How Microsoft Saved Apple (And Why They Did It)

published on July 17, 2020

Appl hands-down the most successful American company between the ubiquity of their devices in the almost fanatical loyalty of their customers it should come as no surprise that Apple recently became the first trillion-dollar company listed on the American stock market and

Yet just twenty years ago Apple was on the verge of bankruptcy and it wasn't Steve Jobs to save them but rather their greatest rival at the time Microsoft this video is brought to you by dashlane never forget your passwords

Again by registering with the link in the description the Apple of 1997 was a very different company it wasn't selling smart phones they weren't even invented yet but what they were selling was computers back then Apple was a computer

Company and that was even reflected in their name but by oh accounts it was a company in decline Apple's computers were simply too expensive to be massively popular they did have good margins but their market share was

Abysmal you see Apple refused to license its operating system to other companies which had no choice but to go to the only other player in town Microsoft now keep in mind back in the 1990s the vast majority of computers were used for

Commercial purposes their main value was the software they had and if your computer didn't have the necessary programs developed for it well then it was effectively useless for big companies in 1997 Microsoft had a

Staggering 90 percent market share and unsurprisingly almost all the software that was being developed at the time was made for Windows every software developer had to make a choice he could spend only as much money as necessary to

Create programs for Windows or throw almost twice as much to also support Apple which had less than 10% market share it's also worth noting that throughout this period Steve Jobs wasn't even part of the company the Apple Board

Of Directors had forced him out in 1985 but in 1997 the situation was truly desperate sales were declining rapidly and after a series of unsuccessful CEOs the Apple board actually brought Steve back

In February they acquired next if the company Steve had started after leaving Apple but by that point apples finances were in such bad shape that Steve Jobs didn't actually receive cash for this purchase instead he received Apple

Shares specifically one and a half million of them but even that wasn't enough by the end of July Apple had less than 90 days worth of cash left and bank Apple was worth less than three billion dollars and had lost over a billion in a

Single year but then on the 6th of August 1997 Steve Jobs made an announcement that shocked the world and I'd like to announce one of our first partnerships today a very very meaningful one and that is one with

Microsoft you probably noticed that the crowds response was hesitant they just could not comprehend how Apple could possibly partner with their biggest competitor who was driving them out of business as the announcement progressed

Things got worse next we have taken a look at browsers out there and Apple has decided alpha has decided to make Internet Explorer its default browser on the Macintosh

Since we believe in choice the speech was sounding like a surrender statement and lastly Microsoft is making an investment in Apple Microsoft is buying a hundred and fifty million dollars worth of Apple stock at market price it

Is non-voting shares note is the key word here non-voting Microsoft wasn't trying to acquire Apple instead it was just funding it but it wasn't just cash that Bill Gates was offering the second part of this is Microsoft is committing

To release Microsoft Office on Macintosh for the next five years the issue with software I mentioned earlier that was basically bringing Apple down was being solved by Bo gates single-handedly no one would ever

Purchase an Apple computer without Microsoft Office on it and here is Bill Gates giving it away for shares at market price which he could have just purchased off of the market so why did Bill Gates do it why save Apple under

Eve of what would have been their death at the hands of Microsoft well as you probably guessed Bill Gates wasn't doing this out of the kindness of his heart in fact back then Bill Gates had a rather negative

Reputation he wasn't really into philanthropy yet instead he was seen as a cutthroat businessman willing to do anything to succeed in his industry and by all accounts Microsoft was successful so successful in fact that it was

Attracting the attention of antitrust regulators the Department of Justice had been preparing its case against Microsoft since 1993 and obviously Bill didn't want his company broken up so what better way to show that Microsoft

Isn't a monopoly than by literally propping up his competition less than a year after the Apple partnership the DLJ summoned Bill Gates for a painstaking three-day long deposition by the way you can tell a lot

About someone based on how they act during these things did you ever have any discussion with any representative of real networks concerning what products will network should or should not offer

No notice how long he takes before giving an answer carefully considering how his responses could be used against him a program designed to assist in the performance of a specific task such as word processing accounting or inventory

I said it's a pretty vague definition vague but accurate throughout the deposition he'd attack definitions and remain as vague as possible because he knew that by saving a poor year earlier he had really saved Microsoft the DOJ of

Course eventually gave up and in 2001 peered Microsoft with minimal punishments and asked what happened with the Apple shares Microsoft had well Bill Gates got rid of them as soon as they had served their purpose once the

Department of Justice had settled with Microsoft Bill Gates converted his preferential non-voting Apple shares into regular stock in toto he ended up with eighteen point two million shares of Apple which

He sold in 2003 now keep in mind this was after thecom bubble had crashed and in 2003 Apple stock price was still extremely low compared to its pre bubble heights so just how much money did Bill Gates miss out on well Apple has been

Performing so well since 2003 that its stock has splits twice in that time once at a two to one ratio in 2005 and a second time and a seven to one ratio in 2014 thus the eighteen point two million

Shares then would be 254 million today as of August 2008 een Apple stock price is roughly 210 dollars apiece which would make Microsoft's former stake be worth fifty three and a half billion dollars today so yeah Bill Gates might

Have missed out on a few billion dollars but hey at least he doesn't have to worry about remembering all his passwords faxed the services like – Lang – Wayne makes managing passwords a breeze it generates strong passwords

Stores them safely across all of your devices and automatically fills them in wherever you need them – Wayne is so and secure that I honestly would not be surprised if Bill Gates himself has it installed on his computer

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