Bill and Steve

The role of Microsoft in the development of the Mac was complex and risky – it was a dual-edged sword. Microsoft was founded in 1975 and Apple was founded in 1977. Both Bill Gates and Steve Jobs were born in 1955 (as was I). 

I first met Bill in the spring of 1981 when I interviewed for a fulltime job during my second year at the Stanford Graduate School of Business. As mentioned in another Mac Story, I didn’t get a job offer. I later heard that Bill said that the company already had one non-technical employee (my friend Steve Ballmer) and they would never need another.

In the early 1980s Microsoft was not yet “Microsoft”. The personal computer industry was in its infancy and the role of independent software developers was still a new and untested idea. Microsoft ended the year 1981 with 128 employees and revenues of $16 million. By contrast, Apple's revenues for their FY1981 were $335 million.

That same year (1981) – and a full three years before the Mac would be launched – Bill made an amazing commitment to the unproven Mac by assigning a disproportionately large number of software programmers to work on innovative new Mac applications. This was fabulous for the Mac. But also in 1981, Microsoft licensed its MS-DOS operating system to IBM to be the brains for their brand new IBM-PC. Without MS-DOS there would be no IBM-PC. Everyone seemed to need Microsoft.

Apple supplied Microsoft with early prototypes of the Mac that were kept in a locked room at their headquarters in Bellevue, Washington. A very talented, wonderful man named Jeff Harbers managed the project. Jeff died young in a plane crash in Montana in 2006. Jeff gave a special code name for the project: Sand. I can recall visiting Jeff at Microsoft and going into the Sand room with their prototype Macs.

Apple was counting on Microsoft to develop some key applications for the Mac -- because if the Mac lacked reliable third party business apps at the time of its launch, we would be dead in the water. And the Microsoft brand would add credibility to Mac as a “business ready” computer.

At the same time we were greatly worried that Microsoft might come out with a new operating system (OS) utilizing a graphical user interface and a mouse for the IBM-PC. And by working on the Sand project, they could easily borrow ideas from the Mac OS to make an IBM-PC compatible version. This could ruin Apple. 

To stir the pot a bit more, both Bill and Steve were naturally very competitive! Both loved to win and hated losing. The stakes, personally and institutionally, were very high.

In 1983 the suspicion and tension simply became too great. 28-year-old Steve called 28-year-old Bill and told him that he didn’t trust him and insisted that he fly down to our offices in Cupertino immediately. 

Bill arrived from Seattle as quickly as he could. He brought with him recently hired Microsoft President Jon Shirley. Steve Jobs, Bob Belleville, Bill Gates, Jon Shirley and I (and perhaps some others) met in an Apple conference room. This was Steve’s meeting and he strongly vented his distrust. Then he commanded Bill to spill his guts. Steve wanted to know everything that Microsoft was doing – he had to find out if they were friend or foe. 

Bill obligingly told all – he went up to a white board and described with words and diagrams all that Microsoft was doing. I remember thinking that Bill was remarkably non-defensive and exceptionally open. But by the time he was done on the white board, Steve wasn’t satisfied and still didn’t believe him. Bill left the meeting and flew back to Seattle with Jon Shirley in tow.

Early the next morning Bill called me at my office. In a serious tone he asked if Microsoft should continue developing software for the Mac. He was genuinely seeking direction. He was ready to pull the plug if necessary.

Without checking with Steve, I immediately told him yes. We desperately needed their software and we’d have to figure out how to co-exist.

In hindsight it was the right decision. In November 1983 Microsoft announced a new IBM-PC compatible operating system called Windows - our worst fear. But the first version, Window 1.0, didn’t shipped until November 1985, and was a commercial failure. (The Mac was launched on January 24, 1984.) It wasn’t until Windows 3.0 came out in May 1990 that the Window’s juggernaut took off. Lucky for us, this 6-year delay allowed the Mac to gain a solid foothold in the marketplace and to be viewed as the market innovator.

As a postscript, Microsoft’s suite of productivity applications (now called Office and consisting of Word, Excel, PowerPoint and Outlook), have been a best selling Mac app for over 30 years. A win-win for everyone. 

Thanks Bill for that phone call, and glad you kept developing your Mac apps! And thanks also to Jeff Harbers – if you’re up in heaven reading this, I hope you’re smiling!