Bill Gates said Steve Jobs caught Microsoft 'flat-footed' with launch of iTunes Store
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.
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.
Keep up with everything Apple in the weekly AppleInsider Podcast -- and get a fast news update from AppleInsider Daily. Just say, "Hey, Siri," to your HomePod mini and ask for these podcasts, and our latest HomeKit Insider episode too.If you want an ad-free main AppleInsider Podcast experience, you can support the AppleInsider podcast by subscribing for $5 per month through Apple's Podcasts app, or via Patreon if you prefer any other podcast player.
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.
Keep up with everything Apple in the weekly AppleInsider Podcast -- and get a fast news update from AppleInsider Daily. Just say, "Hey, Siri," to your HomePod mini and ask for these podcasts, and our latest HomeKit Insider episode too.If you want an ad-free main AppleInsider Podcast experience, you can support the AppleInsider podcast by subscribing for $5 per month through Apple's Podcasts app, or via Patreon if you prefer any other podcast player.
Comments
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.
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.
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.
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.
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.
The structure Apple culture is what it is thanks to the foundation that was Steve Jobs. Truly a revolutionary man.
It’s a peaty he left us so early.
He could give so much more to the world…….
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.
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.
Who did the Oculus Quest catch flat footed?
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.
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.
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.