BOSTON — The cold war of computing thawed Wednesday when desperate Apple Computer Inc. grabbed the hand of its sworn enemy, Microsoft Corp., in an alliance that stunned the industry but elated investors.
The agreement, which includes a $150-million investment in Apple by Microsoft, capped a series of moves that, combined, represent one of the most dramatic turns in Apple's storied history.
The struggling company, which has lost more than $1.5 billion over the last 18 months, also rebuilt its beleaguered board of directors. The company added a crop of heavyweights topped by Apple co-founder Steve Jobs and Oracle Corp. Chief Executive Lawrence Ellison while ejecting company co-founder and longtime kingmaker A.C. "Mike" Markkula.
For Apple, the deal provides a critical vote of confidence and assurance that software will continue to be available for the Macintosh. Microsoft gains access to a potentially vast group of new users of its Internet software, and also helps assure the survival of a key customer.
Analysts cautioned that the alliance and other changes are no cure for Apple's problems. But the moves restored a degree of optimism to a company that seemed caught in a perilous fall.
Jobs delivered the news during his keynote speech at the MacWorld Expo trade show in Boston Wednesday morning. Many of the 2,000 assembled Apple loyalists gasped and booed when the Microsoft alliance was unveiled.
"We have to give up this notion that for Apple to win, Microsoft has to lose," Jobs said, struggling to quiet the crowd. "The era of setting this up as a competition between Microsoft and Apple is over. This is about getting Apple healthy."
The unlikely deal was crafted by two titans of the computer industry who have clashed on both style and substance for two decades. Jobs is the charming, intemperate whiz kid who talked of revolutions even when he was co-founding Apple in his Silicon Valley garage in 1976.
Microsoft Chief Executive Bill Gates is the archetypal nerd, a Harvard dropout who methodically built the most powerful empire in the computer industry.
In the past, Jobs has often publicly chided Microsoft, saying its ideas and its products are inelegant and unoriginal. But Jobs called Gates about a month ago seeking a compromise, Apple executives said.
Gates Addresses a Wary Crowd
The two men were in harmony Wednesday, with Gates--the richest man in the world, according to Forbes magazine--addressing the suspicious MacWorld crowd via satellite.
