Microsoft’s Gates ‘not amused’ about Apple’s digital media supremacy, courts Hollywood allies

“When Apple Computer transformed the digital music scene in April 2003 by selling songs over the Internet, the richest man in the world was not amused,” Reuters reports. “Microsoft chairman Bill Gates had struggled for a decade to get his software into consumers’ home entertainment systems. Now the digital media party was finally starting, and he was not invited,” Joseph Menn writes for The Los Angeles Times.

“But the blow gave Gates new insight, motivation and some needed humility, and it intensified work on what might prove the turning point in his quest to extend Microsoft’s supremacy from the office into the living room,” Menn writes. “Just weeks after Apple’s seismic announcement, Gates and new AOL Time Warner chairman Richard Parsons settled America Online’s claim that Microsoft had crushed its Netscape software subsidiary with illegal monopolistic behavior. More important, Gates and others said, the settlement led to a new relationship that has changed the course of Microsoft’s fractious dealings with Hollywood. Since then, the Warner Brothers studio has guided its movie industry peers in quietly meeting Microsoft halfway on a range of contentious issues, setting the stage for the software giant to play gatekeeper for the home video business of the future.”

MacDailyNews Take: Hands up, including even the most delusional Stockholm Syndrome-suffering Windows-only fans: Who wants Microsoft to play gatekeeper of your living room? (crickets chirping) Thought so.

Menn continues, “Gates’ battle to succeed in video where he failed in music is far from over. For one thing, the movie studios and television broadcasters are more prone to internal disagreement than were the record companies when Apple signed them up. That makes it trickier for Microsoft to forge content deals… Even if they stick together, the content creators may stand pat, place their bets with multiple technology partners or choose someone other than Gates. In particular, few in Hollywood would be shocked to see Apple founder Steve Jobs pull another rabbit out of his hat, unveiling a perfectly thought-out system for moving paid video to computers and portable devices.”

“Whichever way it shakes out, Gates vows not to play the victim in ‘Son of iPod,'” Menn writes. “After learning a hard lesson in the digital music business, ‘we’re really having to work more closely with partners in the hardware industry and content industry, to really think through the whole end-to-end experience and make it better,’ Gates said. ‘That’s where we’ve done our mea culpa. We are fixing that.'”

Full article here.

MacDailyNews Take: Okay, so Gates is finally going to Think Different and, for once, “think through the whole end-to-end experience and make it better?” Yeah, right. So, Gates has learned his hard lesson and done his “iPod mea culpa?” Whatever happened to the Bill Gates who, back in September 2004, said sarcastically of Apple’s iPod, “Oh, wow, I don’t think we can do that.”

Looks like he’s finally figured out that, wow, he couldn’t.

Bill Gates’ karma is in worse shape than Rob Glaser. Bill Gates has racked up quite a long-overdue wallop. Hopefully, “Hollywood” sees Microsoft for what it is — instead of what it likes to portray itself as — and thinks long and hard before shackling itself to Microsoft.

[UPDATE: 3:50pm EDT: added the word “sarcastically” to describe Gates’ “Oh, wow, I don’t think we can do that” comment regarding iPod.]

Related MacDailyNews articles:
Apple and Microsoft battle for control of future living rooms – June 01, 2005
Bill Gates: ‘I don’t believe the success of the Apple iPod is sustainable in the long run’ – May 12, 2005
Bill Gates jokes about Mac OS X ‘Tiger’ and calls Apple ‘the super-small market share guy’ – May 03, 2005
Microsoft’s Bill Gates is once again playing catch-up to Apple’s Steve Jobs – April 16, 2005
Experts say Bill Gates’ doodles show he’s ‘stressed and tense, not a natural leader’ (with image) – January 31, 2005
Apple Computer will own the living room, not Microsoft – January 10, 2005
Even Bill Gates can’t avoid Windows malware; Mac users surf the Web freely – October 03, 2004
Bill Gates’ sarcasm regarding Apple iPod: ‘Oh, wow, I don’t think we can do that’ – September 07, 2004


  1. I cant wait to see how Microsoft is going to make something thats already difficult to do in setting up home entertainment systems, and put his company’s stamp on it. Uh yeah, how many remotes does the average viewer have?

    For one i think he will finally crack the age-long problem of setting the clock on the vcr. Press 57 buttons on the remote that charge you to have Microsoft do it.

    The Microsoft way is always the harder less elegant solution. Bank on it. It will suck.

  2. Gates and MS in general have been so focused on the business market that it would take a huge mind shift to come up to Apple’s level on media innovation. Gates is far better off waiting to see how Apple does it, then start a division that can copy as much as possible. This avoids the situation where Apple can say “you forgot this, this, this and that”.

  3. Good luck to Microsoft on this front. Hollywood has long been wary of Gates’ and Co., and Microsoft’s reputation for arrogant, predatory behavior over the years has stirred up a lot of suspicion and outright hostility among media companies. Microsoft will have to overcome this perception before they can even begin to address the technical hurdles that remain. The settlement between Microsoft and AOL has a sort of rushed feel to it, as if they were calling off hostilities so as not to be distracted while dealing with a greater potential threat, namely Apple’s earth-shattering entry into the digital media scene. This reminds me somewhat of Saddam hurriedly negotiating peace terms with Iran before the start of the first Gulf War. Little good it did him, though.

  4. I’ve sold 500,000,000 bits of content for the content makers.

    i’m just about done making a video player that will make people shit in their pants.

    i would suggest that Bill figure out quick how this works… or don’t, I don’t care.

    Step 1: Make a gadget so easy to use and integrated that Your Mom(tm) could operate it. And make it so sexy that everyone wants it
    Step 2: ???
    Step 3: Go to the content providers with the cache on YOUR side of the desk, not the other way around.
    Step 4: Profit.

    You’re trying – yet again – to start with Step 3. You are not in command of that discussion… what’s worse is that Apple has proven that they can distribute content profitably on YOUR systems WITHOUT YOU.

    Sorry, i need to have a tofu-lemon grass shake break. Sometimes, that whole “mercurial” tag is apt for me… i know. I hate to say it.

  5. Microsoft’s first instinct is always “How can we lock people in to what we are selling?” Now that they are being watched carefully by governmental agencies they’re in a colossal dilemma, plus what they sell is crappy. Their only advantage is their huge size, just like Halliburton, but that’s not going to help them here.

    Elsewhere I saw an article about Bill Gates complaining about the dropoff in enrollment in computer science programs in colleges. Gee, I wonder why, with the mess he’s created. He’s suffering from a severe case of self-deception and reality avoidance, common among rich people who think they know everything because, hey, they’re rich!

  6. The one thing Gates doesn’t have is the customers that vote with their dollars. APPLE CUSTOMERS PAY FOR THEIR STUFF. Yes it’s in caps for a reason. You buy a PC and every friend tells you how to download free, music, movies ,por=n, and software. You buy a Mac and your go through legitimate channels. There’s a revenue stream for content providers to reap the benefit from. So they can make more content. The music video business is a case in point. Make a great video now and receive cash for it. Hey if it pays fro production most bands will be happy. It’ll sell the band and the music. Remember to follow the money.

  7. Apple has an entire operating system designed to manage media and make it move smoothly through the hardware and software. The only way Microsoft can match this is to come up with a totally new operating system… Longhorn? NOT!

  8. Furthermore, screw him. he acts as if his company has a birthright to dominate every single market. Guess what Billy Boy, you don’t.

    Microsoft has achieved dominance in essentially what has been a vacuum of competition. They have offered the only real alternative in a world that demands a cheap commodity product. Therefore, they were bound to succeed based on that alone. Fast forwward to a new market in the digital media world. They are having their a$$es handed to them by smaller companies who have had to earn their keep to survive, Apple being one of them. MS has never had to really really innovate and create a great product. Being just good enough has always been just good enough to stay on top. What he MS really would have to do to succeed here is change the company culture to reflect one of true innovation AND great product design. Unfortunately thats easier said than done in a company that historically has looked at ways of holding market dominance by weilding a heavy stick, as opposed to giving their customers a real reason to love their product and desire it.

    MW ‘red’ as in Billy’s face must really be red these days.

  9. MS wants to attach DRM to all files- not just media- in it’s next version of Windows and that would be their proprietary Janus DRM- not Apple’s FairPlay or Real’s Helix. The success of the iPod and iTunes on the Windows platform has thrown a major wrench into Microsoft’s future plans for DRM.
    If you are Microsoft and are planning to lock your user base into Janus DRM, this is not a happy state of events. This explains the unending misinformation and FUD in the M$ Jihad against iTunes, the iPod, QuickTime and FairPlay.

  10. Somebody explain to me why the media always attaches the term ‘proprietary’ to Apple’s FairPlay encoded iTunes content but NEVER to Microsoft’s Janus encoded Windows Media content.

  11. The music companies only let Apple in because they were losing revenue from music file sharing. They realized they couldn’t solve this problem themselves. Competition amongst legal online music vendors was started by letting other companies sell music online. Apple are clearly the leader in the business now and hopefully in the long term.

    Now let’s compare this to the film industry. I find it interesting that both the Invincibles and Shrek 2 have done poorly in DVD sales. Why? Because DVD-R drives can now easily copy DVDs. Piracy is really beginning to hit the movie industry hard in the same was the music counterparts experienced in the last 5 years.

    When will the point be at which the movie industry says “we’ve had enough – how else can we make money?”? Maybe soon. Maybe the technology is good enough to provide a decent experience.

    I tell you one thing – DVR is great – very flexible, a cheap and efficient way to capture TV programing.

    Can Apple provide something along those lines for movies ala OnDemand? Can H264 provide space saving needed to store hours of HDTV?

    My biggest question is how can Apple integrate with other services like cable and satellite TV?

  12. Anyone who gets into business with MS better look at the track record for other “partners”.

    Oh and who has the most successfull studio in Hollywood? I know Pixar is 6 for 6 on their films, wonder how he is going to talk them into coming to the party…

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