Apple, Microsoft Ink 5-Year Mac Office Deal

During the keynote address at San Francisco's MacWorld Expo, Apple chief executive Steve Jobs relinquished the stage to executives from Microsoft's Macintosh Business Unit (Mac BU), who outlined the deal.

"Microsoft has a history of successful collaboration with Apple, and this agreement underscores our commitment to the Mac platform," said Tom Gibbons, vice president of the consumer productivity business group at Microsoft, in a statement. "We&'ve had many years of success with Office for Mac, and this formal commitment confirms that we&'re in the Mac business for the long haul."

As part of the agreement, Microsoft has promised to create what it calls "universal binaries" for Office for the Mac, versions that run equally well on both the older PowerPC architecture, and the new Intel-based systems. Until Office's applications -- Word, Excel, PowerPoint, and Entourage -- are recrafted to run on Intel Macs natively, users will have to run the suite using the new machines' Rosetta emulation.

No schedule has been set for the next Office, but if Microsoft keeps to its traditional two-to-three year development cycle, it would release sometime during the second half of 2006 or the first half of 2007. That tentative schedule, however, could be affected by the need to create the universal binaries, said Roz Ho, the general manager for Mac BU, in a separate statement.

"We'll know just how much the schedule will need to shift as soon as we're able to fully test our current and forthcoming solutions on Intel-based Macs," said Ho.

Ho also said that her group was on track to update Entourage 2004, the Office for the Mac's e-mail client, in March, and will add features to Messenger for Mac that enterprise customers have requested.

The agreement essentially formalizes the arrangement Apple and Microsoft have had since 2002, when the last deal expired. That agreement, which was signed in 1997, included a $150 million investment in Apple by Microsoft and a promise by the Redmond, Wash.-based developer to continue to create Mac products.

(That $150 million investment in 1997, by the way, has grown -- assuming Microsoft held on to those non-voting shares -- through two stock splits and a surging Apple bottom line to about $1.85 billion today.)

"We're taking our already strong relationship to the next level," said Ho. "The commitment agreement officially reinforces our existing plans."

Although the two technology giants were all smiles Tuesday, they have increasingly butted heads, whether over browsers -- Microsoft recently threw in the towel on the Mac version of Internet Explorer -- or competing for music download customers.

In fact, also on Tuesday, Apple released an update to its iWork suite, dubbed iWork '06, that includes new versions of Page, a word processor, and Keynote, a presentation maker, competitors to Office's Word and PowerPoint, respectively.