Linked by Thom Holwerda on Fri 25th Aug 2006 20:33 UTC, submitted by Saad
Legal When Mac sales dropped off in 1985, Bill Gates personally wrote John Sculley suggesting that he license the Macintosh design to companies like Apollo, DEC and Wang, and establish the software as the industry standard. Apple declined, and Microsoft published Windows. Sculley was enraged, and eventually filed suit. After five years, Apple lost, but not before severely damaging its relationship with Microsoft (which accounted for 2/3 of all Mac software sales).
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RE[2]: Fatal delusion
by siebharinn on Sat 26th Aug 2006 11:50 UTC in reply to "RE: Fatal delusion"
Member since:

"The initial licensing scheme of DOS is what allowed to squash other players in the GUI arena that were competing with somewhat supperior offerings than Windows 1.x/2.x, like GeoWorks, and GEM. Those anticompetitive practices are what forced every other player out of the PC OS market."

That is revisionist bullshit.

Reply Parent Score: 2

RE[3]: Fatal delusion
by alcibiades on Sat 26th Aug 2006 14:49 in reply to "RE[2]: Fatal delusion"
alcibiades Member since:

'Revisionist bullshit' is a bit impolite, but its true that the argument has little merit. Go to:

Go to the years 1982-1989, a little down the page. These are absolute numbers shipped. There is also, a bit further down, a chart of market share.

I don't think it shows that anti competitive practices were what did it for MS. Certainly the IBM compatibility issue was very important and gave legitimacy to the PC.

But you still have to ask about Apple management: how on earth did they expect to meet global demand under their business model? You can see from the chart that they never got much over 10% with the Mac, and that was in the nineties. They couldn't, and must have known they couldn't, supply the level of demand shown in the charts all by themselves. If they did not expect to meet global demand themselves, and if they wouldn't let anyone else help them, then what did they expect to happen? Were people to give up and do without computers?

What in fact happened is that they bought PCs. As they were bound to. As we would have done. You were General Motors in those days. If you had ordered what you needed from Apple, they couldn't have supplied you.

The same thing, by the way, has happened all through Apple's history. They just run out of supply. As evidently they are doing right now.

The business model is not necessarily a problem if you are bound and determined to be a niche player. But people should realise that the niche status is the result of a strategic choice made by the company. It is not mainly due either to anti-competitive machinations by others, or to idiocy on the part of buyers. It is intrinsic to a business model which prevented them from supplying more than a tiny fraction of demand.

Edited 2006-08-26 14:50

Reply Parent Score: 5

RE[4]: Fatal delusion
by alucinor on Sat 26th Aug 2006 16:10 in reply to "RE[3]: Fatal delusion"
alucinor Member since:

Apple seems to be cautiously shifting strategies from niche to commodity market, now that they're on x86 processors with a UNIX OS ... pretty industry standard. It's interesting that MS dropped VB macro support in Excel for Mac just recently, or else it would have been too easy for many businesses to adopt Macs over Dells in droves.

Edited 2006-08-26 16:14

Reply Parent Score: 1

RE[4]: Fatal delusion
by javiercero1 on Sat 26th Aug 2006 17:38 in reply to "RE[3]: Fatal delusion"
javiercero1 Member since:

"I don't think it shows that anti competitive practices were what did it for MS. Certainly the IBM compatibility issue was very important and gave legitimacy to the PC"

Nice strawman,but if you look at the actual marketshare of the PC by the late 80s, it is well over 70%. Guess what? MS licensing for DOS was such that if you as a manufacturer wanted to sell DOS on any of your computers, every other PC that you sell as a company had to have a copy of DOS. They were strong arming OEMs first with DOS, and then showelling Windows down every body's throats. That is indeed quit the keen business model, it is however not an approach that deserves my respect.

You can put graphs that have nothing to do with the actual licensing of DOS all you want, next I recommend you also show how the average temperature for each of those years clearly proves that MS was doing nothing uncompetitive.

Edited 2006-08-26 17:38

Reply Parent Score: 2

RE[3]: Fatal delusion
by steve_s on Sun 27th Aug 2006 11:47 in reply to "RE[2]: Fatal delusion"
steve_s Member since:

Jeez - not another MS apologist.

MS's OEM license required that manufacturers of PC Compatible hardware that wished to supply MS-DOS/Windows with their machines would have to pay MS a license fee for ever machine they shipped. This was irrespective of whether the machine was even capable of running DOS/Windows, so long as it was based on an Intel chip. This is how MS came to completely dominate the OS market on IBM PC Compatible hardware. It also helped to prevent alternative Intel-based platforms from becoming established.

Windows 1 and 2 were abysmal pieces of software. GEM and GeoWorks really were technically superior. PenPoint was a real OS, crushed by MS's Windows for Pen Computing which was vapour. All those OSes suffered through the fact that MS had to be paid a license fee for every machine that shipped with them installed, inherently making them significantly more expensive.

This does not explain how the PC market came to be dominated by clones of the IBM PC and their descendants rather than something else. That is explained by diversity of supply - corporate buyers were happier knowing they were not tied to a single PC manufacturer.

Reply Parent Score: 1

RE[4]: Fatal delusion
by alcibiades on Sun 27th Aug 2006 14:57 in reply to "RE[3]: Fatal delusion"
alcibiades Member since:

Agreed on the anti competitive aspect. And no, not an MS apologist. The anti competitive practices they followed are inexcusable. But, two points.

One is you have to account for why MS could get away with its licensing scheme. Answer: the threat of withdrawal of DOS. Now why was this a viable threat? Market power and demand is unfortunately the answer. It occurred, I believe, in 1988, by which time the threat was viable. But what you have to explain is why Mac was not a viable contender before the arrival of per processor licensing, ie the years 1985-8. That is the value of the charts. They show when the decisive moment really was.

Two, there was no alternative available from Apple during those years. Suppose MS had lost out to one of the other OSs that would run on IBM compatibles. It would not have helped Apple. They were absolutely refusing to supply. The key moment was the Compaq bios suit. Once Compaq won that, there were only two choices for Apple. One was to license other manufacturers on Intel. The other was retreat to the niche. Again, the charts show the timing of this.

javiercero1 - the years you have to explain are 1985-7. This is when the market decisively chose compatibles instead of Apples. I believe it was not until 1988 that MS began to introduce the infamous per processor licensing, and that was in response to the DR Dos threat. Maybe you are differently informed on the history of this though?

If that is correct (my source is the Utah law suit brought by Novell), then it was not the per processor licensing that advantaged MS against Apple. It was the business model issue that was decisivie. That and the consequent inability of Apple to supply. By the time per processor licensing came in, and all the other anti competitive practices were viable for MS, it was all over.

Please don't call me an MS apologist, I am not. I simply strongly believe in understanding the real lessons of business history as it was. The mistaken explanation based on Apple victimisation, when the reality was that what happened was a consequence of an Apple free choice, doesn't do Apple any favors.

Reply Parent Score: 3