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Bill Gates’s famous Internet Tidal Wave memo came out in May 1995, just a few days after Sun launched Java, and in November 1995 Goldman Sachs took Microsoft off its "buy" list because of the Internet threat. Both Windows and Office began to look threatened.
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That soon came to look like a mistake as Sun worked on Java, promising a future where the web could deliver programs to any computer, and PDF started to replace Word files on the internet as a way of distributing documents. The group at the retreat decided to add TCP/IP support to Windows 95 and give Word the option of saving documents as Web pages, but nothing more radical. The problem was that Gates didn’t see how you could make money from the Internet. He thought Microsoft should build its own browser and tried to convince Russell Siegelman to base Microsoft’s planned MSN service on web technologies rather than a proprietary system. That got more attention than J Allard’s memo the previous month which he’d titled "Windows: the next killer application for the Internet." Allard had been trying to get Microsoft to take the Internet seriously since he joined the company in 1991, and created the company’s first Internet server as part of a skunkworks project. He emailed Gates and his team a warning Cornell is WIRED!
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Stranded on the Cornell university campus at the end of a recruiting trip in February 1994 by a snow storm, Steven Sinofsky - then technical assistant to Bill Gates - wandered through the computing rooms to find students using not Microsoft Office and other desktop software but web browsers. Internet Explorer: Another sign of a faster, more open Microsoft In the kind of irony that has affected Microsoft disturbingly often during its history, the company was early to the party - then changed its mind and went home before the cool kids arrived.