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  • Wacky Theory Department: An Apple/Microsoft Merger?

    December 11th, 2013

    The other day, I read yet another revisionist story about Microsoft's 1997 investment in Apple, claiming that the $150 million influx was necessary to prevent bankruptcy. That, however, is an urban legend. The truth is that the investment was actually part of a settlement between the two companies over various intellectual property lawsuits. Don't forget that Apple had been after Microsoft for years for alleged theft of the Mac OS interface and other matters.

    The most important part of the deal, however, was validating the future of the Mac, with Microsoft agreeing to continue to develop Office for the next five years. Apple also agreed to make Internet Explorer the default browser, which continued until the early years of OS X when development languished. So Safari took over and MSIE disappeared from the Mac platform.

    So much for urban legends.

    What's unfortunate is that, once falsehoods of this sort are spread and given even a modicum of credibility, corrections no longer seem to matter. It just gets repeated over and over again as if it were true. Sure, Apple was in deep trouble financially back then, but Microsoft's check wasn't meant as a lifeline.

    Now over the years, Microsoft and Apple have remained frenemies. They compete in some places, cooperate in others. So Office is still being supported on the Mac, and I assume a new version will be out one of these years. You also select Microsoft Bing as a search option for Safari, but both companies are head-t0-head competitors for mobile gear and personal computers.

    If this arrangement seems strange, don't forget that Apple and Samsung compete in the mobile space, yet the latter still supplies parts to the former. Somehow this all works out, though less well with Samsung in light of those patent lawsuits. That's an area where Apple and Microsoft buried the hatchet with that 1997 settlement.

    Now there's a really screwy theory about where the Apple/Microsoft partnership may lead. It has already been presented on one of the cable TV news outlets without critical comment, so the person who came up with this curious idea doesn't deserve any more publicity.

    So imagine Apple and Microsoft becoming cozier and cozier and, five or ten years hence, actually merging. Really?

    Now it's probably hard to make sense of this theory, except that this supposed alliance is somehow necessary to go up against the onslaught of Google and Facebook. Otherwise, Apple is toast, I suppose, and Microsoft can't be far behind.

    Understand that the tech business is changing really fast, and trying to guess what might happen over the next half a decade or even further out is probably an exercise in futility. But you can look at trends and try to make sense of them.

    So, yes, Google's Android platform dominates the mobile space both in smartphones and tablets. But that's very much a matter of selling millions and millions of cheap Android gadgets. Profits are mostly confined to two companies in the mobile hardware game, with Apple number one and Samsung number two. Sure, I suppose it's possible Apple might be forced to consider cheaper gear to expand into the third world. But it's more certain they'll remain as they are now, confident and secure with products that have much higher average selling prices.

    One argument has it that developers might begin to switch in large numbers to the Android platform, rather than continue parallel development on Google's OS. But that would require Android becoming a more lucrative proposition than it is now. But the rush to the bottom of the market isn't going to reach many people who might actually pay for apps. Besides, with so many Android handsets stuck with older versions of the OS, developers are going to continue to have an awful time trying to deliver the latest and greatest features.

    In any case, a dismal future of this sort presupposes that Apple's market share will seriously decline, that revenue and profits will be challenged and that, with Microsoft suffering from the erosion of Windows, and the ongoing failure of Windows Phone to catch on except in a small way, an alignment would be inevitable.

    That presupposes an awful lot. But at the end of the day, wouldn't Apple prefer to just allow Microsoft to die on the vine? Other than Office, there's not much in Microsoft's product arsenal that would attract Apple. No, not the Xbox. To Apple, mergers must have valid reasons, generally to acquire new technology. Buying a company, failing or otherwise, with decades of baggage simply fails the logic test.

    As to Facebook: I don't see the point, or how the number one social network competes with Apple or Microsoft. Sure, there have been rumors of Facebook-branded hardware, but wanting and executing are not the same. That Facebook mobile interface, dubbed Home, was one big failure.

    Or maybe Apple and Microsoft should be worrying about Twitter. Or maybe worry about a couple of entrepreneurs in a garage who may truly come up with the next great thing.



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    4 Responses to “Wacky Theory Department: An Apple/Microsoft Merger?”

    1. Jim Stead says:

      Won't happen unless Apple's leadership goes into serious decline. The two cultures couldn't be more different.

      Gene Steinberg Reply:

      @Jim Stead, So much for synergy, right?

      Peace,
      Gene

    2. AdamC says:

      I believe Apple is already addressing the cheap iPhones in the developing countries, I believe besides Apple they are many entities selling used iPhones there.

      As for Facebook it is more of a threat to google because both are selling ads for survival.

      Gene Steinberg Reply:

      @AdamC, Well, there's Google Plus and Facebook. The former has lots of members and no activity, so, yes, Facebook remains a huge threat, but not to Apple or Microsoft.

      Peace,
      Gene

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