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Why Microsoft really does need IBM this time

Mike Ricciuti CNET News

Published: 23 Sep 2003 16:05 BST

It's a rare and momentous occasion when IBM and Microsoft share a stage to announce a new joint venture.

As far as anyone can recall, the last time the bitter rivals came together -- prior to last week -- was more than a decade ago, just before the two companies had a legendary falling out over PC operating systems.

You might remember OS/2, which the two computing giants hyped relentlessly as the future of the industry back in the late 1980s. Famously, Bill Gates once wrote that OS/2 was "destined to be the most important operating system, and possibly program, of all time."

IBM, which once paid its software programmers per line of code written, needed Microsoft's more limber development team to make OS/2 a success.

But not long after Gates wrote his words of support, his company dropped OS/2 development like a bad habit, and instead poured its resources into the development of Windows NT. That sealed OS/2's fate as a historical footnote and set the stage for Windows' eventual dominance.

So what are we to make of Wednesday's joint commitment by Gates and IBM software chief Steve Mills to cooperate on so-called advanced Web services standards? Clearly, both companies have a lot on the line. Each has committed millions, if not billions, of dollars on Web services product development. And each has cooperated, along with Oracle, Sun Microsystems and others, on the core Web services standards already in place.

The party line is that the companies are cooperating for the greater good. They are also cooperating for their mutual benefit: standards help to lay the foundation for applications built using each company's proprietary technologies. As Mills said last week: "There are huge opportunities for making money here."