The unimaginable happened to Apple today, when Microsoft said it would take a $150 million stake in the company.
Steve Jobs, putative head of the ailing desktop maker, caused a near riot at the Mac World conference in Boston today when he told delegates about the agreement. He also announced a dramatic boardroom reorganisation, which brings Jobs himself, Oracle chief Larry Ellison and former IBM chief financial officer Jerome York on to the board of directors, at the expense of Mike Markkula, Katherine Hudson and Bernard Goldstein, all deposed.
Although Wall Street has been speculating on who would emerge as a 'white knight' to rescue Apple from its current crisis, IBM or Motorola were most widely expected to make the move - not the company whose technology is responsible for pushing Apple into a backwater. The news threw Wall Street into pandemonium, with Apple shares soaring. Although Microsoft will not get voting rights, analysts believe it will not only secure influence over Apple's direction but also protect it from takeover. Microsoft cannot sell its stake for three years.
Jobs, who like his close friend and new co-director Ellison has a bitter enmity against Microsoft chief Bill Gates, said: ?We have to let go of the notion that for Apple to win, Microsoft has to lose.?
That volte-face from Jobs could begin to haunt him if the Justice Department starts to take a close interest in the case. Steve Brazier, an associate director at analysts Dataquest, said: ?It could be that Microsoft feels that, if it took a share in Apple, it will help its case with the SEC. Apple has been both a competitor and a demand generator for Microsoft.?
There were also implications for the Wintel alliance, he said. ?Microsoft and Intel?s relationship is very close but Intel?s strategy is to move people to faster processors. The Microsoft strategy is to move people to scalable Windows solutions.? In fact, 10-15 per cent of Microsoft's revenues come from Mac software.
But Apple has sometimes been a thorn in its side in this respect - for instance, the failure to deliver new versions of Microsoft Office for Mac. ?If Apple wanted Microsoft to prosper, they could have supplied the upgrade to Office for the Mac platform earlier,? he said. ?That has not happened yet.?
The Justice Department declined to confirm or deny that it would reopen its investigation into Microsoft on antitrust grounds, after it insisted the company built a series of Chinese Walls four years ago.
Jobs said a new head had not yet been agreed for Apple.
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