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Microsoft to Invest in Apple; Jobs, Ellison on Board

Internet Explorer to be default browser for the Macintosh; Office moving over too.

By Boston Bureau, PCWorld   

BOSTON--Microsoft plans to buy $150 million in struggling Apple Computer stock and pledged to develop Macintosh versions of Internet Explorer, Office, and other key applications. Microsoft%squots backing was made public by Apple cofounder Steve Jobs during his keynote address at the MacWorld Expo show here, and was met by boos and gasps from the audience.

In another shakeup, Jobs also announced that he will sit on a new board of directors along with Oracle%squots Larry Ellison.

The latest revelations follow the July 9 resignation of Gil Amelio as Apple%squots chairman and CEO after a 17-month tenure and the subsequent departure of his hand-picked executive vice president of advanced technology, Ellen Hancock.

Microsoft%squots $150 million investment will give it nonvoting shares in the company, shares that it will not sell for at least three years, Jobs said. Microsoft, whose Windows operating system running on Intel chips dwarfs the Mac platform in the market, also made several product pledges to show its commitment to Apple.

%dquotMicrosoft is going to be part of the game with us as we restore this company back to health,%dquot Jobs said.

Microsoft also agreed to a patent settlement that calls for perpetual cross-licensing of existing patents, Jobs said. Microsoft pledged to develop and update versions of Microsoft Office for the Macintosh for the next five years, have the same number of major releases on the Macintosh as there are for Windows, and make Internet Explorer the default browser on the Mac, Jobs said. Microsoft will also collaborate with Apple on Java to ensure compatibility between their Java virtual machines, Jobs said.

The board announcements end weeks of speculation about Jobs, who has been acting as an advisor to Apple since the company purchased Next Software last December. Ellison has also repeatedly expressed interest in Apple.

In addition to Jobs and Ellison, chairman and CEO of Oracle, the two other new board members are Jerry York, former chief financial officer of IBM and Chrysler, and Bill Campbell, CEO of Intuit.

Apple is not naming a chairman at this time, according to Jobs. It will wait until it appoints a new CEO.

Ellison%squots appointment was greeted by boos from the audience, to which Jobs replied, %dquotI hope that wasn%squott a boo I%squotm hearing.%dquot Jobs said Apple %dquotwould like to do a lot more in software,%dquot and having Ellison%squots Oracle expertise available to the company is attractive.

Despite the boos for Ellison, attendees applauded Ellison%squots videotaped comments that %dquotApple needs to worry less about competing with Microsoft%dquot and focus instead on innovation.

Jim Vestao, a Macintosh consultant from Raleigh, North Carolina, is pleased that Jobs was not named to the chairmanship but he is also glad that Jobs is going to stay on the board.

%dquotI%squotm encouraged that they%squotre focusing on areas that need focus,%dquot Vestao said. %dquotI%squotm extremely pleased with the board changes. The new board represents a diverse group and it will move Apple forward.%dquot

Some attendees booed initially over Microsoft%squots Internet Explorer becoming the Mac%squots default browser. Others said they were surprised but pleased by the Microsoft show of support.

%dquotThe Microsoft partnership was a long time in coming,%dquot said Raymond Huy, an advertising general manager at Happy Harry%squots, adding that he thinks it will be very healthy for Apple and healthy for users.

Jobs did not address licensing issues during the keynote speech, despite a protest before the address in which people in Power Computing Corp. jumpsuits held signs decrying Apple%squots lack of candor on licensing to other hardware manufacturers.

Concerns about future licensing of the MacOS have been brewing since before the show. After the keynote, a Power Computing executive said he was disappointed that Jobs did not clarify anything.

%dquotWe care about our customers,%dquot said John Ellett, vice president of worldwide marketing at Power Computing in Round Rock, Texas. %dquotThe customers needed clarity and they didn%squott get it.%dquot