Gates' explanation for co-developing a PC with a hardware vendor.
Hardware and software development had at times been "a little out of sync," Gates said.
"The best way to advance the state of the art is to work even more closely, always starting from the customer's perspective and focusing on the combination of hardware and software that works best to create an innovative and compelling PC," he said.
The notion of designing computer hardware and software in tandem is, indeed, a terrific idea, but Microsoft and HP are late in embracing it.
Apple, based in Cupertino, Calif., has been designing personal computers that way for 25 years and isn't alone. Several companies that build sophisticated business computers -- IBM Corp. and Sun Microsystems Inc., among them -- also have done it that way for a long time.
Veteran Mac devotees can reel off a lengthy list of similar incidents, from Microsoft's legendary quest to duplicate the Macintosh operating system's look and feel to knockoffs of such Apple software as iMovie with Windows Movie Maker.
Though Apple fans may seethe, the truth is that "borrowing" ideas from competitors is an accepted and common business practice. Genuine inventions can be patented, but clever ideas will always be ripped off -- especially when there is money to be made.
For that matter, many of Apple's storied innovations actually have been improvements -- though often vast improvements -- on existing ideas: the graphic user interface pioneered by Xerox Corp.'s Palo Alto Research Center that Apple reworked into the Macintosh interface, introduced as early as 1983, and 2001's acclaimed iPod, which grew from Apple's desire to make a better MP3 player.
"Success always has a thousand fathers," said Tim O'Reilly, founder and president of O'Reilly & Associates, the computer book publisher based in Sebastopol, Calif.
"But what Apple does so well," O'Reilly added, "is to realize the potential in a technology and to frame it in such a way that people discover that they need it."
Josh Bernoff, an analyst for Forrester Research Inc. in Cambridge, Mass., agreed, saying Apple is good at figuring out when technologies are ripe and at how best to popularize them.
But, inevitably, the companies of the PC world -- be it Microsoft, Gateway or anyone else -- recognize the value in an Apple idea and copy it.
"There's enormous pressure on Apple to continue to innovate," Bernoff said. "Everything they do gets commoditized by somebody else and all the profit driven out of it."
Adding to the challenge is that Apple must maintain its parade of innovations with far fewer resources than its Windows rivals.
Although Apple, for instance, invests 8 percent of its gross sales in research and development -- a higher percentage than most other computer companies -- its total R&D budget is dwarfed by that of its competitors.
For its 2002 fiscal year ended Sept. 30, Apple invested $446 million in R&D. Such spending at Microsoft totaled $4.3 billion in its last fiscal year -- nearly 10 times Apple's. Microsoft's Athens partner, HP, meanwhile, spent $3.3 billion on R&D in fiscal 2002.
Luckily for Apple, the diversity of companies involved in PC technology makes major changes more difficult to implement. Since Apple completely controls the hardware and software for the Mac, its only significant impediment to wholesale changes is resistance from users who have a hard time keeping up.
Yet Apple has little choice but to keep the innovations coming, because one of the Mac's critical selling points is that it's a step ahead of the PC in many areas. If Apple loses that advantage, it could lose customers -- a scenario a company with only 3 percent of the market can ill afford.
But there's another side, too: if Apple is an acknowledged leader in the computer universe, why isn't its market share growing? Shouldn't there be more people lining up to buy products from the industry's chief innovator?
Edward J. Black, president and chief executive of the Computer and Communications Industry Association, a Washington technology industry lobbying group, credits Apple for having "great vision" and being more creative than its competitors, but sees several barriers obstructing Apple's progress even though Apple has an impressive set of products.