Apple-Microsoft match paying off

At Macworld today, Jobs outlined the progress that the two companies have made one year after they forged a controversial agreement, in which Microsoft is investing $150 million in Apple.

The deal has drawn the scrutiny of antitrust regulators and has sparked some concern among Mac loyalists. It also hurts some of Apple's Silicon Valley neighbors, including Netscape Communications.

According to Jobs, however, the deal has helped revitalize the Macintosh platform.

"Although our relationship was first met with boos at Macworld a year ago, it has blossomed and is delivering some really great products to our joint customers."

Jobs's sentiment was highlighted by Apple's announcement today that Internet Explorer 4.01 and Outlook Express 4.01 will come preinstalled on the iMac, the much-hyped consumer system that Apple is launching next month. Other examples include the following:

• A Mac edition of Microsoft Office 98. iMac customers will get a $100 rebate when they license Microsoft Office 98 Macintosh (See related story).

• Microsoft's Internet Explorer browser integrated in the Mac operating systems. The number of users of the Mac version of IE has increased by 28 percent since last August, Apple said.

• The companies said in March that they planned to create a single Java virtual machine for the Mac OS. This will include a number of Microsoft technologies for Java.

Executives from the two companies, which produce competing operating systems, have been meeting regularly at an office in San Jose, California--dubbed "MS-Bay"--to collaborate.

Apple and Microsoft still are rivals, but the deal represents another example of "coopetition," which refers to businesses cooperating--to mutual advantage--with their competitors. The concept is catching on in the high-technology industry.

Analysts appeared to agree with Jobs that the partnership is paying off.

"From the start, the most important factor from Apple's perspective was Microsoft's commitment to producing the Office suite for the Macintosh for the next five years," said Dwight Davis, an analyst who follows Microsoft at Summit Strategies.

Before the deal, he said, "the Mac user base was always a step or two behind in getting their hands on this very popular software." Under the partnership, Microsoft is committing not only to developing its office suite for the next five years, "but also to keeping it in sync with Windows" releases.

Now that Apple has decided to fold its Rhapsody operating system into its Mac OS line, thereby eliminating the possibility of competing against Windows NT, Davis said the partnership is on firm footing.

Daniel Kunstler, an Apple analyst at J.P. Morgan Securities, agreed. "What downside could there possibly be?" he said. "Apple is not a threat to Microsoft, so you can pretty much count on that commitment being filled in both letter and spirit."