rank were fixed, sold, or closed. The company has ended
up the business equivalent of a magnificent art collection, Jack
Welch, curator.
Founded in 1975, Microsoft is a relative newcomer compared to
the century-ol dGE. It develops, manufactures, licenses, an dsup-
ports a range of software products, including operating systems,
server applications, worker productivity applications, and software
development tools. Microsoft’s success would have been hard to pre-
dict in the middle to late 1980s, when the dynamic of the software
industry was uncertain. As that decade came and went and the 1990s
confirme dthe power an dimportance of that in dustry, the company’s
dominant position became easier to predict.
Yet pervasive an dwi desprea dInternet use in the late 1990s might
have pose da threat to Microsoft’s business, though a threat it man-
age dto navigate (excuse the pun, but it is an apt characterization)
through its aggressive entry into an dforceful presence in the Inter-
net browser industry. While it is a somewhat older business than
Amazon.com, its relative youth compare dto GE makes its future
(wholly apart from its legal an dregulatory environment) har der to
predict than that of its classic elders.
Still, you can learn from its annual report that Microsoft’s Win-
dows operating system is installed on more than 300 million Intel-
based personal computers (PCs), making it the world’s leading PC
software company. It is also a leader in PC application tools and has
grown rapidly to rank among the top networks on the Internet. Its
properties receive over 40 million unique monthly visitors to sites
such as Hotmail, MSNBC, Carpoint, an dMoneyCentral. If these
computing an dInternet operations are up your alley, rea dabout Mi-
crosoft’s stuff in its annual report an dCEO Bill Gates’s books or
annual letters to shareholders.
Amazon.com is a business infant begun in 1994, retailing on-line
books, CDs, an dvi deos an doffering some 5 million titles. Its busi-
ness model, while interesting, is hard to pin down because it con-