The now trillion dollar tech giant, Apple has seen a long way full of hardships and troubles. Some 20 years ago, it was under deep waters and was saved by none other but their rival, Microsoft.
In 1997 Apple was a rather different entity than what it is in the present year. It was known as Apple Computers as it was what they produced back then; computers. The problem was that Apple computers were simply too expensive to be purchased by the mass majority; having good margins wasn’t good enough as their market shares were unsubstantial.
Having refused to license their operating systems to other companies they were left with no option but to go to Microsoft. Back then it was the case that the computers were used for commercial purposes and the essential value was of their operating software. If your computer didn’t have the needed programmes developed for it, it became practically useless for the big company.
In 1997 Microsoft owned 90% of market share and all software developed were for Windows. Every software developer was presented with a choice to spend only as much money needed to develop software for windows who had a 90% market share value or spend twice as much to support Apple – a company that had only 10% market share.
This was a time when Steve Jobs wasn’t a part of Apple as he was forced out of the company. However later he had to be brought back in after a series of CEO failures and the grim shape of Apple. Regardless, things were looking downhill for apple Having left only 90 days of working capital and having lost over a billion dollars in a single year, until at Apple’s yearly conference, when Steve Jobs made a very surprising announcement.
Steve Jobs announced for Microsoft to be one of Apple’s key strategic partners. The deal was for Microsoft to invest $150 million into Apple as it bought the non-voting shares of Apple and in exchange would license Microsoft Office to Apple for another 5 years. While the audience didn’t seem to understand and had a mixed reaction, ultimately Microsoft’s deal proved to be the knight in shining armor for Apple. So why did Bill Gates save Apple?
In all honesty, he was not doing this out of friendship, support or kindness but he was rather concerned by the threat of anti-trust regulations. So it was the case that Bill Gates didn’t have a perfect reputation and he was known as the go-getter kind who would do anything to get ahead. He was aware that the Department of Justice was all prepared to break up Microsoft on monopoly grounds, so he did his best to prop up his competition. Essentially, he saved Apple only to save Microsoft.
The proof for this would be that as soon as the anti-trust threat had been resolved in 2001, Bill Gates sold his stake in Apple and moved on. The irony we are all aware of now is that Apple eclipsed Microsoft (and practically every other tech company) and Bill Gates’ original $150 million stakes would’ve been valued at over $50 billion today – If only he would have been a little more sincere and it looks like Bill Gates missed out on substantial long-term gains!