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. Last Updated: 07/27/2016

Apple Alliance to Prove Fruitful for Microsoft

The biggest beneficiary of software giant Microsoft Corp.'s decision to invest $150 million in its financially struggling rival Apple Computer Inc. may be Microsoft itself.


The alliance, announced Wednesday, keeps alive Microsoft's attractive business in selling software for Apple's Macintosh computers -- one that's estimated by analysts at about $300 million a year.


It also gives Microsoft potentially more important advantages in selling its Internet browsing software, deflecting antitrust concerns and setting global standards for the hot new Java programming technology, several industry specialists said last week.


Microsoft has been locked in a battle with some of Silicon Valley's biggest companies, including Sun Microsystems Inc., Netscape Communications Corp. and Oracle Corp., over Java. Programs written in Java, which was developed by Sun, can be shared over the Internet and, most important, can run on different types of computers without revisions.


Java, which is widely seen as the next big trend in computing, could help boost sales of computers made by Sun, International Business Machines Corp. and others that don't rely on Microsoft's popular Windows operating system. Fearing this, Microsoft has been promoting a version of Java that's tied into Windows.


The deal with Apple is expected to help advance that effort, a critical task for Microsoft, analysts said.


"This is where computing is heading ... and Microsoft wants to define the standards,'' said Walter Winnitski at PaineWebber Inc. in New York. "This is a big way for them to do that.''


Although Macintoshes represent only a small fraction of all personal computers sold -- about 3.8 percent worldwide in the second quarter of this year -- Apple's machines are uncommonly important in creating software and content on the Internet. Apple co-founder Steve Jobs boasted Wednesday that 80 percent of World Wide Web sites were designed with Macs. "They carry a big stick there ... which is going to help Microsoft,'' he said.


By helping to keep Apple afloat, which effectively gives customers an option other than Microsoft's Windows software, Microsoft also helps deflect concerns that it has become too dominant in the computer industry, legal specialists said.


For its part, Microsoft maintains that blunting antitrust concerns was not a factor in the investment.


Under terms of the deal, Apple has promised to make Microsoft's Internet Explorer browsing software the easiest choice to use for new Macintosh customers. That gives Microsoft a much-needed leg up in its competition with browser maker Netscape. "It leverages their presence against Netscape,'' said Richard G. Shurlund, a Goldman, Sachs & Co. analyst.


In another benefit for Microsoft, Apple has promised not to resurrect a failed lawsuit alleging that Microsoft stole the "look and feel'' of the Macintosh in developing Windows.