Apple & Microsoft: Odd-couple partners
Companies sign pact promising to extend software availability for Macs 5 more years.
NEW YORK (CNNMoney.com) - When Steve Jobs announced on Tuesday that all Apple computers will contain Intel chips by the end of the year, he simultaneously announced a five-year partnership with Microsoft. The agreement is not revolutionary – it's an extension of an already existing arrangement between the two companies – but it does allay some fears, raised at the time Apple (Research) announced the switch to Intel chips, about whether Microsoft (Research) would continue to provide Office software on the new "Mactel" platform.
As part of the agreement, signed in November 2005 and good for five years, Microsoft has agreed to deliver Office software for the Mac; forthcoming versions are expected to be compatible with both the pre-Intel Macs as well as the new Intel models. The companies inked a similar five-year deal in 1997 but had been working together without a partnership since 2002. Scott Erickson, director of product management and marketing for Microsoft's Macintosh Business Unit, said those questions prompted Microsoft to ink a new agreement formalizing its long-standing relationship with Apple. Because of Microsoft's competing relationship with Apple, rumors about Microsoft's commitment to making Office software for Mac users have continually swirled. "There is always this whispering that Microsoft wants to drop office for the Mac -- I think more than anything else, this is just a way for Microsoft to deflect some of the rumors out there that they are going to drop the Mac," said Greg DeMichillie, a senior analyst with Directions on Microsoft, an independent consulting and analysis firm focusing specifically on Microsoft. Those rumors perked up when Microsoft finally announced it would stop making new versions of its Internet Explorer web browser in 2003; after putting out a few updates to the browser, the company finally took Explorer for the Mac off life support last year. Most recently, Microsoft announced it is pulling the plug on Windows Media player for the Mac, according to a news report on Cnet.com. Microsoft will continue to offer the software, which allows users to play music and video clips on their computers, for download to Apple users but will not release new versions or updates. Money talks...
But as DeMichillie points out, Explorer is free, while Office is not. And though Apple clearly benefits from having the widely-used Office software available to its users, it may seem less obvious what Microsoft stands to gain from continuing its relationship. But according to Greg DeMichillie, a senior analyst with Directions on Microsoft, an independent consulting and analysis firm focusing specifically on Microsoft, the business is still a profitable one for Microsoft. While it's not a huge part of Microsoft's business, given the company's sheer scale, "Apple's 3 to 4 percent market share doesn't hurt them either," DeMichillie said. "Also, to have them be seen going out of their way to hurt a competing operating system is not really helpful from an anti-trust perspective." ...and the customer is always right
For his part, Microsoft's Erickson said, "It's not a question of what Microsoft gains, it's a question of what our customers gain, and that is the peace of mind that we're in this for the long haul." The partnership – and its prime-time announcement during Jobs' fervently-followed keynote address at the Macworld Expo in San Francisco -- also highlighted Microsoft's Macintosh Business Unit, dubbed Mac BU, a cluster of about 180 Microsoft employees who spend their working lives making products for Apple computers. It's a curious dichotomy, given the competitive relationship between the two companies. Erickson said he sometimes gets strange looks as a Microsoft employee whipping out an Apple laptop during meetings and presentations, but said that working on a "Mac island" in a sea of Microsoft developers has offered a different culture and perspective within Microsoft. "It's the best of both worlds," he said. "We get to work with Microsoft's developers and have great partnerships with both the Mac and PC worlds." The Mac business unit split from the Windows development team and became a separate unit in 1997. The majority of the Mac BU employees work in Redmond, Microsoft's headquarters. About 50 live in California, with some working in offices just seven minutes from Apple's headquarters. Erickson said that outside Apple, Microsoft's Mac BU is the largest Mac developer outside Apple and has been making software for the Mac for 20 years. In fact, Microsoft's Word and Excel software programs existed for the Mac before they were available for Windows PCs, Erickson said. Today, the group's main products are the Office software suite, MSN Messenger for the Mac and Virtual PC, which helps Mac users run Windows-only programs on their computers. ----------------------------------------------------- Does tiny Apple have too much influence? Click here.
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