For the first thirty years of the personal computer age, you had a pair of high-energy college dropouts both born in 1955 leading the pack: Steve Jobs and Bill Gates. In an oft mythologised bit of tech history, their paths once converged in a fairly direct way when Bill Gates offered a financial olive branch to a nearly bankrupt Apple Computers in the form of his US$150 million (AU$200 million) investment.
Similar to Albert Einstein and Neils Bohr in the sphere of 20th-century physics, the two had quite a well-documented professional rivalry that stemmed from the fact that there was nobody else operating on quite the same level. In Jobs’ biography, Walter Isaacson likened it to a “binary system” in astronomy terms – when the orbits of two stars are linked because of their gravitational interaction.
They were known to openly mock and chastise each other and even had a series of ongoing legal feudings to go along with it. For this reason, the announcement of the deal on August 6th, 1997 sent shockwaves across the business world. In its wake, the New York Times opinion section wrote that “even in cyberspace, the moment can only be described as surreal.”
In typical Jobs fashion, the surprise announcement itself was pure theatre. At Macworld in Boston, a satellite video feed of then-Microsoft CEO Bill Gates was beamed into the auditorium above Jobs. This was met with loud booing from the Apple faithful in attendance, whom Jobs was left to console.
“We have to let go of a few notions here. We have to let go of the notion that for Apple to win, Microsoft needs to lose.”
With 24 years of hindsight to work with, it’s clear that the reverse of this was also true; both companies needed this deal to happen exactly when it did. As far as Apple was concerned, they were a far cry from the 21st century powerhouse we would come to know them as. Long before they revolutionised the music and communications industries, Microsoft dwarfed them in terms of their respective share of the desktop computer market, and Apple’s time was fast running out.
For Microsoft, the company was in the midst of an image-tarnishing antitrust fight over its heavy-handed promotion of IE during the height of the browser wars with Netscape. This allowed them to look like a noble competitor for a change, helping out the little guy with an investment that was barely noticeable for them financially.
After receiving their much-needed cash injections, and an assurance that Microsoft would support Office for the Mac for five years, Apple gave Gates non-voting shares in return. Apple also agreed to drop a long-running lawsuit in which they alleged Microsoft copied the look and feel of the Mac OS for Windows, and to make Internet Explorer the default browser on its computers.
The Bill Gates Apple investment also allowed for Jobs’ Phoenix-like return to the company. After 18 months of losses for the company, the strength of this deal on the back of Steve Jobs elevated him from a mere advisor of Apple to their new “interim CEO”. After being fired in 1985, Jobs returned as top dog with a plan to undo everything his predecessor John Sculley had done.
Things look a lot different for both companies now. Apple’s market capitalisation is currently US$2.394 trillion (AU$3.24 trillion), with Microsoft’s sitting at US$2.286 trillion (AU$3.09 trillion). The rivalry between the companies and their figureheads continued long after pen was put to paper, continuing to shape the computer industry in lockstep.
Gates’ trust has since sold his shares in Apple, which ultimately exceeded AU$2 billion. When Jobs died in 2011, Gates honoured the Apple icon as both competitor and friend.
“Steve and I first met nearly 30 years ago, and have been colleagues, competitors, and friends over the course of more than half our lives,” Gates wrote.
“The world rarely sees someone who has had the profound impact Steve has had, the effects of which will be felt for many generations to come. For those of us lucky enough to get to work with him, it’s been an insanely great honour. I will miss Steve immensely.”
You can watch the two tech icons reminisce on the deal 10 years later below: