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Before Steve Jobs saved Apple, it was Bill Gates who rescued it from doldrums

Microsoft saved Apple from certain bankruptcy in 1997 with the most unlikely of partnerships.

January 30, 2019 / 06:00 PM IST

Apple is considered one of the most successful company, reaching a $1 trillion-dollar market value in 2018. Between the universality of their devices and the loyalty of their customers, Apple has built itself up as the most successful company in the United States. But we may have never seen an iPod, or iPhone had it not been for an unlikely billionaire named Bill Gates.

Before Apple, there was Apple Computers

Roll the clocks back to August 1997, when cordless phones were all the rage and Apple was still a computer company with a failing business model. Then known to the world as Apple Computers, the company were on the verge of bankruptcy, only to be rescued by their biggest rival at the time, Microsoft.

A failing business model

Apple computers were too expensive to be massively popular, and despite having good margins, Apple’s market share was abysmal. Apple refused to licence its Mac OS to other companies. Now, it had no choice but to go to the only other player in the operating system game, Microsoft.

In the 1990s computers were primarily used for commercial purposes. The primary value of these computers was the software they possessed.

By 1997 Microsoft had a staggering 90% market share, hence for software developers, focusing on developing software for Microsoft and only Microsoft was a much profitable deal.

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Simply put, software developing agencies weren't interested in spending a similar amount of money they spent for Microsoft and still be able to cover only 8% of total market share.

It simply didn't make business sense.

By the end of July 1997, Apple had less than 90 days of cash reserves left in the bank, and the company was worth less than $3 billion.

Microsoft to the rescue

Everything changed on 6th of August 1997, when Steve Jobs made an announcement that shocked the computing world. Jobs announced a partnership with Microsoft that received mixed reviews among the Macintosh aficionados until two significant announcements:

Microsoft bought $150 million of Apple Stock at market price, as non-voting shares – non-voting being the key term here. This meant that Microsoft wasn’t acquiring Apple or having a say on company decisions but it was just funding it.

Soon, Microsoft was releasing Microsoft Office on Macintosh (as part of a 5-year commitment).

This led to a situation in the 1990s where no one would buy an Apple computer without Microsoft Office on it.

With this significant step, Bill Gates saved Apple from what would have led to their demise at the hands of Microsoft.



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Moneycontrol News
first published: Jan 30, 2019 05:58 pm
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