Posted on 03/31/2009 11:03:33 PM PDT by Swordmaker
Both Microsoft (MSFT) and Apple (AAPL) belong to the Most Innovative Companies category; however, we rarely see anything original from MSFT. Rather, Microsoft is widely accused of copying ideas from Apple. I guess the reason MSFT is in this category is because the Windows OS has an innovative meaning to the entire human being. This type of innovation doesn't necessarily indicate creativity, which, on the other hand, is the exact characteristic that differentiates Apple from the rest.
On the other hand, Microsoft is the indisputable monopolist in the Operating System world, owning around 88% of the market, and Mac OS owns around 10%. However, according to many users with Mac experience, the OS from Apple is so much cooler than Vista, and for years, there have been voices arguing that Apple should license the OS to the OEMs, the same way that Microsoft sells its flagship product.
Here are some thoughts on the rivalry.
1) Why is Microsoft less creative?
With such a dominating market share, you might think that the business operation environment for MSFT won't be that tough. But it is the opposite - MSFT is constantly under immense internal/external pressure, which exhausts its power to stay innovative.
First, internally, the Windows OS, if not the most complex software system in human history, is well qualified to be one of the most complex ones. Virtually it is like a platform of your daily life, somewhat matching the unlimited possibilities in real life. To develop and support such a system is a daunting task for any single company. Think about it: billions of dollars in budget, thousands of developers, hundreds of modules, dozens of versions, iterations, releases, integrations, testings, code bases, documents ... there is an endless task list. If you have the experience managing a one million dollar project, you know it only takes a few mistakes to see your process spin out of control. Then try to imagine this monster at MSFT's hand. I have no clue how MSFT manages the life-cycle of Windows, but for sure it is a process demanding rigor, consistency, cautious planning and solid implementation. I won't say these values prohibit creativity, but for sure, they won't encourage creativity.
Second, Windows is an OS independent of the hardware, and MSFT only specifies the minimum hardware requirements. We understand that this is required for MSFT to maximize its market share. The result is, MSFT has to deal with the compatibility issue with hundreds of hardware variations. On the other hand, the OS is a platform, i.e., it opens its interface for thousands of other software companies to build upon, which creates another compatibility issue. Then adding the challenges created by rapid evolving technologies and backward compatibility, these could easily turn into a disaster that devours the company. Again this is the daily task of MSFT.
Third, Windows is estimated to have more than 1 billion users worldwide, which means it is open to unlimited possibilities/challenges/risks created by the immense brain power of a vast crowd, where exist countless usage patterns/habits, unbelievable stupidity and unimaginable brilliance, geeks, hackers, pirates, virus writers, Windows lovers, Microsoft haters..... As an indicator, MSFT never escaped from the criticism about the security flaws of Windows, even after spending billions of dollars year after year attempting to fix it. Here, code quality actually is only one side of the story, the other side, the enormous user base.
In summary, all these demanding tasks that fill the daily life of MSFT ultimately defined the overall operation atmosphere and corporate culture. Here, the top priority is about being solid, thorough, proactive and making less mistakes. Then how about creativity - stay original and novel? Sure it is nice to have creativity, but it is fine to live without it. It is a shame to copy ideas invented by others. But business-wise, what is the big deal? As long as it is legal, it simply means less cost.
2) Why is Apple more innovative?
At first glance, it looks like in the CPU market we have a similar competition pattern with Intel (INTC) controlling the market and AMD as a challenger. Here, the dominating market share gives Intel extra power over AMD, because it may directly squeeze the margin of AMD by reducing the price of its own chips. You may think that in the OS world,MSFT would have the same leverage over Apple, but not really.
The secret lies in Apple's bundling strategy, i.e., it doesn't allow the Mac OS to be installed on any non-Apple branded hardware. In other words, Apple refuses to open its software to the open public. What does Apple gain from this? It avoids the full-blown competition, as well as the big headaches that MSFT has to deal with (listed above). Furthermore, from the space that the monopolist's power can't reach, Apple created itself a very stable niche market with a group of very loyal users.
First, through bundling, Apple has full control over the hardware platform its software runs on, virtually eliminating all hardware compatibility issues that MSFT has, and rendering the backward compatibility into a minor problem. This translates directly into a lean product management process and less cost.
Second, Apple has full control over the look and feel of its product, thus retaining the leverage to consistently maintain the luxury and sleek style of its product, which caters well to its target customer.
Third, fat margins. A Mac normally costs twice as much as a PC with similar processing power.
And fourth, Apple has a small but friendly user base, characterized by higher income and education, which frees the company from dealing with all sorts of malicious behaviors that are very common in the Windows world. As an example, the user doesn't even need an anti-virus software on his or her Mac.
In summary, with MSFT taking on all the hatred and accusation, Apple operates under an environment with much less internal and external pressure, thus gaining the luxury to be internally focused, thus more innovative.
Disclosure: Long AAPL, no positions in MSFT.
Such is the fate of all monopolies... however, until the Justice Departments of both the United States and the Economic Union agree to withdraw their sanctions, Microsoft will still have to abide by the limitations placed on them because of the anti-trust convictions as a monopoly.
It matters not what you think... it does matter what the LAW has determined. Incidentally, Obama, Pelosi, and Frank are irrelevent to these cases as the determination was made prior to Obama's administration, and Pelosi and Frank have no jurisdiction.
You can bloviate and obfuscate as much as you want, but Microsoft WAS convicted in multiple courts of monopolistic practices. If one is convicted of a crime, one is convicted.
By-the-way, calling people with whom you are debating "adolescent" is an ad hominem attack... which is the last resort of those who do not have an argument against the facts.
You are swallowing the Microsoft face-saving MYTH...
Apple was NOT bailed out by Microsoft. Microsoft essentially LOST a copyright and patent infringement lawsuit brought by Apple and as part of the court approved, three interlocking settlement agreements (which you can now read on-line) Microsoft had to pay $150,000,000 to Apple (it was handled as a purchase of non-voting, preferred stock), license certain MS patents to Apple in perpetuity at no cost, and continue developing and marketing MS Office for Mac for an additional five years. For its part of the agreements, Apple agreed to drop its suits, license certain copyrights to MS in exchange for fees for a period of five years, and include Internet Explorer for Mac on its OS distribution disks along with Netscape for five years.
"Later testimony in the U.S. D.O.J. Microsoft anti-trust trial revealed that, at the time, Apple was threatening Microsoft with a multi-billion dollar lawsuit over the allegedly stolen code, and in return Bill Gates was threatening with the cancellation of Office for the Mac. [2] [3] In August 1997, Apple and Microsoft announced a settlement deal. Apple would drop all current lawsuits, including all lingering issues from the "Look & Feel" lawsuit and the "QuickTime source code" lawsuit, and agree to make Internet Explorer the default browser on the Macintosh unless the user explicitly chose the bundled Netscape browser. In return, Microsoft agreed to continue developing Office, Internet Explorer, and various developer tools and software for the Mac for the next 5 years, and purchase $150 million of non-voting Apple stock. The companies also agreed to mutual collaboration on Java technologies, and to cross-license all existing patents, and patents obtained during the five-year deal, with one another."—WikipediaAt the time of this so-called saving of Apple, Apple had over 1.2 BILLION DOLLARS in CASH the bank and more in liquid assets and had debts of under $70 million. Apple was not at risk of going under.
"Apple, which ended its third quarter with $1.2 billion in cash, will use the additional $150 million to invest in its core markets of education and creative content, Anderson said. He added that the company expects to gain a higher percentage of its revenues from software and services in these core markets in the future."—CNET NEWS, August 6, 1997
They had had just ONE quarter of loss, two quarters previous to the settlement, but were already back in the black. Apple had already turned the corner into profitability before these agreements were inked. ALL of this was reported in contemporaneous news articles when it occurred. It was several years later that the "spin" was started about how Microsoft had magnanimously "Saved Apple from bankruptcy."
and yes, you can get a similarly equipped PC for about $600. of course, if microsoft installed all that free software on the box, like apple does, then there would be nonstop complaints about anti-competitive practices
Look again at the chart I posted from Fortune Magazine about the comparison they did between all-in-one computers (a market in which Apple competes) and tell me that you can get a "similarly equipped PC for about $600. Apple simply does not compete in the bottom basement bargain bins. They have chosen not to.
Microsoft is NOT a computer maker.. they are a software company. The hardware makers are completely free to add whatever equivalent "free" software they choose on their boxes... even Microsoft's... but MS cannot, because of their conviction for anti-competitive practices, compel them to do so.
I maintain Windows and Mac computers and manage networks for publishers, medical, dental, optometric, chiropractic, and law offices, a few other professionals, a couple of local charities, and fix computer problems for anyone who calls me for help. Word of mouth keeps me so busy I stopped advertising years ago. I'm on a yearly retainer with several of the offices and come running when they yell "HELP!"
In the past, I was an area representative for the National Federation of Independent Business and before that covered Norther California and Nevada for the United States Chamber of Commerce. Before those politically oriented jobs, I variously managed the Olde Sacramento Armoury and Simms' Hardware's Gun Department for several years. In college, I was a movie projectionist.
Dell beats Apple any day of the week with its 400$ computer packages that do what your average consumer wants to do. I assemble my own computers BUT.....
If I needed one a cheapo Dell $400 desktop+LCD would be just fine. The only *perhaps* upgrades would be for a DVI video card and more memory. And depending on what the current Dell deals are the DVI and memory might be included anyhow
They forgot to mention macs are for liberal pussys
- Sent from my iPhone
Just a general observation. Anti-monopoly legislation originally came about in response to Ford Motor Company's practice of trying to control every aspect of the production of their cars. In this respect, Apple appears to be arguably much closer to having a monopolistic business model than Microsoft.
But, the beauty of the Macs is that Macs are attacked MUCH LESS by viruses.
Heard also about a new PC virus going around.
Well this conservative FRper USES a Mac. I have a very good dear friend who is conservative as well and uses up to 3 Macs computers for his line of work, talkradio show work, local, and has as a 4th and 5th Macs, an iPod and an iPhone. :)
You can buy a Mac Mini from Apple with free shipping for $599. This begs the question that if someone wanted the Mac experience for less money, why would that person by a machine from Psystar? It lends credence to the notion that Psystar is simply a front organization intended as a WMD against Apple's intellectual property rights as noted in this TMO article.
Frighteningly, I do remember working with one of those machines. I used it with Lotus to build a database for the company I was working for, before every desk had a computer on it.
What in the world did we fill our desks with before keyboards and monitors?
I learned all about rs-232 ports and serial interfaces trying to get information off an osborne and onto a commercial strength automated printing offset press (!!!)
Ultimately successful but what a learning process. (Love them non-standard serial cables. Have soldering iron will travel.)
Wrong metaphor. Imagine if Toyota had such a stranglehold on the market that no car dealer could turn a profit if it didn’t sell Toyotas.
Now some other car manufacturer wants to have his cars sold at dealers, but it turns out Toyota told the dealers “If you sell any other brand we’ll jack up your price for the cars, killing your profit.”
Even worse, imagine Toyota said “You have to sell Toyotas. Even if you sell a Ford to a customer, you have to pay us for a Toyota.”
The latter one is what killed OS/2. However, you really have to call Microsoft a former monopolist because Microsoft has been prohibited from doing either of those things for years.
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As an example, the user doesn’t even need an anti-virus software on his or her Mac.
This is a silly myth among ignorant Apple users. Please don’t flame me for using the word ignorant, I did not say stupid. Ignorance is actually more dangerous than stupidity because it implies a lack of education or knowledge not the inability to acquire it. Therefore, be aware of the fact that an Apple IS vulnerable to malicious attacks when not protected by firewalls or anti-virus software.
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Yep, I *do* run antivirus software. It’s great at finding viruses on my Parallels Windows partition. Never seen a single peep on the Mac side since 1984.
Currently, Phoenix, the ignorance is on YOUR part. Even Charlie Miller, the winner of the last two CANSECWEST hacking PWN to OWN contests, says it is unnecessary to run AV on a Mac. There are currently ZERO self-replicating, self-transmitting, self-installing viruses for OS X in the wild. There are currently ZERO spyware, and ZERO adware in the wild. There are about 14 easily avoided and removed Trojan horse applications in the wild. Until there is some credible threat that requires the use of AV software, it is unnecessary to run it on a Mac.
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