Microsoft’s dirty tricks or genius negotiation strategies? Apple gets screwed anyway

Published on March 7th, 2007

Microsoft Threatened To Kill Mac Office To Gain Infamous 1997 Apple Deal, E-Mails Reveal – InformationWeek.com: Ah, more evidence has been found on M$’s negotiation strategies, such naughty boys.

Weeks prior to bailing out a struggling Apple Computer by purchasing $150 million of its stock, Microsoft officials threatened to cut development of a key product for the Macintosh in order to coerce its rival to make the deal, according to an e-mail unearthed during a recent court hearing.

In an e-mail to Microsoft founder Bill Gates, the head of the company’s Macintosh development unit told his boss that threatening to kill off Microsoft Office for the Mac “is the strongest bargaining point we have.” In the e-mail, Microsoft Mac unit head Ben Waldman further noted that “doing so will do a great deal of harm to Apple immediately.”

Waldman’s e-mail indicates that Microsoft didn’t hesitate to put further pressure on Apple at a time when Apple was reeling from big financial losses and layoffs. Several weeks after Waldman wrote his e-mail in June 1997, Microsoft announced at the Macworld conference in Boston that it had acquired $150 million in Apple stock.

You know he wants to be naughty…

27 users responded in " Microsoft’s dirty tricks or genius negotiation strategies? Apple gets screwed anyway "

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# 1 pedro said, on March 7th, 2007 at 8:05 am

This is bull. Mac never needed neither MS’ money nor MS office.

# 2 Richard said, on March 7th, 2007 at 8:22 am

#1 Oh they absolutely needed it then. Apple wasn’t doing well and Microsoft did help them out.

# 3 kballweg said, on March 7th, 2007 at 8:25 am

Pedro,
Do you ever check anything out before you post? As usual, you are more than a little wrong. At the time of the deal, Apple was still trying to recover from the Gil Amelio years, and hadn’t released the first recovery product, the Bondi iMac. Jobs had taken over, but was still dealing with a brand that was frequently written off in the press, and even by us Mac fanboys. Jobs was buying time, and MS was buying relief from patent suits.

I know it will hurt at first, but read a book now and then. Your brain is starving.
K

# 4 Nick said, on March 7th, 2007 at 8:28 am

Yes, in an email Don Bradford of Microsoft referred to Office for Mac as “the perfect club to use on Apple”. When asked about this is court, Bill Gates–who, let us remember was on oath–said that he did not know what Mr. Bradford had meant.

Of course, the point here is what the club was for–what Microsoft wanted in exchange from Apple.

Mr. Gates was asked a number of questions about references in emails to both Netscape and Sun. One might conclude that Microsoft had wanted Apple to ship Internet Explorer for the Mac in order to damage Netscape’s business and had wanted Apple to “cooperate on Java” in order to damage Sun’s. Mr. Gates was asked about such matters.

His answers seem unsatisfactory not to say evasive.

The transcript of Mr. Gates’s testimony can be found here:

http://tinyurl.com/3cjs6k
[Ed. - Please use Tinyurl.com when providing links]

# 5 sheva said, on March 7th, 2007 at 8:29 am

pedro you are wrong, Apple would not be alive and lucrative today if it weren´t for Microsoft.

Microsoft saved Apple.

# 6 Angel H. Wong said, on March 7th, 2007 at 8:32 am

“Microsoft saved Apple.”

I thought M$ OWNED Apple.

# 7 Lauren the Ghoti said, on March 7th, 2007 at 9:05 am

pedro pedro pedro

I’ve told you time and again about posting before the meds kick in. I can always tell because you refer to the company by the name of their product. For consistency’s sake, please refer to ExxonMobil as “Gasoline” and Sony as “Trinitron.”

In other news, M$ did something unethical? I may faint.

Considering how they owe their very existence to Apple, having ripped off the GUI (oh, STFU up with the “Apple stole it from PARC” horseshit. No, they didn’t.), I suppose that’s how they show gratitude.

# 8 @$tr0Gh0$t said, on March 7th, 2007 at 9:09 am

#7, I think you meant Xerox instead of PARC, and they did “steal/borrow” ( ) the GUI (Windows type OS+mouse interface).

# 9 Angel H. Wong said, on March 7th, 2007 at 9:13 am

I almost forgot, I bet it must be as uncomfortable for Apple fans to admit M$ saved their beloved company, just as much as it’s uncomfortable for Turkish muslims to admit that Turkey USED TO BE A CHRISTIAN NATION

# 10 TheGlobalWarmer said, on March 7th, 2007 at 9:29 am

You mean people didn’t know this? I thought this came out years ago.

From an ethics standpoint, as long as Apple gets screwed, it’s all good.

Lauren, technically you’re correct. Apple did pay PARC with some stock for their engineers to visit so it wasn’t “theft”. But afterward, the Mac project looked completely different and just like PARC’s UI.

# 11 James Hill said, on March 7th, 2007 at 11:20 am

Since Apple fans know more about computing than the average computing fan, it’s a safe bet the majority are well aware of this.

# 12 pedro said, on March 7th, 2007 at 11:41 am

#3 You obviously don’t read my posts, otherwise you wouldn;t have written that. Look at Lauren’s reply.

#7 I know you love it when I call it mac. BTW, how do you call q-tips?

#8 You’re partly right and I’m partly right. I was being lazy in writting things up. That first GUI was developed, as you pointed at Xerox, by a division called Palo Alto Research Center. PARC in short. Nowadays is an independant entity.

#9 as uncomfortable as getting a grip on the notion that all parts inside a mac can be found on a pc but not because pc manufacturers (see? many, not one) copy what mac was doing, but because mac copied what the rest of the world was doing, even chinese outsouring.

#10 yes, it did come out years ago. Could you also tell the audience that mac didn’t invent the mouse either? nor the floppy disk, nor scsi, nor…

# 13 Lauren the Ghoti said, on March 7th, 2007 at 1:10 pm

#12 – pedro

“Could you also tell the audience that mac didn’t invent the mouse either? nor the floppy disk, nor scsi, nor…”

Hmm. Mouse; 4.5″ microfloppy; scsi; bitmapped display… Yeah you right, p-dawg. All IBM innovations. Shame how they forgot and left ‘em all sit in some warehouse for a few years, giving Steverino a chance to sneak in and copy ‘em all. Suits, lawyers and beancounters have always been the true creative members of the computing community; I think it’s an inspiration to us all how you aren’t afraid to stand up for them.

# 14 Podesta said, on March 7th, 2007 at 1:21 pm

Pedro is actually partly right. Microsoft’s monetary contribution was more a show of support than financial respite. In a worse case scenario, Steve Jobs could have floated Apple a loan either personally or from Pixar. The most recent comments from Jobs on this topic are in Steven Levy’s “The Perfect Thing,” a homage to the iPod. (Say Pedro, why don’t give it a read?)

# 15 Lauren the Ghoti said, on March 7th, 2007 at 1:39 pm

There’s them who maintain that BillG coming up with cash to keep Apple afloat was nothing more than self-interest, since, at that time, if Apple folded, M$ would’ve become a de facto monopoly and been broken up. Under those circumstances, keeping your competition on life support is the best move.

# 16 pedro said, on March 7th, 2007 at 2:01 pm

#13 (bad luck number for a post) Where did I said those were IBM inventions? where’s IBM now? Still waiting for that pc/m – dos comeback, this was not it.

#15 yeah, it would look bad to have 100% market share, as opposed to have 2.5% market share, right?

# 17 TJGeezer said, on March 7th, 2007 at 2:04 pm

15 – That’s exactly how most tech reporters I knew at the time read that situation: MS needed plausible competition. But the bailout wasn’t entirely or maybe even primarily financial. Though internally MS took Linux or at least open source seriously at the time, outside the industry people mostly did not. Having a reputation as the company that killed Apple (note: even if that wasn’t really in their power) would have magnified the MS legal problems considerably harder to deal with. From an investor relations point of view, Apple’s getting the money from MS/Gates meant a LOT more than it would have meant for Jobs to lend it from his spare change box. It was a declaration that MS did not intend to kill Apple and it restored a lot of investor willingness to refrain from selling Apple out to the bottom-feeders. That’s how I recall it and I admit my memory is…. what’s that word?…

# 18 Angel H. Wong said, on March 7th, 2007 at 2:04 pm

#15

This is frightening, I’m agreeing with you again.

It’s the same deal with Intel & AMD, if AMD goes bellyup or gets bought by Intel, then the monopoly would be pretty obvious.

# 19 pedro said, on March 7th, 2007 at 3:06 pm

#18 Thank god that MS existed to bail mac, even out of pity (I’d be embarrased). BTW, did you read that AMD is reporting loss this quarter? they’re blaming it on ATI.

# 20 Brucemlloyd said, on March 7th, 2007 at 7:19 pm

Indeed, Microsoft’s input of cash did help, quite a bit. Not nearly as much as the iPod did, though.

# 21 Thomas said, on March 7th, 2007 at 10:21 pm

#13
Mouse – Invented at SRI in 1964
3.5″ Floppy – Developed by Sony in 1983
SCSI – Developed by Shugart Associates in 1979
Bitmaps – Clearly you cannot be claiming Apple created bitmaps nor displays.

What was innovative about Apple and the Macintosh is that they standardized on these technologies not that they invented them. Apple’s claim to fame is combining existing inventions in a new way.

# 22 pedro said, on March 8th, 2007 at 3:12 am

#20 now, who let the ipod’s synch soft & itunes be ported to that other OS that has the real marketshare ipod was after?

What I find funny, is the latest mac statement that they aren’t porting itunes to neither windows 64 bits versions (XP nor Vista). What, too small a marketshare to bother?

# 23 R said, on March 8th, 2007 at 3:23 am

I was working for Apple at that time as an engineer. I wasn’t in a position to have first hand knowledge of what was happening but the word within the company was that Apple was about to hit Microsoft with a big patent infringement lawsuit. Instead of creating another big Apple v. Microsoft court mess, they decided to settle the suit in the form of a stock purchase.. It made Apple look good because Microsoft was (supposedly??) investing in the company and it didn’t make Microsoft look like a bad guy (borrowing other companies technology) once again. BTW, at that time, Apple still had about $5 billion in the bank.. Far from a bankrupt company and definitely not in need of MSFT’s money.. But Apple was definitely in a poor state after Gil Amelio and the previously CEO’s. This was just part of Job’s turnaround plan for Apple.

# 24 pedro said, on March 8th, 2007 at 4:43 am

#23 See? A well informed person with a positive input. What a pleasure to read a post like that.

# 25 MikeN said, on March 8th, 2007 at 7:47 am

# 26 MikeN said, on March 8th, 2007 at 7:48 am

Most of you are saying that Apple was in a very poor position at the time. In that case, there is nothing wrong with what Microsoft did. They shouldn’t have needed a club if Apple was so desperate. If MS hadn’t done what they did, there would be no Apple at all. Once again, you guys are just engaged in blind MS rage. If Microsoft kills a company, they/re evil. If they save a company, they’re evil.

# 27 Mr. Fusion said, on March 8th, 2007 at 9:04 am

#24, LOL real hard. I agree, #23 sounds good and I buy it.

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