Steve Jobs used patents to pressure Bill Gates into 1997 investment in Apple | Hacker News Reader

Steve Jobs used patents to pressure Bill Gates into 1997 investment in Apple

bgr.com

59 pointszacharye31 comments

This is revisionism. Now that Apple's back on top, they can afford to re-write history. Apple's patents were worthless. They invented nothing; everything they claimed was prior art. The real story is Microsoft bailed Apple out. Microsoft had several motivations, none of which was settling patent disputes. They wanted to crush netscape. They wanted to demonstrate to the DOJ that they weren't a monopoly. They wanted to counteract the growth of Linux. Apple was more than willing help out.

They also wanted Apple to quietly forget that Microsoft stole the source code to Quicktime.

Why is this voted down? It's accurate.

I downvoted because the post was misleading (although admittedly the bgr.com article is as well)

>Apple's patents were worthless. They invented nothing; everything they claimed was prior art.

I posted the link to the San Francisco Canyon Company wiki article earlier. Apple had won injuctions in the courts and there's no reason to believe that there wasn't a big payday at the end of the line. http://findarticles.com/p/articles/mi_m0CGN/is_1999_Jan_26/a...

>The real story is Microsoft bailed Apple out.

In Politifact terms, "half true" - the money meant nothing (see the 10-K link I posted below) but the gesture meant that investors felt better about Apple. Let's not forget that Mac Office was one of the most profitable products for MS back then and MS avoided potentially paying out a lot of money for patent infringement. There was also the patent cross-license agreement (which I think was renewed in the early 2000's and answers the question of why Apple didn't go after MS for the same things it went after Android vendors for).

I didn't downvote, but it just seems silly to me to accuse Apple of revisionist history. I think they're a lot more interested in the future than the past.

Apple at that point in history was very close to going out of business, Jobs said that himself. Nobody pretends otherwise. I don't think they are trying to foster any illusions that Apple was anything but a very sick, very poorly-run company in those days.

>> "If we kept up our lawsuits, a few years from now we could win a billion-dollar patent suit. You know it, and I know it. But Apple’s not going to survive that long if we’re at war. I know that. So let’s figure out how to settle this right away"

That quote and the title of the article are pretty, um, incongruent.

Agreed; the title of the article is linkbait at best. This is far less "patent pressure" and more an appeal to a long-time colleague to lay down arms because it was a lose-lose for everyone. For Jobs, it was more of a concession that though he knew he was in a fight that he couldn't win. Truthfully, I find that story far more interesting and compelling than the ridiculous assertion that this was a form of "patent pressure."

It's about par for the course around here. You'll similarly see headlines about patents that were won (that were really filed) and acquisitions that happened (that were merely discussed).

This is all in addition to the usual link-baity headlines such as "Plan to FAIL!,", "How being lazy made me a millionaire," etc. etc.

The context that is missing is there was a DOJ lawsuit against MS at the time. MS needed someone propped up as slight competitor..hence the deal as otherwise MS could have just waited until Apple ran out of money and their patent problem would be solved.

The quote might be wishful thinking

Apple's patents would have be auctioned in bankruptcy; perhaps to Sun, IBM, Oracle, or Microsoft themselves. Might have gone for more than the Apple investment.

This blog post from the former CEO of Sun is perhaps relevant:

In 2003, after I unveiled a prototype Linux desktop called Project Looking Glass, Steve called my office to let me know the graphical effects were “stepping all over Apple’s IP.” If we moved forward to commercialize it, “I’ll just sue you.”

My response was simple. “Steve, I was just watching your last presentation, and Keynote looks identical to Concurrence – do you own that IP?” Concurrence was a presentation product built by Lighthouse Design, a company I’d help to found and which Sun acquired in 1996. Lighthouse built applications for NeXTSTEP, the Unix based operating system whose core would become the foundation for all Mac products after Apple acquired NeXT in 1996. Steve had used Concurrence for years, and as Apple built their own presentation tool, it was obvious where they’d found inspiration. “And last I checked, MacOS is now built on Unix. I think Sun has a few OS patents, too.” Steve was silent.

And that was the last I heard on the topic.

http://jonathanischwartz.wordpress.com/2010/03/09/good-artis...

Honestly who upvotes a BGR linkbait article that recycles a Forbes article, adds nothing new but does spend half it's length recounting the unrelated but sensational Android quote from Steve.

Think before you click! Don't do drugs. Stay in school....

Probably one of the best investments MS ever made. Certainly better than Skype and it's attempt at Yahoo.

I'd agree with that, but I imagine not for the reasons I presume you mean.

Microsoft's small investment ($150M) in Apple was really to prop them up just enough to avoid Apple's bankruptcy. Apple may very well have died had they not received that cash injection, and Microsoft, facing pressure from the DoJ regarding their monopoly, could point to this barely-hanging-on company as viable competition.

It is interesting to ponder, in that context, that Apple likely owes its existence to that act.

Microsoft's small investment ($150M) in Apple was really to prop them up just enough to avoid Apple's bankruptcy

Apple had over $1 billion in cash at the time of the investment. You can argue that the investment and continued development of Mac Office help shore up investor confidence, but the cash made little difference to Apple's bottom line.

http://apps.shareholder.com/sec/viewerContent.aspx?companyid...

"It is interesting to ponder, in that context, that Apple likely owes its existence to that act."

Except it doesn't.

http://www.wired.com/thisdayintech/2009/08/dayintech_0806/ http://community.seattletimes.nwsource.com/archive/?date=199...

"The unexpected revelation by Apple co-founder Steve Jobs in a keynote speech at MacWorld prompted gasps of disbelief and loud boos from the audience of thousands of Mac users and software developers."

Sounds like they still haven't subsided.

We have a direct quote from Steve Jobs' official biographer from Jobs' himself, unless you mean that the Office/IE development was more important than the money.

The money seems to be so that MS felt that Apple's success was tied in to it's own, and thus won't skimp on the IE and Office development make them to par with their Windows versions.

Relevant: http://en.wikipedia.org/wiki/San_Francisco_Canyon_Company

Is this really news to anyone? I remember the announcement of the 1997 investment. The press statements and coverage at that time said that the investment was one aspect of an agreement to settle all IP-related claims between the two companies.

http://news.cnet.com/2100-1001-202143.html

What was Microsoft's ROI on their $150 million investment?

I don't know that the full numbers are well known, but this Ars article reveals some of the details:

http://arstechnica.com/microsoft/news/2010/05/apples-stock-r...

FTA: All told, Microsoft spent a little over $151 million to acquire 18.2 million shares of Apple stock, for roughly $8.31 per share. Microsoft confirmed that it sold all of its AAPL holdings some time ago, and likely did so at a healthy profit—after all, AAPL has traded significantly higher than $8 for many years. But what if Microsoft had held on to that investment just a little longer?

They would have made a little under 1.2 [edit: 9.7, typod math] billion dollars if they still held the investment today. Which would increase their cash and short term investment reserves by about 2% [edit: 10%].

Microsoft is printing money. Cash is not what they need or care about.

[Edit: math was corrected above] I'm not following your math, 18.2 million shares of Apple today would be worth about $9.8 billion--for a $151 million investment. I'm sure there are nuances that I don't fully grasp; but that's a huge discrepancy.

FWIW, I didn't mean to imply that MS should have held onto that investment; I was only answering the question about the purely financial ROI.

On the other hand, the ROI on investing into Apple might compare favorably to a lot of their actual business moves since 1997.

The appellate overturning of the DOJ's successful case to split Microsoft up was surely worth more than any investment in AAPL. These aren't directly tied, obviously, but a seriously infirm Apple (at the time, the only serious competitor in the consumer computing market -- this was before Linux broke out and long before smartphones) might very well have changed a few minds in the 9th circuit.

Completely agreed, even if all they did was break even on the deal financially (or honestly, even if all that money had eventually gone up in smoke) the value of having a real competitor to point to at that time was worth every penny.

I have a problem with people placing 15 year old conversations inside of quotes.

Have you ever played purple monkey dishwasher?

Try playing that with yourself, for 15+ years... I doubt hardly any of that quote from Steve Jobs is a "quote".

http://www.youtube.com/watch?v=PEHNrqPkefI

The crowd wasn't happy at all when Steve Jobs announced about the partnership with Microsoft. I guess they would have looked back, especially in the last few years when Apple has done so well, and thought that it was indeed a good decision on Steve's part.

Edit: The talk about the partnership starts at around 26 mins into the video.

"All I need is a commitment that Microsoft will keep developing for the Mac..."

I guess this led to Apple's development of iWork and Safari so that they would not have to depend on Microsoft Office and Internet Explorer.

Partly.

All through the 90s, Apple had ClarisWorks/AppleWorks,[0] which were basically what iWork is now – including that few serious Office users would look twice at them. (I liked them a lot, but I’m not in the Office demographic.)

And Apple was never heavily dependent on IE, because Navigator was always around. Safari had more to do with both IE and Navigator being awful, and with the long game of getting a light and fast browser ready for mobile and embedded devices.[1]

0. http://en.wikipedia.org/wiki/AppleWorks#AppleWorks.2FClarisW...

1. Recall that c. 2003, everything was pointing towards enormously bloated browsers. Jobs was already thinking about iP[oa]ds, and clearly anything on the Netscape codebase’s size trend line would be a dog. Firefox – Mozilla lite – was also a response to this, though as far as I know not with smartphones in mind.

Reply on news.ycombinator.com