Bill Gates said Steve Jobs caught Microsoft 'flat-footed' with launch of iTunes Store

Posted:
in General Discussion edited July 9
Microsoft co-founder Bill Gates was caught off guard with the launch and structure of Apple's iTunes Store in 2003, with Apple co-founder Steve Jobs once again putting Gates in catch-up mode, according to an internal email that surfaced this week.

Gates and Jobs


Dug up by Internal Tech Emails and posted to Twitter, Gates' correspondence was made public in the Comes v. Microsoft class action lawsuit from 2000.

In the letter to Microsoft executives, Gates vented about Apple's -- more specifically Jobs' -- ability to beat the industry in obtaining beneficial licensing deals for the then-new iTunes Store.

"Steve Jobs['] ability to focus in on a few things that count, get people who get user interface right and market things as revolutionary are amazing things," Gates wrote. "This time somehow he has applied his talents in getting a better licensing deal than anyone else has gotten for music."

At the time, Microsoft was working to field its own music distribution service through limited partnerships and joint ventures.

As Gates notes, no one, including music companies, had nailed a user-friendly digital purchasing experience. Apple was primed to lead the segment with its iTunes and iPod.

"This is very strange to me. The music companies['] own operations offer a service that is truly unfriendly to the user and has been reviewed that way consistently. Somehow they decide to give Apple the ability to do something pretty good," Gates wrote.

Apple's iTunes library was already a mainstay for digital music enthusiasts, with an intuitive user interface and clever features like automatically generated track listings for ripped CDs, sound processing and content sharing. Adding a storefront to the software was in many ways the next logical step.

Gates in the email expresses a sense of urgency for Microsoft to create its own music distribution product now that its -- at the time -- much smaller competitor had a winning solution.

"Now that Jobs has done it we need to move fast to get something where the UI and Rights are as good," Gates wrote. "I am not sure whether we should do this through one of these JVs or not. I am not sure what the problems are. However I think we need some plan to prove that even though Jobs has us a bit flat footed again we move quick and both match and do stuff better."

Microsoft ultimately launched MSN Music in 2004. The service shuttered in 2008 to make way for the ill-fated Zune Marketplace and other similarly abysmal content delivery products.

Interestingly, it appears that Microsoft was at one point considering a subscription service rather than the content licensing scheme adopted by iTunes.

"With the subscription who can promise you that the cool new stuff you want (or old stuff) will be there?" Gates asked.

After more than a decade of dominating digital music sales, Apple introduced its own subscription service in Apple Music to follow a market that had largely transitioned to streaming.

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Comments

  • Reply 1 of 44
    cornchipcornchip Posts: 1,856member
    So predictable. One couldnt’ve written a better script if they’d tried. 
    baconstangBeatswatto_cobra
  • Reply 2 of 44
    mpantonempantone Posts: 1,609member
    It wasn't predictable. That's why Microsoft was caught flat footed. Remember that Apple's market valuation was decidedly small compared to Microsoft, really a David vs. Goliath situation at the time.

    Time and time again Jobs surprised. The iPod itself was widely doubted when it debuted (2002 I think); just do an Internet search for "cmdrtaco ipod" to see what a popular technologist thought.

    Apple stunned again with the iPhone in 2007 and many predicted failure due to the lack of a physical keyboard. Remember that the RIM BlackBerry was the smartphone gold standard at the time and Windows mobile phones were still a significant player.

    Apple again caught the industry off guard when it released its own silicon in the form of the A-series SoCs and a few years later left the entire semiconductor industry speechless when the A-series jumped to 64-bit architecture, years before it was expected to show up in a mainstream product.

    Apple crushed it again with the iPad and then killed it with Apple Watch, the latter despite long-standing rumors that Apple had been testing "wearables" on its corporate campus for years. Remember that each time, Apple was not first to market MP3 players, online media stores, smartphones, tablets, smartwatches, custom ARM silicon.

    About the only thing predictable from Apple in the past five years was the Apple Silicon Mac. Savvy industry watchers presumed that Apple had been running macOS on prototype ARM-powered Macs in their labs for years, maybe as early as that first 64-bit A7 SoC. There were hints all along: the deprecation of OpenGL, the end of support for 32-bit apps. The inclusion of specialized chips like the T2 Security Chip which was clearly an interim solution to be paired with Intel CPUs until Apple could ship their own SoC with that functionality built in.

    One can see where this is headed for the Macs. macOS Monterey is leveraging the Neural Engine in the M1 SoC, the machine learning silicon. My guess is that the M2 and future designs will vastly improve on the Neural Engine's capabilities which will take on tasks that it is better suited for than the CPU cores: image recognition, text recognition, voice recognition, signal processing (both audio and video). As mentioned in the WWDC keynote, more machine learning tasks will be handled on device rather than being sent to Apple's servers.

    Nvidia's GeForce RTX GPUs do audio and video processing with their Tensor cores (machine learning); if you have an GeForce 20 or 30 series graphics card, you can use the Nvidia Broadcast software to clean up audiocasting and videocasting.
    edited July 9 raybofastasleepbloggerblogjas99p-dogbyronlScot1pscooter63urashidAlex_V
  • Reply 3 of 44
    blastdoorblastdoor Posts: 2,438member
    I really appreciate the sincerity of bill’s emails. It’s nice to see the genuine appreciation of a competitor’s capabilities.
    baconstangpichaeljas99byronlScot1pscooter63urashidAlex_VrundhvidDogperson
  • Reply 4 of 44
    danoxdanox Posts: 599member
    Apple’s experience over the years (Motorola, IBM, Intel) taught it, if you want something done you are going to need, to roll up your selves and do it yourself, next up modems (Qualcomm Sushi).
    edited July 9 lkruppbaconstangjas99BeatsbyronlAlex_VBombdoewatto_cobra
  • Reply 5 of 44
    fastasleepfastasleep Posts: 5,691member
    I'm sure there's a Ballmer quote somewhere along the lines of: "What? An online store where you can just buy any song you want for 99 cents? Haha yeah right, like that'd work!"
    baconstangpichaeljas99BeatsbyronlScot1pscooter63Alex_Vlordjohnwhorfinwatto_cobra
  • Reply 6 of 44
    mpantonempantone Posts: 1,609member
    blastdoor said:
    I really appreciate the sincerity of bill’s emails. It’s nice to see the genuine appreciation of a competitor’s capabilities.
    Great people respect their competitors. It has been like this since the beginning of time.

    Bill Gates has plenty of character flaws and weaknesses but for sure he was a ruthless businessman and pugnacious adversary.

    By contrast, his hatchet man Steve Ballmer didn't take Apple seriously, squandered Microsoft's entire mobile presence and let Apple blow past them in terms of market valuation.

    Ballmer was the right guy for a short period of time but couldn't successfully step into a larger leadership role. B-schools routinely use Microsoft as a case study of disastrous failure. Today Microsoft has re-emerged as a powerhouse but only from their enterprise/cloud computing efforts. The current Microsoft CEO can take most of this credit, certainly not Ballmer.
    p-dogbyronlpscooter63Alex_VfastasleepJWSCFileMakerFellerwatto_cobra
  • Reply 7 of 44
    doggonedoggone Posts: 294member
    THat's part of the genius of Jobs and Apple.  Take a process / product and figure out how to sell it that makes sense to customers.  Tech companies often decide what they want to sell and then try and force their angle down the customers throats.  

    With iTunes, Apple had the advantage of a software that users were comfortable with.  People were used to ripping their CDs and building their libraries up.  The store worked in the iTunes app and didn't require changing software.
    Then the final advantage was that stealing music was rife and the labels were scared of losing it all.  Other music services were crap. Apple came along with a solution at the right time and the label were desperate to try anything that could work.  So they were willing to accept Apple's terms which ended up being what the consumer was willing to accept.  And that, as they say, was that and the rest is history.

    Classic Apple and why I have held the stock for over 15 years.
    jas99Beatspscooter63Alex_VFileMakerFellerwatto_cobra
  • Reply 8 of 44
     to make way for the ill-fated Zune Marketplace and other similarly abysmal content delivery products. 
    Whoa whoa whoa! Hold on a minute.  Zune Marketplace was absolutely ill-fated.  But “abysmal content delivery product” is a gross mischaracterization.  By Gen 3 Microsoft, in 2008, had competitive hardware for the day and in most respects better software and services than Apple has in Apple Music today.  

    Sure, Zune had long since been panned by consumer electronics blogs, but gen 3 hardware was legit.  The desktop software would still hold up against Spotify and Apple Music in terms of usability and vastly outclasses either in style.  The music exploration and recommendations were excellent.  I still miss the playback visualizations.  They had social features baked in and had a web music player that was a first class citizen in their ecosystem. You could cast music between devices before the word “casting” had been coined.  Zune Pass gave you access to unlimited streaming of 14 million tracks and let you keep 10 each month.  While Apple was raising digital downloads to $1.29/track, Microsoft was offering discounted annual subscriptions at $149.  It was the equivalent of buying 10 songs on iTunes each month plus $1.75/mo for unlimited streaming.

    Zune lost the battle of mind share, but 13 years later I’m still waiting for someone to step up and revive the golden age of streaming music.




    gregoriusmAlex_VDogpersonFileMakerFeller
  • Reply 9 of 44
    Jobs caught bill flat footed constantly. 

    Original Mac OS GUI and windowing, (limited) internet search, the mouse, the Newton, ipod, iTunes, iPhone, iPad, os widgets, etc. 

    Windows 95 and office apps were bills shrewd move and instantly entrenched Microsoft in big business. Within one year, the stage was set for MS success. 

    Jobs had the vision, the dream, and the wisdom to bring it to clean, functional reality. Jobs built the best stuff. 

    Gates had the shamelessness and the thought to maximize whatever he had in the market. Gates took whatever he had and shopped it like no tomorrow. 

    It took a while for people to figure it out, but we are now in an age where business and consumer alike have wised up and invest in the better product, not just whatever was entrenched before. 

    Cook may not be the master visionary thst jobs was, but he’s pretty dang good. And he’s better at marketing his wares than gates ever was. He’s also better and maximizing his ROI. 

    The structure Apple culture is what it is thanks to the foundation that was Steve Jobs. Truly a revolutionary man. 
    edited July 10 jas99p-dogAlex_Vwatto_cobra
  • Reply 10 of 44
    qwerty52qwerty52 Posts: 311member
    Yes, Steve Jobs was a genius!
    It’s a peaty he left us so early.
    He could give so much more to the world…….
    jas99BeatsbyronlAlex_Vwatto_cobra
  • Reply 11 of 44
    dewmedewme Posts: 3,824member
    Those opposing pictures are priceless.

    Wish I could overlay some cartoon speech bubbles …

    Steve’s forced smile conveys “FU Bill … you classless piece of s*** ” while Bill’s conveys “Yeah, I may be a classless pos … but you wanna compare bank accounts … sweater boy?”

    What can I say, that’s just what I see.

    qwerty52BeatsAlex_VJWSCwatto_cobra
  • Reply 12 of 44
    danox said:
    Apple’s experience over the years (Motorola, IBM, Intel) taught it, if you want something done you are going to need, to roll up your selves and do it yourself, next up modems (Qualcomm Sushi).
    That’s how I feel about repairing my own devices.
    pscooter63Alex_V
  • Reply 13 of 44
    ajmasajmas Posts: 579member
    Steve jobs caught a lot of people flat footed. Microsoft often had some good ideas, but didn’t have that human experience orientated drive and philosophy to get the magic right. If they cared it didn’t make itself apparent. 

    Microsoft already had a phone and a tablet, but they were targeted towards a business market. This is a market where as long as you have the functionality the rest is extra. Steve targeting more of a consumer market and having created the Mac knew that the offering had to be as much an emotional one as it was functional. 

    seanjwatto_cobra
  • Reply 14 of 44
    BeatsBeats Posts: 2,531member
    mpantone said:
    It wasn't predictable. That's why Microsoft was caught flat footed. Remember that Apple's market valuation was decidedly small compared to Microsoft, really a David vs. Goliath situation at the time.

    Time and time again Jobs surprised. The iPod itself was widely doubted when it debuted (2002 I think); just do an Internet search for "cmdrtaco ipod" to see what a popular technologist thought.

    Apple stunned again with the iPhone in 2007 and many predicted failure due to the lack of a physical keyboard. Remember that the RIM BlackBerry was the smartphone gold standard at the time and Windows mobile phones were still a significant player.

    Apple again caught the industry off guard when it released its own silicon in the form of the A-series SoCs and a few years later left the entire semiconductor industry speechless when the A-series jumped to 64-bit architecture, years before it was expected to show up in a mainstream product.

    Apple crushed it again with the iPad and then killed it with Apple Watch, the latter despite long-standing rumors that Apple had been testing "wearables" on its corporate campus for years. Remember that each time, Apple was not first to market MP3 players, online media stores, smartphones, tablets, smartwatches, custom ARM silicon.

    About the only thing predictable from Apple in the past five years was the Apple Silicon Mac. Savvy industry watchers presumed that Apple had been running macOS on prototype ARM-powered Macs in their labs for years, maybe as early as that first 64-bit A7 SoC. There were hints all along: the deprecation of OpenGL, the end of support for 32-bit apps. The inclusion of specialized chips like the T2 Security Chip which was clearly an interim solution to be paired with Intel CPUs until Apple could ship their own SoC with that functionality built in.

    One can see where this is headed for the Macs. macOS Monterey is leveraging the Neural Engine in the M1 SoC, the machine learning silicon. My guess is that the M2 and future designs will vastly improve on the Neural Engine's capabilities which will take on tasks that it is better suited for than the CPU cores: image recognition, text recognition, voice recognition, signal processing (both audio and video). As mentioned in the WWDC keynote, more machine learning tasks will be handled on device rather than being sent to Apple's servers.

    Nvidia's GeForce RTX GPUs do audio and video processing with their Tensor cores (machine learning); if you have an GeForce 20 or 30 series graphics card, you can use the Nvidia Broadcast software to clean up audiocasting and videocasting.

    I think he meant “predictable” as in Bill copying Apple too late predictable. He even admits if he had make knockoff iPhones faster than Google that they would own market share.

    I also find it funny how people hold Apple to a far different standard when it comes to inventing things. There was no iTunes before iTunes. There was no iPod before iPod but of course “Apple invented nothing” as if Google or MS invented anything.

    You also say Apple didn’t invent the smart watch. Who would you give that title to? I would say either Apple with the iPod Watch or Casio with their calculator watches. Still a funny different standard.
    qwerty52Alex_Vcornchipuraharawatto_cobra
  • Reply 15 of 44
    Tim Cook could have caught the entire industry flat footed with the release of a $300 M1 powered Mac Nano but didn't. There was absolutely no technical reason why he could not have done that. Tim simply doesn't have Steve's vision and desire to disrupt first, dominate later.
    Who did the Oculus Quest catch flat footed?
    edited July 10
  • Reply 16 of 44
    mpantonempantone Posts: 1,609member
    Beats 
    You also say Apple didn’t invent the smart watch. Who would you give that title to? I would say either Apple with the iPod Watch or Casio with their calculator watches. Still a funny different standard.
    Nah, of the big companies Sony, LG, Samsung and Qualcomm all released smartwatches before Apple.

    I would argue that the first smartwatch distributed more widely than as an oddity would be the Pebble which shipped to Kickstarter backers in early 2013.
    pscooter63fastasleep
  • Reply 17 of 44
    lkrupplkrupp Posts: 9,471member
    ericesque said:
     to make way for the ill-fated Zune Marketplace and other similarly abysmal content delivery products. 
    Whoa whoa whoa! Hold on a minute.  Zune Marketplace was absolutely ill-fated.  But “abysmal content delivery product” is a gross mischaracterization.  By Gen 3 Microsoft, in 2008, had competitive hardware for the day and in most respects better software and services than Apple has in Apple Music today.  

    Sure, Zune had long since been panned by consumer electronics blogs, but gen 3 hardware was legit.  The desktop software would still hold up against Spotify and Apple Music in terms of usability and vastly outclasses either in style.  The music exploration and recommendations were excellent.  I still miss the playback visualizations.  They had social features baked in and had a web music player that was a first class citizen in their ecosystem. You could cast music between devices before the word “casting” had been coined.  Zune Pass gave you access to unlimited streaming of 14 million tracks and let you keep 10 each month.  While Apple was raising digital downloads to $1.29/track, Microsoft was offering discounted annual subscriptions at $149.  It was the equivalent of buying 10 songs on iTunes each month plus $1.75/mo for unlimited streaming.

    Zune lost the battle of mind share, but 13 years later I’m still waiting for someone to step up and revive the golden age of streaming music.




    "By Gen 3 Microsoft, in 2008, had competitive hardware for the day and in most respects better software and services than Apple has in Apple Music today. “

    Give us a fricken break will you. You sound like a disgruntled Amiga user. This crapaganda that the only reason Apple succeeds is because of marketing is as much bullshit today as it was back then. 
    Alex_VcornchipJWSCwatto_cobra
  • Reply 18 of 44
    seanjseanj Posts: 255member
    The fact that Gates writes that Microsoft “match and do stuff better” just shows out of touch with reality he was. With that kind of delusion he was never going to recognise the fundamental problems Microsoft had which consistently resulted in them producing inferior products.
    cornchipuraharawatto_cobra
  • Reply 19 of 44
    pscooter63pscooter63 Posts: 1,055member
    ericesque said:
     to make way for the ill-fated Zune Marketplace and other similarly abysmal content delivery products. 
    Whoa whoa whoa! Hold on a minute.  Zune Marketplace was absolutely ill-fated.  But “abysmal content delivery product” is a gross mischaracterization.  By Gen 3 Microsoft, in 2008, had competitive hardware for the day and in most respects better software and services than Apple has in Apple Music today.  

    Sure, Zune had long since been panned by consumer electronics blogs, but gen 3 hardware was legit.  The desktop software would still hold up against Spotify and Apple Music in terms of usability and vastly outclasses either in style.  The music exploration and recommendations were excellent.  I still miss the playback visualizations.  They had social features baked in and had a web music player that was a first class citizen in their ecosystem. You could cast music between devices before the word “casting” had been coined.  Zune Pass gave you access to unlimited streaming of 14 million tracks and let you keep 10 each month.  While Apple was raising digital downloads to $1.29/track, Microsoft was offering discounted annual subscriptions at $149.  It was the equivalent of buying 10 songs on iTunes each month plus $1.75/mo for unlimited streaming.

    Zune lost the battle of mind share, but 13 years later I’m still waiting for someone to step up and revive the golden age of streaming music.

    Microsoft did what they always do: aim for a tactical target date, and release whatever is ready, regardless of the actual shape it’s in, come hell or high water. You said it yourself, Gen3… but as you also said, the ship of opportunity had long sailed, and most greeted it with a yawn, no matter how great it might have been technically.

    Remember PlaysForSure?  Ballmer rode that horse for all of three years.  What kind of message did that send to the marketplace?  The mud brown Zune didn’t help, either.  Completely tone-deaf.
    Alex_Vseanjwatto_cobra
  • Reply 20 of 44
    lkrupplkrupp Posts: 9,471member
    mpantone said:
    Beats 
    You also say Apple didn’t invent the smart watch. Who would you give that title to? I would say either Apple with the iPod Watch or Casio with their calculator watches. Still a funny different standard.
    Nah, of the big companies Sony, LG, Samsung and Qualcomm all released smartwatches before Apple.

    I would argue that the first smartwatch distributed more widely than as an oddity would be the Pebble which shipped to Kickstarter backers in early 2013.
    As we have seen over and over again throughout the decades the first to market is of negligible value. It’s who gets it right and wins the market. And that has been Apple time and time again.
    Alex_VJapheyseanjwatto_cobra
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