A short history - update
I don't fully understand why Microsoft felt that they were "smoked." They weren't really in the music market at all at the time. Why does Apple and Microsoft feel that they must compete in every field?
If this is a serious question, I think I can help you.
The truth is Steve used to like Bill. Maybe he still does. And Bill would love to be as cool [and as smart] as Steve. There's actually a strange, tense kinship there. After all, they grew up together in the industry. But Steve doesn't trust Bill because Steve once made the fatal mistake of trusting him with the GUI knowledge. And in turn, Bill knows Steve is smarter at business than he is. No one does deals like Steve Jobs. No one.
Steve is also a naturally very curious person. He's curious about everything. He's searching for information and opportunities for excellence. Opportunities where something isn't being done very well are prime targets for Steve.
Steve isn't a geek, and this is very much to his advantage in the game he's chosen to play - the game that's made him the most highly respected entrepreneur in the world. But because Steve isn't a geek, he's constantly intrigued by the workings of a geek's mind. Steve knows that geeks come up with ideas - often very good technical ideas, which in turn are often too far ahead of their time to work.
But rarely do these technical ideas come with solutions attached to them. And rarely do geeks return to their potentially best ideas at the very time when they could work. Because geeks are star gazers [and in Bill's case, a star gazer who can't resist talking about his future predictions], they are already dreaming and planning [and talking] about their next batch of premature ideas.
Bill is successful because he did two deals:
June 1981 - Buying the rights for 86-DOS from Rod Brock of Seattle Computer. Total cost: $75,000 - not a bad return on investment!
August 12, 1981 - Awarded IBM contract for PC-DOS on IBM PC.
You can throw in Office and Server in there too.
The trust big corporate buyers placed in Big Blue was based on their experience with mainframes, the might IBM threw at their sales operation, and the simplified solution that MS Windows offered. The reason MS have a virtual monopoly today is based on a combination of laziness on the part of the enterprise market, and Apple's concentration on home and niche buyers, and eventually largely ignoring the low unit profit/high support cost big order end of the business.
And that lead to Bill becoming the richest, [and in many quarters, most despised] man in the world.
So, the answer to your question is that Bill and MS are forever playing catchup, because Bill dreams ideas [before their time] - think tablets [2001], and Steve launches them... 9 years later - when the time is right!
And if that isn't clear, just imagine being Bill, returning home to Melinda and the kids on the evening of 27 Jan 2010, as his wife says: "Honey, didn't you announce a tablet 9 years ago?... And didn't Steve show one just the other day? What's happening there?"
Bill has to compete, because he's still got to prove himself as something more than a one trick pony. He never will of course, but he's got to keep trying. To this end, he's trying to buy a Nobel Prize. I don't wish to diminish the obvious good his money and Melinda are doing, but I personally hope the Norwegians see through his act.
Finally, why the music industry? Because the best entrepreneur in the world had [in April 2003] just demonstrated that it was the game to be in. It's that simple. Bill is only capable of visualising simple linear deals. Apple's deals with the music industry were based on Buddhist thinking, Chinese war craft, and the most Machiavellian of Machiavellian dealing. Remember he duped Wozniak [his best friend] out of $2,200 in the Breakout circuit board deal with Atari. Even if Bill could work something like the iTunes deal out for himself, he couldn't possibly carry it off.
And there's the BIG difference. Bill is about ideas. Steve is about collecting the best ideas, testing them to destruction and making the best ones happen. Bill actually believes he does make things happen. And in a way, he does play a vital part, but he derives absolutely no financial benefit from them, just §h1tloads of abuse and derision!
What we also learn from this is that even the richest man in the world, who can boast that he turned a $75,000 investment in an operating system in 1981 into earnings of $58.437 billion in 2009, has an inadequate self image - just like all the rest of us!
Do I feel sorry for him? Hell no.
