History of Apple and Microsoft: 4 decades of peaks and valleys

The decades-long relationship between Apple and Microsoft is packed with ups and downs, but it also shaped the evolution of personal computing. The companies have again cozied up to one another, and this time they have a new endgame: enterprise.

evolution apple microsoft
Thinkstock

The on-again, off-again relationship between Apple and Microsoft began in earnest in the late 1970s, during the dawn of the PC era. The hot and cold periods were often tied to the personalities of the companies' founders and longtime leaders: Steve Jobs and Bill Gates. Today, Apple and Microsoft are much different companies, with new leaders who don't lug along the baggage that comes as a result of nearly 40 years of fierce competition.

The following events, from periods of harmony and acrimony alike, define the long, rocky relationship between the two modern-day technology giants.

Youthful innocence of the early '80s

During the first Macintosh's development and early years of production, Microsoft was a critical Apple ally. The software pioneer created important programs for Apple's PC in the early '80s. "We had more people working on the Mac than [Jobs] did," Gates said of the early years, according to Walter Isaacson's biography, Steve Jobs

At an Apple event in 1983, Gates told attendees Microsoft expected to earn half of its revenues selling Macintosh software the following year. And when Jobs asked Gates if he thought Mac would become another standard in personal computing, Gates praised the platform: "To create a new standard it takes something that's not just a little bit different, it takes something that's really new and really captures people's attention. And the Macintosh, of all the machines I've seen, is the only one that meets that standard."

Isaacson's book also detailed just how quickly the relationship between the two companies soured when they started to develop competing OS software with graphical interfaces. Jobs lashed out at Gates during a meeting later that same year and equated Microsoft's plans for Windows to theft. (Xerox PARC originally developed graphical interfaces, not Apple, but for Jobs that was beside the point.) 

Isaacson also described the Microsoft founder's response to Jobs's accusations. "Gates just sat there coolly, looking Steve in the eye, before hurling back, in his squeaky voice, what became a classic zinger. 'Well, Steve, I think there's more than one way of looking at it. I think it's more like we both had this rich neighbor named Xerox and I broke into his house to steal the TV set and found out that you had already stolen it.'"

12 years of Apple without Jobs

Before the end of 1985, Windows 1.0 was released, and Jobs was ousted from Apple, the company he founded nine years earlier. Microsoft then went on to dominate the PC industry while Jobs founded NeXT, where he spent the following 12 years building computer workstations for higher education and business.

Jobs didn't pry significant market share away from Microsoft during his time with NeXT, but he did continue to regularly lob insults at Microsoft. "The only problem with Microsoft is they just have no taste," Jobs said in the 1996 "Triumph of the Nerds" TV documentary. "They have absolutely no taste. And I don't mean that in a small way, I mean that in a big way, in the sense that they don't think of original ideas, and they don't bring much culture into their products," 

Jobs also said Microsoft's applications for Mac were "terrible" and called the company's products "third rate." He eventually spoke to The New York Times about the documentary and his decision to call Gates and apologize for his comments, but his statement felt disingenuous. "I told him I believed every word of what I'd said but that I never should have said it in public," Jobs told the newspaper. 

An awkward period of harmony

When Apple acquired NeXT in 1997 and brought Steve Jobs back into the fold, the company was in disarray amid growing uncertainty about the future of Microsoft Office for Mac. During his keynote address at the Macworld Expo that year, Jobs extolled the virtues of partnering with industry leaders and spoke of the need to improve Apple's partner relations.

Jobs suggested Apple needed help from others and that destructive relationships weren't helping any tech companies. Then he announced a new pact between Apple and Microsoft, which was received with a chorus of boos from the audience.

The previously unimaginable deal had many components, including a perpetual cross license for all existing patents and patents issued during the next five years; IE became the default browser on Mac; Microsoft said it would release Office for Mac for the next five years; and Gates's company invested $150 million in Apple.

"Microsoft is going to be part of the game with us as we restore this company back to health," Jobs said before asking Gates to address the crowd via satellite. The "kumbaya moment" continued when Gates told attendees that some of the most exciting work of his career was done with Jobs on the Mac.

"We think Apple makes a huge contribution to the computer industry," Gates said. "We think it's going to be a lot of fun helping out."

When Gates finished and the attendees' collective blood pressure dropped, Jobs tried to frame the deal in a way Mac users and Apple fans could appreciate. "We need all the help we can get. If we screw up and we don't do a good job, it's not somebody else's fault, it's our fault," Jobs said. "I think if we want Microsoft Office on the Mac we better treat the company that puts it out with a little bit of gratitude. We like their software. The era of setting this up as a competition between Apple and Microsoft is over as far as I'm concerned."

However, history hinted at what was to come, as Apple inched toward dominance and eventually overtook Microsoft in the computing market by 2010.

A full decade at odds

By the mid-2000s, Jobs had returned to his old ways, and he chastised Microsoft for "copying Google and Apple" despite having a $5 billion annual research and development budget.

A seminal moment occurred in 2007 when Gates and Jobs jointly took the stage for an interview at the D5 conference. The appearance is considered one of the most significant moments in the history of technology. But before the panel with Gates, Jobs couldn't resist taking a jab at Microsoft during a one-on-one interview with journalist Walt Mossberg. "We've got cards and letters from lots of people that say iTunes is their favorite app on Windows," Jobs said. "It's like giving a glass of ice water to somebody in hell."

Later, the joint interview kicked off with a question about the companies' contributions to the PC and technology industries. Jobs leaned forward, scratched his head, and said: "Bill built the first software company in the industry … Bill was really focused on software really before anybody else had a clue it was the software."

Gates offer clear praise in his response. "What Steve's done is quite phenomenal," he said.

Jobs warmed up eventually and acknowledged the long, rocky relationship between the two men when asked to describe the their greatest misunderstanding. "I think of most things in life as either a Bob Dylan or a Beatles song, but there's that one line in that one Beatles song — 'You and I have memories longer than the road that stretches out ahead' — and that's clearly very true here," he said.

Opportunities in enterprise rekindle old flames 

A new era of partnership buoyed by opportunities in the enterprise blossomed during the past couple years. With new leaders at the helm of both companies came an end to the insults and grandstanding … for now, at least. The past month saw three separate events that demonstrate the companies' new commitment to compromise and combined efforts. 

At Apple's September 2015 new product event in San Francisco, the company invited a Microsoft executive on stage to demonstrate Office 365 apps working in split-screen mode on an iPad Pro. At Salesforce's Dreamforce conference a week later, Microsoft CEO Satya Nadella demoed the company's iOS apps on an iPhone. And finally, during a keynote at cloud-storage company Box's BoxWorks conference in late September, when asked about the company's renewed relationship with Microsoft Apple CEO Tim Cook said he doesn't believe in holding grudges.

Microsoft's surprise on-stage presence at an Apple product event showed just how cordial relations have become between the two tech giants. When Nadella used an iPhone on stage at Dreamforce, he acknowledged such a thing would have been unheard of in the past but also used the opportunity to pump up his own company. "I like to call it the iPhone Pro because it has all the Microsoft software and applications on it … It's pretty amazing."

Such friendly exchanges between frequent foes might never have taken place if not for the opportunities both companies see in the business market. Apple's new pursuit of enterprise, paired with Nadella's penchant for a partnership-friendly corporate culture, let this new relationship flourish.

"If you think back in time, Apple and IBM were foes. Apple and Microsoft were foes," Cook said at BoxWorks. "Apple and Microsoft still compete today, but frankly Apple and Microsoft can partner on more things than we could compete on, and that's what the customer wants." 

Apple and Microsoft might not ultimately share the same sentiment on the consumer side of things, but the leaders of both companies determined the enterprise is an area in which they want to cooperate and better cater to customers. However, nothing in the enterprise is ever a sprint, and the hatchets will need to remain buried for years to come if the two companies hope to realize the fruits of their collective labor.

Copyright © 2015 IDG Communications, Inc.

Get the best of CIO ... delivered. Sign up for our FREE email newsletters!