Ben Wilson, www.NewsFactor.com

Five years ago, Microsoft (Nasdaq: MSFT - news) and Apple (Nasdaq: AAPL - news) signed a controversial pact that brought the two firms together in a software development and innovation-sharing relationship. Since then, the relationship has blossomed.

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By delivering two of the most critical applications for Mac OS X (news - web sites), Internet Explorer 5 and Office v.X, Microsoft's Mac business unit has become more of a savior than an enemy to Apple.

NewsFactor spoke with Kevin Browne, general manager of Microsoft's Macintosh (news - web sites) business unit, about his firm's evolving relationship with Apple, the current array of Microsoft Mac applications, and prospects for another five years of partnership.

Apple a Better Firm Today

NewsFactor: Looking back on the past five years, what have been the greatest successes of the Microsoft-Apple relationship?

Browne: I think the biggest impact by far is that customers are no longer caught in the middle of a feud between the two companies. There are many people and organizations that choose to use Microsoft software on Apple's computers. We had made it way too hard for customers to be successful doing that, but for the last five years I think we've been able to meet -- and in some cases exceed -- our customers' expectations. We've delivered apps that personify what it is to be Mac-like.

We have also helped each other make important advances in critical Mac technologies and in the way customers experience and leverage those technologies. When a customer escalates a problem, we've been able to work together to address it instead of pointing fingers at each other.

State of the Market

NewsFactor: How does Microsoft view the state of the Mac market now as opposed to the way it was five years ago?

Browne: It's very different now because the primary driver, Apple, is in a completely different state. Five years ago, Apple was a company on the rocks. Apple was losing customers, making huge mistakes in forecasting demand, and writing off hundreds of millions in inventory each quarter. They were making too many types of Macs that weren't sufficiently different -- customers had a hard time figuring out what to buy, even if they were convinced they wanted a Mac. They had an aging OS, a history of failed projects intended to replace the OS and little credibility with developers.

I remember an Apple ad when Windows 95 shipped that said "Win95 = Mac 89." That wasn't true, but what was worse was the fact that Apple forgot that "Mac 95 = Mac 89." They had just ceased to make progress. Apple of 2002 is innovative, creative, efficient and engaged. They've managed to stay profitable in the worst PC market in 20 years. We've said we're staying engaged because we think Apple can grow out of this downturn, and that will be good for our business.

NewsFactor: It's obvious that Microsoft has kept its part of the bargain -- delivering blockbuster applications that take advantage of the latest Mac technologies. Has Apple kept its part of the agreement?

Browne: We're happy with the state of the relationship. Although Apple doesn't draw the roadmap as far out as we would like in order to plan our business, we get briefed on their plans and get access to builds as early as any developer. (That was not the case before August '97, by the way.) We can work together to the benefit of customers, which was our goal in the agreement.

The Jobs Factor

NewsFactor: How instrumental has Steve Jobs (news - web sites) been in facilitating the Microsoft-Apple relationship?

Browne: Steve has been absolutely critical to the success of this relationship because he truly believes that Microsoft can help Apple to grow. Absent that support at the top, our job would be much harder.

Doing It Right

NewsFactor: What is the primary reason behind Microsoft's ardent support of Mac OS X? Is it purely because products like Office v.X are profitable?

Browne: We said when we got into this business that we were going to do it right. We have always tried to make the right choices for our customers. Our support for QuickTime in Office for Mac is better than our support for Microsoft media technologies because that's what customers asked for. We forged close ties with Palm and FileMaker, even though they compete with parts of our company; that was the right thing to do for our customers.

The same is true for supporting Mac OS X; customers clearly wanted and needed a new OS to build on for the future. Our experience at Microsoft told us that transitioning from one OS to another is fraught with confusion and risk. We felt that making the strongest possible statement of support was vital to customer acceptance of OS X, so Office v.X runs only on OS X. We're out of business if OS X does not succeed.

NewsFactor: Which members of the MacBU have made the greatest contributions to development efforts?

Browne: MacBU has 160 great employees, and each person covers a huge amount of ground in the product. Our developers routinely contribute to multiple apps and components. Where a tester in Win Office might cover just the "file save" feature in depth, one of our testers covers that, "file open," Word Tables and two or three other things. So, it would be inappropriate for me to single anyone out.

Another Five?

NewsFactor: Do you see Apple and Microsoft continuing to have a semi-symbiotic relationship? That is, continuing to compete on some levels while benefiting from each other on other levels?

Browne: I think it can work that way, as long as both companies recognize the value of doing so.

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