1997: Microsoft Saves Apple

Fifteen years ago, Steve Jobs announced at the Boston Macworld Expo that Microsoft was making a $150 million investment in Apple Computer, cash Apple desperately needed to remain afloat – along with a promise that Microsoft would continue to develop Office and Internet Explorer for Mac for at least five years, an assurance that helped Macs grow in the workplace.

In exchange for the investment, Apple would drop its suit against Microsoft alleging that Windows copied the look-and-feel of the Mac OS, and new Macs would ship with Microsoft Internet Explorer as their default browser, replacing Netscape. Apple also protected itself by selling nonvoting shares to Microsoft.

Bill Gates appeared at the 1997 Boston Macworld Expo via live video feed.

Bill Gates appeared at the 1997 Boston Macworld Expo via live video feed.

What really shocked the Mac faithful was that Jobs made the announcement during his keynote address and had Bill Gates in a video feed on the huge screen behind him, which you can view on YouTube. Listen for the audible reactions, especially the boos when Jobs announces IE as the default browser and the mixed response when Gates appears on the screen.

Microsoft has long been one of Apple’s frenemies. The Apple II didn’t really take off until Apple licensed Microsoft BASIC and released the Apple II+ with AppleSoft BASIC. Microsoft Word and MultiPlan, the predecessor of Excel, were essential in getting the Macintosh off the ground in 1984. And by working to make Microsoft Office files work across platforms, Microsoft made it easier for Macs to coexist in the mostly Windows workplace.

Back in 1997, IE was duking it out with Netscape Navigator. IE was at version 3.0, with 4.0 a couple months away on Windows and destined to reach Macs in January 1998. Netscape was at version 4.0 and beginning to run out of steam, although it would eventually be reborn as Firefox and become IE’s primary competitor (until Google got into the browser game).

Microsoft was good on its word, and to this day it continues to develop Microsoft Office for Macs. Internet Explorer didn’t fare as well. IE for Mac made it to version 5.x in 2001, but after Apple released it’s own browser, Safari, in 2003, making it the Mac’s default, and Microsoft officially ended further development and support in 2005.

Nobody knows just how much Microsoft made from its $150 billion investment, but I’m sure it did well. Two years ago, Ars Technica reported that had Microsoft held onto those shares, they would have been worth $4.5 billion.

It’s a good thing Microsoft has found its relationship with Apple and with Mac users so profitable, because ever since 1997, whenever Microsoft and Apple compete in the same space, Microsoft loses. Zune was never able to compete with the iPod. Microsoft’s two failed DRM music initiatives paled in the face of the successful iTunes Store. Ever since the iPhone arrived, Microsoft’s mobile operating system has been declining in market share. And in the tablet market, it looks like Microsoft’s Surface is going to be a lot more expensive than the iPad, although Microsoft is very hush-hush about pricing and technical specifications.

Thanks, Microsoft, for bailing out Apple in its darkest hour. Maybe Apple will return the favor someday.

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