Apple, Microsoft: An Affair to Remember

Late last week, Microsoft was once again talking about its committed relationship with Apple, developer of one of the only desktop alternatives to Windows.

Well, that wasnt much of a surprise! Im referring, of course, to Microsoft Corp.s recent declaration of fealty to the Mac platform.

The software giant last week invited the media to the Mountain View, Calif., home of its Macintosh Business Unit.

There, MacBU General Manager Kevin Browne sought to allay any remaining concerns that the pending expiration of an historic deal between Microsoft and Apple Computer Inc. imperils Microsofts hugely profitable business developing applications for the only proprietary desktop alternative to Windows.

That bit of rhetoric really wasnt much of a feat for Browne: Any worries on that front were largely the creation of a few shrill technology reporters who seem more concerned with the formalities of contract law than the realities of Apples and Microsofts lengthy and complex relationship.

A quick recap for the young or forgetful: Having ousted Apple CEO Gilbert Amelio and reclaimed the reins of the company he co-founded, Steve Jobs wasted no time in proving that he hadnt lost his flair for showmanship.

In the then first major pyrotechnic display of his new administration, Jobs in August 1997 took the wraps off a new detente with Microsoft, Apples perennial top software developer and OS bete noir.

Basking in the reflected glow of an enormous video image of Bill Gates beamed via satellite from Redmond to the keynote stage at Macworld Expo/Boston, Jobs somewhat breathlessly announced that Apple and Microsoft had signed a dramatic five-year agreement: Microsoft would buy $150 million in non-voting Apple stock and commit to continued Mac development; Apple would bundle Internet Explorer, not Netscape Navigator, as the default Web browser with the Mac OS; and both companies agreed to cross-license some software patents and work on compatible Java compilers.

That was then: President Clinton was entering the final rounds of his re-election sparring with Senator Dole; both Power Computing and MacWEEK were still profitable, vital members of the Mac community; and the aforementioned Netscape still seemed like it could retain at least a remnant of its early momentum in the browser market.

But while plenty has changed in that half-decade, the underlying glue holding Apple and Microsoft together has only hardened. And while some news vehicles have tried to make hay out of the agreements pending expiration, Microsofts status as a key Mac developer has never really been in doubt.

The Expo deal inspired some buzz in the national media. Within the tech community, it outraged Mac fanatics convinced that Gates satellite feed marked Cupertinos final capitulation to Redmond, and it has long been cited by Windows partisans convinced that Microsofts modest financial investment "saved" Apple. Meanwhile, however, mainstream Mac stalwarts remained singularly underwhelmed by an announcement that did very little to change the status quo of the companies historic interdependence.

While I wouldnt turn up my nose at $150 million, it was hardly more than a drop in the bucket to Apple, which even in the darkest hours of the mid-90s had cash reserves in the billions. With the rise in Apples share prices, Microsoft ultimately got more financial lift out of the deal than Apple.

And speaking of making money: Microsoft has always made lots of it from Mac software. Whatever schemes of world domination the Windows juggernaut may nurse, Microsofts arch-deity is Mammon. It would simply be stupid for Microsoft to walk away from a nice little application-development business like Mac Office in hopes that its departure would convince the remaining 5 percent of OS holdouts to embrace Windows.

About that OS hegemony: Since the 1997 deal was struck, youll recall, Microsoft found its monopolistic tendencies the subject of intense scrutiny by the Department of Justice. It also found itself engaged in a pitched propaganda battle with an up-and-coming open-source operating system called Linux.

Would it be better to accept co-existence with a minority commercial platform that has been providing Microsoft steady revenues for 20 years or to take up arms against this small but healthy cash cow, opening the barn door for new accusations of predatory monopoly and for desktop depredations by the far-less-monetizable open-source community? Do we really need to ask?

As Microsofts Browne himself said during last weeks media confab, "The relationship between Microsoft and Apple really just has nothing to do with the technology agreement. The technology agreement never has and never will define what it is that we do on the Mac, or how we do it."

The Microsoft gathering did include one headline-worthy tidbit: All future Microsoft software from the Mac Business Unit will leave Mac OS 9 out in the cold and focus exclusively on Mac OS X.

"Today were going to make a big bet," Browne said. "Were going to say, Mac OS X is our whole future.

"Were not going to do another product on Mac OS 9. Well do a little maintenance work as required for quality and security issues ... but every major release that my business unit does from now on will be based on Mac OS 10. If Apple is betting its business on Mac OS 10, it makes sense for us to do so, and my personal belief ... is that the only reason youll see us go away is because Apples going away, too."

Thats a significant endorsement coming from Apples largest third-party software developer, and it puts Microsoft ahead of the pack when it comes to its commitment to Apples new OS.

At a time when other top Mac developers are hedging their bets or eschewing Mac OS X entirely for some releases (such as Quark did with XPress 5.0 or Adobe did with the newly announced FrameMaker 7.0), Im glad to see the industrys top gambler put some skin into Apples software game.

Mac veteran Matthew Rothenberg is online editor for Ziff Davis Medias Baseline and CIO Insight magazines.