Let’s face it: You’re either a Mac or a PC user. However, that iconic advertising campaign glossed over some critical information: There’s a good chance Apple wouldn’t exist today, if it weren’t for Microsoft.
In August 1997, Apple was on the brink of bankruptcy and had just parted ways with CEO Gil Amelio. Co-founder Steve Jobs was brought back to save the company, a task requiring bold action. Jobs quickly eliminated unsuccessful product lines such as the Newton. Then he did what many Apple customers considered unthinkable: He cut a deal with Bill Gates.
Announced on Aug. 6, 1997, in true dramatic Steve Jobs fashion at MacWorld Expo, the deal between Apple and Microsoft included the following provisions:
- Microsoft would continue producing Office for Mac.
- Apple would make Internet Explorer the default browser on its computers.
- Microsoft and Apple would settle outstanding litigation and agree to collaborate on technology.
- Microsoft would invest $150 million in non-voting Apple stock.
The world reacts to the Microsoft-Apple partnership
As Gates appeared on the big screen, the MacWorld Expo crowd jeered. Jobs chided them: “We have to let go of the notion that in order for Apple to win, Microsoft has to lose. The era of setting this up as a competition between Apple and Microsoft is over as far as I’m concerned.” Gates pronounced that some of his “most exciting work” had been projects for the Macintosh.The media went nuts. The “cold war of computing” had “thawed,” announced the Los Angeles Times. It was a “dramatic concession in the technological Cold War,” wrote the Washington Post.
The markets saw stability, and Apple’s stock regained strength, paving the way for future innovations such as the iPod and the iPhone.
The agreement required Microsoft to sell its $150 million of stock back to Apple in 2003. Had Microsoft kept the stock, it would have been worth more than $50 billion today.
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