Attendees at the MacWorld Expo show in Boston yesterday were stunned to hear Apple Computer Inc co-founder Steve Jobs announce that Apple and Microsoft are to cease hostilities with Microsoft taking a $150m investment in Apple, a stake of around 5%, for non-voting stock which it has agreed not to sell for three years. Under the deal, the two arch rivals agreed a broad technology development agreement, including cross-licensing agreements on existing patents and future patents for five years into the future, ending years of legal bickering over user interface technologies. An additional, undisclosed payment will be made, presumably from Microsoft to Apple, as part of the patent agreement. Bill Gates, broadcasting via satellite from Seattle, committed to delivering applications for the Macintosh platform as well as Windows, including a Macintosh version of Office98; he says he’s got eight million users running their Microsoft applications on Mac. MacOffice 98 is expected to be out by the end of the year. In return, Apple has agreed to bundle Internet Explorer in with MacOS as the default browser, in a move that looks like very bad news for Netscape Communications Corp. And Apple and Microsoft are to collaborate on Java technologies, making sure their Java virtual machines and programming languages remain compatible. They said there was no obligation for either company to take each other’s technologies; Sun Microsystems Inc has recently criticized Microsoft for attempting to poison Java, with proprietary extensions based on Windows. There were boos amongst the audience as Jobs summed up the various announcements with the words: We have got to let go the notion that for Apple to win, Microsoft must lose. Apple also plans to incorporate Microsoft ActiveX in to Mac OS but gave no details. The company has clearly decided that to have any chance of pulling out of the nose-dive it’s in it has to settle with the enemy and re-focus its product strategy around markets it knows well; education and creative content. The settlement with Microsoft pre-dates Steve Job’s renewed involvement with the company. The deal had been in the works since the arrival ten months ago of former CEO Gil Amelio who had talks with Microsoft which stalled until Jobs got involved about a month ago. The deal, which was not signed until the early hours of Tuesday morning Eastern Daylight Time, and under NDA until the 9am announcement, meant Apple has no chance to contact partners affected by its actions, such as Netscape, in advance of the news. Netscape later said it wasn’t unduly concerned by Apple’s plan. Apple said it wasn’t sure if the deal was going to go down as planned until right up to the event: there were a couple of different speeches that could have been given. News of the alliance sent Apple stock up $6.69 to close at $26.44.
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