Contents
“Pirates of Silicon Valley” was written and directed by Martyn Burke in 1999 for the American cable network TNT, based on the nonfiction book “Fire in the Valley” by Paul Freiberger and Michael Swaine. Noah Wyle plays Steve Jobs, and Anthony Michael Hall plays Bill Gates. At the center is a relationship that fits no simple pattern: Apple and Microsoft are partners and rivals at the same time – a case of Co-opetition.
Two founders, two paths
Situation
The film spans the years from 1971 to 1997. Steve Wozniak and Steve Ballmer narrate in retrospect. Jobs and Wozniak build the first Apple in the garage. Bill Gates, Paul Allen and Steve Ballmer write software, first for the Altair, then for the IBM PC. Apple builds machines; Microsoft supplies programs.
Link to the principle
From the start, the two companies occupy different positions in the same value creation. A computer without programs is worthless, and so are programs without a computer. Adam M. Brandenburger and Barry J. Nalebuff call such players complementors: what one offers makes the other’s offering more valuable.
The partner looking over your shoulder
Situation
Historically, Microsoft is among the first companies to write programs for the new Macintosh: Multiplan for the Mac appears in 1984, Word in early 1985. To do this, Microsoft works closely with Apple and gets to know the machine’s graphical interface in detail.
Link to the principle
This is the classic risk of co-opetition. If you work with a potential rival, you show them your cards. Jobs needs Microsoft’s programs so that the Mac will sell. At the same time, he opens the door to a competitor in his own field.
The break
Situation
In the film, Jobs learns in October 1983 that Microsoft is preparing a graphical interface of its own, Windows. He confronts Gates and accuses him of copying Apple. Gates counters that Microsoft acted within the terms of the contracts and that Apple had itself borrowed from Xerox. The partner has become an opponent.
Link to the principle
Co-opetition fails when one side does not clarify where the cooperation ends. Jobs did not secure the boundary. Microsoft used the cooperation to become stronger in the competition. The film presents this as betrayal. Strategically, it is above all a failure to draw a line.
The pact of 1997
Situation
Right at the beginning, the film jumps briefly to Macworld Expo 1997, and it ends there. After Apple’s purchase of his company NeXT, Jobs has returned to Apple and announces an alliance with Microsoft. Historically, Microsoft invested $150 million in Apple at the time and committed to releasing its Office suite for the Mac for five years.
Link to the principle
The rivals need each other again. Apple needs Office to survive. Microsoft has an interest in Apple not disappearing. The cooperation returns without the competition ending. Exactly this double relationship is co-opetition.
What the film shows and what it doesn’t
Situation
Martyn Burke said that every scene was meant to be based on real events and that he had at least two sources for each one. Steve Wozniak found much of it very accurate but disputed individual depictions, such as the claim that he had quit Apple. Steve Jobs called the film brutal and mean but praised how closely Noah Wyle had studied his mannerisms.
Link to the principle
The film condenses and dramatizes. For the principle, the basic pattern is enough: two companies that need each other cannot simply be enemies. They have to learn to cooperate and compete at the same time.
Key takeaways
Key lessons
- Recognize who makes your offering more valuable, even if they could become a rival.
- Clarify in advance what your partner may see and use.
- Protect the core that sets you apart.
- Be prepared for a partner to become a rival, and vice versa.
- Don’t let old grievances prevent useful cooperation.
Summary
“Pirates of Silicon Valley” shows Apple and Microsoft as companies that need each other and fight each other. Microsoft develops for the Mac and at the same time builds Windows. The break comes because the boundary of the cooperation was not secured. The pact of 1997 shows that rivals can become partners again when both depend on it.
Sources
- Adam M. Brandenburger and Barry J. Nalebuff: Co-opetition. New York: Currency Doubleday 1996.
- Paul Freiberger and Michael Swaine: Fire in the Valley: The Making of the Personal Computer. 1984.
