Outrage as Gates nibbles away at Apple
THE MacWorld Expo is an annual gathering of Apple Macintosh aficionados from around the world. For those attending this year's event in Boston, it must have seemed like the revelation of original sin in the Garden of Eden.
At the opening of the fair on Wednesday last week, Steve Jobs, co-founder of Apple Computer, announced to stunned devotees that computing's Satan, Microsoft, had taken a $150-million bite out of the ailing company.
Jobs also unveiled a new board that would comprise himself, Oracle chairman Larry Ellison, previous IBM chief executive Jerry York and Intuit president William Campbell.
DuPont's Edward Woolard and Hughes International's Gareth Chang remain after three original members resigned. A new chief executive officer will be appointed by the end of the year. The disbelieving crowd loudly booed the announcement, directing abuse at Microsoft for its perceived predatory behaviour.
Compounding their misery, Microsoft chairman Bill Gates appeared via satellite on a giant screen to sweet-talk the alliance. The crowd's vicious reaction suggested that Gates had been prudent not to deliver his address in person.
Attempting to soothe the audience, Jobs said: "We have to let go of a few notions here that for Apple to win, Microsoft has to lose. We need all the help we can get. We better treat Microsoft with a little gratitude."
Ironically, users' laments were reason to cheer on Wall Street. Within minutes, Apple's stock began to climb, gaining nearly one third by close of trade. Analysts have welcomed the injection of cash and skills to help reverse years of indifferent results.
Apple's sales performance has been dismal for shareholders. After generating $11.1-billion in 1995, sales fell to $9.5-billion in 1996 and will dip further this year to around $7-billion. The company has lost nearly $1-billion in its last three quarters alone.
The alliance will end a long-running feud after Apple accused Microsoft of plagiarising its operating system with Windows.
Apple will now have access to Mac versions of Microsoft's most popular software, including its Internet Explorer browser which will be the default browser in future releases of the Mac operating system. This is an ominous announcement for Netscape, whose market share is likely to erode further.
Apple and Microsoft have also agreed to extensive cross licensing of patents, and they will co-operate to make their versions of the Java programming language compatible.
According to Internet news agency MSNBC, the deal comes after secret talks between the bitter rivals that lasted more than a year. The discussions faltered until Apple chairman Gil Amelio was ousted last month.
Jobs, who returned to Apple in December 1996 as a special adviser, revived the deal after Amelio's departure by contacting Gates directly, suggesting that Microsoft make an investment.
While Apple's most passionate supporters will be looking to an anti-trust probe to save their beloved company from Gates' evil, analysts believe the investment is a shrewd one.
If Apple can be restored to competitive health, Gates will be a champion of diversity and free enterprise. It would also make it extremely difficult for anti-trust regulators to act against Microsoft's apparent software monopoly.
Users should draw some succour from this since Apple was unlikely to get back on its feet independently after financiers began to run shy of the red ink.
With an investment that buys just 5% of Apple, Gates may come to be hailed as the man who stopped the rot at Apple.