Wayback Machine: Microsoft's shot to kill Quicktime video

Ten years ago, give a week or so, Apple CEO Steve Jobs introduced QuickTime 3.0 to the National Association of Broadcasters' convention. Behind the scenes in the months before the introduction, Microsoft was playing hardball with hardware and software vendors over its new A/V APIs along with demands to kill the QuickTime competition.
Written by David Morgenstern, Contributor

Ten years ago, give a week or so, Apple CEO Steve Jobs introduced QuickTime 3.0 to the National Association of Broadcasters' convention. Behind the scenes in the months before the introduction, Microsoft was playing hardball with hardware and software vendors over its new A/V APIs along with demands to kill the QuickTime competition.

In hindsight, the debut of QuickTime 3.0 heralded a new way for Apple to sell software, one that will play out in a big way in the iPhone and iPod touch mobile platform.

In the Department of Justice's long antitrust battle with Microsoft over the browser and video playback, Apple executives gave evidence surrounding QuickTime 3.0, including mentions of NAB 1998. Along with the new Quicktime, the show was the venue for Microsoft's announcement of Advanced Authoring Format (AAF). (I didn't attend that NAB, having worked the Seybold New York conference the week before.)

Essential Information still has online excerpts of the testimony Apple's then-senior vice president Avadis (Avie) Tevanian to the DOJ trial. The direct testimony (in PDF) can be found here.

In meetings and in memos, Microsoft told Apple that it would have to get out of the video playback business. The professional content creation segment might be okay for Apple, however, video playback for any Windows machine would be done with Microsoft ActiveX technology.

"Microsoft's proposal, the substance of which is contained in documents marked as Trial Exhibit 912, entitled QuickTime/DirectX Convergence Proposal, includes the following provisions: (1) the parties would cross-license their codecs to each other and collaborate on all future codecs, (2) Apple must adopt Microsoft's inferior DirectX run-time platform for Windows, (3) Apple must adopt Microsoft's inferior, proprietary streaming technology, and (4) Apple must adopt Microsoft's new, inferior AAF file format for authoring."

"Microsoft's proposal amounted to a forced abandonment of one of Apple's most successful and innovative products. ... Accordingly, Steve Jobs told Microsoft that Apple had no interest in giving up QuickTime. Microsoft's response conveyed a simple message: Microsoft would drive Apple out of the multimedia business."

Apple was pitching QuickTime 3.0 to PC vendors and there was some interest at the time, Tevanian said. Of course, following a decade of tech buyouts, there's more than a bit of nostalgia reading the company names and brands.

"Mr. David Oblecz, a procurement engineer for Compaq's Presario division, approached Mr. Schiller's product manager, Mr. Steve Bannerman, and expressed excitement about QuickTime 3. [At a meeting with Compaq in Texas in March 1998,] the questions and statements that followed reflected a clear conflict between Compaq engineers and the Compaq marketing employees."

"On the one hand, the engineering partitipants expressed great excitement about the technology embodied in QuickTime 3. On the other hand, the comments made by Compaq's marketing managers showed some resistance to bundling any QuickTime product with Compaq computers." ...

"Mr Oblecz's frustration became so great that he stood up and explain to Compaq's marketing team that the technology paths Microsoft had chosen in the past had failed Compaq, and he doubted that Microsoft's latest strategy would fare any better. Mr. Oblecz stated that Apple had the solution in QuickTime, for which there was a much clearer opportunity for success. ... 'Compaq has been screwed before in multimedia by Microsoft,' Mr. Oblecz exclaimed, and he reiterated the point that Microsoft had made at the SPA conference."

"At the conclusion of the meeting, the Compaq engineering team stated that they were very pleased with what Apple had presented. As Mr. Schiller was leaving the meeting, Steven Decker, the Director of Procurement in the Presario Division, came up to him and said, 'You have to understand what's going on here. They're very afraid of doing anything to upset Microsoft. We are very wary of bundling anything that would upset Microsoft because they touch us in so many places.'

"As week after the meeting, Apple was informed that Compaq had decided not to move forward with any licensing plan for QuickTime 3. Compaq, moreover, had also decided to remove all QuickTime products that were currently being bundled with its computers."

Microsoft's pressure also went towards video-market vendors, he testified.

"Mr. Jencks explained that Microsoft was about to announce a new channel for selling software and that channel would be part of the Windows 98 ("Memphis") products. This new software channel, he was told, would allow ISVs to sell software to users directly from the user's desktop. Mr. Jencks told Mr. Schiller that he had approached Microsoft and the Memphis team about being part of the new software channel to sell their Cinema software. The Memphis team told him that as long as Cinema supported QuickTime, his product would not be part of that sales channel."

"Mr. Jencks explained that he attempted to explore with Microsoft the possibility of Avid developing new products for the software channel. He was told by Microsoft, 'That's not good enough. You need to top QuickTime out of your product if you want to be in this channel.' ...

"Microsoft's pressure obviously succeeded. On April 6, 1998, at the meeting of the National Association of Broadcasters, Microsoft introduced its AAF format for multimedia authoring. Joining Microsoft as a partner in this announcement was Avid."

Of course, at the time, Apple kept pointing out to developers and content creators that the cross-platform QuickTime 3.0 was ready to go, while the Windows AAF and AAS specs weren't due into later in the year.

However, the confidence in Apple was very low and major "defections" by longtime Apple partners such as Avid were felt by the Mac community.

In the 04.13.98 issue of MacWEEK, the product marketing manager for the Avid Media 100 nonlinear digital video editing system, said the company was offering a version for Windows NT " because of market pressure."

People seem to want NT," she said. However, Imhoff said moving to NT does not seem to bring any performance benefits. Moreover, while Media 100 gains new Windows customers, Mac users don't seem to be migrating."

Looking back, for the most part, professional Mac users held the line and were loyal to the platform.

And I'll forgo a rant on the outcome of the DOJ vs. Microsoft case.

In that same 1998 issue of MacWEEK, columnist Ric Ford sounded prescient about the forthcoming iTunes Store channel for iPhone software. He looked at the online licensing for QuickTime 3.0 Pro.

It was a stroke of genius. How could Apple simultaneously build a vital database of customers, boost short-term profit and create a foundation for high-margin future business? The answer: QuickTime 3.0 Pro.

With a sudden swing into electronic commerce, Apple priced QuickTime 3.0 to move and made it available solely through electronic purchase of a key. This limits the potential market, but key encryption reduced Apple's cost of goods to virtually nothing. ... Meanwhile, Apple gathers valuable credit card data about each customer.

Imagine the implications. If Apple were to introduce a new computer platform, it could use this exact approach to control the distribution of applications, system software and updates. Apple could keep profit margins sky-high and manage customer relationships directly, without resellers and distributors getting in the way.

Just imagine! Hello, iPhone. A new platform as Ford called it.

Ford went on to tell a tale of woe about actually getting his upgrade license. At the time he compared it to Apple's first online store, called the Apple Club, which was started in 1997.

Downloads were glacially slow and arrived corrupted. Credit card authorizations failed repeatedly, without reason, and were duplicated multiple times. Apple's ordering support was absurd, instructing people to call back two weeks later if they encountered problems.

Well, from a rocky start a decade ago, a mighty online oak is grown.

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