The Digital Revolution
Early October of the Digital Revolution. ID Technology had completed all preparations for the formal trial regarding the injunction to ban sales of Android Alpha. Yet the trial had not even begun. During the exchange of written arguments, Microsoft had requested a postponement of the start date, citing insufficient preparation, and the court had granted it. Dragging trials out indefinitely was Microsoft's specialty. It seemed that tactic was being deployed again, but there was a larger reason. Rumors suggested that Microsoft's top executives were considerably flustered by the unfamiliar American reaction. It made sense. In this lawsuit, Microsoft had regarded ID Technology as merely another Silicon Valley startup that had struck it big a few times—an unusual one, at that, with a foreign owner. They judged it a small company that could be blown away with a puff of wind, and one burdened by the significant weakness of being foreign.
Microsoft's calculation was that a foreign company had significantly infringed upon American corporate interests through a novel business model. While a conservative court would need to examine the legal requirements, they believed it would side with the American company even if it meant stretching the rules. The actual preliminary injunction decision came out exactly as Microsoft had calculated. What they had failed to anticipate, however, was the reaction from Americans—or rather, from people around the world. It was not merely unfavorable. Microsoft was increasingly being cast as an axis of evil, drawing universal condemnation. Petitions in support of Microsoft from prestigious universities and Silicon Valley had surpassed ten thousand, yet countless reports exposing Microsoft's conduct had also surfaced. In the process, matters previously known only to IT professionals began appearing in the news, and as other victims read those articles and came forward with their testimonies, a vicious cycle began for Microsoft.
Above all, Microsoft, which had underestimated ID Technology, found the systematic response from Yoo Jae-won, Remington, and Ellen far more formidable than expected. Although Yoo Jae-won had not used American media, he presented a user-friendly image through interviews with Korean outlets. His interview with Korean media regarding the security challenge offering a ten-million-dollar prize had become particularly noteworthy. He stated that even if ID Office's encryption were cracked, he would feel no shame; rather, he would be honored to recruit talent surpassing himself at the "bargain" price of ten million dollars. The article traveled through the Yonhap News Agency and reached the United States as well. Because it stood in complete contrast to Microsoft's behavior, the public responded with enthusiasm.
Yet there was a more fundamental reason: people's inherent nature strongly dislikes having something given only to be taken away. Especially from the user's perspective, suddenly having to purchase the sixty-dollar MS-DOS instead of the free Android Alpha they had believed was theirs was enough to provoke curses. Of course, Android Alpha had no copy protection or serial number requirements, so one could simply ask a friend to copy it or download it from a private BBS archive. Still, no one welcomed something that had been legal suddenly becoming illegal. Even corporations were attempting to form a united front with ID Technology against Microsoft, leaving Microsoft no choice but to feel alarmed.
Yoo Jae-won was in no hurry. Since America was not the world government, the sales ban was merely a ruling valid within the United States. Distribution remained possible in Canada, South America, Europe, and Asia. ID Technology's management decided to seize this opportunity to focus on conquering Europe and Asia. Though these were newer markets with less penetration than the US, the lawsuit story was an issue that would interest Europeans. The names Android Alpha and ID Office had instantly risen to global prominence, and actual purchases had surged dramatically compared to a month earlier. Remington, the vice president, would handle the European push, while Asia naturally fell to Yoo Jae-won.
For Yoo Jae-won, Asia evoked the image of the massive market of the twenty-first century. China, the world's most populous nation; the East Asian countries posting remarkable growth rates each year; Korea, which had caught the last train into the ranks of advanced nations; and Japan, Asia's largest economic power. It was an enormous market. It would not be an exaggeration to say that most twenty-first-century economic disputes arose over the Asian region—specifically China. But in 1989, the only countries where Android Alpha and ID Office could realistically enter were Korea, Japan, and Taiwan. China remained huddled behind the bamboo curtain, and Southeast Asian nations lacked the economic capacity to run the latest computers. Taiwan and Korea were relatively better positioned, while Japan was already an advanced country. Thus, choosing between Taiwan, Korea, and Japan, selecting Japan appeared to be common sense. Yet the Japanese market was far too closed for an advanced nation, making easy penetration difficult. The computers popularized in Japan at the time were not IBM-compatible models but the PC-98 series. It was a sixteen-bit computer manufactured by NEC, similar in structure to IBM-compatible machines yet different. It used Intel chips for the CPU, but the interface connecting the CPU and peripherals employed an independent expansion card bus called the C-bus. The PC-98 series was a system that fully embodied Japan's Galápagos-like preference for standards independent of the global norm.
The popularized PC-98 offered decent speed, vibrant colors, and high-quality FM sound as standard. Despite its good resolution and rich color palette, it had a critical flaw: processing speed. Screen transitions were slow, rendering it unsuitable for action games. There was even talk that the prevalence of visual novels and simulation games such as Romance of the Three Kingdoms in Japan stemmed from the PC-98 series' limited specifications.
Taiwan presented its own problem: the use of Chinese characters. Although ID Office supported Chinese characters, with only 1,800 commonly used characters available, supporting Taiwanese remained impractical. What was needed for countries in the Chinese-character cultural sphere—Japan, Taiwan, and China—was a language input method. For languages whose characters were too complex to fit on a single keyboard, users could input phonetically using the alphabet, after which the computer would convert the input into Chinese characters, Japanese, or other scripts. Typically, the entire word had to be entered, but the input method Yoo Jae-won envisioned was a modern system that would recommend words after only the first one or two characters were typed. The language input method was planned as one of the core features of ID Office 2.0, alongside the spell checker. Once completed, it would also be installed in Android 1.0 to begin targeting the Asian market.
For these reasons, the only country in Asia where ID Technology could immediately begin its advance was Korea. The starting point for the Korean campaign was naturally Sambo Computer. For Yoo Jae-won, Sambo Computer was not an ally but the closest partner in Korea. Moreover, Sambo's chairman and vice president held great favor toward him. At Sambo as well, ID Technology's moves in America had been so conspicuous that curiosity was inevitable. When a meeting was requested, a date was promptly arranged. October 2nd. Vice President Lee Yong-kwon welcomed Yoo Jae-won at Sambo Computer headquarters in place of Chairman Lee Yong-tae, who was away on a business trip for European exports.
"Welcome."
Lee Yong-kwon greeted Yoo Jae-won warmly, as though welcoming his son's best friend. Having even invited him to his home previously, he could pride himself that their intimacy had risen another notch.
"Thank you for the warm welcome."
"What, is this even a warm welcome? If anything, we're the ones honored. The president of ID Technology, whose reputation is soaring in America, has come to visit in person."
Vice President Lee Yong-kwon was thoroughly familiar with ID Technology's affairs in America. Sambo Computer also maintained a US branch and received the latest American news via fax or telephone. It would have constituted a dereliction of duty for Sambo's American branch if the story of ID Technology's confrontation with Microsoft had been omitted. Fortunately, the branch manager was diligent, so he knew far more detail than those who had only seen the cursory reports in Korean media.
Vice President Lee Yong-kwon had prepared freshly brewed coffee and cookies for Yoo Jae-won. He remembered that Yoo Jae-won had enjoyed coffee during his previous visit to the vice president's home.
The conversation began immediately with the dispute against Microsoft. Since Vice President Lee Yong-kwon already understood the general flow, no explanation was required. Describing how they were preparing for the lawsuit largely satisfied his curiosity.
"Hmm, so that's how it is. Paul & Smith—that's impressive."
What particularly impressed Vice President Lee Yong-kwon was the decision to retain the Paul & Smith law firm as litigation counsel. America was called the land of lawsuits, so lawyers abounded. Naturally, law firms were also numerous. Yet among them were firms that had built formidable reputations through proven capability. If Crane & Schmidt held sway in the eastern United States, Paul & Smith dominated the west. In particular, riding the Silicon Valley wave, Paul & Smith possessed deep understanding of cutting-edge technology and boasted a high win rate in corporate disputes. The drawback was the exorbitant retainer fees commensurate with their prestige. Sambo Computer had also considered Paul & Smith when contemplating American litigation but had been unable to retain them due to cost.
"I was also surprised—it was more expensive than expected. But this lawsuit is practically beginning with ID Technology's victory already assured. If we win, we can recover all litigation costs from the opposing party, so there was no burden."
Reviewing the data compiled by the Paul & Smith attorneys and Ellen revealed abundant evidence to refute Microsoft's unreasonable claims. The direct revenue ID Technology had earned from Android Alpha amounted to only two hundred thousand dollars, as twenty advertising slots had been sold at ten thousand dollars each. However, the added value created by Alpha easily exceeded sixty million dollars. To compete with Alpha, the price of MS-DOS 4.0 had been reduced by forty dollars. While this represented a forty-dollar loss for Microsoft, users saved forty dollars they could spend elsewhere. Forty dollars was sufficient to purchase one game title, or, even if not spent on information technology, could fund a nice meal out or a generous grocery run. Moreover, numerous game developers and hardware manufacturers had seen sales increases through Android Alpha. When these abstract effects were organized into data, they appeared quite plausible. Of course, this too could be dismissed as unreasonable if one wished, but it was far more objective than Microsoft's claim of sixty million dollars in damages.
Furthermore, the petition initiated by Richard Stallman had surpassed ten thousand signatures. Signed by experts and university students, the petition would exert considerable pressure on the judges. And there remained the final secret weapon: James Augustine. Although American courts had frequently sided with conservatives and the establishment, he could be certain this case would differ. The trial might drag on, but victory was assured. He intended to extract not only litigation costs but also compensation for losses caused by the sales ban and even damages for emotional distress.
"Impressive."
"But we are not satisfied with merely extracting money!"
"No, can you realistically obtain more than compensation in this case?"
"Of course!"
Yoo Jae-won answered without hesitation. Through this incident, he planned to deal Microsoft an irreparable blow. That was why they were closely coordinating with Digital Research, the company founded by Gary Kildall, creator of CP/M—the first personal operating system and the origin of DOS. If Gates had become emperor of the PC market in the 1980s, the 1970s had belonged to Gary Kildall. He created the world's first BIOS and the operating system CP/M (Control Program/Monitor), dominating the decade. Kildall's fatal mistake was rejecting IBM's OS supply contract; the company that seized the opportunity IBM offered was Microsoft. Digital Research was the firm that created DR-DOS, the operating system Microsoft had excluded from fair competition through special code. Microsoft had attempted the same tactic against ID Office via MS-DOS 4.0, but because the product was newly released, the scale of damage remained difficult to estimate. DR-DOS, however, had been on the market for several years, so the damages were enormous. In America, which maintained a punitive damages system, clear fault could generate staggering fines and compensation. Yoo Jae-won's goal was to join forces with Digital Research, extract compensation large enough to bankrupt Microsoft, and finish them off.
"So what can we do to help? Adopt Android Alpha as standard?"
Vice President Lee Yong-kwon also harbored little goodwill toward Microsoft. Sambo Computer had accumulated many grievances against them as well. As a finished-computer manufacturer, every machine shipped to market naturally included an operating system. In other words, Sambo Computer sold tens of thousands—sometimes over one hundred thousand—copies of MS-DOS each year. Recently, having secured large European orders, the factories were running at full capacity. As production volume rose, MS-DOS purchases increased accordingly. It was natural to expect discounts on bulk purchases, yet the figures fell short of expectations. In contrast, the man before him—Yoo Jae-won—offered a baseline ten percent discount, rising to twenty or thirty percent for larger volumes, while Korean Microsoft provided only single-digit discounts and made people weary with endless haggling. Sambo Computer was naturally testing Android Alpha. The Korean version ran slightly slower than the English version because each Korean character required two bytes, demanding twice the processing power. It also consumed more memory, as the Korean character set had to remain loaded. Nevertheless, most programs used by ordinary people ran well. Moreover, the graphical Ribbon Interface was far more convenient than DOS, which required typing commands directly onto a black screen with a blinking cursor.
"That would be excellent if you could do so!"
"Yes. We want to do that as well. But there is a bit of a problem."
A problem? If Android Alpha had encountered enormous compatibility issues, they would have been reported long ago. Yet no such reports had surfaced.
"If it is an application problem, that is something the respective software companies must resolve. There may be minor issues besides that, but the Silicon Valley development team is working diligently on version upgrades. Plus, it is inexpensive. At this price point, simply adopting it would bring Sambo substantial benefit, would it not?"
"You are correct."
Above all, the greatest advantage was that Alpha was far cheaper than MS-DOS. Although Android Alpha was distributed free to users in adware form, it could not be provided that way to finished-computer manufacturers. Doing so would mean placing a competitor's advertisements on their own products. Finished-product manufacturers could obtain pure Android Alpha with the advertising function removed at $9.90 per unit—6,700 won in Korean currency. In return, the manufacturer had to handle packaging and manuals themselves. Customer support and inquiry calls were also their responsibility. There were many additional tasks compared to MS-DOS. Yet the groundbreaking price of $9.90 made enduring those inconveniences worthwhile. Concrete discussions were also underway with American finished-product manufacturers such as Compaq and Dell. Although negotiations had momentarily stalled due to the sales-ban injunction, they had not collapsed. The appeal of the product called Alpha remained tremendous.
"Do you know what percentage of the products currently shipping from our factory are computers equipped with both a VGA card and a hard disk?"
At Vice President Lee Yong-kwon's words, Yoo Jae-won grasped the nature of the problem. At the same time, he roughly calculated the VGA installation rate in his head. The government had set the performance standard for computers distributed to schools this year as a 286 with VGA. Yoo Jae-won imagined that academically ambitious parents might purchase similar specifications. Considering the proportion of home computers at Sambo, an approximate figure emerged.
"Around thirty percent?"
"Ten percent. Our main products are still XT models, and many computers lack even hard disks, let alone VGA."
"Oh dear. That is a significant problem."
Because he primarily operated in America, Yoo Jae-won had come to measure computer specifications by American standards. America was a country where 386 machines had become commonplace beyond the 286, and hard disks were widely distributed. Korea, by contrast, was still taking only baby steps. Android Alpha could be installed on XT machines as well. However, it required three essential components: a VGA card, a hard disk, and 1 MB of RAM. It was possible to make it boot from a floppy disk alone, but he judged that approach unreasonable. DOS booting did not take particularly long. Alpha, however, had to read numerous graphic resources to construct the Ribbon Interface, which would require an inordinate amount of time.
"Haha. Those high-end models amount to only a few hundred units per month at most. It is a volume that would not satisfy you, who sells millions of units in America."
"It is fine. The beginning matters most. There is no law stating that only XT models will sell in our country forever. Besides, the day will come when every household owns at least one computer, so we must steadily expand our foothold from now."
Lee Yong-kwon nodded, yet inwardly wondered whether Yoo Jae-won had grown optimistic from experiencing only success. While XT models would eventually be phased out, that remained years away, and they were currently thriving. Moreover, the prospect of every household owning a computer was beyond rosy. In any case, since Yoo Jae-won was satisfied even with a small volume, Vice President Lee Yong-kwon decided to confirm the adoption of Android Alpha. They drafted the contract and paid the deposit on the spot.
Yet Yoo Jae-won's business was not finished.
"Ah, do you also accept custom computer orders?"
"Of course. Though we limit them to high-performance products."
Vice President Lee Yong-kwon answered immediately. Although Sambo specialized in finished products, for high-performance PCs they would customize to the client's desired specifications. Come to think of it, this was Yoo Jae-won's first custom order. ID Technology had previously purchased several 386 computers as finished products but had never requested specific specifications.
"Intel 486, 4 MB RAM, latest VGA card, 80 MB hard disk, PCM sound card. Fourteen-inch color monitor supporting VGA."
With each specification that emerged from Yoo Jae-won's mouth, Vice President Lee Yong-kwon could not help but gasp in admiration. Each component was extraordinarily expensive. The 486 commanded whatever price one named, and 4 MB of RAM was likewise costly. An 80 MB hard disk was expensive enough to make one gasp. Combined, the total easily exceeded several million won.
"Forty units to begin with. I will place the order."
"Gasp!"
A gasp escaped Vice President Lee Yong-kwon's lips. Because the computers were so high-spec, even producing a single unit was highly profitable. And this was not one unit but a full forty—an order worth hundreds of millions of won. Yet Yoo Jae-won's order was not finished.
"Instead, please manufacture them in this shape. I will cover the mold and modification costs separately."
He reached into his pocket, withdrew something, and handed it to Lee Yong-kwon. Computers in this shape? Were not all computers shaped alike? With a face full of curiosity, Lee Yong-kwon unfolded the paper.
"What is this? A television?"
"No, it is a computer. An all-in-one computer."
Even after hearing Yoo Jae-won's explanation, Lee Yong-kwon could not quite grasp it at a glance. There, on the paper, was a design that felt both strikingly unfamiliar and sophisticated.