Technology

when Bill Gates realized the potential of the iPod and the iTunes Store

When you’re running a big tech company, a big part of your job is trying to see the intent and strategy of your competitors. If you get it done in time, you can gain a market advantage that can translate into millions of dollars in revenue. But if you can’t figure it out… what happened to Bill Gates with the iPod in 2003 can happen to you.

“I don’t see that we are doing enough to be seen as leaders”

In November 2003, the iPod was two years old and the iTunes Store was taking hold on home computers. It was the beginning of what was going to be the musical ecosystem that would catapult Apple’s income. Bill Gates was Microsoft’s Chairman of the Board at the time (he stepped down as CEO in 2000), and wrote an email to his colleagues to talk about the direction of the iPod that we can read thanks to the Twitter account @techemails:

In it we can see Bill’s reaction very well after understanding the direction the market was taking. Notify other senior Microsoft officials that “has not seen any scenario” in which Microsoft could compete in conditions with Apple, “not even in Photos, with the large number of users it has.”

Bill is also right in his next prediction: “all the hardware that people have will be tied up with other services. And people won’t want to get rid of their hardware.” In other words, he realized that Apple was getting secure their consumers with their own music services. If you had an iPod, you bought music from the iTunes Store.

“I don’t see that we are doing enough to be seen as leaders,” Bill stressed in his email. “I admit they’re rich, but I have friends who are buying iPods with thousands of songs on them. Herb Allen has bought dozens of them for his friends. And Warren Buffett loves it.” By the time that email was sent it was already too late..

What does it mean for the Apple world and its ecosystem that Microsoft has bought Activision

Now, Microsoft as such can’t complain: today a good part of its current income comes from its services, and it is growing steadily in the cloud market. Office is still the king of office automation, and Windows is still the most used desktop operating system in the world. We learn from mistakes.

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