
Microsoft to invest $150 million in Apple (1997) - alexyim
http://news.cnet.com/2100-1001-202143.html
======
chaosmachine
"Apple has not been the bogeyman to Microsoft in a long time. They are more
than happy to have a legitimate threat to their business, and it's called
Java."

Out of all the things to end that sentence with, Java was probably the last
one I expected.

~~~
pohl
Really? It was the driving force behind the creation of .NET, and the
motivator for the infamous sweaty (Developers)* rant.

~~~
cabalamat
Indeed. Java -- more precisely the JVM's promise to code once, run anywhere --
had Microsoft worried in the late '90s. Rightly so, IMO.

------
dcurtis
If Microsoft hadn't sold its 1997 $150mm investment in Apple, it would be
worth $7.4 billion at close today. That's a 4250% return.

Instead they sold in 2003, at one of AAPL's lowest points. They made less than
20%. (It's hard to pinpoint exactly how much because Apple's SEC filing only
indicates that Microsoft sold in Q2 2003, and it doesn't indicate the price
agreed.)

~~~
eru
How well did an equivalent investment in Microsoft stock either 1997 or 2003,
until today fare?

~~~
_delirium
MSFT is basically flat since 2003, and up about 60% since 1997. It did start
paying a dividend in 2003, which adds about 15% overall. No multi-thousand
percentage returns, though.

------
mc
I was young, but I remember the cover of Time magazine very well.

<http://marcchung.com/mc/world_is_a_better_place.jpg>

------
snprbob86
This headline needs [1997]

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Anechoic
FTR, it wasn't so much an "investment" as it was part of a settlement:
<http://en.wikipedia.org/wiki/San_Francisco_Canyon_Company>

IIRC there was supposedly a private payment upwards of $1 billion as part of
the settlement in addition to the $150 million but I can't find a reference
right now.

------
ugh
What? A link to this story and no one linked to the legendary video of Bill
Gates appearing on the big screen at the Macworld Boston Keynote 1997, looming
large over Steve Jobs and the crowd booing?

Here, I will do that: <http://www.youtube.com/watch?v=WxOp5mBY9IY> (skip to
3:30 if you want to see how the investment is received, skip to 4:40 if you
want to see Bill Gates)

------
davidalln
"Apple, which ended its third quarter with $1.2 billion in cash, will use the
additional $150 million to invest in its core markets of education and
creative content, Anderson said. He added that the company expects to gain a
higher percentage of its revenues from software and services in these core
markets in the future."

Interesting how this gives us a bit of insight on the shift in business plans
even before the iMac was officially announced. Obviously they picked the
correct market to focus on going into the 2000s, but I wonder what made them
specifically choose the "education and creative markets" 15 years ago.

~~~
fleitz
It wasn't until Photoshop 2.5 that Adobe even had a Windows version. Look at
PageMaker / Quark and it's the same story.

Education and creative markets were the bread and butter of Apple for the 80s
and 90s, it's a no brainer business-wise.

At the time this article was written Jobs had been CEO for a month, it's a
basic play to reassure the market and boost a falling stock price. If you look
at what Apple actually did it was to move into consumer electronics. A
transition that is arguably complete with iPad. The machine people consume
software with is finally different from the machine they produce software
with.

~~~
jasonford1
To continue your thought, this was the most brilliant move Jobs made by moving
the consumption off the machine that produced. Now jobs can control the
distribution from the machine that produces content to the machine that
consumes content. He plays middle man, owns the vertical, and collects 30%
every time a purchase is made. I wonder how much this strategy evolved from
the early days or if the idea of separating content and owning the
distribution channels was the strategy from day one. Either way it is clear in
hind sight that the play payed off.

On a side note I saw a statistic earlier (reference has been lost) which said
Apple sells 10% of consumer computers but captures over 50% of the industry
profit. I would search for the reference in a different tab, but I'm on my
iPad and can't. Thanks Steve.

~~~
fleitz
I believe the 50% profit figure is for "smart phones". I think DHH mentioned
it in a video. Not sure what the primary source is.
[http://techcrunch.com/2009/11/11/while-rivals-jockey-for-
mar...](http://techcrunch.com/2009/11/11/while-rivals-jockey-for-market-share-
apple-bathes-in-profits/)

This is the best reference I can find for it.

------
zaidf
Could Microsoft's investment be seen as a HUGE strategic blunder?

I don't think Microsoft would have invested had they known Apple would
flourish so well. They would rather see a competitor crumble and die.

So why did they invest? And if they hadn't, were there others waiting to bail
out Apple? I could google all this but figured there must be many who weren't
10 years old when this happened :)

~~~
cabalamat
> _Could Microsoft's investment be seen as a HUGE strategic blunder?_

Oh I don't know. Maybe Microsoft's shares in Apple will be its most valuable
asset in another 10 years... (1/2 joking)

~~~
chollida1
they sold those shared long ago.

------
julio_the_squid
"He noted there have been no discussions with Microsoft to license Windows CE,
the operating system designed for handheld devices, settop boxes, and other
non-PC products."

is my favorite line.

------
noelchurchill
I wonder what would have been if Microsoft hadn't invested in Apple...

~~~
gecko
Largely nothing. The investment at the time was seen as a public sign that
Microsoft wanted Apple to stick around, not a make-or-break deal that could
leave Apple crippled if it fell through. That, plus the announcement that
Microsoft would continue developing Office for Macintosh, helped assure the
public that Apple wasn't going anywhere, at a time when a lot of people feared
that Apple had become completely irrelevant, independent of whether Jobs would
manage to succeed where Amelio had failed at fixing the immediate problems. I
think Microsoft could have not invested and things would be the same. I'm less
confident what would've happened if they hadn't pledged to support Office and
IE.

~~~
eru
So the investment was important, but more for its signalling value than for
the money?

~~~
gecko
That's my feeling on the matter, yes.

------
rms
Well that was a great investment, right? What is it worth now?

------
rythie
What if Adobe had invested back then?

~~~
rimantas
Adobe does exist in part just because Apple invested in them early in its
days.

------
curtisspope
yeah lets remember that next time apple fanboys want to post an article saying
AAPL is worht more than MS

~~~
pyre
Though you claim that saying AAPL is worth more then MSFT is a sign of fanboy-
ism, it can also be used as proof that AAPL is no longer the 'under-dog' that
some fanboys still like to portray them as. (i.e. AAPL is now the '800lb
Gorilla')

[Nit: Microsoft's NASDAQ symbol is MSFT, not MS. It looks wildly inconsistent
to refer to Apple by AAPL, but then drop to MS for Microsoft. ]

~~~
eekfuh
"Fanboys" call them the underdog due to their 7-8% market share of the
computer market compared to Windows ~90% market share.

I'd still call that an underdog.

Also who is the "you", that you are referring to? Also we are not claiming, we
are merely using todays EOD market-cap to show they are worth more, in which
case they are. Also Apple has growth in other areas, which are new areas, and
MSFT is just suckling the tit of office and the PC's use of Windows software.

/fanboyism

~~~
pyre

      > "Fanboys" call them the underdog due to their 7-8% market
      > share of the computer market compared to Windows ~90%
      > market share.
      > 
      > I'd still call that an underdog.
    

I wouldn't. You're ignoring several factors:

* Even though Microsoft may own 90% of the market, the fact that their company as a whole (which includes other markets) is worth less than Apple is telling. The investors certainly don't think that they are an underdog.

* A few years ago Microsoft own _95%_ of the market. (i.e. The trend is towards a shrinking strangle-hold on the market)

* The 'market' usually refers to the _general_ PC market which (IIRC) includes corporate purchases. Most corporate purchases for the foreseeable future will probably remain in Microsoft's court, but that doesn't prevent Apple from taking over the _personal_ computer market. [Yea, I know PC stands for 'Personal Computer,' but here we are referring to personal in terms of ownership, instead of personal in terms of desktops vs mainframes.] I would definitely _not_ call Apple the underdog in terms of personal/family computers.

* Apple has great mind-share right now, as well as a number of devices that tie-in well with their Macs. Those devices (iPhone,iPad) are at the top of a lot of people's minds and at the cutting edge of their respective niches. Those devices will probably do well at driving people towards Macs when they next upgrade their desktop/laptop even though that probably isn't their ultimate goal.

* You're ignoring the other markets that Apple is in where they are _not_ the underdog (mp3 players, tablet devices).
    
    
      > Also who is the "you", that you are referring to?
    

To the poster of the comment I was replying to? Maybe I should have phrased it
as such:

    
    
       Though you claim that saying, "AAPL is worth more then MSFT,"
       is a sign of fanboy-ism,
    

I was refuting the claim that talking about Apple's worth vs Microsoft's worth
is a sign of fanboy-ism.

