Microsoft Marshal -- The Man Considered No. 2 Behind Gates Hopes For Order In Windows-Os/2 Battle

He once was Microsoft's Mr. Windows. Then he was Microsoft's Mr. OS/2.

When the war between Windows' latest version, 3.1, and IBM's newly revamped OS/2 2.0 sounds its next volley at the Comdex/Spring computer trade show tomorrow in Chicago, Steve Ballmer knows where his allegiances will be:

"Microsoft has an operating system strategy to establish Windows very pervasively on the desktop," said the man generally considered No. 2 in the Microsoft hierarchy behind Chairman Bill Gates. "I don't have any historical or emotional feelings that impact my blind dedication to our customers and our strategy."

Just over a year ago, that strategy included OS/2, an advanced operating system for personal computers that, for the previous four years, had been co-developed by Microsoft and IBM. No one was more closely identified with OS/2 than Microsoft's beefy then-systems chief, known for thumping his fist and repeating "OS/2, OS/2, OS/2" when making a point about the future of desktop computing.

Ballmer also supported Windows, the Microsoft operating environment that uses pictures in addition to text to represent files and commands, and a mouse to execute various tasks. But OS/2 was the wave of the future, he emphasized.

Then IBM, in a climactic meeting at Microsoft headquarters in March 1991, disclosed a new strategy to fold Windows into OS/2, giving the latter more prominence and momentum in the marketplace as well as undercutting Microsoft's cash cow, MS-DOS.

"I said, `It won't work!' " Ballmer recalled. To prove he meant it, he promised to eat a floppy diskette if IBM succeeded by the end of the year.

"I think I actually said some other things, too, about what I'd do, like crawl around on my hands and knees naked or something," Ballmer recalled. The point was, "It was a bad technical strategy."

For Ballmer, who wound up not having to eat the diskette, those events marked the final, sour closure to an 11-year relationship perhaps unparalleled in U.S. business in terms of two industry superpowers working together. Not long after, Microsoft's version of OS/2, until then dubbed 3.0, was renamed - to Windows NT, for New Technology. It is still under development, aimed primarily at networking PCs under Windows.

Ironically, Ballmer, who from 1984 marshaled Microsoft's forces on behalf first of Windows and then, beginning in 1987, OS/2, is not directly involved in the latest go-round.

Two months ago he was promoted to head of worldwide sales and support in Microsoft's newly formed Office of the President. His former duties were placed under ex-IBMer Mike Maples, who added systems development to his applications (software programs) responsibilities.

Ballmer's involvement with Windows began in August 1984 when then-president Jon Shirley named him to head a new Systems Software group. Windows was at that point moribund, bogged down by personality clashes and philosophical differences over how the program should operate.

Prodded by Gates, his former classmate at Harvard who had hired Ballmer away from Stanford Business School in 1980, Ballmer encouraged the Windows "kids" to get the program done "before the snow flies" in 1985.

After that it was a matter of convincing industry-leader IBM to include Windows on its computers the way it had done with MS-DOS since 1981. Instead, IBM pushed for its own versions of DOS and Windows, eventually called OS/2 and Presentation Manager.

Like some strange animalistic mating rite, the Windows-OS/2 tango kept the two companies in an uneasy liaison through the latter 1980s. When things got rough, it often fell on Ballmer's shoulders to smooth them over.

Until last April's relationship-buster, in fact, Ballmer held out hope the two computer giants could keep working together. "I know in my heart we weren't separated" before then, he said, despite frequent news reports and rumors to the contrary.

At 36, the Detroit born-and-raised son of a Swiss immigrant and Ford Motor Co. career man finds himself in a new life phase as family man, member of the Harvard Board of Overseers and supervisor to some 5,500 Microsoft employees. He admits he doesn't work as long hours as a decade ago - down to 60 a week from 95 to 100 - and enjoys an occasional round of golf and Sonics basketball game.

During a recent visit by the Detroit Pistons, Microsoft financial chief Frank Gaudette introduced Ballmer to the team's assistant coach, whom Gaudette had known in school. When Ballmer showed up at his court-side seat, he was soon approached by one of the players.

"I hear you're from Farmington Hills (a Detroit suburb)," the player said. "Hi, I'm Isiah." It was Isiah Thomas, the star Piston guard. He later wrote Ballmer a letter, which hangs in a frame on his office wall.

Ballmer still jogs every morning. On the one day off a week he takes - Saturday or Sunday - he's likely to be found watching an NBA or NCAA basketball game.

Otherwise, he says, he has no hobbies.

"I don't juggle, I don't ride a unicycle," he says, referring to the skills on display at Microsoft on any given sunny afternoon. "I work. I'm consumed by it. It's fun."

As for working with IBM, Ballmer is still an optimist. The two companies currently disagree over royalty payments and contract arrangements involving OS/2, he said.

Negotiations are proceeding to resolve the differences. If they succeed, the two may be together again.

"IBM needs to work with us, and we need to work with IBM," he said. "That's a fact. Windows has to work on IBM's (computers) . . .

Windows has to communicate with IBM . . . That's true from both companies' standpoint. And there's a slight thaw in some of those areas."

But mostly, he admits "it's a Windows-OS/2 struggle."

--------------------------- Windows vs. OS/2 --------------------------- COST -- Windows 3.1: $79 retail, $49 street -- OS/2: $139 retail, $49 for Windows users, $99 for DOS users

HOW TO BUY -- Windows: 800 number for direct mailing, retail software stores -- OS/2: 800 number, software stores, IBM dealers

SYSTEM REQUIREMENTS -- Windows: 1 megabyte memory required, 4 megabytes recommended -- OS/2: 4 megabytes memory required, 6 to 8 recommended -- Windows: 7 megabytes hard-disk space -- OS/2: 30 megabytes disk space

FEATURES -- Windows: Multitasking, improved file manager, TrueType fonts, faster operation, fewer crashes, better network capability -- OS/2: Multitasking, multithreading, true 32-bit architecture, drop-and-drag interface, superior networking reliability

INSTALLED BASE -- Windows: 10 million copies sold -- OS/2: 1 million copies sold (Estimates vary on how many copies actually in use)

EXPECTED SALES -- Windows: 10 million to 12 million copies for coming year -- OS/2: 2 million to 4 million copies for coming year