What about it makes you wonder? It's not like Apple is a threat to Microsoft in the operating system market. Apple is a threat in the portable music player and smartphone markets, but those are not core to Microsoft's business anyway. Microsoft had a chance to take over the smartphone market before Apple showed up, and blew it with a crappy interface and being slow to incorporate push e-mail natively into Exchange.
The goodwill they engendered from this move was sorely needed at the time and surely that alone was worth the investment.
They may lose the battle (just like the zune has already lost the battle, I'm surprised they haven't cut it yet) but for now they're putting up a fight.
The fact that they're competing means Windows Mobile is a business, not that it's a core business. Something isn't a core business until it makes a significant fraction of the company's revenue, and WinMobile doesn't approach Windows/Office on that front.
Microsoft's strategy is to have as many businesses as possible, and for each business to compete, in hopes that some of them become core businesses. Apple's strategy is to make almost everything a core business. I don't think "having tons of businesses that don't try to compete very hard" is even a strategy.
Year over year, Apple's market share has grown from 3.54% to 4.86%. That's 37% growth, FWIW. Seems like that would correspond to a pretty big jump in sales.
Apple might have cost MS some sales, but it is worth
~30x more today. Even if 150million was not a big deal the 4.5 billion ROI is nothing to complain about. Granted, I don't know if or when they sold that back.
PS: I also think Jobs might have gotten back into the computer bis if Apple had folded. He made a lot of money from Pixar and could have easly started something from scrach. IMO, Apple, NeXT, and Pixar are all technology companies with a focus on good design.
I don't think they had much choice. I do think they got off cheap, though. At that point Apple was the only thing in the consumer OS space they could point at and call "competitor" with a straight face.
Why does one side have to "win"? I think it was quite obviously mutually beneficial.
Microsoft got out of some potentially costly lawsuits extremely cheaply and got some additional defence for the then-upcoming antitrust litigation. Apple got the immediate investment they desperately needed on favourable terms, they were able to stop spending money on expensive litigation, and they got guarantees over the software they wanted. Both sides also got each others patents, which was probably favourable for both companies as it allowed to resolve any potential remaining patent issues and allow interoperability.
Oh, I'm sure it was mutually beneficial at the time (otherwise the deal wouldn't have gone through), it's just that it seemed to me that Apple was not in a position to dictate terms. GGP makes an excellent point by showing how strong Apples negotiation position really was.
Why wouldn't they? I don't think Microsoft could have ever hoped for a better long term outcome. Microsoft made about $60B in revenues last year. Apple made a little more than half that and, for the most part, is still hardly a threat to Microsoft. Sure, they get their asses kicked in the portable music player and song download markets, but it's not really their core business. I think Microsoft's entries there are more about establishing fence posts than taking over a market.
You've already ruled out the portable music players, so what else do they have ?
- search ?
- office software ?
- desktop operating systems ? (massive piracy, bad product launches)
- mobile operating systems ? (lost to the iphone, in due time probably lost to android, too early to tell)
- game consoles ? (lost to the wii)
They're still doing well, but they could be doing a whole lot better.
If fence posts were all they were then they would have been better of to never get those products out the door. Once bitten twice shy. When microsoft was the only game in town that strategy worked. Today I think that is no longer a viable way to do business.
I don't know if they're planning for this to be a new core business. Up to this point they haven't been competing there like it is one. Bing is a fine entry, though. It's not going to knock off Google search, but they've done a very respectable job.
- office software ?
I dislike Microsoft Office and haven't used it for many years, but I realize I'm in the minority. Microsoft is so entrenched here it's ridiculous. The MS Office upgrade cycle will be safe for quite some time.
- desktop operating systems ? (massive piracy, bad product launches)
Every Windows release that I can remember has been a flop in one way or another, although Vista is in a tight race with Windows ME for worst launch ever. It hardly matters when the majority of PCs purchased come with Windows whether you want it or not. Besides, many of the people avoiding Vista are ending up with a new copy of Windows XP.
- mobile operating systems ? (lost to the iphone, in due time probably lost to android, too early to tell)
It's a joke.
- game consoles ? (lost to the wii)
Everyone lost to the Wii. It doesn't mean Microsoft hasn't had a respectable showing here. They're also still sufficiently different that they can coexist without much trouble.
It's obvious that Microsoft doesn't dominate markets the way they did 10 years ago, but I wouldn't be surprised if, after the anti-trust thing, they realized they don't have to. They are incredibly well diversified and making money in a lot of different places. They're still #1 by a longshot in the OS and office suite markets and making a good showing in a couple others.
