The Struggles of Apple in the 1990s
In the early 1990s, Apple was having a tough time. The company had lost its main visionary, Steve Jobs, in 1985. Without him, Apple began to decline. The Macintosh computer line wasn’t selling well, and Apple’s management was constantly changing. To make matters worse, Apple products were twice as expensive as Microsoft alternatives. By the start of 1997, Apple was on the verge of bankruptcy.
The Return of Steve Jobs
Steve Jobs returned to Apple in July 1997. At first, he only acted as an advisor. However, he quickly realized that Apple needed a bold new direction. He made his return as CEO later that year. One of his conditions for coming back was that Apple would acquire and merge with his new company, NeXT. Using the Apple brand and NeXT’s operating system and software, Jobs created Mac OS X and started a new line of devices, including the iMac and iPod.
Microsoft’s $150 Million Investment
While many believe that Microsoft saved Apple, the story is a bit more complex. In 1997, Apple was still struggling financially, but they had won a lawsuit against Microsoft and acquired NeXT. At the Mac World Conference that year, Steve Jobs announced a partnership with Microsoft. Microsoft invested $150 million in Apple and agreed to support Microsoft Office on Mac devices for five years. In return, Apple agreed to ship new Mac devices with Internet Explorer.
Why Did Microsoft Help Apple?
Microsoft’s investment in Apple wasn’t just about helping a competitor. At the time, Microsoft controlled about 92% of the PC market. They were facing two major lawsuits for copyright infringement and monopolistic practices. The US government and the public were watching Microsoft closely. By investing in Apple, Microsoft hoped to avoid being seen as a monopoly.
Copyright Infringement Lawsuit
In the early 1990s, Apple had hired a company to create a video editor called QuickTime. This code was later found on Windows operating systems and in Intel drivers, meaning Microsoft and Intel were guilty of copyright infringement. The lawsuit was settled out of court, with Microsoft allegedly paying $100-$200 million in settlement money.
Monopoly Accusations
During the same period, the US government noticed Microsoft’s large market share. One of the biggest internet search engines at the time, Netscape, protested that Microsoft should not be allowed to monopolize the market by bundling Windows with Internet Explorer. Microsoft was offering Internet Explorer for free, which was uncommon at the time since most search engines charged a fee. This led to a court case, and Netscape and other search engines eventually went out of business due to the launch of Internet Explorer.
Apple’s New Beginning
By the end of 1997, Apple had welcomed back Steve Jobs, acquired NeXT, and settled a lawsuit with Microsoft. The partnership with Microsoft gave Apple the financial boost it needed to survive. While Apple may have struggled without Microsoft’s help, it’s clear that Microsoft’s investment was also about saving itself from monopoly accusations.
Today, Apple is a cultural and innovative icon, thanks in part to the return of Steve Jobs and the partnership with Microsoft. The story of Apple and Microsoft in the late 1990s is a reminder of how companies can change their fortunes with the right leadership and strategic partnerships.
