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  • I've invited here today 3 industry experts to have a panel discussion on software

  • and now ladies and gentleman the Macintosh software dating game welcome to the Macintosh

  • software dating game software CEOs could I please ask you to introduce yourselves

  • Hi Fred Gibbons president of Software Publishing Corporation

  • Hi I'm Mitch Kapor president of Lotus we do a product called 1-2-3 my name is Bill

  • Gates I'm chairman of Microsoft and during 1984

  • Microsoft expects to get half its revenues from Macintosh software

  • software magnate number three, when was your first date with Macintosh?

  • we've been working with the Mac for almost two years now and we put some of our a really

  • good people on it software CEO number three will Macintosh be

  • the third industry standard? well to create a new standard it take something

  • that's not just a little bit different it takes something that's really new and really

  • captures people's imagination and the Macintosh of all the machines I've

  • ever seen is the only one that meet that standard

  • software CEO number three describe your ideal relationship with Apple

  • we'll be selling our software independently so the key thing is that

  • Apple gets a lot of consistent standard machines out there quickly

  • well sorry Steve, time's up ... we'd like to give Steve a few moments to decide

  • today's winner OK Steve, who's the winner?

  • apples are red IBM's blue if Mac's gonna be the third milestone

  • I need all of you

  • Now, I'd like to talk about to talk about meaningful partners.

  • Apple lives in an ecosystem and it needs help from other partners, it needs to help other

  • partners. And relationships that, uhm, that are destructive

  • don't help anybody in this industry as it is today, so, during the last several weeks,

  • we have looked at some of the relationships, and uh, one has stood out as a relationship

  • that, uh, hasn't been going so well but had the potential, I think, to be great for both

  • companies, the discussions actually began because there were some uh, patent disputes.

  • And, uh, rather than, I know, rather than repeating history, I'm extremely proud of

  • both companies that they have resolved these differences in a very very professional way.

  • I happen to have a special guest with me today, uh, via Satellite downlink, and uh, if we

  • could get him up on the stage right now. Some of the most exciting work that I've done

  • in my career has been the work that I've with Steve on the Macintosh. Uh, whether it's the

  • first introduction or doing products like Mac Excel, uh, these have been major milestones.

  • Uh, we're very excited about the new release we're building. This is called Mac Office

  • 98. We do expect to get it out by the end of this year. I think it's going to really,

  • uh, set a new bench mark for doing a good job with performance and exploiting unique

  • Mac features. Uh, in many ways its more advanced than what we've done on the Windows platform.

  • We're also excited about Internet Explorer and we've got a very dedicated team that's

  • down in California that works on that product and, uh, the code is really specially developed

  • for the Macintosh. It's not just a port of what we've done in the Windows environment

  • and we look forward to the feedback from all of you as we move forward doing more Macintosh

  • software. Thanks.

  • The era of setting this up as a competition between Apple and Microsoft is over as far

  • as I'm concerned. This is about getting Apple healthy, and this is about Apple being able

  • to make incredibly great contributions to the industry, to get healthy and prosper again.

  • So thank you all for coming I look forward for earring the grillings and cheerings tonights

  • and for the days to follow Well, thank you.

  • Before we get started, there were some pioneers--of course, we have the pioneers here on the stage,

  • but there were some other really important pioneers in the video we just saw and a couple

  • of them are here in the audience. Mitch Kapor, who is a regular, could you just stand up,

  • wherever you are? There he is. And Fred Gibbons, who has not come to D before,

  • but is here tonight. Fred. There's Fred right there.

  • And I don't know if he's in the room, but I do want to recognize our fellow journalist,

  • Brent Schlender from Fortune, who, to my knowledge, did the last joint interview these guys did.

  • It was not onstage, but it was Fortune magazine. Brent, I don't know if you're in the room.

  • If you are, can you stand? Maybe he's way over there.

  • So let's get started. I wanted to ask, there's been a lot of mano-a-mano/catfight kind of

  • thing in a lot of the blogs and the press and stuff like that, and we wanted to--the

  • first question I was interested in asking is what you think each has contributed to

  • the computer and technology industry, starting with you, Steve, for Bill, and vice versa.

  • Well, you know, Bill built the first software company in the industry and I think he built

  • the first software company before anybody really in our industry knew what a software

  • company was, except for these guys. And that was huge. That was really huge. And the business

  • model that they ended up pursuing turned out to be the one that worked really well, you

  • know, for the industry. I think the biggest thing was, Bill was really focused on software

  • before almost anybody else had a clue that it was really the software.

  • Was important? That's what I see. I mean, a lot of other

  • things you could say, but that's the high order bit. And I think building a company's

  • really hard, and it requires your greatest persuasive abilities to hire the best people

  • you can and keep them at your company and keep them working, doing the best work of

  • their lives, hopefully. And Bill's been able to stay with it for all these years.

  • Bill, how about the contribution of Steve and Apple?

  • Well, first, I want to clarify: I'm not Fake Steve Jobs.

  • What Steve's done is quite phenomenal, and if you look back to 1977, that Apple II computer,

  • the idea that it would be a mass-market machine, you know, the bet that was made there by Apple

  • uniquely--there were other people with products, but the idea that this could be an incredible

  • empowering phenomenon, Apple pursued that dream.

  • Then one of the most fun things we did was the Macintosh and that was so risky. People

  • may not remember that Apple really bet the company. Lisa hadn't done that well, and some

  • people were saying that general approach wasn't good, but the team that Steve built even within

  • the company to pursue that, even some days it felt a little ahead of its time--I don't

  • know if you remember that Twiggy disk drive and...

  • One hundred twenty-eight K. Oh, the Twiggy disk drive, yes.

  • Steve gave a speech once, which is one of my favorites, where he talked about, in a

  • certain sense, we build the products that we want to use ourselves. And so he's really

  • pursued that with incredible taste and elegance that has had a huge impact on the industry.

  • And his ability to always come around and figure out where that next bet should be has

  • been phenomenal. Apple literally was failing when Steve went back and re-infused the innovation

  • and risk-taking that have been phenomenal. So the industry's benefited immensely from

  • his work. We've both been lucky to be part of it, but I'd say he's contributed as much

  • as anyone. We've also both been incredibly lucky to have

  • had great partners that we started the companies with and we've attracted great people. I mean,

  • so everything that's been done at Microsoft and at Apple has been done by just remarkable

  • people, none of which are sitting up here today.

  • Well, not us. Not us. So in a way, you're the stand-ins

  • for all those other people. Yeah, in a way, we are. In a very tangible

  • way. So Bill mentioned the Apple II and 1977 and

  • 30 years ago. And there were a couple of other computers which were aimed at the idea that

  • average people might be able to use them, and looking back on it, a really average-average

  • person might not have been able to use them by today's standards, but it certainly broadened

  • the base of who could use computers. I actually looked at an Apple ad from 1978.

  • It was a print ad. That shows you how ancient it was. And it said, thousands of people have

  • discovered the Apple computer. Thousands of people. And it also said, you don't want to

  • buy one of these computers where you put a cartridge in. I think that was a reference

  • to one of the Atari or something. Oh, no.

  • You want a computer you can write your own programs on. And obviously, people still do.

  • We had some very strange ads back then. We had one where it was in a kitchen and there

  • was a woman that looked like the wife and she was typing in recipes on the computer

  • with the husband looking on approvingly in the back. Stuff like that.

  • How did that work for you? I don't think well.

  • I know you started Microsoft prior to 1977. I think Apple started the year before, in

  • '76. '76.

  • Microsoft in ... '74 was when we started writing BASIC. Then

  • we shipped the BASIC in '75. Some people here, but I don't think most people,

  • know that there was actually some Microsoft software in that Apple II computer. You want

  • to talk about what happened there, how that occurred?

  • Yeah. There had been the Altair and a few other companies--actually, about 24--that

  • had done various machines, but the '77 group included the PET, TRS-80 ...

  • Commodore? Yeah, the Commodore PET, TRS-80 and the Apple

  • II. The original Apple II BASIC, the Integer BASIC, we had nothing to do with. But then

  • there was a floating-point one where--and I mostly worked with Woz on that.

  • Let me tell the story. My partner we started out with, this guy named Steve Wozniak. Brilliant,

  • brilliant guy. He writes this BASIC that is, like, the best BASIC on the planet. It does

  • stuff that no other BASIC's ever done. You don't have to run it to find your error messages.

  • It finds them when you type it in and stuff. It's perfect in every way, except for one

  • thing, which is it's just fixed-point, right? It's not floating-point.

  • So we're getting a lot of input that people want this BASIC to be floating-point. And,

  • like, we're begging Woz, please, please make this floating point.

  • Who's we? How many people are in Apple? Well, me. We're begging Woz to make this floating-point

  • and he just never does it. You know, and he wrote it by hand on paper. I mean, you know,

  • he didn't have an assembler or anything to write it with. It was all just written on

  • paper and he'd type it in. He just never got around to making it floating-point.

  • Why? This is one of the mysteries of life. I don't

  • know, but he never did. So, you know, Microsoft had this very popular, really good floating-point

  • BASIC that we ended up going to them and saying "help."

  • And how much was the--I think you were telling us earlier ...

  • Oh, it was $31,000. That Apple paid you for the ...

  • For the floating-point BASIC. And I flew out to Apple, I spent two days there getting the

  • cassette. The cassette tapes were the main ways that people stored things at the time,

  • right? And, you know, that was fun. I think the most fun is later when we worked

  • together. What was the most fun? Tell the story about

  • the most fun that was later. Or maybe later, not the most fun.

  • Let them talk. Teasing.

  • Well, you know, Steve can probably start it better. The team that was assembled there

  • to do the Macintosh was a very committed team. And there was an equivalent team on our side

  • that just got totally focused on this activity. Jeff Harbers, a lot of incredible people.

  • And we had really bet our future on the Macintosh being successful, and then, hopefully, graphics

  • interfaces in general being successful, but first and foremost, the thing that would popularize

  • that being the Macintosh. So we were working together. The schedules

  • were uncertain. The quality was uncertain. The price. When Steve first came up, it was

  • going to be a lot cheaper computer than it ended up being, but that was fine.

  • So you worked in both places? Well, we were in Seattle and we'd fly down

  • there. But Microsoft, if I remember correctly from

  • what I've read, wasn't Microsoft one of the few companies that were allowed to even have

  • a prototype of the Mac at the time? Yeah. What's interesting, what's hard to remember

  • now is that Microsoft wasn't in the applications business then. They took a big bet on the

  • Mac because this is how they got into the apps business. Lotus dominated the apps business

  • on the PC back then. Right. We'd done just MultiPlan, which was

  • a hit on the Apple II, and then Mitch did an incredible job betting on the IBM PC and

  • 1-2-3 came in and, you know, ruled that part of the business. So the question was, what

  • was the next paradigm shift that would allow for an entry? We had Word, but WordPerfect

  • was by far the strongest in word processing dBase database.

  • And Word was kind of a DOS text ... All of these products I'm saying were DOS-based

  • products. Right.

  • Because Windows wasn't in the picture at the time.

  • Right. That's more early '90s that we get to that.

  • So we made this bet that the paradigm shift would be graphics interface and, in particular,

  • that the Macintosh would make that happen with 128K of memory, 22K of which was for

  • the screen buffer, 14K was for the operating system. So it was ...

  • 14K? Yeah.

  • The original Mac operating system was 14K? 14K that we had to have loaded when our software

  • ran. So when the shell would come up, it had all the 128K.

  • The OS was bigger than 14K. It was in the 20s somewhere.

  • I see. We ship these computers now with, you know,

  • a gigabyte, 2 gigabytes of memory, and nobody remembers 128K.

  • I remember that. I remember paying a lot of money for computers with 128K in those days.

  • So the two companies worked closely on the Mac project because you were maybe not the

  • only, but the principal or one of the principal software creators for it, is that right?

  • Well, Apple did the Mac itself, but we got Bill and his team involved to write these

  • applications. We were doing a few apps ourselves. We did MacPaint, MacDraw and stuff like that,

  • but Bill and his team did some great work. Now, in terms of moving forward after you

  • left and your company grew more and more strong, what did you think was going to happen to

  • Apple after sort of the disasters that occurred after Steve left?

  • Well, Apple, they hung in the balance. We continued to do Macintosh software. Excel,

  • which Steve and I introduced together in New York City, that was kind of a fun event, that

  • went on and did very well. But then, you know, Apple just wasn't differentiating itself well

  • enough from the higher-volume platform. Meaning Windows, right?

  • DOS and Windows. OK. But especially Windows in the '90s began

  • to take off. By 1995, Windows became popular. The big debate

  • wasn't sort of Mac versus Windows. The big debate was character mode interface versus

  • graphics mode interface. And when the 386 came and we got more memory and the speed

  • was adequate and some development tools came along, that paradigm bet on GUI paid off for

  • everybody who'd gotten in early and said, you know, this is the way that's going to

  • go. But Apple wasn't able to leverage its products?

  • After the 512K Mac was done, the product line just didn't evolve as fast--Steve wasn't there--as

  • it needed to. And we were actually negotiating a deal to invest and make some commitments

  • and things with Gil Amelio. No, seriously. Don't be mean to him.

  • I'm sorry? Just saying the word Gil Amelio, you can see

  • his... So I was calling him up on the weekend and

  • all this stuff and next thing I knew, Steve called me up and said, "Don't worry about

  • that negotiation with Gil Amelio. You can just talk to me now." And I said, "Wow."

  • Gil was a nice guy, but he had a saying. He said, "Apple is like a ship with a hole in

  • the bottom leaking water and my job is to get the ship pointed in the right direction."

  • Meanwhile, through all this--I want to get back to the thing we saw in 1997 at Macworld

  • there--but Windows was just going great guns. I mean, Windows 95, to whatever extent earlier

  • versions of Windows had not had all the features, all the GUI stuff that the Mac had, and Windows

  • 95 really was an enormous, enormous leap. Yeah. Windows 95 is when graphics interface

  • became mainstream and when the software industry realized, wow, this is the way applications

  • are going to be done. And it was amazing that it was ridiculed sort of in '93, '94, was

  • not mainstream, and then in '95, the debate was over. It was kind of just a commonsense

  • thing. And it was a combination of hardware and software maturity getting to a point that

  • people could see it. So I don't want to go through every detail,

  • the whole history of how you came back, but... Thank you.

  • But you in that video we all saw, you said you had decided that it was destructive to

  • have this competition with Microsoft. Now, obviously, Apple was in a lot of trouble and

  • I presume that there was some tactical or strategic reason for that, as well as just

  • wanting to be a nice guy, right? You know, Apple was in very serious trouble.

  • And what was really clear was that if the game was a zero-sum game where for Apple to

  • win, Microsoft had to lose, then Apple was going to lose. But a lot of people's heads

  • were still in that place. Why was that, from your perspective?

  • Well, a lot of people's heads were in that place at Apple and even in the customer base

  • because, you know, Apple had invented a lot of this stuff and Microsoft was being successful

  • and Apple wasn't and there was jealousy and this and that. There was just a lot of reasons

  • for it that don't matter. But the net result of it was, was there were

  • too many people at Apple and in the Apple ecosystem playing the game of, for Apple to

  • win, Microsoft has to