An Offer from a Rival Summer 1997

You are advising Steve Jobs, who has returned to Apple as an adviser and is shaping the company’s strategy.

Apple is losing money and market share, and software developers are questioning the Macintosh’s future. Microsoft, Apple’s biggest rival and its opponent in a long-running dispute over intellectual property, is proposing a deal.

Known information

Microsoft would buy $150 million of non-voting Apple shares.
Microsoft would commit to continue developing Microsoft Office for the Mac.
Apple would make Microsoft’s Internet Explorer the default web browser on the Mac, and the two companies would agree a broad patent cross-licence.
Many loyal Mac users regard Microsoft as the enemy.
Apple has recently replaced its chief executive after heavy losses.

Reveal what happened (spoilers: decide first)

Fact

What actually happened

Apple accepted the agreement with Microsoft. (Accept Microsoft’s deal)

The agreement was announced on 6 August 1997 at the Macworld Expo in Boston, with Bill Gates appearing on a giant video screen; some in the audience booed. Jobs became Apple’s interim chief executive weeks later, and the iMac launched in 1998.

Important

Possible consequences · Analysis and speculation, not fact

Without the deal, some analysts think Apple could have lost key software and struggled to recover; others argue its turnaround depended mainly on new products and cost cutting, and might have happened anyway.

History does not reveal what would definitely have happened under the other choice. Many factors could have changed the outcome.

Context · Why it was decided this way

For Apple the deal secured Office, the most important business software on the Mac, and settled a legal dispute. For Microsoft it helped keep a competitor alive at a time when it faced antitrust scrutiny, and promoted Internet Explorer.

Commentators still disagree about how much the $150 million itself mattered, compared with the signal it sent to customers and developers that the Mac would continue to have mainstream software.