Here is the story you might have missed from years back
There is no doubt that the rivalry between Microsoft and Apple is one of the longest standing in the tech industry.
Many know that both companies are in the ‘billion-dollar’ club at present and lead the tech world in terms of market cap and influence.
However, many may have forgotten that a few years before the dot com bubble in 2000, Apple was struggling and on the brink of bankruptcy.
Apple had just acquired NeXT in 1997 (who Steve Jobs founded), and Jobs became CEO once again of his former company (yes, Jobs was ousted from Apple before). At the time, Apple was almost going bankrupt, and Jobs had a momentous task ahead, which was to revive Apple from the ground.
This was when he decided to reach out to Gates, who was running Microsoft at the time.
What did Gates do to save Apple?
In August 1997, Steve Jobs would announce something that would shape the trajectory of Apple’s future.
At the time, Apple was one of Microsoft’s biggest rivals but was on the brink of bankruptcy. Even Jobs admitted that Apple was ‘going to lose’ and that to stay alive, he had to step outside of his competitive mindset.
“Apple was in very serious trouble,” said Jobs. “And what was really clear was that if the game was a zero-sum game where for Apple to win, Microsoft had to lose, then Apple was going to lose.
This is when Jobs reached out to Gates and tried to patch things up, especially with all the competition over the years.
Subsequently, this event led to him announcing a partnership with Gates at the Macworld Boston conference. Known as Apple Computer at the time, Bill Gates bought $150 million of non-voting shares in Apple Computer and even offered free access to Microsoft Office for five years for the company.
This gave Jobs a much-needed lifeline to save the company even if the crowd was booing against Gates.
But why did Gates Save Apple?
On paper, the move spelled out a few things.
As part of the deal, Apple would agree to drop its lawsuit against Microsoft, which involved calling out that Microsoft had copied the look and feel of the Mac OS for Windows (among other patents).
The second part of the deal meant that Microsoft’s Internet Explorer was to become the default browser on Mac computers.
“That’s worked out very well,” says Gates at the 2007 Macworld Boston Conference. “In fact, every couple years or so, there’s been something new that we’ve been able to do on the Mac and it’s been a great business for us.”
With this deal, however, Gates still could have easily left Jobs at the door and continued on.
Even with all these lawsuits, Jobs said that Apple would not last long enough for them to pursue them since they would go bankrupt by then.
So the question is, why did Gates do it?
Gates always had a soft spot for Apple
In Walter Isaacson’s biography on Steve Jobs, Jobs said that Gates always had a soft spot for Apple.
“Bill always had a soft spot for Apple. We got him into the application software business. The first Microsoft apps were Excel and Word for the Mac.” Jobs said
Not only that, but Apple got him into the application software business (and now one of Microsoft’s most valuable product areas).
Rather than letting Apple bleed to death, Gates decided to take it as an opportunity to work with a competitor. This not only strengthened his own company’s position for the future but also to showcase that Microsoft wasn’t a monopoly by helping a competitor (The Department of Justice at the time was going after Microsoft as well).
Even with the long-standing rivalry, both admitted to mutual admiration of each even if there was some bitterness at the early stages.
Since then Apple has grown to a behemoth
We all know the rest is history, as Apple is one of the biggest tech companies in the world today.
At the time in 1997, Microsoft was much bigger than Apple, and ironically, years later, Apple turned this around (during Ballmer’s term at Microsoft).
Today, both companies stand close to each other, with Apple standing at a market cap of $1.64 Trillion and Microsoft at $1.54 Trillion (as of 28th of July 2020).
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