Bill Gates Speaks on iPod Success, Refers to Mac as Past Hit
TMO at CES - Bill Gates Speaks on iPod Success, Refers to Mac as Past Hit
by , 4:15 PM EST, January 6th, 2005
LAS VEGAS, NV -- Microsoft Chairman Bill Gates discussed Apple in an interview with CNet News published early Thursday. In that interview, he acknowledged the success Apple is having with the iPod, and spoke about the differences in the way his company is approaching the market. He also, perhaps accidentally, spoke of the Mac as a has-been hit in the same company as the Apple II.
Music
CNet News reporter Michael Kanellos asked Mr. Gates if Microsoft was going to put effort into selling content. The comparison, though unspoken, was to Apple's major effort to make the iPod and the iTunes Music Store a big part of its business.
"We've said that having the music platform there is just part of the overall online relationship that we want to have with these customers, " said Mr. Gates. "The boundary between what's game playing, what's socialization and what's communication--you will have really broken down the barriers there."
Noting that "the Windows ecosystem provides variety," Mr. Gates contrasted this to Apple.
"Apple is doing things the way Apple does -- where it's the Apple hardware and the Apple store," he said in the interview. "That's great for them. We're doing it the Windows way, where you've got things like this Creative Zen Micro, which sold out this holiday season. This brings the photo capability in, and it's a very attractively priced device. So the variety story is an important one for us; it uses our rights management format and supports a subscription approach that we think can be a significant part of online music sales."
Creative's Zen Micro did sell out, but it's not likely to have touched the number of iPods sold during the December quarter. Estimates have ranged from 4 to 4.5 million units sold by Apple, but neither Apple nor the tracking services have yet released numbers for the quarter. Apple will most likely report iPod units sold when it announces its quarterly financial results on Wednesday, January 12th.
Has-been
Mr. Gates Freudian mention of the Mac as a past hit came during CNet News' follow up question about what Mr. Gates thinks of Apple's success with the iPod. In his answer, Mr. Gates acknowledged the success of Apple's digital media device, and described it as one of three hits the company has had.
"They had a hit with the Apple II, they had a hit with the Macintosh, and they have a hit with the iPod, so this is a company that's had three hits, and that's very impressive," he said in the interview. "There are a lot of companies that don't have three hits. And in the same way that Macintosh helped get people exposed to the graphical user interface, the iPod is doing a great job getting people to think about digital music.
The key to his comment is his choice of verbs: "had a hit with the Apple II," "had a hit with the Mac," "have a hit with the iPod" (emphasis added).
In the immortal words of Sesame Street, "one of these things just doesn't belong here," unless of course one considers the Mac a has-been. At the same time, perhaps it can be properly argues that the Mac is no longer a hit in that it no longer commands a large double digit share of the computer market.
With growing Mac sales and the supposed iPod Halo Effect, however, there are no clear answers to such a question. One's perspective on the issue is subjective, but Mr. Gates choice of wording was, at the very least, interesting.
Looking pragmatically at the situation, where Apple currently dominates the music player market, Mr. Gates said: "In the long run, there will be a lot of people making digital music players, and we think that there will be a very different market share with dozens and dozens of companies."
He brought his message home, by saying, "other than Apple, all those player makers are signing up to work inside the Windows PlaysForSure ecosystem."
The PlaysForSure marketing campaign is Microsoft's effort to brand the many, many competing music players on the market that don't work with the iTunes Music Store, but instead rely on Microsoft's Windows Media format.
There is much, much more on many other topics and issues in the full interview, which we recommend as an interesting read.
Observer Comments
Thu Jan 06, 2005 6:36 pm Subject: "the Windows ecosystem provides variety"
Yeah, that one really stuck in my brain too. Then, WHAM, he used that phrase again saying:
"...Windows PlaysForSure ecosystem"
Let's look it up:
ecosystem. n.
"An ecological community together with its environment,
functioning as a unit."
Yup, sounds just like Windows to me! 
Is this anything like Bill's "Plug-and-Play" promise of years past? Shouldn't there be at least SOME ironic smirking at this point? What's next? The "Windows WeSwearThisTimeItWorks" ecosystem?!!!
(I'm lovin' Billy's new buzzword!)
-Ken P
"They had a hit with the Apple II, they had a hit with the Macintosh, and they have a hit with the iPod, so this is a company that's had three hits"
Apple had (and still have) that little thing called the iMac too. I guess Bill forgot that one....
And the iTunes Music Store....
And OS-X...
And the iBooks...
And the TiBooks...
And those retail Apple Stores...
But I forgive you, Bill... I'm sure I've forgotten all the great hits that Microsoft has come up with lately too!
-Ken P
Bill could have been referring to the Mac's introduction in 1984. I'm one the the biggest Mac/Apple fanboys out there, and I wouldn't refer to the Mac as a "hit" in the present tense either. The term "hit" would generally refer to a relatively new success... like the iPod. The Macintosh is 21 years old.
Billy here goes on and on about apple's "three" hits and never mentions any of his own company's hits? how about crash happy windows? virus infectable internet explorer? doom of xbox if not for the halo franchise? wonder why he forgot these? also, i think he forgot about a couple apple products like the online music store, the iMac, the powermac, ibook/powerbook and any other apple product that puts the microsoft variant to shame (pretty much everything)... and most importantly Panther...bill needs to rethink microsofts strategy (like trashing windows for starters) because it wont be long before the masses start to realize that when it comes to apple and microsoft, there simply is no comparison
Yes, the Apple had a hit with the Mac... that doesn't mean it is over. Are the other Mac "flavors" different enought to warrant being a "hit" on their own.
The iTunes store is iPod-centric and therefore does it really warrant being a hit outside of the iPod "eeek!-o-system"? 
Replace iTunes/iPod with OSX/mac.
The AppleStore is a hit? Ask the underpaid staff what they think?
A "hit" is synonymous to the shooting star concept in a marketing matrix. It's taking off. It's making waves. It holds great promise. After it's established, then it's called a "cash cow", and funds the development of new hits. The Mac WAS a hit. It's now a cash cow. The iPod IS a hit. Please, try to understand the concepts before you overanalyze Gates' words.
QuoteGuest wrote:
Billy here goes on and on about apple's "three" hits and never mentions any of his own company's hits? how about crash happy windows?
The last time I had a system crash, it was on my quicksilver g4. In fact, it was a kernel panic during the 10.3.7 upgrade. It required hours to fix before I could run anything other than terminal. I wish I had those hours back to be productive.
The last time I had my XP system crash... I can't remember. My XP workstation was logged in with about 20 apps for 23 days recently, until the a change to the Novell Zenworks forced me to reboot.
QuoteGuest wrote:
The only reason I've never purchased a mac is because of the users. Something about them I can't stand. It's like they are their own cult.
Yeah! You're right! We are a cult, just like Windows zealots are a cult and fans of any given sports team are a cult! I think we have a winner! What do we have for him, Johnny?
looks like our friend billy forgot to add mac's flagship OS, OSXOSXOSXOSX HA HA HA. Hmm I think he left that one out, because we all know that it is better, more reliable and more secure than sindoze. Don't get me wrong I hated Mac until OSX, but now it's freeBSD based, with a unix terminal, i'm sold. Good luck with longhorn billy, your still trying to catch up to OSX, and you just cut costing on longhorn, so it looks like like horn is a longshot. Hey sometimes it's hard to admit defeat. Buy a Mac and install darwine, beside who needs your DRM lockout. Besides who needs windows when I can run it the same code from a csh Ha ha ha ha ha.
Oh Bill, he never ceases to amaze me. To people who argue that the youth vote didn't show up (most youth vote is done absentee) this, too, I guess this could make sense. But there are so many windows units bought and sold because you NEED to buy more and more of them in hopes they'll start working.
I have used both Apple and Windows..... Apple rules.....but I work in Windows envirnoment most of the time..... had a choice.... i would choose Apple....it is like "An Apple a day would keep computer tech support at bay" By the way I have a grad degrees in Comp Sci/Eng.
By the way does Windows have a cult???? is it like a Windows hating cult??? It is had to imagine that windows has "Windows loving cult"
Quotejhonka wrote:QuoteGuest wrote:
The only reason I've never purchased a mac is because of the users. Something about them I can't stand. It's like they are their own cult.
Yeah! You're right! We are a cult, just like Windows zealots are a cult and fans of any given sports team are a cult! I think we have a winner! What do we have for him, Johnny?
If it wasnt for the ipod apple would be really struggling right about now...
but have to admit they have come a long way since the crap the produced up till about 6 years ago.
on the other hand microsoft is one of the largest companies in the world for a reason they have teh widest distrobuted software in the world (for a reason) as bill said microsoft allows variety. apple on the other hand have always been criticised for their lack of the ability for variety, anything changed? nup
"And in the same way that Macintosh helped get people exposed to the graphical user interface, the iPod is doing a great job getting people to think about digital music."
The important thing is not about calling the mac a 'has-been' in this sentence he is basically saying that apple are simply opening doors to a new technology which, like GUI will be taken over by Gates and Co.
Oh by the way, love apple products, design is impeccable but there is no freedom with the products. I cant build my own mac from scratch, cant swap stuff, cant dip down to an electronics store and buy a new drive for instance,
Secondly, for God's sakes man, port the damn mac OS to the PC please, it is the only way to beat Bill
--Bob
Doe anyone even realize Mr. Gates has a lot of Apple stock? From what I understand Microsoft owns 18.2 million shares of VOTING common stock in Apple Computer. I do not understand the motivation execpt that it appears Microsoft needs apple to keep goverment regulaters off their back. I think hes a realist and knows full well what he is doing.
...yourself think you are better by labeling every apple user as "strange". I could just as easily label all pc users "dumb"...
...but hey wait I am not a jerk, and my mom uses a Windows machine.
I personally buy a computer for how well it works for me. I am strange. But, PC users are not dumb.
love,
me
QuoteGuest wrote:
Secondly, for God's sakes man, port the damn mac OS to the PC please, it is the only way to beat Bill
--Bob
It has been ported, it's call Pear PC, it's still in dev, so support pearpc.org. windows has been ported to mac already, it's called darwine, ie wine, point2play etc etc... binaries are binaries, you don't need a windoze PC to run exe files, because they are all x86 instructions read up http://www.winehq.com/
Where is the slip? Do you honestly think the guy with the biggest market share cares about the 4% of the market who actually uses the Mac. I personally am a Linux guy and OS X is definitely a big step for Apple. The Kernel however leaves a lot to be desired. Linux is the future not MS or Apple so it doesn't matter anyway.
QuoteGuest wrote:
I have used both Apple and Windows..... Apple rules.....but I work in Windows envirnoment most of the time..... had a choice.... i would choose Apple....it is like "An Apple a day would keep computer tech support at bay" By the way I have a grad degrees in Comp Sci/Eng.
By the way does Windows have a cult???? is it like a Windows hating cult??? It is had to imagine that windows has "Windows loving cult"
Yeah, I debate them on a regular basis on the XvsXP.com forum. Then there's this site. Oh, and that Paul Thurrott fellow.
I have used macs for the last 15 years or so and have bought at least a dozen for my work and home. I hope the platform survives a good deal longer because I prefer macs. But Bill Gates's comments were accurate. The contest between windows and apple has been over for some time now, to the point that most young people prefer windows boxes. While the corporate world has its own reasons (Heavily invested in windows and unlikely to change), the kids are the more malleable future of the apple market. For them to take the trouble to switch to macs, the macs would have to be BOTH better and less expensive, (and run the latest games too). That is not the case. Since macs have slowly approached 0 market share over the last few years, apple will shift focus to making money in other ways. That process is clearly underway with the ipod. It is not that windows is better, or even very good. It is just cheaper out the door and good enough to satisfy most people. Apple has not been willing to do what it takes to reverse this now decade-long trend. One can only expect that for the ipod, the past is prolog. Bill Gates seems to understand this. His buisness pays a dividend. Apple shareholders (paying 90 times earnings for a share!) will find out the hard way. Again.
Sure, MS pays a dividend - but let's compare share values over five years using this simple chart…
here
(Ed: link was huge and page-widening. Cleaner this way.)
So, with MSFT, your money halves in value and with AAPL, your money gains around 40% (around 7.25% compound growth).
BTW, you have to go back 9 years to find a long-term position in which investing in MSFT creates a better end point than investing in Apple. Yep, looks like a deal to me…
Thu Jan 06, 2005 11:52 pm Subject: Re: Bills comment on Apple
QuoteIf I am not wrong, this is the $150 million stake that Microsoft invested in AAPL to settle the copyrights/patent issue in 1997 - Jobs negotiated the deal with Gates. The deal requires Microsoft to continue developing Microsoft Office for Mac for at least 5 years and involves some exchange of copyrights/patents.Anonymous wrote:
Doe anyone even realize Mr. Gates has a lot of Apple stock? From what I understand Microsoft owns 18.2 million shares of VOTING common stock in Apple Computer. I do not understand the motivation execpt that it appears Microsoft needs apple to keep goverment regulaters off their back. I think hes a realist and knows full well what he is doing.
Even though Apple has many software crown jewels such as Mac OS X and QuickTime, it is still widely regarded as a hardware company. So Bill Gates is right to say that Apple has 3 hits. In saying that, Bill implies that Apple will not be able to deliver another hit. Hehe, let's see whether the iMac mini (headless Mac) or Eserve (entertainment server) will be a big hit.
Btw, Windows had won the desktop platform war long ago. The war now is about QuickTime vs Windows Media. Microsoft had scored a battle victory with Xbox and Apple had scored a battle victory with iPod. There are still many battles to fight before we know who has won. For the uninitiated, the prize is cuts from embedded shopping and targeted advertising.
Fri Jan 07, 2005 12:16 am Subject: "Missing the point" missed the point
QuoteGuest wrote:
Oh by the way, love apple products, design is impeccable but there is no freedom with the products. I cant build my own mac from scratch, cant swap stuff, cant dip down to an electronics store and buy a new drive for instance,
--Bob
Think again! You may not be able to build a Mac in a beige box (praise the Lord), but you can sure slip down to the electronics store and buy a new drive. Macs use industry-standard RAM and ATA devices, and you generally don't even need to install drivers for Macs to support a wide range of drives and PCI/AGP-type expansion cards.
Although we sometimes have to wait a bit for video cards, our Macs support up to 8 monitors right out of the box, and replacing or adding video cards is as simple as snapping them into the slot!
Many Macs are also processor-upgradeable. Just a year ago I upgraded the processor in my Pismo Powerbook. How many Wintel laptops have user-upgradeable processors?
Quotepyxl8 wrote:
"They had a hit with the Apple II, they had a hit with the Macintosh, and they have a hit with the iPod, so this is a company that's had three hits"
Apple had (and still have) that little thing called the iMac too. I guess Bill forgot that one....
And the iTunes Music Store....
And OS-X...
And the iBooks...
And the TiBooks...
And those retail Apple Stores...
Well iMacs and iBooks ARE Macs, so you can't really put them on the list.
I don't agree with Bill's use of past tense, but I think his list is a good one.
You're just getting nit-picky here...I mean, when you say the Mac is a hit, aren't you IMPLYING that the OS is part of that success? And the stores are only a hit because they're selling Macs and iPods, so why should that be a seperate item? I guess I just feel like arguing tonight. Here's my lists for Apple:
HITS
* Apple II
* Macintosh
* iPod/iTunes store
INNOVATIVE 'FIRSTS' that pushed computing industry forward
* Home computing/Desktop Publishing
* GUI interface for home users
* Original iMac
* Creating Firewire & pushing USB onto users
* OS X based on Unix
* iPod/iTunes store
* iLife programs
* Utilizing a 64-bit OS sooner than others
So yeah, I think we can have a longer list than just 3 items, but that's a different list. My 'HITS' list is the same as Bill's.
QuoteGuest wrote:QuoteGuest wrote:
Billy here goes on and on about apple's "three" hits and never mentions any of his own company's hits? how about crash happy windows?
The last time I had a system crash, it was on my quicksilver g4. In fact, it was a kernel panic during the 10.3.7 upgrade. It required hours to fix before I could run anything other than terminal. I wish I had those hours back to be productive.
The last time I had my XP system crash... I can't remember. My XP workstation was logged in with about 20 apps for 23 days recently, until the a change to the Novell Zenworks forced me to reboot.
You do realize, don't you, that at Bill Gate's keynote in Las Vegas yesterday that his Winoze OS crashed 3 times? How do you explain that? I never have had OSX crash and you wouldn't either if you knew how to do the OS updates.
QuoteAny thought on why Mr Peter Mehring, former founder of Umax Corporation was appointed as Head Mac Hardware Engineering?Anonymous wrote:
Secondly, for God's sakes man, port the damn mac OS to the PC please, it is the only way to beat Bill
--Bob
Sure fire way of killing off Mac. Too many sh*t components on the pc side of the market.
I'll be reading the interview. I know from previous experience that Bryan likely doesn't know what he is talking about. He seems to have a profound reading comprehension problem. I decided not to trust anything he says after his recent attack on a WSJ reporter's tongue-in-cheek (and flattering) remarks about the iPod.
Quotepyxl8 wrote:
"
Apple had (and still have) that little thing called the iMac too. I guess Bill forgot that one....
And the iTunes Music Store....
And OS-X...
And the iBooks...
And the TiBooks...
And those retail Apple Stores...
Don't miss the next HIT. It's gonna hit hard. Its this one:
http://www.apple.com/xserve/
Fri Jan 07, 2005 3:22 am Subject: Re: RE: What did Gates really say?
QuoteAnonymous wrote:
I'll be reading the interview. I know from previous experience that Bryan likely doesn't know what he is talking about. He seems to have a profound reading comprehension problem. I decided not to trust anything he says after his recent attack on a WSJ reporter's tongue-in-cheek (and flattering) remarks about the iPod.
Oh, Guest, I am wounded.
Wait, no I'm not, and I'll stand on my record and my writing any time.
If you wish to insult me (anonymously), you'll have to do far better than to tell me that you (anonymously) disagreeing with my interpretation of something invalidates everything else I write.
Bryan
Editor
TMO
you are totally incorrect. MS purchased $150 million in NON VOTING stock. Apple, at the time had over $5 BILLION dollars cash in the bank.
The money was a “goodwill gesture†to close the lid on the “look and feel†lawsuits Apple kept hammering MS with.
MS has long since sold the NON VOTING stock (about 2 years ago, it was totally gone)
Don’t perpetuate non-truths, learn the truth.
apple needs to open fairplay, they are gonna loose another great piece of software because again they just want to sell hardware...they could have the market share for music. license fairplay make some money on it, plus if they wanted they could just license to hardware makers like zen, etc and still not to realplayer etc, apple is gonna screw it up again, 'cause its an all or nothing attitude with them...give it all to us or nobody gets it..bah humbug
>> you are totally incorrect. MS purchased $150 million in NON VOTING stock. Apple, at the time had over $5 BILLION dollars cash in the bank.
>>The money was a “goodwill gesture†to close the lid on the “look and feel†lawsuits Apple kept hammering MS with.
>>MS has long since sold the NON VOTING stock (about 2 years ago, it was totally gone)
>>Don’t perpetuate non-truths, learn the truth.
Truth? All I can say is rubbish!
A. Apple did not have ~ 5 billion in cash in the bank. Try ~ 4 billion.
B. This had nothing to do with the "look and feel" lawsuit. Try stealing code from Quicktime. So sad you don't know about "knifing the baby".
C. M$ made out on the 5 year Office deal and did very well on their $150 million investment in non-voting stock deal.
But Apple got the best of this deal. Tokens or not Apple got access to Microsoft's IP and that opened up Windows. Small price to pay on Microsoft part for a bruise from Apple in the Anti-Trust suit.
By the way, the baby is still around and is leading Apple to much higher places.
Fri Jan 07, 2005 8:05 am Subject: Motorola phone....start of something?
Interesting news about Motorola's ENTIRE range of phones to support iTunes and Fairplay files. With QuickTime being bundled by so many phone companies now, Apple need to get more manufacturers on board, including Nokia, to kill off Microsoft's latest FUD.
The mechanism for third parties to earn money by linking to iTMS is already in place, which could bring big players like Vodafone on board. An iTMS tie in with Satellite and Cable TV operators would also lay the ground for Quicktime-supplied VOD once Apple get the codecs tight enough. News Corp's Sky operation in the UK already bundle Tivo-like digital video recorders, perfect for holding music libraries on.
Playsforsure. Sony and Apple both don't support it, and I don't think either ever will. Bill can line up as many music and video players from two-bit companies as he likes. Unless it gets done right, nobody is going to buy it. With USB, 802.11, Bluetooth, & CD recording, one company knew how to get people actually using the technology, rather than thinking it might be a good idea. It wasnt' Microsoft.
Why should anyone care that much about Gates' personal opinion?
This is the guy who missed the Internet.
This is the guy who slavishly copied/adored the Mac.
Anything he says in the realm of being a tech visionary or in putting down the Mac therefore has zero credibility.
I'll give him a few points for loving the Mac enough to copy it, though. Too bad he only went partway and kinda botched the job.
QuoteI built my own PCs for years but now all of my new systems are Macs. For myself and for others who used to rely on me for custom built PCs. Apple wants to control the entire user experience. By contolling the hardware configurations, they are able to do just this. They can design the software against a set number of configurations which leads to the "it just works" experience. You have to actually use a Mac regularly to develop an appreciation for this. Or lets take my friend who recently just built a new PC for audio production. He bought a super fast mobo and CPU and a high end sound card and somewhere in that combination is an obscure bug in the driver for the sound card which causes his audio programs to crash many times a day. And thats on a fresh install of XP with all updates and latest drivers. It's not the various companys' faults per se, its simply a side effect of having endless hardware configurations. You can't test against them all.Guest wrote:
Oh by the way, love apple products, design is impeccable but there is no freedom with the products. I cant build my own mac from scratch, cant swap stuff, cant dip down to an electronics store and buy a new drive for instance,
Secondly, for God's sakes man, port the damn mac OS to the PC please, it is the only way to beat Bill
--Bob
As far as porting OS X to "the PC" (by which I assume you mean the x86 architecture)... you've got it backwards. Remember MS has already ported the NT kernel to the G5 for the next XBox. IBM doesn't mind. I don't think Apple is looking at x86 as the wave of the future.
Fri Jan 07, 2005 10:55 am Subject: Re: I hate apple users
QuoteGuest wrote:
how about crash happy windows? virus infectable internet explorer? doom of xbox if not for the halo franchise? .. a couple apple products like the online music store, the iMac, the powermac, ibook/powerbook and any other apple product that puts the microsoft variant to shame ..
Windows doesn't crash any more often than OS X when used by intelligent people. Internet Explorer has it's problems, but most of them are the result of idiots who click on every popup that comes their way. Doom of xox if not for Halo? How about the doom of the macintosh if not for the GUI. It makes about as much (poor) sense. The xbox isn't doomed (yet), Halo helps, but people buy other games as well. So the xbox so far is a successful platform, but probably not a "Hit."
I will admit that the iTunes music store can be classified as a success. The powermac and iBooks have never been Hits, you might think they are great products, but I think a hit should have an overwhelming response. Something along the lines of iPods constantly being out of stock, because so many people want them.
"Windows doesn't crash any more often than OS X when used by intelligent people."
Windows DOES crash more often than OS X. Maybe I'm not an intelligent person, and maybe that is why windows crashes so much, but OS X doesn't crash for an idiot like me. Computers are made mostly for idiots (err, people who aren't computer experts), people who just want to surf the web, of use word processing, blah blah. I've never had OS X freeze up, I've had programs like word, and photoshop quit, but never freeze the whole system. Windows is a whole other story. Sometimes it just quits out of the program, but other times I have to restart the dang computer because windows is frozen.
If someone is really intelligent, they'll buy a mac.
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