A Month of Gates #2
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News Analysis. This second retrospective installment looks back at Bill Gates' satellite appearance at Macworld 1997. |
[Editor's Note: Microsoft's chairman steps down from day-to-day operations on June 30. Throughout the month, Microsoft Watch will look back on his contribution to the company and the tech industry.]
In October 1997, Michael Dell said about Apple: "What would I do? I'd shut it down and give the money back to the shareholders." There were many people talking about the demise of Apple in 1996 and 1997. Following his late 1996 return to Apple, co-founder Steve Jobs became interim CEO early the next year. Steve set about righting the listing company. One of the first places he turned: Microsoft.
In August 1997, Steve told Macworld attendees: "Microsoft is going to be part of the game with us, as we restore this company back to health."
Microsoft had agreed to develop a Mac version of Internet Explorer, commit to five years of Mac Office development and invest $150 million in ailing Apple. The Macworld audience didn't well receive Microsoft's contribution. Nor did they think much of Bill's appearance, larger than life, projected on a screen via satellite hookup. People booed.
"It's very exciting to renew our commitment to the Macintosh," Bill told the Macworld attendees. Many people probably don't realize that Microsoft products such as Excel and Word got their start on the Mac and later migrated to Windows.
Bill bragged about the forthcoming Office 1998. "In many ways it's more advanced than what we've done on the Windows platform," he said. To that, the audience actually clapped.
Microsoft's $150 million investment and, more importantly, revitalized Office development were monumental contributions to Apple at the time. Apple desperately needed the cash and legitimacy Office brought to the Mac. To Microsoft, the investment and commitment were in tandem quite insignificant. Yet from that seed and the work done by Steve and his executive team thereafter, Apple recovered from the brink.
Surely, Bill couldn't have guessed what Microsoft's investment would create in Apple about a decade later. Apple's market capitalization is $164 billion, or about three-and-a-half times that of Dell, at $46.5 billion. The Apple brand is resurgent, Mac computer market share is climbing, the iPod and iPhone weaken cornerstones of Microsoft's digital media strategies, and "Get a Mac" TV commercials rip into Windows Vista.
Bill is mighty sensitive about those TV ads. In every interview I've seen where he was asked about them, he tried to avoid responding at all.
So what did $150 million buy Bill Gates? A lot of pain.
Comments (8)
"Apple desperately needed the cash"
Not true Joe. The $150M MSFT "invested" was actually part of an out of court settlement where MSFT paid Apple over $900M in cash and other considerations to resolve a pending copyright lawsuit. It seems Gates and the boys literally copied QuickTime source code (see below) and they were caught red handed. If it had gone to trial, the case would have been slam-dunk in Apple's favor and it would have crippled MSFT's multi-media efforts.
The court sealed the case after the settlement was negotiated and Jobs graciously allowed Gates to save face by publicly claiming the $150M preferred stock purchase was a goodwill gesture.
http://en.wikipedia.org/wiki/San_Francisco_Canyon_Company
Posted by Ed T | June 2, 2008 10:13 PM
Gotta agree with Ed T. The public filings don't show an ailing Apple. Quite the opposite. Apple wasn't exploding like MSFT, so perhaps the perception they were "ailing" is borne from that distorted view.
Posted by Al | June 3, 2008 9:37 AM
I love the past where Steve Jobs rebuked the audience for booing Gates. I guess they never saw that coming.
Posted by Andre Da Costa | June 3, 2008 10:51 AM
Just to be fare to everyone, there was a pirate flag outside Apple, in the early days, and they did love the guerilla or "pirate" tactics... The Xerox Research Center was one of the victims...
Posted by Zach Beo | June 3, 2008 11:26 AM
"The Xerox Research Center was one of the victims..."
Another urban myth. FYI, Apple compensated Xerox Corporation with AAPL stock options -- options that eventually made more money for Xerox than all of their sales of the STAR document systems combined.
Yes, Apple engineers visited PARC several times to see what was going on there, and quite a few of the PARC guys eventually went to work for Apple (including true geniuses like Alan Kay and Larry Tesler).
Along with guys like Bill Atkinson they reinvented computing, and if you think that is the same thing as copying 2000+ lines of QuickTime source to make VFW work, then you probably should get a job at MSFT.
Posted by ED T | June 3, 2008 12:03 PM
Does Bill Gates really matter anymore? Sure, he owns all this wealth, Micro$oft voting stock, still Chairman of the Board or MSFT, and has packed Micro$oft with all his cronies. You know, total control, even though Bill will not be there on a "day to day basis." Bill has been the world's richest man for 13 years, before dropping down to number 3. I will not be supporting Vista or Seven in Bill's attempt to regain the number one position, either.
I say its a good thing for Micro$oft that Bill is at least giving up a very little small bit of control. His thinking is all about lock-in and extended the monopoly, using shady business tactics.
Its disgusting how some of you people (especially the M$ Shills) fawn over Bill Gates, as if he was some kind of "God." Even Joe Willcox, who I do believe trys to be fair, seems to fall somewhat into this trap.
Bill is your historial classic super filthy rich person. Lets list a few of those here, King Midas, Marcus Licinius Crassus, and the Robber Barons of the 19th century, including, the best example, J. P. Morgan. Bill never worried about his reputation until the press got after him for being a cheapskate. Only then did he decide to really start supporting charities. And what of Steve Ballmer with his 12 billion plus? Is he doing anything with his money for his fellow human beings? Marcus Licinius Crassus being probably the most interesting of the super rich folks, historically. He used his "monopoly" of running the Fire department in ancient Rome, to show up at burning buildings, and offer to buy homes a tiny cents on the dollar amounts, before putting out the fire. Of course, the Robber Barons also had their monopolies, and Bill has his.
What we should be talking about is the future, and not Bill, and his attempt to become the "new J. P. Morgan." Is the future Windows Seven?
Desktop Windows: Is it time to "cut and run?"
http://weblog.infoworld.com/enterprisedesktop/archives/2008/06/desktop_windows.html
This link seems to say it all.
Posted by chips | June 3, 2008 1:17 PM
Ed T wrote: "Not true Joe. The $150M MSFT "invested" was actually part of an out of court settlement where MSFT paid Apple over $900M in cash and other considerations to resolve a pending copyright lawsuit."
Al wrote: "Gotta agree with Ed T. The public filings don't show an ailing Apple. Quite the opposite."
To Ed: I most certainly recall the copyright settlements and $150 million investment, but not $900 million; your Wikipedia link also doesn't corroborate the larger number. Do you have another reference?
To Al: C`mon. Go back and look at the financials. Apple was in the red quarter after quarter. It's true that for the third calendar quarter 1996 Apple posted an unexpected profit. But in January 1997, Apple ssued a profit warning on fourth-quarter earnings. Absolutely, Apple was hard up.
Joe
Posted by Joe | June 3, 2008 8:31 PM
RE: "Ailing" Apple and settlement numbers
Apple lost money for a few quarters, but in September 1997 they had $1.23 billion in cash and short-term investments on the balance sheet, and were not close to bankruptcy. If they were about to fold, do you honestly think Bill Gates would have stepped in to help? LOL! The $900M I mentioned is the number whispered by insiders familiar with the settlement and included both cash and the value of other considerations like continued development of Office/Mac for five years, cross licenses for patents, and access to APIs so QT could be ported more easily to Windows. In reality it probably didn't cost MSFT anywhere near $900M to make good on their end of the deal, but that's how the game is played when lawyers hammer out a settlement because bigger numbers make their legal fees seem smaller in comparison.
Since the settlement is sealed, we will never know the exact details. The fact that MSFT settled at all is completely out of character for that company and should give us some clues to the seriousness of the situation. Gates' lawyers must have told him to make the deal or face huge financial losses for willful copyright infringement. And I'm sure the looming DoJ probe was on their minds as well.
Posted by Ed T | June 4, 2008 1:41 AM