Microsoft and Apple have been business partners and tough competitors for many years. Back in the seventies, Steve Jobs and Bill Gates worked close together. In 1997 the Windows-manufacturer saved the Mac-inventor.

Steve Jobs & Bill Gates (1985)

In the early seventies there was no such thing as a personal computer. I took geniuses and  visionary like Steve Wozniak and Bill Gates to invent this new industry. The early computer geeks were energized by the arrival of the January 1975 issue of Popular Mechanics, which had on its cover the first personal computer kit, the Altair. The Altair wasn’t a real computer —more a $495 pile of parts that had to be soldered to a board that would then do little—but for hobbyists and hackers it heralded the dawn of a new era. Bill Gates and Paul Allen read the magazine and started working on a version of BASIC, an easy-to-use programming language, for the Altair. It also caught the attention of Jobs and Wozniak.

Later Steve Jobs had to ask for the Microsoft BASIC because his friend Wozniak didn’t finish his own version of NASIC for the Apple II. “He was very childlike,” said Jobs later to the author of hi biography, Walter Isaacson, abou “Woz”. “He did a great version of BASIC, but then never could buckle down and write the floating-point BASIC we needed, so we ended up later having to make a deal with Microsoft. He was just too unfocused.”

With the rise of the Apple II in the late seventies Microsoft became more and more successful – even before the IBM PC was invented. When Apple developed the Macintosh Bill Gates and his team were the most important software partner – despited the fact that Microsoft was also the driving force behind the IBM PC and the PC clones. And Steve Jobs even invited Bill Gates for the preview of the Mac: The high point of the October 1983 Apple sales conference in Hawaii was a skit based on a TV show called The Dating Game. Jobs played emcee, and his three contestants, whom he had convinced to fly to Hawaii, were Bill Gates and two other software executives, Mitch Kapor and Fred Gibbons. As the show’s jingly theme song played, the three took their stools.

Gates, looking like a high school sophomore, got wild applause from the 750 Apple salesmen when he said, “During 1984, Microsoft expects to get half of its revenues from software for the Macintosh.” Jobs, clean-shaven and bouncy, gave a toothy smile and asked if he thought that the Macintosh’s new operating system would become one of the industry’s new standards. Gates answered, “To create a new standard takes not just making something that’s a little bit different, it takes something that’s really new and captures people’s imagination. And the Macintosh, of all the machines I’ve ever seen, is the only one that meets that standard.”

Title of BusinessWeek (October 3rd, 1983)

But even as Gates was speaking, Microsoft was edging away from being primarily a collaborator with Apple to being more of a competitor. It would continue to make application software, like Microsoft Word, for Apple, but a rapidly increasing share of its revenue would come from the operating system it had written for the IBM personal computer. The year before, 279,000 Apple IIs were sold, compared to 240,000 IBM PCs and its clones. But the figures for 1983 were coming in starkly different: 420,000 Apple IIs versus 1.3 million IBMs and its clones. And both the Apple III and the Lisa were dead in the water.

Just when the Apple sales force was arriving in Hawaii, this shift was hammered home on the cover of Business Week. Its headline: “Personal Computers: And the Winner Is . . . IBM.” The story inside detailed the rise of the IBM PC. “The battle for market supremacy is already over,” the magazine declared. “In a stunning blitz, IBM has taken more than 26% of the market in two years, and is expected to account for half the world market by 1985. An additional 25% of the market will be turning out IBM-compatible machines. (Walter Isaacson, p. 159-160)

Apple boss John Sculley’s marketing strategy for the launch of the Macintosh was obvious. The former Pepsi manager, who had been brought to Apple by Steve Jobs, intended to arrange a duel between IBM and Apple, black vs. white, with Apple playing the role of the underdog. Sculley wrote in his book Odyssey:

So we needed a campaign that would focus on a two-horse race to leverage off of Apple’s underdog status. Dozens of other computer companies were coming out with products and I was afraid we were going to get lost in the crowd. If we could create a two-horse race between us and IBM, we might be able to convince people that there are really only two computer companies competing in the marketplace. In any large consumer industry, few people remember the third- or fourth-largest competitor.

In the fight against competitors such as Atari, Commodore, Sinclair and Amstrad, the Apple strategy paid off well. But Sculley, as well as Steve Jobs, had completely underestimated that Microsoft, being an ally from the outset, would, with the aid of Apple, develop into a dominant power of the PC industry and even dwarf IBM.

Bill Gates und Paul Allen (1981)

Bill Gates and Paul Allen had founded Microsoft as a small software company in Albuquerque (New Mexico) in 1975 and developed the programming language BASIC for the legendary computer MITS Altair in collaboration with other co-workers. Due to fortunate circumstances, Microsoft landed the order from IBM to deliver not only BASIC, but also the operating system for the first IBM PC in 1980. In the negotiation phase, the then leading operating system manufacturer Digital Research (CP/M) did not want to engage in page-filling adhesion contracts from IBM – and thus lost this gigantic deal.

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Though Microsoft did not have any operating system at that time, this did not prevent Bill Gates and his companion Steve Ballmer from playing for high stakes while facing IBM. From their neighboring software shack Seattle Computers (in the mean time, Microsoft had moved to the northwest of the USA) they bought all rights for QDOS (Quick and Dirty Operating System) for no less than 50,000 dollars in July 1981 and renamed it as MS-DOS. Gates had been clever enough at that time not to have all rights to the system negotiated away by the IBM crew and was therefore able to win clone companies such as Compaq as customers later.

When Microsoft provided their BASIC for the Apple II, Steve Jobs and Bill Gates constantly ran into each other at that time. “Even before we finished our work on the IBM PC, Steve Jobs came and talked about what he wanted to do, what he thought he could do, sort of a Lisa but cheaper. We said boy, we’d love to help out”, Gates remembers. “The Lisa had all its own applications, but of course they required a lot of memory, ah, and we thought we could do better, and so Steve signed a deal with us to actually provide bundled applications for the first Mac, and so we were big believers in the Mac and what Steve was doing there.”

Apple urgently needed software for the Mac, as there did not yet exist any program for the new system except for their in-house products MacWrite and MacPaint. Gates promised to have the programs Chart and File written for the Mac in addition to the spreadsheet program Excel. Steve Jobs appreciated the risk Microsoft took, but was not content with the first results though. “Most people don’t remember, but until the Mac, Microsoft was not in the applications business… it was dominated by Lotus. And Microsoft took a big gamble to write for the Mac.”

Apple still could have coped well with having given Microsoft’s new application business a leg up. However, Bill Gates had tasted blood in the Macintosh project. Jeff Raikes, who was responsible for the Office business at Microsoft until early 2008, reviews: “And so we got started in early 1982 on our Macintosh software effort and I think at that point in time, you know, it really clicked with Bill that, you know, graphic user interface was going to be the way, the way of the future. But while Bill was having his own GUI revelation, Jobs believed that Apple’s true enemy was IBM.”

The system was based on DOS and was incredibly slow, but it reminded one of the Macintosh GUI in some features. In order to prevent Apple from taking legal action, Gates put the screws on Apple boss Sculley. His message was: As soon as Apple sends out the lawyers, Microsoft will immediately stop the development of Word and Excel for the Mac. Since Apple was depending on the Microsoft applications, Sculley licensed some of the Mac technologies to Microsoft.

As Microsoft went public with the next large version leap of Windows 2.03 at the beginning of 1988, Sculley tried to pull the ripcord and sued Microsoft and Hewlett-Packard for copyright infringement on March 17, 1988. John Sculley had been in a difficult situation, particularly as he had engaged in vague formulations in the contract with Microsoft in 1985, which gave great leeway to Gates and his lot. Moreover, he knew that his chances to win an action against Microsoft had been, purely from a legal viewpoint, not particularly good: “The look and feel, which is how it looks, the experience of using it, was not patentable, but it was copyrightable, but there was no precedent law. This was going to be a precedent setting case.”

The introduction of Windows 3.1 in 1992 brought Microsoft the breakthrough in the “GUI war”. The system lacked the elegance and usability of the Macintosh system 7.0, but Windows appeared good enough to most PC users. With the help of Windows 95, which had been introduced with gigantic effort on August 24, 1995, Microsoft caught up closer to the Mac and in some aspects even appeared more progressive than the Mac OS, which had become dated in the meantime.

Steve Jobs, who, as the head of NeXT, had observed the advance of Windows from a distance, did not have any kind words for Bill Gates at the launch of Windows 95:

The only problem with Microsoft is they just have no taste, they have absolutely no taste, and what that means is – I don’t mean that in a small way, I mean that in a big way. In the sense that they don’t think of original ideas and they don’t bring much culture into their product, and you say why is that important – well you know proportionally spaced fonts come from type setting and beautiful books, that’s where one gets the idea – if it weren’t for the Mac, they would never have that in their products and so I guess I am saddened, not by Microsoft’s success – I have no problem with their success, they’ve earned their success for the most part. I have a problem with the fact that they just make really third rate products.

It is claimed that Jobs has apologized to Bill Gates for this remark later.

The relationship between Apple and Microsoft – and thus also the relationship between Steve Jobs and Bill Gates – did not get back to normal before the summer of 1997, when Steve Jobs had returned to Apple and engaged in the support of Microsoft in order to make the troubled company profitable again.

Microsoft invested 150 million dollars in 150,000 Apple stocks and, according to certain rumors, paid further 100 million dollars for copyright infringement during the past few years. At the same time, Gates obliged himself to continue the development of the Internet Explorer and Microsoft Office for the Mac for the following five years. Gates drew hisses from the audience of Apple faithful. The crowd also groaned when Steve Jobs said Apple would make Microsoft’s Internet Explorer the default browser for viewing the World Wide Web on Macintosh computers. That development was a blow to Netscape Communications Corp., which made a more popular competing browser and lost later on in the famous “browser war” against Microsoft.

13 years later – after a stunnishing comeback – Apple Inc. overtook Microsoft Corp. to become the most valuable technology company on optimism it can keep adding customers for its iPhone, Macintosh computer and iPad. On May 26, 2010 by 4 p.m. New York time in Nasdaq Stock Market trading, Apple’s market value was at $222.1 billion, higher than Microsoft’s $219.2 billion. That made Apple the most valuable technology firm in the world.

In an interviews with Kara Swisher and Walt Mossberg from the Wall Street Journal Apple CEO Steve Jobs downplayed the significance of Apple’s passing Microsoft in market value. “For those of us who have been in the industry a long time, it’s surreal,” Jobs said. “But it doesn’t matter very much, it’s not what’s important.

“It’s not why any of our customers buy our products. So I think it’s good for us to keep that in mind.”

Christoph Dernbach

Image gallery: The top 10 standout Macs of the past 25 years.

The Mac lacked the applications that dragged the Charlie Chaplin figure across the screen box by box in the IBM’s advertising spot for the PC. Therefore, Guy Kawasaki and other “Software Evangelists” of Apple made an effort to convince the developers of other software companies to write programs for the Mac. The Mac’s ROM, which had been calculated far too narrowly at 128 kilobytes, did not make this a simple task. Not until the “Fat Mac” with 512 kilobytes was launched one year after the first Macintosh had this narrow bottleneck been removed.

The problem came to a head when by the beginning of 1985, the Macs that had not found purchasers during the Christmas sales of 1984 were piling up in storage. Apple had to publish the first quarterly loss in the company’s history and release a fifth of the staff. During a marathon meeting on April 10 and 11, 1985, Apple’s CEO John Sculley demanded to have Steve Jobs relieved of his position as an Apple vice president and general manager of the Macintosh department.

Steve Jobs and John Sculley

On May 31, 1985, Jobs lost his responsibilities and was shuffled off to the chairman position. In September, the Apple co-founder left the company with a few people in order to found NeXT Computer. “I feel like somebody just punched me in the stomach and knocked all my wind out. I’m only 30 years old and I want to have a chance to continue creating things. I know I’ve got at least one more great computer in me. And Apple is not going to give me a chance to do that,” Jobs wrote to Mike Markkula on parting. Ten years later, Steve Jobs also commented on his disempowerment with bitterness in the TV documentary “Nerds in the Valley” (1996): Jobs:

What can I say? I hired the wrong guy. – Question: That was Sculley?
Jobs: Yeah and he destroyed everything I spent ten years working for. Starting with me but that wasn’t the saddest part. I would have gladly left Apple if Apple would have turned out like I wanted it to.

Apple’s Heart and Soul

Andy Hertzfeld, one of the Macintosh’s fathers, later recalled the events:

The conflict came to a head at the April 10th board meeting. The board thought they could convince Steve to transition back to a product visionary role, but instead he went on the attack and lobbied for Sculley’s removal. After long wrenching discussions with both of them, and extending the meeting to the following day, the board decided in favor of John, instructing him to reorganize the Macintosh division, stripping Steve of all authority. Steve would remain the chairman of Apple, but for the time being, no operating role was defined for him. John didn’t want to implement the reorganization immediately, because he still thought that he could reconcile with Steve, and get him to buy into the changes, achieving a smooth transition with his blessing. But after a brief period of depressed cooperation, Steve started attacking John again, behind the scenes in a variety of ways. I won’t go into the details here, but eventually John had to remove Steve from his management role in the Macintosh division involuntarily. Apple announced Steve’s removal, along with the first quarterly loss in their history as well as significant layoffs, on Friday, May 31, 1985, Fridays being the traditional time for companies to announce bad news. It was surely one of the lowest points of Apple history.

Andy Hertzfeld

It is an irony of computer history that, according to industry experts, the Macintosh’s breakthrough on the market was becoming apparent exactly at the time of Jobs’ disempowerment due to the Mac’s poor sales volume. The convincing the “Macintosh Evangelists” were doing gradually began to show results.

Screenshot of PageMaker 1.0 (french version)

New software companies such as Aldus had made an effort to become acquainted with the details of the “Macintosh Toolbox” and written the first desktop publishing programs, such as PageMaker. In combination with the Apple LaserWriter and the page description standard PostScript (designed by Adobe), PageMaker turned the technology of the publishing sector inside out; it did even more when the Mac Plus with 512 kilobytes of ROM entered the market by the beginning of 1986. The Mac Plus even featured cursor keys on its keyboard, which had been resolutely rejected by Steve Jobs for the first Mac, since he intended to force the users to accept the mouse as an input device.

And it is also an irony of computer history that Jobs later saved the struggling Apple Computer company. NeXT’s subsequent 1997 buyout by Apple brought Jobs back to the company he co-founded, and he has served as its CEO since then.

Apple boss John Sculley’s marketing strategy for the launch of the Macintosh was obvious. The former Pepsi manager, who had been brought to Apple by Steve Jobs, intended to arrange a duel between IBM and Apple, black vs. white, with Apple playing the role of the underdog. Sculley wrote in his book Odyssey:

So we needed a campaign that would focus on a two-horse race to leverage off of Apple’s underdog status. Dozens of other computer companies were coming out with products and I was afraid we were going to get lost in the crowd. If we could create a two-horse race between us and IBM, we might be able to convince people that there are really only two computer companies competing in the marketplace. In any large consumer industry, few people remember the third- or fourth-largest competitor.

In the fight against competitors such as Atari, Commodore, Sinclair and Amstrad, the Apple strategy paid off well. But Sculley, as well as Steve Jobs, had completely underestimated that Microsoft, being an ally from the outset, would, with the aid of Apple, develop into a dominant power of the PC industry and even dwarf IBM.

Bill Gates and Paul Allen had founded Microsoft as a small software company in Albuquerque (New Mexico) in 1975 and developed the programming language BASIC for the legendary computer MITS Altair in collaboration with other co-workers. Due to fortunate circumstances, Microsoft landed the order from IBM to deliver not only BASIC, but also the operating system for the first IBM PC in 1980. In the negotiation phase, the then leading operating system manufacturer Digital Research (CP/M) did not want to engage in page-filling adhesion contracts from IBM – and thus lost this gigantic deal.

Advertisement

Though Microsoft did not have any operating system at that time, this did not prevent Bill Gates and his companion Steve Ballmer from playing for high stakes while facing IBM. From their neighboring software shack Seattle Computers (in the mean time, Microsoft had moved to the northwest of the USA) they bought all rights for QDOS (Quick and Dirty Operating System) for no less than 50,000 dollars in July 1981 and renamed it as MS-DOS. Gates had been clever enough at that time not to have all rights to the system negotiated away by the IBM crew and was therefore able to win clone companies such as Compaq as customers later.

Microsoft then provided their BASIC for the Apple II as well. Therefore, Steve Jobs and Bill Gates constantly ran into each other at that time. “Even before we finished our work on the IBM PC, Steve Jobs came and talked about what he wanted to do, what he thought he could do, sort of a Lisa but cheaper. We said boy, we’d love to help out”, Gates remembers. “The Lisa had all its own applications, but of course they required a lot of memory, ah, and we thought we could do better, and so Steve signed a deal with us to actually provide bundled applications for the first Mac, and so we were big believers in the Mac and what Steve was doing there.”

Apple urgently needed software for the Mac, as there did not yet exist any program for the new system except for their in-house products MacWrite and MacPaint. Gates promised to have the programs Chart and File written for the Mac in addition to the spreadsheet program Excel. Steve Jobs appreciated the risk Microsoft took, but was not content with the first results though. “Most people don’t remember, but until the Mac, Microsoft was not in the applications business… it was dominated by Lotus. And Microsoft took a big gamble to write for the Mac.”

Apple still could have coped well with having given Microsoft’s new application business a leg up. However, Bill Gates had tasted blood in the Macintosh project. Jeff Raikes, who was responsible for the Office business at Microsoft until early 2008, reviews: “And so we got started in early 1982 on our Macintosh software effort and I think at that point in time, you know, it really clicked with Bill that, you know, graphic user interface was going to be the way, the way of the future. But while Bill was having his own GUI revelation, Jobs believed that Apple’s true enemy was IBM.”

However, it was not until November 1985 that Microsoft introduced the first version 1.01 of Windows, which was two years after Gates had announced Windows in his first Comdex keynote at the Fall 1983 Comdex in Las Vegas. The system was based on DOS and was incredibly slow, but it reminded one of the Macintosh GUI in some features. In order to prevent Apple from taking legal action, Gates put the screws on Apple boss Sculley. His message was: As soon as Apple sends out the lawyers, Microsoft will immediately stop the development of Word and Excel for the Mac. Since Apple was depending on the Microsoft applications, Sculley licensed some of the Mac technologies to Microsoft.

As Microsoft went public with the next large version leap of Windows 2.03 at the beginning of 1988, Sculley tried to pull the ripcord and sued Microsoft and Hewlett-Packard for copyright infringement on March 17, 1988. John Sculley had been in a difficult situation, particularly as he had engaged in vague formulations in the contract with Microsoft in 1985, which gave great leeway to Gates and his lot. Moreover, he knew that his chances to win an action against Microsoft had been, purely from a legal viewpoint, not particularly good: “The look and feel, which is how it looks, the experience of using it, was not patentable, but it was copyrightable, but there was no precedent law. This was going to be a precedent setting case.”

Bill Gates recalls also reluctant this time.: “But it was a period of five years where, Microsoft er, our whole strategy would have been ruined because Windows was very important to us. (…) We assumed that the lawyers, the judges would all come to the right conclusion which eventually they did.” Sculley: “And Apple lost. But in that period of about six years that this case was going on it may have lulled us into a bit of complacency thinking that we were going to be insulated, you know, from the Windows attack.”

The introduction of Windows 3.1 in 1992 brought Microsoft the breakthrough in the “GUI war.” The system lacked the elegance and usability of the Macintosh system 7.0, but Windows appeared good enough to most PC users. With the help of Windows 95, which had been introduced with gigantic effort on August 24, 1995, Microsoft caught up closer to the Mac and in some aspects even appeared more progressive than the Mac OS, which had become dated in the meantime.

Steve Jobs, who, as the head of NeXT, had observed the advance of Windows from a distance, did not have any kind words for Bill Gates at the launch of Windows 95:

The only problem with Microsoft is they just have no taste, they have absolutely no taste, and what that means is – I don’t mean that in a small way, I mean that in a big way. In the sense that they don’t think of original ideas and they don’t bring much culture into their product, and you say why is that important – well you know proportionally spaced fonts come from type setting and beautiful books, that’s where one gets the idea – if it weren’t for the Mac, they would never have that in their products and so I guess I am saddened, not by Microsoft’s success – I have no problem with their success, they’ve earned their success for the most part. I have a problem with the fact that they just make really third rate products.

It is claimed that Jobs has apologized to Bill Gates for this remark later.

The relationship between Apple and Microsoft – and thus also the relationship between Steve Jobs and Bill Gates – did not get back to normal before the summer of 1997, when Steve Jobs had returned to Apple and engaged in the support of Microsoft in order to make the troubled company profitable again.

Many faithful Apple fans still remember with horror the moment when Steve Jobs announced the former archrival very pragmatically as the knight in shining armor at the MacWorld Expo 1997 in Boston with Bill Gates appearing on an oversized video screen just like “Big Brother.” Introducing Gates, Jobs said: “”We have to let go of the notion that in order to for Apple to win, Microsoft has to lose. Relationships that are destructive don’t help anybody. The era of setting this up as a competition between Apple and Microsoft is over.”

Microsoft invested 150 million dollars in 150,000 Apple stocks and, according to certain rumors, paid further 100 million dollars for copyright infringement during the past few years. At the same time, Gates obliged himself to continue the development of the Internet Explorer and Microsoft Office for the Mac for the following five years. Gates drew hisses from the audience of Apple faithful. The crowd also groaned when Steve Jobs said Apple would make Microsoft’s Internet Explorer the default browser for viewing the World Wide Web on Macintosh computers. That development was a blow to Netscape Communications Corp., which made a more popular competing browser and lost later on in the famous “browser war” against Microsoft.

Christoph Dernbach

Steve Jobs

The only problem with Microsoft is they just have no taste, they have absolutely no taste, and what that means is – I don’t mean that in a small way I mean that in a big way. In the sense that they they don’t think of original ideas and they don’t bring much culture into their product ehm and you say why is that important – well you know proportionally spaced fonts come from type setting and beautiful books, that’s where one gets the idea – if it weren’t for the Mac they would never have that in their products and ehm so I guess I am saddened, not by Microsoft’s success – I have no problem with their success, they’ve earned their success for the most part. I have a problem with the fact that they just make really third rate products.

Steve Ballmer

I will admit quite frankly that I think Windows today is probably four years behind, three years behind where it would have been had we not danced with IBM for so long. Because the amount of split energy, split works, split IQ in the company really cost our end customer real innovation in our product line and so whenever I hear these criticisms which I gotta to say sting eh sometimes, I say to myself just you watch, just you watch Windows 95, Windows 9…there’s no lack of focus there hasn’t been here for the last three or four years since we didn’t have this big spot with IBM. Even in the operating systems here now, you’ll start to see clear, clear…and people will recognise clear leadership.

Mac Pro (March 2009) with Apple LED Cinema Display

Mac Pro (March 2009)

Specifications

Photos: Apple

Specifications
Source: Article “Mac Pro” (2009, March 8). In Wikipedia, The Free Encyclopedia. Retrieved 20:21, March 9, 2009, from http://en.wikipedia.org/w/index.php?title=Mac_Pro&oldid=275861403

This entry is published under the GNU General Public License.