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By Mick O'Neil

The Power to be Mediocre
Watching the face of Microsoft Chairman Bill Gates appear on screen at Macworld, my mind immediately leaped to that famous 30 second Super Bowl commercial first aired in 1984 where Big Brother's address to a room full of passive nerds was interrupted by a lithesome blond who charged down the aisle, threw a sledge hammer into the screen, and introduced Macintosh - 'the power to be your best.'. Almost by instinct I glanced over my shoulder, but the doors to the theater were blocked by corporate security...the rebel days were over.

Alas, it was much worse. Standing on stage was Steve Jobs, the Apple co-founder. Instead of attempting to break loose from the Chairman and his iron hold on the computer industry, he virtually embraced him. Instead of a sledge hammer, he tossed the Chairman a purse that contained Apple's Crown Jewels. I wondered why...and now I think I have some of the answers.

Dancing
First, it's important to recall Apple's last major deal with Microsoft. Of course, this is a vast oversimplification, but the story goes that the Macintosh was at a critical juncture and John Sculley, Apple CEO at the time, traded the look and feel of the Mac for continued development of Microsoft Excel on the Mac. The net results were the release of a competitive version of Microsoft Windows that still dominates the computer industry, a marginalized Macintosh market, and millions of dollars and man hours wasted on Apple's 'look and feel' lawsuits. In retrospect, it was perhaps one of the worst deals in corporate history.

More recently, there's been some controversy over Apple's QuickTime technology. Specifically, Apple contracted with a 3rd party to help develop QuickTime for Windows. Unable to countenance Apple's success with a Windows add-on and incapable of developing an equivalent technology within, the Microsoft/Intel alliance hired the same company to bail out Video for Windows. Lo and behold, Apple programmers discovered amazing similarities in Microsoft's code. Apple filed an injunction and forced Microsoft/Intel to rework their code. As part of the recent deal, Microsoft paid Apple 100 million dollars and Apple has agreed to drop such contentious issues and cross license core technologies. Potentially, of course, the market for QuickTime or a Windows equivalent is enormous.

In Job's words, "The two companies have reached a full cross-license agreement for all patents that exist and for patents that are filed within the next five years. It has been a very serious patent settlement." To fully appreciate the potential impact of this agreement, Reuters interviewed spokespersons at Apple Singapore who indicated that. "As part of the deal, the two companies signed a broad patent cross licensing agreement... Microsoft could use the patents to Apple's core technology for improvisation later on. Analysts have said Microsoft could be eyeing Apple's software technology, including its multimedia capabilities."

The new Apple/Microsoft deal involves Microsoft's investment of some $150,000,000 dollars in non-voting Apple stock along with a commitment to hang on to these shares for three years. Ironically, this part of Job's announcement seemed to get the most press play and is probably the least important. In the short term, it did help shore up the value of Apple stock and it looked like a vote of confidence in Apple. Some cynics might suggest that it was akin to a fat farmer feeding the Thanksgiving goose.

The truth is that Microsoft wants it all but can't appear to have it all or the company risks federal antitrust action. 'Cross licensing' technologies while propping up what remains of Apple gives Microsoft the best of both worlds. There's little question that, once again, Bill Gates has hustled Apple.

It's certainly possible that Windows 2000 could sport a Finder (perhaps called something appropriately innocuous like Interactive_Location_Manager) as well as much of the look and feel of Macintosh. If Windows 95 was scoffed at as 'Mac 87', Windows 2000 might be appropriately called Mac 2010. This may be bad news for Mac users but finally, the Mac interface - even a bastardized version - may pervade the industry. To an extent that's good news for the 'rest of them.'

In an interview with Time Magazine, Jobs related how it suddenly dawned on him that Apple and Microsoft could control the industry together: "Another bolt of lightning is that Apple plus Microsoft equals 100% of the desktop computer market. And so, whatever Apple and Microsoft agree to do, it's a standard. And I think that you'll be seeing us work with Microsoft more, because they're the only other player in the desktop industry. And I think you'll be seeing Microsoft want to work with Apple more, because Apple is the only other player in the desktop industry."

So it took a 'bolt of lightening' for Steve to figure out that Apple plus Microsoft will dominate the personal computer market. I wonder how long we'll have to wait for Jobs to work out the equation: Apple plus Microsoft equals Microsoft? One might suspect that he's already toyed with this equation.

The Real Devil
In analyzing why Steve Jobs, co-founder of Apple Computer would agree to such a deal, it's necessary to examine his commitment to the Macintosh platform. Jobs divested himself of 1.5 million shares in Apple computer about ten days before the Apple Board asked for CEO Gil Amelio to resign. This was hardly a vote of confidence in Apple, but Jobs claimed that he had given up on the Apple board taking any decisive action.

As an Apple stock holder (albeit a mere 100 shares), I'd like to know exactly if and when Mr. Jobs became involved in the board's decision. Certainly, if Steve was involved in or had any knowledge of the board's action at the time of the sale, there's a case for a Security and Exchange Committee investigation on the basis of insider trading. Though there's been a lot of focus on the fact that Jobs didn't take advantage of his pre-knowledge about the Microsoft deal, it doesn't take a barefoot guru walking through the Palo Alto parks to have guessed that Apple shares might decline once the CEO was forced out.

The stock sale and Steve's attempt to keep it quiet demonstrate both a lack of commitment to Macintosh and a Jobs sleaze factor that now stalks his high profile publicity stunts. The naiveté with which he sold out to Gates simply demonstrates the incompetence that caused his earlier expulsion from Apple's Board of Directors.

The Pale Moonlight
So the question arises, where does the Apple/Microsoft deal leave the future of the Macintosh platform? In the short term, there are plenty of reasons to be optimistic. First, the installed base of 25 million Mac users ensures that the Mac will not simply fade away. Second, the evolution of the PowerPC chip means that Macintosh will continue to outpace its Intel rivals in terms of processor speed for the foreseeable future. Third, Apple's System 8.0 software is a remarkable improvement over earlier systems and distances itself even further from Windows as the premier 'user friendly' operating system. And finally, 'Rhapsody', Apple's new multi-everything operating system, could breathe new life into the platform, particularly if it doesn't stray to far from the Mac interface.

In the long term, however, Microsoft's developers now have free rein to catch up with the Mac and I would expect this to happen sooner rather than later. Once Windows really does compete, sheer market volume may kill Macintosh. Meanwhile, you can bank on Apple shipping boxes with Rhapsody running on Intel chips.

A License to Kill
Of course, no discussion of the Mac's future can be complete without addressing the licensing issues. Mac journalists implored, begged, and harassed Apple until the company finally agreed to license the operating system. The Wall Street Journal even called Apple's earlier failure to license its operating system one of the great corporate blunders of our century (similar to the recent Apple/Microsoft deal referenced above). Unfortunately, by the time Apple got around to licensing, the timing was all wrong. Though some of the licensees have done remarkably well in shipping their own versions of Macintosh, they've done so at the expense of Apple's market share. Instead of growing the market, companies like Power Computing, Motorola, and UMAX directly competed with Apple and seriously cut into Apple's revenues. Again, in the short term, Apple should simply kill its present licensing system. In the long term, however, Microsoft could end up the biggest cloner of them all!

Mick O'Neil (mickoneil@mymac.com)

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