News and commentary from the cross-platform scripting community.
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Mail Starting 8/6/97 | |
The race is over. Microsoft dragged Apple across the checkered flag today, feet first, as Jobs and Gates made peace to preserve the future of the Macintosh platform. But what really happened here? Why is Microsoft suddenly so enthusiastic about the Mac, and how genuine is its support? Why is Larry Ellison, the Apple board member who can't wait to take his Mig-29 for practice runs over Redmond, playing along?
From: naval@corp.home.net (Naval Ravikant);
Sent at 8/6/97; 7:44:05 PM;
The Microsoft-Apple DealThe official story is that Apple and Microsoft had been haggling over patent issues for a while, and Jobs came in, wrapped them up, and arranged a long-term licensing deal and an equity investment. It's very likely, however, that there may have been some subtle coercion on Microsoft's part. As in past patent disputes (see Kawasaki's memoir, "The Macintosh Way"), Microsoft may have implied that it could delay Office development for the Mac if patent problems continued. Certainly, the threat of losing millions of enterprise and education customers would have persuaded Apple to make a deal. This Damoclean sword, by the way, is one that will continue to hang over Apple's head as long as Office is successful on the Macintosh. It'll only get worse as Internet Explorer on the Mac starts displacing Netscape Navigator.
WINNERS AND LOSERS
Although the Street failed to recognize it, Microsoft was certainly a big winner in the deal:
- They've already made a hefty return on their $150 Million investment
- They gain access to all current and future Apple patents, including Quicktime, Mac OS look and feel, OS 8 features, Rhapsody technologies, etc.
- For under a paltry 2% of Microsoft's cash hoard, the DOJ will be kept at bay for another few years. Microsoft can continue to point to competition in the desktop OS market, even when Netscape is driven completely out of consumer desktop platforms.
- Internet Explorer will ship as the default browser on practically all new purchases of 95% of new hardware. Once the majority of the hardware base has completely turned over, Netscape will be relegated only to those corporations that have standardized on Communicator. Combine this with the huge upcoming IE 4.0 marketing budget, exclusive deals with ISPs, and the fact that Microsoft is essentially kicking Netscape off of the "open" Windows 98 platform (which uses IE and ActiveX for everything from OS bookmarks to help files), and Netscape's bid for the desktop is over.
- Microsoft, although losing some sales of Windows, gets to keep milking the very profitable Mac market
- Microsoft will now seed technologies and standards into the MacOS that Apple will become dependent upon. Microsoft's control of these technologies will render Apple's ability to cross north of 10% market share impossible. Internet Explorer and ActiveX will lead the way.
- And of course, the single most important factor is Java - Microsoft has no desire to ship Sun's OS on top of their own OS, and would love to see Java as a language rather than as a platform or an object model. Apple has promised that Microsoft and Apple's JVMs will be "compatible." Which is more likely...that Microsoft will conform to Apple's Sun-specified JFCs or that Apple will comply with Microsoft's OS-specific J/Direct? In fact, as Jobs pointed out, Apple and Microsoft together can definitely set the standards, and more likely than not, they'll be setting and sealing Microsoft standards rather than Sun's or Apple's. Unless Sun's NC / appliance revolution arrives ASAP, Java will fragment.
The long term benefits to Apple are less compelling. However, the short term benefits to Apple are critical:
- Apple gains badly needed credibility with Wall Street analysts, the press, large investors, and major customers worried about Apple's future
- Microsoft Office will continue to be provided for the Macintosh, preventing yet another round of hemorrhaging from enterprise and education customers standardized on the product
- The $150 Million is symbolic, as Apple already has $1.2 billion in the bank
Larry Ellison and the Netscape-Oracle-Sun-IBM camp are definitely the losers:
- One of Java's strongest cross-platform arguments will be weakened, as the Mac OS moves more towards Microsoft's direct Java model - a trend already begun with Rhapsody
- Microsoft has potentially dodged the DOJ, while managing to wound Netscape at the same time
- However, the announced MS-Apple deal seems to focus mainly around the MacOS, and avoids mention of Rhapsody and Network Computing. Jobs has also hinted at major product announcements at the end of this year. One should not be surprised when sleek, black, Rhapsody network computers are announced at the end of this year. It's unlikely that these NCs will use much, if any, Microsoft technology. Whether or not most people have access to sufficiently fast LANs for NCs is a topic for another discussion.
OUTCOMES:
A potential worst case scenario is that Apple becomes the successful Microsoft "Bob." In other words, 3-10% of the market in the long run may end up being controlled by the easy-to-use Macintosh which offers a an underdog, rebellious alternative to the market leader. However, the majority of profits from the Mac will go to Microsoft, who will control key standards used by the MacOS, and Microsoft will control 100% of the desktop market without explicitly owning it. This scenario isn't terribly likely, however, since even the most naive analysts and antitrust regulators should be able to see through it.
The more likely outcome is as follows:
- Microsoft's support and Apple's new board assist the Mac in returning to 5-10% market share, or in at least maintaining the current share
- This spate of "good" news helps Apple in playing hardball with the clone-makers
- Microsoft will use this as another opportunity to drive both Netscape and Sun out of the desktop platforms arena, and will then assault them on the server side with NT
- Java will be fragmented
- Microsoft will encourage Apple to integrate key Microsoft technologies. It can then leverage this control to keep Apple's market share within ranges that satisfy both the DOJ and Microsoft
- Sun and Netscape will be very unhappy, but then, they sort of abandoned Apple some time back. If the Netscape-Oracle-Lotus-IBM-Sun camp had pledged to fully support the MacOS with all of their application development power a few years back, instead of trying to support "Virtual Machines" on top of existing OSs, we might still have a healthy Apple.
- Microsoft will only reluctantly support Rhapsody, and most likely through the blue-box emulation layer and not natively. NT is Microsoft's single most important long run weapon, and Microsoft isn't keen on seeing it compromised by 25 million UNIX boxes with easy-to-use GUIs and a full set of productivity applications
- Jobs will have to placate Larry Ellison, by having Apple create Network Computers that will not use Microsoft technology.
So, in the eyes of much of the press and Wall Street, Jobs has saved the Macintosh platform. But at what cost?
remember, microsoft nevers does anything that isn't part of building or maintaining its hegemony, i.e. its a well run and competitive business.
From: ralph@democracy.tiac.net (Ralph Mellor);
Sent at 8/6/97; 9:40:26 PM;
Re:Microsoft Backs Appleif apple got the idea they needed to get radical and get really behind the NC they would be very dangerous to ms's ongoing revenue stream. 2 years ago i said that NCs will have utterly changed the landscape of computing within 5-10 years, with MS being the main losers. (they'll still be going gang busters, and will still be the biggest force in computing, indeed in any business, but NCs will have slowed them to the point they'll only own half the world instead of three quarters.)
in the meantime, whoever negotiated with ms was dumb enough to let them have an incredibly sweet deal.
A) they buy shares when the price clearly undervalues the company. if necessary they'll invest more to keep apple alive and maximise the chance they exit with a handsome profit, purely based on the investment. this is quite simply a good bet. there's a guy (a prince?) who's worth something like $10bn. he makes his money by investing in companies that have suspiciously low valued stock due to being out of favor. he bought aapl at something like $15 - $20. so ms are just following the lead of one of the world's most successful stock opportunists. ok, so ms have to leave their money in for 3 years. but that's about the time it'll take for any reality based turnaround momentum to achieve maximum roi.
B) ms get to kill all the patent dispute rubbish. this is good, but again, it has far more value to ms than apple and i wonder whether the negotiator(s) took advantage of this.
C) ms 5 year commitment to Mac Office is a wonderful marketing move. compare how many people _would_ have switched from Mac Office to, say, Corel Office for Java, before this announce, versus after.
D) and ms explorer becomes the Mac's default browser. this is just so amazing i'm speechless.
E) "Jobs says: We must give up this idea that for Apple to win, Microsoft must lose." I agree. But the negotiator(s) should still be shot!
The business reports are making much of "bitter rivals Apple and Microsoft join in alliance."
From: mmcavoy@ix.netcom.com (Michael McAvoy);
Sent at 8/6/97; 6:53:26 PM;
All the hoopla...When I see Apple joining in alliance with its long-time friends, then I'll start to think things might have turned around.
And another thing: the editorial emphasis on Microsoft's interest has been focused on selling software to Mac users, or pre-empting DOJ interest. I don't believe either approach has it quite right. Microsoft would not be propping up Apple to sell software. If Apple were to fold, most users would end up on Wintel where MS sells essentially the same software AND the OS to boot. The anti-trust argument struck me as plausible at first. But it would be easy to show that an Apple collapse came primarily through internal mismanagement rather than predatory MS business practices. That would buy Microsoft a year or two, and--despite its bulk--MS has enough nimbility to make the most of such a grace period.
This was strictly PR. Bill just cut a swath through the heart of Evil Empire rhetoric.
Ask yourself this obvious question; 'what markets does Microsoft still not own?'. Then ask yourself, 'how can Microsoft penetrate those markets?'. Yes the answers are education and graphics. Yes the answer is make a deal with Apple.
From: gkucharo@netpower.com (Greg Kucharo);
Sent at 8/6/97; 5:56:00 PM;
Microsoft/Apple againHere is another posit; 'how does Larry Ellison make the NC a viable tool in a corporate space?'. Then ask yourself ,'what is the most popular tool in business today?'. Yes the answer is Microsoft Office. What I see is Apple getting ahold of Office to move it into a NC type space. If Apple moves the MacOS in this direction, Office for Mac will have to follow.
Ok then what does Microsoft get out of this. That's more difficult. I think Bill hopes he can get some technology to penetrate those markets. Also, he probably figures he can move the critical Apple technologies he's getting access to, to Windows. It should take 5 years. Microsoft also gets what it really wanted, a poke in the eye with a sharp stick to McNealy, Netscape, etc.
The scariest part of Jobs whole speech was when he said that Apple+Microsoft=100% of the desktop market. Think about that line for awhile. The possibilities are staggering. I mean those guys in Mountain View must just be livid!
Did you notice that Jobs didn't really mention the Internet at all except to announce MSIE as the default browser?
This is speculation, but it seems likely to me.
From: eau@zip.com.au (Eric Ulevik);
Sent at 8/7/97; 8:50:05 AM;
Microsoft kills Rhapsody/Intel?From Bill Gate's perspective, the primary goal is to keep Windows dominant.
Apple has agreed to not push Rhapsody/Intel. Motorola and IBM concur. By not competing with WIndows NT, Apple is now 'contained' in two niche markets: education and creative media.
The question I have: is a niche market enough to sustain Apple?
Here are my impressions of Apple's announcements today.
From: jayb@MATH.ColoState.EDU (Jay Bourland);
Sent at 8/6/97; 3:33:25 PM;
Apple's announcementsThe Positives:
(1) Obviously, having Microsoft's official blessing leads credence to the idea that the Mac will be around for a while longer.
(2) The cross-licensing is interesting. Does this mean that developers can finally support Apple technology without fear of losing their investment?
Some Negatives:
(1) Does this give Apple enough positive spin to dump their licensing agreements with the clone vendors? This really scares me.
(2) How does Apple make money in education? As someone who purchases a lot of machines for a higher ed institution, I know that price is a really important consideration. The Apple Ed prices have been better than the clone prices - but low margins is what Apple has been screaming about. This just doesn't make sense. Most companies I know treat their educational pricing as sort of a loss-leader. You get them hooked on a product during their educational years, and then they ask for it when they start working. But Apple doesn't have an Enterprise presence (at least no to speak of).
The more I read about this, the more I can't decide who is more Machiavellian, Gates or Jobs. One thing's for sure, Netscape and Sun have just been dealt a serious body blow. With Ellison now on the board that's about the last thing I expected today aside from aliens landing on Earth.
From: gkucharo@netpower.com (Greg Kucharo);
Sent at 8/6/97; 11:11:00 AM;
Microsoft/Apple reduxAny truth to the rumor that while Bill Gates was presented on the huge screen at MacWorld, a lady dressed in athletic clothes and holding a sledge-hammer was tripped while running into the auditorium? ;-)
From: dwlarson@znet.com (Donald W. Larson);
Sent at 8/6/97; 10:42:14 AM;
MacWorld RumorI have to agree that the real 'story' here (which is getting zero coverage) is MS's masterful stab at Sun. IE4.0 & 'compatible' Virtual Machines on Windows 9x & MacOS ? That's close to 9x% of the market. Lovely. I wonder what's NeXT, J/Direct on every Mac JVM? Today was a Bad day for Java.
From: joubin@inch.com (Joubin);
Sent at 8/6/97; 1:39:41 PM;
Java down the drainSo am I right in thinking that today's big losers are Markkula and Netscape?
From: dan@5280pub.com (Daniel Brogan);
Sent at 8/6/97; 9:53:15 AM;
Apple announcementsNot such a crazy concept. This is an inexpensive investment for MS, they get access to Apple's technology, bundle their software with Apple boxes, and essentially lock the Java market. Apple gets cash out of the deal, and reverses spin on the anti - Mac analysts on the street. Apple stock prices will jump, 'cause Chairman Bill has blessed it (I recall MSN considered it Apple a buy a couple of months back....).
From: emmetoye@bechtel.com (Metoyer, Eric);
Sent at 8/6/97; 9:46:01 AM;
Microsoft investment in AppleThe Rob O'Regan piece (scripting news, 4-aug) makes me wonder how all those columnists who came to bury the Apple this week will change their stories; they curry favour with Redmond by slamming Cupertino. An Apple - MS alliance, however, leaves them writing about....
I think this is a very good thing, at least for the short term. The investment is fine, but really the exciting thing is the commitment to keep making Office for the Mac, and to make true Mac versions.
From: dbw11@cornell.edu (David Weingart);
Sent at 8/6/97; 12:34:29 PM;
Re:"Microsoft/Apple partnership"Not that I even use (or like) Office, but can you imagine the hit Apple would take if Microsoft announced they were suspending Mac development? Microsoft investing in Apple is just the sort of mindshare boost Apple needs right now (apparently the stock market agrees)
Apple will definitely benefit from closer cooperation with Microsoft. The question is, what does Microsoft get from the deal? Well, goodwill among the Mac community will help sell more Microsoft Mac products. Mostly, I see this as not being such a big deal for Microsoft, simply trying to grow one of their many markets (and a chance to promote Explorer).
To those who worry about Apple being "assimilated", a strong Apple market means less chance of Apple being "assimilated". A strong Mac market includes Microsoft. (they're still the number one vendor of Mac software, right?)
Other thoughts on the keynote:
The new board seems like a positive step forward.
No word on licensing. Jobs deserves to be hammered on this issue (imho). However, the keynote is probably not the place to do this. Mac users need to keep the pressure on until there is a definitive statement. License OS8. License future versions of the MacOS. Fiddle with certification until everyone's satisfied. Get it done now!
The reports from various sources have very different perspectives on the announcement. The Merc and the New York Times portray the crowd reaction as extremely negative, while the others reflect cheers as well as hisses. MacWeek calls them "rowdy".
From: nbornstein@plr.com (Niel M. Bornstein);
Sent at 8/6/97; 12:30:09 PM;
InterestingBut most of them miss the main story, which is the board change. Only Wired's analyst points out the ouster of Markkula as a major positive change. But he contradicts himself over Microsoft's goal to kill the MacOS.
Cross-licensing is very important. Will MS bundle QuickTime? Will the Yellow Box for Win95 gain? I can't wait to see some analysis.
Just hit quote.com:
From: MaysonG@aol.com;
Sent at 8/6/97; 12:09:47 PM;
AAPLUp 7 - not too surprising, given that your page showed that earlier.
What's amazing is the volume: 19 Million shares!
Where did those shares come from? and where did they go?
I think this can be summed up with one word, Assimilation.
From: gkucharo@netpower.com (Greg Kucharo);
Sent at 8/6/97; 8:58:00 AM;
Microsoft/Apple AllianceFYI http://www.stockmaster.com/sm/g/A/AAPL.html is a real nice stock quote link.
From: tony_jacobs@ced.utah.edu (Tony Jacobs);
Sent at 8/6/97; 9:49:08 AM;
Nice Stock quote link...The whole Apple/Microsoft/Oracle stuff does not make much sense to me although if it would really work, then it would be great.
From: jaggi@pingnet.ch (Christoph Jaggi);
Sent at 8/6/97; 5:15:35 PM;
Making senseSun and Oracle team up to fight Microsoft (in multiple instances) Larry Ellison joins Apple's board. Apple and Microsoft agree to cross-license patents and MS makes an investment in Apple.
This just does not calculate, except that everybody tries to help to save Apple.
I am getting music now, and it seems like Steve has left the stage.
From: steve@ora.com (Steve Clark);
Sent at 8/6/97; 7:47:23 AM;
Short and sweet?NO word on the cloning issue. No demos, no hardware announcements. short sweet and scary.
The silence speaks volumes to me.
Gates appeared via satellite from Redmond. Looked like his living room. :)
From: gorskic@concentric.net (Chris Gorski);
Sent at 8/6/97; 10:46:33 AM;
Re:"Last Note...Bruce Francis Quote"He said that some of his most interesting and exciting times at MS were when he was making Mac software, like Mac Excel.
One thing you didn't mention in your Keynote summary is the fact that MS and Apple will be working together on Java. Does that mean the end of Sun's 100% Pure story? I think so; if MS and Apple define a single Java VM, that will cover 99% of the desktop market. IMHO, Apple's decision to leave the 100% Pure camp effectively means that Sun will have no more influence on where Java will go from here. (or perhaps I am getting carried away here).
From: beno@xs4all.nl (Michel Benevento);
Sent at 8/6/97; 4:41:22 PM;In addition to all the other stuff that has been said, Edgar Woolard, Apple Board member and DuPont Chairman jsut revealed to CNBC's Bruce Francis that MS will, as part of the patent settlement, make "balancing payments" to Apple over the next 5 years. He would not disclose the sum.
From: gorskic@concentric.net (Chris Gorski);
Sent at 8/6/97; 10:42:37 AM;
More Bruce Francis NewsSteve Jobs just reported MacOS 8 sales of 1.2 million copies in two weeks, which is 4 times greater than anticiptated so they are scrambling to say the least.
From: steve@ora.com (Steve Clark);
Sent at 8/6/97; 7:07:52 AM;
MacOS 8 salesSorry to keep writing, but my brain feels like it's connected to a fire hose...
From: gorskic@concentric.net (Chris Gorski);
Sent at 8/6/97; 10:11:21 AM;
More Info...from CNBCApple and MS are also collaborating on Java. What this means for Sun is anybody's guess. Again, forgot about this.
Bruce Francis will interview Ed Woolard (Apple board member) at 10:30 ET (7:30 your time) on CNBC. JObs won't be talking to the press today.
It's my guess that CNNfn (if your cable system carries it) will have very extensive coverage of all this on Digital Jam at 11 eastern (8 your time), probably with lots of video. It's the only thing worth watching on fn, even though Steve Young (their lead anchor) hasn't a clue.
Apple does a little show, and the Net's performance goes all to hell.
From: steve@ora.com (Steve Clark);
Sent at 8/6/97; 6:49:28 AM;
Net performanceWhat a drag. My RealAudio connection with AudioNet is working, but I am getting it buffered. If Jobs speaks for an hour, it will take me 2 to 2 1/2 hours to get it. Arrrrghhh............SC
http://my.excite.com/News/970806/09.BUSINESS-APPLE.html
From: awhitney@lowemcadams.com;
Sent at 8/6/97; 9:48:08 AM;
We're all going to die