Captain Gadget

If you need to know anything about Microsoft Senior Vice President Craig Mundie, consider this: His boat has two computer servers. Few homes, let alone boats, have that sort of computer power. So when you step aboard the 70-foot Serendipity and look into the bay intended for a washer and dryer and see the two servers - used to run everything from the ship's complex navigation system to its satellite television service - you get a sense that Mundie likes his gadgets. "It's sort of a two-bedroom, three-bath floating condominium that goes 50 miles per hour," Mundie said. It's also a glimpse of Microsoft's view of the future from the man who has as much to do about shaping it as anyone. As Microsoft's top gadget guy, Mundie's mission is to figure out what consumer electronics will look like and how the software giant can develop programs to power those devices. He stepped into that job, senior vice president of consumer strategies, last December. Now Mundie reports directly to Microsoft Chairman Bill Gates - a distinction he shares with only President Steve Ballmer and Research Vice President Rick Rashid. These days, Mundie gets about two hours of one-on-one time with Gates every two to three weeks - "which in Bill's time is a very big dose," Mundie said. It's a time they work out a vision of the future. Mundie's vision of the future revolves around Microsoft's home networking strategy, known at the company as universal-plug-and-play. The idea is that all sorts of appliances - from computers to televisions - will connect to a server. Lights will know when to turn themselves on or off. Refrigerators will know what recipes can be made from the ingredients on hand. "I've been the godfather of the universal-plug-and-play initiative," Mundie said. Others in the computer and consumer electronics industries believe computers and other devices will connect directly to the Internet rather than through a server at a home or business. That alternative vision is a direct threat to Microsoft's business model, which would continue to thrive if the company is able to sell the operating system for those servers. Stumping for that future has turned Mundie into the visionary-in-residence at Microsoft, a role Mundie downplays. "I'm a reasonably good speaker and give cool demos," Mundie said. Going overboard If living that vision is preparation for the job, Mundie's a good fit. Consider his boat. The servers, which of course run on Microsoft Windows NT 4.0 operating system, float on stainless steel springs so they continue to operate even as the boat bounces over wakes. Mundie has connected a series of navigation devices - radar, sonar, infrared night vision camera and a global positioning satellite system - to the servers. "I kind of go overboard on safety and performance," Mundie said. The boat also has a digital satellite system for television, a data satellite for his computer and even WebTV, Microsoft's interactive TV service. The monitor in the main cabin is an oversized flat-panel screen made by Sony for trade shows. When Mundie approached the folks at OceanPC, a Seattle company that builds computers for ships, their jaws dropped. It was the biggest machine they've ever been asked to build. "You sit back and think, `Wow, I've never sat before a dual processor Pentium II before," Rory Nordeen, OceanPC's chief technical officer, said of the type of computer system Mundie wanted installed. "There was all this excitement that this is going to be a spaceship." Mundie, who helped design the network, wanted to build a computer that would not quickly become obsolete the way home computers can within a year or two. The two servers have significantly more capacity than they currently need. "Those towers are ultra-redundant," Nordeen said. "They back up the backups for the backup." As much fun as Mundie has with the Serendipity - and you'd better believe that any man who can cruise at 50 miles an hour in a 70-foot boat and turn on a dime is having fun - he also sees it as the future. "This thing as a project portends all about what's going to happen to people's cars, kitchens and toasters," Mundie said. "We're going to put computers in everything." Wild man Mundie married his high school sweetheart, Marie, and the couple have a 22-year-old daughter. He wears his thinning hair short. He's a bit pudgy. And, as Microsoft's chief technology officer Nathan Myhrvold puts it, "He's much more comfortable in a suit than I am." But, despite appearances, Mundie is bit of a wild man at heart. Cruising at 50 miles an hour in a 70-foot boat is one of his milder passions. In 1994, Myhrvold mentioned to Mundie his interest in attending a car racing school. Mundie wanted in and soon the pair went off to the Bertil Roos school in Pennsylvania. "We both spun out multiple times and when you spin out with multiple cars around you, it's a very exciting thing," Myhrvold said. Mundie still enjoys the thrill and, every once in a while, he takes his Porsche for a few laps around the Seattle International Raceway. Mundie and Myhrvold moved from Indy-style cars to dragsters, taking classes at a drag racing school in Florida a year later. But Mundie said his biggest thrill came from air combat classes he took at Boeing Field two years ago with Daniel Langlois, the founder of SoftImage, a former Microsoft subsidiary. "It's a gas," Mundie said. "Of all the things I've sampled, that's the one that I've enjoyed the most." Mundie said those on-the-edge activities are the best way for him to wind down. "I need those sorts of things to decouple," Mundie said. "For me, things that I have to think about are the way I relax. I'm not very good at going to the beach." It's also one of the reasons for the complexity he has built into his boat. He can bring his family and friends along for the ride, but still get the thrill of using all the machinery to keep his mind active. "All these sorts of things I like to do, you can't do with a lot of other people," Mundie said. "My wife doesn't really want to fly upside down shooting lasers at other planes." The digital divide Shooting lasers at other planes was not necessarily what one would have imagined from a school-age Craig Mundie, who concedes he was a bit of a geek back then. Craig James Mundie was born to James and June Mundie in Cleveland on July 1, 1949. His dad, an accountant who worked in the auto industry, moved the family to Detroit when Mundie was 6 months old and then to New Orleans when he was 12. Even as a kid, Mundie had an engineer's passion. He remembers taking apart and rebuilding a fan, for instance. And he fondly recalls finding his grandfather's Keuffle & Esser slide rule with the original instructions. Though only in sixth grade, Mundie taught himself how to use the slide rule, learning the difference between sines and tangents. "I used to go everywhere with my slide rule," Mundie said. But it was also unusual for a kid to walk around with a slide rule. One day, Mundie found it broken in pieces. He's not sure who did it, but to this day, Mundie thinks it was the class bully. "I was just sad in a way," Mundie said. "You could say it was the beginning of the digital divide." As Mundie looks back, he compares the slide rule to an analog computer, perhaps the first step toward his career in computing. In high school, he borrowed a manual for an IBM 360 computer from a neighbor and wrote a term paper on digital computing. But because computers weren't readily available to high schoolers in the mid-1960s, Mundie didn't really get to use them until his college days at Georgia Tech. When he got to college, he immersed himself in all things computer. He received a bachelor's degree in electrical engineering, but had taken almost enough computer courses to receive a master's degree in computer science. When he graduated, personal computers were still in the future. Bright technologists of the day took jobs at supercomputer makers and Mundie soon found himself writing programs for Data General. His work was featured - though he wasn't named - in "The Soul of a New Machine" by Tracy Kidder, which was among the first written tales of the computer industry. He led the team of developers racing against Digital Equipment Corp. to build a new minicomputer. After his team lost that race, Mundie started his own supercomputer maker, Alliant Computer Systems. Its financial backers included a list of Silicon Valley's best-known venture capitalists - Kleiner, Perkins, Caufield & Byers, Hambrecht & Quist and Venrock. In 1988, Fortune magazine included the company's supercomputer on its list of the 100 Products That America Makes Best. Like virtually every supercomputer start-up in the early 1990s, Alliant went out of business, filing for bankruptcy protection in 1992. Learning from mistakes As Alliant was going out of business, Microsoft was looking to start a new business. Myhrvold had written lengthy memos about creating a computer operating system that was significantly scaled down from the ones that Microsoft had developed for personal computers. He envisioned a time when computers would power such devices as televisions, and he persuaded Gates to create a position to develop that business. A friend told Myhrvold about Mundie, and Myhrvold met him in Boston for dinner. The thing Myhrvold remembers most about the dinner was that the conversation was better than the meal, and the food was pretty good. "The dinner was over, but we weren't finished talking," Myhrvold said. Gates never thought the failure of Alliant was a strike against Mundie. "When Bill hired me, he said, `I like people who have been through experiences,' " Mundie said. "The only thing he demands is that you learn from your mistakes, not that you don't make them." From the beginning, Mundie's mission was to make interactive television a reality and put Microsoft at the core of that business. By 1994, Microsoft had developed an interactive TV technology known by its code name, Tiger. Within a year, Microsoft had a pilot project in Toyko with Nippon Telephone and Telegraph. But Tiger never made it past pilot project status. It turned out that the world was slow to move from analog to digital television and that costs remained prohibitively high. Tiger was ahead of its time. Mundie shelved Tiger. He broke off some of the development to seed Microsoft's efforts to build a business around operating systems for small gadgets, such as mobile phones and palm computers. He also kept a small group together to work on interactive TV and keep Microsoft ready when digital television arrived and development costs came down. "To the extent that we find a franchise in this new world, it won't be by accident," Mundie said. Doing deals Mundie has been responsible for a number of recent Microsoft acquisitions - everything from its $1 billion investment in cable operator Comcast in 1997 to its $80 million investment in Thomson Multimedia, the French maker of television sets, last year. But perhaps the most dramatic was Microsoft's $425 million acquisition of WebTV in 1997. The TV world knew Microsoft was developing interactive TV technology. But when Mundie announced the deal, at a National Association of Broadcasters conference in Las Vegas, the gasps were audible. WebTV founder Steve Perlman, considered a visionary in the business, said Mundie immediately understood the potential of WebTV when the two met. "Craig and I immediately hit it off," Perlman said. "We were talking about interactive TV and we wound up finishing off each others sentences." Perlman, who left WebTV to start a new business in the spring, recalled trying to put the deal together in the hours before Mundie's speech. He and Mundie huddled in their hotel room at Treasure Island, while his partner Bruce Leak and Microsoft Chief Financial Officer Greg Maffei hammered out details in Redmond. The problem was that the pirate-themed Treasure Island wasn't really set up as a business hotel. "These guys were coming in these pirate costumes saying, `Here's a piece of the fax,' " Perlman said. The deal didn't close until 10 minutes before Mundie took the stage. Perlman, who reported to Mundie, credits his former boss for not only understanding a business that was new to Microsoft, but defending it to the corporate chiefs who were unfamiliar with how the consumer electronics business worked. "Craig needed to sit down with (group vice president) Paul Maritz, who was running the business at the time, and even Bill and say, `Hey dude, we're not losing money, we're running a new business,' " Perlman said. "I think having two crazies presenting an idea lends a little more credibility than having one crazy doing it." Jay Greene's phone message number is 206-464-3287. His e-mail address is: