So near, and yet so far. That could be Apple’s corporate motto. It missed out on the handheld computing market with the Newton, and the early success of the PowerBook was tarnished by fiascos such as the PowerBook 5300.
Yet none of those disasters hold a candle to Apple’s biggest mistake – handing over the entire personal computer industry to Microsoft in the mid-80s. This was the result of two spectacularly bad decisions.
Before the Macintosh came along, Apple had something like 25 per cent of the personal computer market all to itself, thanks to the success of the Apple II computer. That compares with its current market share of just 5 per cent (and that’s on a good day).
Apple had high hopes for the Macintosh in 1984, because its slick graphical interface was far more advanced and easy to use than anything in the PC market. But when Microsoft announced its plans for its own graphical Operating System, to be called Windows, Apple knew that it might have a fight on its hands. Windows seemed to copy many features from the Mac Operating System so Apple was ready to send in the lawyers (conveniently overlooking the fact that Apple executives had actually swiped the idea for the Mac itself from a research project they had seen at Xerox).
There was a problem, though. Microsoft’s
Word and Excel programs were crucial pieces of software that the Mac would need if it were to succeed in the business market. If Apple sued Microsoft then Microsoft might retaliate by killing off the Mac versions of Word and Excel. That would leave the Mac dead in the water.
So, in November 1985, just a few days
after Microsoft had released Windows 1.0,
Apple CEO John Sculley signed a deal with Microsoft. The deal was that Microsoft would continue to develop Excel exclusively for the Mac, with no Windows version for at least a year. In return, Apple gave Microsoft the right to use ‘derivative’ elements of the Mac Operating System and its interface, such as its windows, icons, and menu designs.
Sculley now says he intended that agreement to only apply to Windows version 1.0, and that Apple’s lawyers screwed up by actually drafting a more open-ended agreement which also allowed Microsoft to copy the Mac interface in future versions of Windows as well. In effect, Apple handed its technological crown jewels to Microsoft on a plate.
The first version of Windows, released in 1985 wasn’t much of a success, but as versions 2.0 and 3.0 were released Microsoft managed to smarten it up so that it became a genuine rival for the Mac Operating System. Apple then tried to sue Microsoft, starting a court case that dragged on until 1995, but the open-ended nature of that original agreement meant that appeal after appeal went in Microsoft’s favour.