Post of the Day
June 3, 1998

From our
Microsoft Board


Subject: Apple vs. Microsoft
Author: DavidInnes

TAGfool asks:

"...is Apple on its way to picking itself up, or is lying on the ground waiting to be stepped on by the Microsoft golaith?"
I say:

At this point MSFT will never try killing Apple.

I haven't seen Blake around for a couple of days so let me take a quick moment to answer with more boring, pointless, and irrelevant history.

1) When MSFT was on the verge of failure, Apple either loaned them something like $10,000 or backed a loan. Either way they really helped pull Gates' fat out of the fire. (This was back when you bought software in zip-lock bags and the "documentation" was printed on the disk label) As far as I know Gates has never forgotten this. This is just one of the reasons Apple is a sentimental favorite of his.

2) Back when LOTUS Corp was threatening to simply annex the entire PC market by putting it's own COMMAND.COM clone in all Lotus123 boxes, MSFT was already the dominant software provider for Macintosh machines. Back then MSFT earned (I believe) about $23 for every PC sold, and (I believe) over $100 for every Mac sold. And of course they still dominate the market for applications written for the Mac OS. As far as I know Gates has never forgotten this, either.
"MSFT was acutely aware that if Apple went down they would automatically cross the magic 85% market share line and become an actionable monopoly under anti-trust law."  
3) When the DOJ first started looking askance at MSFT's OS dominance, Apple was in the middle of self-immolation. MSFT was acutely aware that if Apple went down they would automatically cross the magic 85% market share line and become an actionable monopoly under anti-trust law. They spent tens or hundreds of millions of dollars subsidizing Mac-only software development in an effort to avoid that. If Apple could somehow recover its 15-20% market share, a lot of MSFT's regulatory problems would go away. In the unlikely event Gates ever doubted this he's getting reminder he'll never forget from Washington D.C.

4) A few months before DOJ began preparing its suit against MSFT, a consortium led by Netscape, Oracle, and Sun Microsystems announced their network computing initiative. The front-end would be cheap, no-name PCs running Sun's JAVA in a Netscape shell. The back end would be Oracle databases running on Sun servers. Under this new system there would no longer be any need for, and no room for Windows, Internet Explorer, Word, Excel, PowerPoint, Access or Outlook, or Windows NT, or BackOffice, or any other MSFT product. They bragged this new architecture was so competitive MSFT would instantly and utterly collapse. (As a gesture of their confidence all partners involved started squealing like grease-caked starlings to their lobbyists, their elected representatives, and to the press about Microsoft's crushing monopoly. Bill Gates jokingly told a talk-show host he hoped the Feds would break up MSFT before it was forced out of business.)
  "Anyway, buried under all the martial rhetoric was the fact that any system that buried MSFT would also bury the other, more beloved vendor of personal-computer-based operating systems and applications -- Apple."
Anyway, buried under all the martial rhetoric was the fact that any system that buried MSFT would also bury the other, more beloved vendor of personal-computer-based operating systems and applications -- Apple. Instantly MSFT and Apple became partners in the same Personal Computer market, both threatened by the competing Network Computer market. To help shore up it's staggering partner MSFT bought $300,000,000 in non-voting Apple shares and released Office 98 for the Mac 6 months (and counting) before its Windows counterpart.

Your original question was whether Apple is picking itself up or waiting to be stepped on by MSFT.

For reasons sentimental, historical, legal, and strategic, it's in MSFT's interest to keep Apple on its feet any way it can. Far from stepping on them, they're certainly more worried that Apple will run back into the burning barn. On more than one occasion Apple has taken all steps necessary to squander it's remaining brand image, demoralize it's remaining workforce, alienate it's remaining customers, screw it's remaining working partners, disappoint it's remaining shareholders, and decimate it's remaining credit rating. And that would be a disaster for MSFT.

Gates is unlikely to forget this either. MSFT will probably do what it can to help keep Apple afloat, althought it will take more than that to save it.


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