D5 Live: No fight--Gates and Jobs ponder the past and the future

The highlight of the D: All Things Digital conference featured Bill Gates and Steve Jobs on stage together, with event co-hosts Walt Mossberg and Kara Swisher as referees.The best line of the night came when Swisher asked the two what was the greatest misunderstanding about their relationship.

The highlight of the D: All Things Digital conference featured Bill Gates and Steve Jobs on stage together, with event co-hosts Walt Mossberg and Kara Swisher as referees.

The best line of the night came when Swisher asked the two what was the greatest misunderstanding about their relationship. Jobs quipped, "We've kept our marriage secret for over a decade."


It was more like a Rock & Roll hall of fame induction honoring the two legends than a verbal battle over past and present deeds, such as Apple's current ad campaign that disparages Windows.

The two billionaires have mostly been rivals over the past three decades, although in 1984 Gates said that Microsoft expected to get half of its revenue from the Macintosh, which was just introduced.

They grew up in the computer industry together, each taking a different path, and ending up as the two most seminal figures in the personal computer revolution.

Gates built a behemoth with pervasive market share and $297.62 billion in market cap as of today, while Jobs built his reputation on the first Apple computers, the Macintosh, iPod, Pixar and maybe the iPhone, and his company crossed the $100 billion market cap threshold today.

Jobs, who turned 52 in February, and Gates, turning the same age in October, were asked what they thought each of them contributed to the industry. "Bill built the first software company and was really focused on software before anyone else....that's the high-order bit," Jobs said.

Gates lauded Jobs for betting the company on the Mac. "The team that Steve built even within the company to pursue the Mac was risky. Steve gave a speech once that "we build the products that we want to have ourselves."

Jobs interrupted Gates to tell the story about his co-founder Steve Wozniak writing a BASIC language for Apple machines. "It was perfect but wasn't supporting floating point.....and he never did it.... he wrote it by hand on paper and never got around to making it floating point...he just never did," Jobs said. Jobs then went to Microsoft for help, Gates flew down from Seattle to Cupertino and Apple paid $31,000 for Microsoft's BASIC.

Gates said the most fun was during the early Macintosh days. "We bet our future on the Macintosh being successful and the graphic user interface being successful," Gates said. He added that working together on schedules, quality and pricing was challenging. He thought the price was going to be much cheaper than it ended up.

Jobs said, "What's interesting to remember is Microsoft wasn't in the applications business at the time the Mac came along." At that time Microsoft just had Multiplan for the Apple II, Gates said. The original Mac OS requirement for the applications was 14K, Jobs said, on the 128K Macintosh.



After Jobs was forced out of the company, Apple wasn't differentiating itself from higher volume platforms--DOS and Windows, Gates said. "When the 386 chip came, the paradigm bet paid off on GUIs. After 512K Mac was done the product line didn't evolve as fast as it needed to. We were negotiating with [then Apple CEO] Gil Amelio to invest [in Apple], but then Steve called and said don't worry about Gil, negotiate with me."

Jobs, who replaced Amelio for his second term as CEO, quoted a slogan from Amelio to great laughter: "Apple is a ship with hole in the bottom and my job is to get the ship pointed in the right direction." When he returned to Apple, Jobs found that Apple was in serious trouble.

"Apple invented a lot of stuff and Microsoft was successful and Apple wasn't. There was resentment, and there were too many people in Apple who thought that for Apple to win Microsoft had to lose. Apple had to remember who Apple was. They had forgotten who Apple was. It was important to break that paradigm," Jobs said. He decided to call Gates and patch things up between the two companies.

The two briefly jousted about the current Apple ads. Jobs said that the commercials were artfully made: "The PC guy is what makes it all work," he said to more laughter.

Jobs explained how Apple's big secret is that it views itself as a software company...like Microsoft. "It's a little bit competitive...and we are happy when our market share goes up by a point." Of course, Apple enjoys its lead with the iPod and building hardware. Jobs quoted former Apple Fellow Alan Kay, "People who love software want to do their own hardware." Gates noted that Microsoft does its own hardware and software for prototyping and in special cases, such as the Zune and Xbox, does both.

Regarding Jobs' legendary product vision, Gates said, "I would give a lot to have Steve's taste. In terms of intuitive taste for people and products, I sat in Mac product reviews...and look at it as an engineering question. I see Steve make decisions based on people and products--it's magical."

Jobs said he admired Gates and Microsoft's ability to partner. "Because Woz and I started the company based on doing the whole banana, we weren't good at partnering, whereas Bill and Microsoft were good at it. If Apple had more of that in its DNA, it would have served us extremely well. We didn't learn that until a few decades later.

Gates was asked about his philanthropic legacy and was typically modest about his second career, and said his brain is filled with software. Jobs nailed it when asked if he had any envy of Gates' achievements: "I think world is a better place because the goal is not to be richest guy in the cemetery. I was brought up middle class and never cared much about money. Apple was successful early and then I was able to focus on work and then family. We found what we love to do and we were at the right time and place. It's hard to be happier than that. What more can you ask. I don't think about legacy, but about going to work and creating great stuff."

The two shared a similar vision for the combination of rich clients and Internet services, and that the PC will continue to play an important role. Jobs believes the major innovations will come from post-PC products, like the iPod and iPhone. "In the PC you have to temper thinking. You have tens of millions in our case or hundreds of millions of users in Bill's case....Users don't want to drive with a joystick...they like the steering wheel.... The radical rethinking will happen in post-PC devices," Jobs said.

Mossberg asked about a new paradigm for the PC interface, beyond folders and the graphical metaphors that have been on the PC for the last two decades, which grew out of work at Xerox Parc. Gates pointed to touch, ink, speech and vision as new elements to apply to the user experience, but not as a radical substitute for what we have today. Natural interfaces, such as speech, and 3D will be revolutionary, he said.

Jobs concluded, in talking about his relationship with Gates, that in the early days he was generally the youngest guy in the room. Now he is the oldest. "I think of most things in life as Bob Dylan or Beatles songs," Jobs said. For he and Gates, Jobs partially quoted the Beatles song "Two of Us": "You and I have memories longer than the road that stretches out ahead."

Video from the Gates/Jobs convergence at D

Read Scott Rosenberg's insightful take on the Gate and Jobs show. It tells the whole story.

The full transcript of the interview