Today in Apple history: Microsoft hits the height of its power

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December 1999 was a turning point for Microsoft.
December 1999 proved to be a turning point for Microsoft.
Image: Ste Smith/Cult of Mac

December 30: Today in Apple history: Microsoft hits the height of its power December 30, 1999: Microsoft hits the height of its 1990s dominance and begins its early-2000s decline, clearing a gap at the top for Apple.

After hitting its all-time high of $53.60, Microsoft stock starts to fall. Less than a year later, Microsoft shares fall more than 60 percent in value to $20.

A decade of Microsoft dominance

While I typically focus on Apple (and sometimes NeXT and Pixar) for “Today in Apple history,” it’s worth singling out Microsoft today because of what this date signified about the changing face of tech. In inflation-adjusted dollars, Microsoft’s market cap reached a high of around $850 billion at the time.

It’s tough to think of a company that appeared more unassailable than Microsoft as 2000 approached. Just 15 years earlier, Microsoft had been little more than a successful indie developer for the Mac.

At a time when software could drive computer sales (still true today, but not to the same extent), the tide started to turn when, following Steve Jobs’ forced departure from Apple, then-Apple CEO John Sculley signed a deal with Bill Gates to give Microsoft “non-exclusive, worldwide, royalty-free, perpetual, nontransferable license to use [parts of the Mac technology] in present and future software programs” for its then-fledgling Windows.

Apple’s determination to stick with a proprietary OS while Microsoft licensed out Windows to third-party PC makers spelled a rough few years for Apple. After disastrous product launches and poor management decisions, Apple fell from power. Meanwhile, Microsoft gradually crept closer to matching what Apple was doing with its Mac OS — most notably with Windows 95.

By the time of Jobs’ return to Apple, Cupertino appeared so far from a contender that Microsoft was willing to bail out the company as part of a deal involving Internet Explorer. Apple was said to be 90 days away from bankruptcy.

So what changed?

Within weeks of Apple debuting its 1997 “Think Different” ad campaign, marking Jobs’ vision for what Apple needed to represent, the Justice Department sued Microsoft in what became a long-running antitrust case. This wasn’t enough to topple Microsoft by any means. But it did coincide with the leveling off of the company’s influence.

Not long after the December 1999 stock price high (which was aided by the dot-com bubble), Gates stepped down as Microsoft CEO. Steve Ballmer took over the post. Then, as Microsoft struggled to maintain its relevancy in a new century, Apple released hit product after product. You know the rest.

In addition to Apple, other newer tech giants like Google fill the void left by Microsoft’s former dominance.

Interestingly, Microsoft is now making a creative and commercial comeback. Last month, it overtook Apple’s market cap for the first time in almost a decade.

The tech landscape has shifted profoundly since the Microsoft-versus-Apple rivalry started in the mid-1980s. And yet it seems the power struggle between the two companies is far from over.

How do you see it playing out over the next few years? Leave your comments below.