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Microsoft's Apple Investment: The Worst Deal of Them All?

Steve Jobs stands at a podium as Bill Gates appears on a video screen as he addresses the MacWorld convention praising the new alliance between Apple and Microsoft on Aug. 6, 1997 in Boston
Steve Jobs stands at a podium as Bill Gates appears on a video screen as he addresses the MacWorld convention praising the new alliance between Apple and Microsoft on Aug. 6, 1997 in BostonPhotograph by Julia Malakie/AP Photo

Whether you’re holding an old-school 4, a tooty-fruity 5c, a Shanghai-edition gold 5s, or a Calle Ocho-jailbreak especial, it’s easy to forget how many stars had to align for any iPhone to happen at all. The particular butterfly flappings that combined to create Steve Jobs’s extraordinary life and career are well-known and oft-recalled; less remembered is the $150 million lifeline Microsoft (MSFT) threw Apple (AAPL) in August 1997, when Apple was within weeks of bankruptcy.

That now-infamous investment gave Apple enough money and breathing room to consolidate control of its Mac business and parlay that momentum and cash flow into the iPod and iTunes. Then the iPhone and iPad that would go on to mortally wound the entire personal computer industry, effectively zero-sum annexing continents’ worth of market capitalization from Microsoft’s waning empire. Microsoft was worth $556 billion at its Y2K peak. It’s now worth $320 billion. Apple was worth less than $3 billion when it took Bill Gates’s money; today it commands a planet-leading $505 billion valuation.