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APRIL 24, 2002 BYTE OF THE APPLE By Charles Haddad Jobs and Gates: The Odd Couple Endures Whether or not they renew their cooperation pact, the two bosses know that their companies' fortunes are intimately linked
It was a paltry sum, considering Apple had billions in cash at the time. And Gates never had any intention of shutting down development for the Mac, since it has always been one of the software giant's most profitable markets. Nonetheless, the détente - and its splashy announcement at one of Apple's biggest annual trade shows - made for great theater. The press ate it up. Journalists switched from writing Apple's obituary to proclaiming its turnaround. And history has borne out those predictions. UNSPOKEN SUPPORT. Now, this much-ballyhooed agreement is set to expire during the summer. Should Microsoft and Apple sign a new one? It's a question enlivening debate across the PC industry and the Mac community. But I say: Who cares? Adobe, Macromedia, and Quark haven't signed any multiyear deals lashing them to the Mac platform, yet no one doubts that they'll keep writing programs for it. So why should Microsoft, the largest Mac developer after Apple, need a pact to prove its commitment? Nor does Apple need the publicity jolt. Five years ago, it was fighting for its life as its sales and market position plummeted. Today, the company is doing amazingly well - especially considering the PC market's continuing weakness. Last week, Apple reported second-quarter profits of $40 million, on revenue of $1.5 billion, beating Wall Street estimates. No longer do even ardent PC supporters write off Apple as irrelevant. A steady parade of new, eye-popping products, including the pocket-size iPod MP3 player and the flat-screen iMac, have refurbished Apple's image as a trendsetter. Thank goodness Jobs & Co. no longer needs the floating head of Bill Gates to generate favorable buzz about itself. WATCH AND LEARN. Apple and Microsoft both know that, for better or worse, their fates are entwined. No one would take the Mac seriously if it couldn't run Office and Internet Explorer, which dominate the markets for productivity software and Web browsers, respectively. Even graphic designers, the most ardent of Mac aficionados, write their invoices using Microsoft Word. And the release of an OS X version of Office is driving acceptance of Apple's new operating system. As for Microsoft, its need for Apple is varied and complex. For one, the Mac version of Office is among Microsoft's most profitable products. Office is even more dominant on the Mac platform than it is on PCs. Plus, although he'd rather choke a monkey than admit it, Gates uses Apple as his shadow research and development team. Nearly every innovation pioneered by Apple has been eventually incorporated into Windows. Isn't imitation the highest form of flattery? Indeed, the Microsoft chairman has long professed his admiration of the Mac operating system's technical genius. SMILES AND STABS. Gates also needs Apple for political cover. It's hard enough to argue with a straight face that Microsoft is no monopolist. Imagine trying to make that argument without Apple as the stylish alternative to Windows. It couldn't be done - not even by the wily Gates. That's why he's always using Apple to illustrate why Microsoft has no stranglehold on the software industry. Apple and Microsoft love to trumpet how well they get along -- at least in public. But both have also demonstrated a glee in stomping on each other's foot at every opportunity. Take Microsoft's offer to settle civil antitrust litigation by flooding schools with $1 billion in free software and services. Schools, of course, are Apple's largest single market, and it heatedly objected to Microsoft's proposal. And Apple rejected using one of Microsoft's sites as the default home page for new Macs. Instead, it chose Netscape.com, a unit of Microsoft archrival AOL Time Warner. And so it goes, shaking hands one minute, trading punches the next. That's the way it has always been between Microsoft and Apple, Gates and Jobs. You won't find two stranger bedfellows in any industry.  Haddad, Atlanta-based correspondent for BusinessWeek, is a long-time Apple Computer buff. Follow his weekly Byte of the Apple column, only on BusinessWeek Online Edited by B. Kite Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | APRIL [an error occurred while processing this directive] |
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