Apple Predicted to Become Trillion Dollar Company Within 12 Months

[IJ Reilly]

The Urban Myth That Just Won't Die. Microsoft's alleged $150 million check was in partial settlement of a lawsuit (most likely related to stolen QuickTime video acceleration code used in Video for Windows), and was just an initial payment according to Fred Anderson, Apple CFO at the time. The exact total amounts have never been publicly revealed, but could have been up to a Billion. The settlement also included cross licensing of patents (including that stolen code), and MS promise to continue Mac versions of Word and Excel for five more years.

By the way, back then Apple had never had less than $400 million in the bank, with little to no long term debt. Never near "insolvency".

Yes a lot of the 1997 Microsoft-Apple deal has become the stuff of urban legend, but this account is not quite right either. The $150M wasn't alleged, it actually happened. It also wasn't a check, it was an investment in Apple shares, a special nonvoting class that Microsoft was required to hold for at least three years. As you say, how much cash changed hands behind the scenes was never reported. At the time Apple still held over $1B in cash, but they'd lost that much in just the year and a half before, so Apple was indeed bleeding at a rate that would have been terminal at some point, not very far off. A takeover or buyout looked pretty much imminent.

When this deal happened, it was most often reported as "Bill Gates Wins Again!" Because, you know, Bill Gates always won back then. Even getting roundly booed by the crowd when his face appeared on the big screen at MacWorld was seen somehow perversely as a win for him. Not many had the insight to look beyond the surface for what really happened, which is that Steve Jobs had brilliantly engineered a deal that disengaged Apple from their death-clutch with Microsoft and did it in a way that gave Bill Gates enough cover to sign on. I bet he regretted it later.

This is probably the single-most important and least understood thing Steve Jobs did to ensure Apple's survival. If it had not happened, very likely no iMac, no iPod, no iPhone, no iPad.

 

[e-coli]

Great post! Sorry to hear about your dad. May he may he rest in peace.

I bought my mom and dad iPhones and share pics and vids of their grandchildren all the time and they can see all those precious moments since I devices are so easy to use. That make them happy. My 2yrs old daughter ft her cousins, grandparents, aunties, on her own and have regular conversations with the family through ft, etc. My wife and I use iPads as baby monitors when our kid sleep and enjoyed HD quality with long battery life instead of those ugly and expensive baby monitors.

So yeah, Apple devices made our lives better and closer to each other as well.

Haters gonna hate.

Appreciate the condolences.

We're all so quick to forget how different the world was a decade ago. But some on this board may just be too young to remember. (yikes)

 

[farmboy]

Yes a lot of the 1997 Microsoft-Apple deal has become the stuff of urban legend, but this account is not quite right either. The $150M wasn't alleged, it actually happened. It also wasn't a check, it was an investment in Apple shares, a special nonvoting class that Microsoft was required to hold for at least three years. As you say, how much cash changed hands behind the scenes was never reported. At the time Apple still held over $1B in cash, but they'd lost that much in just the year and a half before, so Apple was indeed bleeding at a rate that would have been terminal at some point, not very far off. A takeover or buyout looked pretty much imminent.

When this deal happened, it was most often reported as "Bill Gates Wins Again!" Because, you know, Bill Gates always won back then. Even getting roundly booed by the crowd when his face appeared on the big screen at MacWorld was seen somehow perversely as a win for him. Not many had the insight to look beyond the surface for what really happened, which is that Steve Jobs had brilliantly engineered a deal that disengaged Apple from their death-clutch with Microsoft and did it in a way that gave Bill Gates enough cover to sign on. I bet he regretted it later.

This is probably the single-most important and least understood thing Steve Jobs did to ensure Apple's survival. If it had not happened, very likely no iMac, no iPod, no iPhone, no iPad.

When I said "alleged" I meant to imply that the precise amount was not revealed, and "check" was being glib (although not so much if I have to explain it, I guess). Back then, I estimated that tooling, fabrication, parts and software licensing would only have cost Apple about $20-25 million per model, and another $30 million for marketing/sales, so if they sat on their hands for R&D and new facility construction they could have survived for quite a while.

The danger wasn't insolvency, the danger was irrelevance.

 

[IJ Reilly]

When I said "alleged" I meant to imply that the precise amount was not revealed, and "check" was being glib (although not so much if I have to explain it, I guess). Back then, I estimated that tooling, fabrication, parts and software licensing would only have cost Apple about $20-25 million per model, and another $30 million for marketing/sales, so if they sat on their hands for R&D and new facility construction they could have survived for quite a while.

The danger wasn't insolvency, the danger was irrelevance.

It was both, ultimately. The burn rate was unsustainable. The cash infusion was less important than Apple freeing itself from a running battle with Microsoft, a battle that Microsoft could win even by losing. Steve made it look like Microsoft was now on Apple's side. The PR value was immense. I bought my first AAPL back then not because I was so sure they'd survive let alone thrive but because it seemed the worst-case scenario for them was a takeover. Sun Microsystems wanted them for the intellectual property and supposedly even made the board an offer. Now that's some irony.

Anyway, not to get too pedantic, the word alleged is constantly misused. It means to accuse, usually of wrongdoing, without proof or evidence. A nice meaty word when it is used properly. Allegedly and supposedly have different meanings, though in this case, neither really applies to the $150M investment. That part of the deal was very deliberately public.

 

[bbotte]

Well I have an iPhone 6s+, had every phone before that, and yep that's just before they stoped subsidizing the phone. I'm not shelling out $1000 this year either, and I'm not adding $40-$50 a month for a cellphone payment. I'm not in contract on 4 lines. Apple should be careful about this phone, price it out of the market when and Android has all that and more at half the price is gonna turn people away. I've already made my decision not to purchase again. Lots of others will too. I personally do not see this as sustainable for apple without subsidies. The middle class and poor have less and less each month. It's cheaper for me to buy and install a new battery on the current phone I own. This throw away $600-$1000 piece of tech each year cannot continue. Not to mention it's painfully obvious Jobbs is dead, the wireless charging will be separate on this phone and late? Their direct rival has had it for 2 years? AirPods are on a 6 month backorder? There is a stylus for the iPad. The watch is garbage, wish I never bought it. Nothing innovating has come out since he passed.