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.


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.


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.