April 4, 1975: Childhood friends Bill Gates and Paul Allen found Microsoft Corporation, a software company destined to become a tech behemoth — and a major Apple frenemy.
A few years later, Microsoft will break through to the mainstream with Excel and Word, becoming a key developer of Macintosh software. Then comes the Windows operating system, looking suspiciously Apple-like. After Windows arrives, Microsoft and Apple will embark upon a long-running feud.
Apple and Microsoft: Good friends, better rivals
Perhaps the most interesting thing about Microsoft and Apple is just how similar the companies were in several ways. Gates and Steve Jobs, the CEOs who came to represent the two companies, were both born in 1955. Both later dropped out of college.
Gates and Allen created Microsoft when they saw a gap in the market following the launch of the Altair 8800 kit computer. In Silicon Valley, the Altair inspired the creation of the Homebrew Computer Club, where Jobs and Steve Wozniak first showed off the Apple-1 computer. (The Altair also sparked the creation of the Byte Shop, the computer dealership that first stocked Apple’s debut computer.)
Microsoft: A key Mac developer
Microsoft became a major developer for the Mac, which Apple launched in 1984. After Jobs left Apple the following year, Microsoft used its position as the maker of Word and Excel to strong-arm Cupertino. As a result, Apple CEO John Sculley signed a deal granting 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 operating system.
The use of Apple-inspired tech helped Windows rise to prominence in the late 1980s and 1990s. (Gates still maintains that both companies simply borrowed from Xerox PARC.)
Windows’ success coincided with Apple’s fall from grace as its margins increasingly got squeezed. Bad business decisions, like licensing “clone Macs,” threatened to sink Apple.
Windows pits Microsoft against Apple
For years, Apple battled Microsoft over the appearance of Windows, which looked suspiciously similar to Mac OS. Initially, Apple sued Microsoft for 189 counts of copyright infringement relating to Windows 2.0.3. Other lawsuits followed.
The long-running Microsoft-Apple legal battles ultimately got resolved in August 1997, when Cupertino agreed to drop all lawsuits against its rival.
Apple also agreed to make Internet Explorer its default web browser (later replaced by Apple’s own Safari). Microsoft, in turn, bought $150 million of non-voting Apple stock, and continued to support the Mac in terms of software.
Microsoft’s cash injection came at a time when Apple was reportedly months away from bankruptcy. Not too long after, Microsoft hit its tech bubble peak and began to decline in the early 2000s. Meanwhile, Apple released the iMac G3, iTunes, iPod, iPhone and other products that fueled its rise to dominance.