Christmas week, 1996, I sat at Cafe Du Monde in the French Quarter, sipping on an au lait and nomming a beignet and looking at the USA Today. And on the front page of the business section: Apple Acquires Next; Steve Jobs Returns. And I thought to myself, well, that’s that – we will live or die with this one.
At the time, Apple was worth $16 billion, and Microsoft $556 billion.
Market cap – debt = AAPL worth more as a company than MSFT.
I feel a little lightheaded just thinking about that.
If you weren’t an Apple aficionado in the mid-90s, I don’t think you can appreciate just how much Cupertino Hexachrome Fruit was hanging on by a fingernail. The PowerPC-based systems had failed to change the world. A whole litany of projects – CHRP, OpenDoc, GeoPort, PowerTalk – had utterly failed to catch fire. Copland – the mythical System 8 – was a year late and a GNP short. Michael “The Diesel” Spindler had given way as CEO to Gil Amelio, who seemed bound and determined to run Apple off the rails – the January 1997 MacWorld Expo keynote rivaled only Labour’s 1983 election manifesto for the title of “longest suicide note in history”. And after doing what everybody had insisted Apple needed to do – open its hardware to clone manufacturers – other companies were making better (or at least sufficient) hardware for less money, digging away at Apple’s most reliable profit margin. And to add insult to injury, Power Computing was outmarketing the Mac OS in almost every conceivable fashion.
It wasn’t Apple Computer, it was “beleaguered Apple Computer.” Press speculation ran rampant that Apple would be bought by Sun. Or Disney. Or Microsoft, who had launched Windows 95 and brought a sorta-Mac-like interface to PCs that was good enough for the vast majority of buyers, and undercut a big part of Apple’s usability advantage. That was the worst part – Microsoft was selling a shitty operating system, on cheap-ass screwdriver-job PCs, and devastating Apple in the marketplace despite superior technology at every level from Cupertino. Maddening.
That’s why there was almost a religious angle to Steve coming back. (I’m not making this up – Wired magazine even had the controversial “sacred heart of Apple” cover in summer ’97 with the simple headline “Pray.”) And then, at the summer MacWorld, there on that big screen – Bill Gates. Because Apple had to do something to ensure Microsoft Office would continue for the Mac, because without it the last finger would slip off the cliff. Fortunately, Microsoft had every incentive to stave off the antitrust regulators circling them, and keeping Apple from going under was an insurance policy – and cheap, at only $150M.
People still rolled their eyes. No point to Apple, they said. When Microsoft put the 95 interface on NT, that was the end, they said. No future. No future.
Well, the future’s here.
Microsoft missed the boat on digital music. Then they missed the boat on consumer smartphones. Then they missed the boat on social networking. And while they sat on a near-monopoly in operating systems and office suites, letting that river of cash fund everything else, Apple pared their line of goods down and decided that they would only sell the best products out there – no more competing at the discount end any more than Dior sells at Wal-Mart or Mercedes makes econoboxes. And then, in 2001, Apple (and at this point, make no mistake, that meant Steve) decided to sell people something they didn’t even know they wanted. Six years later, when the iPod ruled digital music, they decided to sell something else people didn’t know they wanted, and the iPhone revolutionized consumer smartphones in a way that Danger or Blackberry or Symbian never had.
And around 2007, as Vista flopped, Microsoft looked up and realized they essentially hadn’t budged in six years. And they suddenly realized the meaning of Stagger Lee’s Tenth Law: “In the 21st century, if your Next Big Thing runs on a PC, it’s not the Next Big Thing.” Of all the hottest things going – iPhone, Android, Facebook, Twitter, Foursquare – none of them relies on a PC running a Microsoft product.
Not to say that the race is over. It’s never over, and like the man says, in the end it’s only with yourself. But to look out on an Apple whose stock has gone up about 5000% since the old days, and to see the head of one of Microsoft’s most forward-looking groups resigning, and watching the world hold its breath for June 7…
I’m not gonna lie. It feels like a win. So I’ma call it a win.
Meanwhile, we wait for the fate of “beleaguered Microsoft”…