Microsoft is running scared at Apple's resurgence, and now warns shareholders that the Steve Jobs-led company could be a threat to Redmond's business.
Proof positive of the new fear in at Microsoft CEO Steve Ballmer's HQ is contained within the company's recently-filed Form 10-K. This time around, Microsoft has introduced a new risk factor that has never been there before - and while the company fails to name the company that threatens it, you can draw your own conclusions.
“A competing vertically-integrated model, in which a single firm controls both the software and hardware elements of a product, has been successful with certain consumer products such as personal computers, mobile phones and digital music players," Microsoft's threat assessment states, adding, "We also offer vertically-integrated hardware and software products; however, efforts to compete with the vertically integrated model may increase our cost of sales and reduce operating margins.”
We're pretty sure we know who that company is. Ballmer said last month, "In the competition between PCs and Macs, we outsell Apple 30-to-1. But there is no doubt that Apple is thriving. Why? Because they are good at providing an experience that is narrow but complete, while our commitment to choice often comes with some compromises to the end-to-end experience."
He has a plan, saying, "Today, we’re changing the way we work with hardware vendors to ensure that we can provide complete experiences with absolutely no compromises."
This means we can see the near future become pretty personal, as the world's largest software company tries to ignore the damp interest in Vista and Apple's ever-growing market share.
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MS Doublespeak
"commitment to choice" ?!
Microsoft's greatest strength
Microsoft's greatest strength was identifying startups with potential (e.g. Netscape) and destroying them by developing crappy me-too features bundled into Windows. And a good dose of FUD just in case.
MS has no chance of replicating that strategy against Apple. Yes, Apple is a relatively small company that has had recent success. But no, MS isn't even close to being the market leader in the portable media player and smartphone markets. Microsoft's only successes are in the desktop computing market. Even Xbox has lost MS billions.
But the real killer is that Ballmer is totally missing the point, in classic Microsoft style. He rants about "a competing vertically-integrated model." He thinks that by copying Apple's development process, Microsoft will create competitive products and become relevant and hip and therefore successful in the media player and smartphone markets.
What he doesn't understand, and never would admit even if he did, is that Apple's success comes from the fact that people want their products. Apple is dominating open markets full of competitors. They take the time to develop world-class products that people want. Apple pulls people in by offering appealing products and have woven their products and brand image into popular culture all around the world.
Microsoft only knows how to push, not pull. Their old marketing model was to push software into enterprises because it's the de facto standard. Then they'd push upgrades into their existing customer base because corporate IT had no choice. Then they'd push their half-assed versions of competitors' features into the consumer market (remember "embrace and extend"?)
When you're a dominant player, a near monopoly, all you need to do is push. When you're a smaller company trying to compete, you need to pull. Ballmer will never understand that quality products pull customers in to a brand. He still thinks that just being big ("we outsell Apple 30-to-1") is enough to get people to buy Zunes, just from some kind of '90s Windows sales inertia.
Wrong.
Apple already dominates the portable music player market. So are they pushing or pulling? They're still pulling. They revise their iPod lineup every year, improving them relentlessly. They aren't just sitting there on their market share and milking the old designs for as long as they can. They're investing engineering and design time on the next generation.
Good luck trying to copy that, Ballmer. You'll be well past retirement age before Microsoft can even change course, let alone get up to speed and start chasing Apple. Just like Vista, MS is too big, too slow, too full of legacy garbage to be responsive and adaptable.
Microsoft's greatest strength
Microsoft's greatest strength was identifying startups with potential (e.g. Netscape) and destroying them by developing crappy me-too features bundled into Windows. And a good dose of FUD just in case.
MS has no chance of replicating that strategy against Apple. Yes, Apple is a relatively small company that has had recent success. But no, MS isn't even close to being the market leader in the portable media player and smartphone markets. Microsoft's only successes are in the desktop computing market. Even Xbox has lost MS billions.
But the real killer is that Ballmer is totally missing the point, in classic Microsoft style. He rants about "a competing vertically-integrated model." He thinks that by copying Apple's development process, Microsoft will create competitive products and become relevant and hip and therefore successful in the media player and smartphone markets.
What he doesn't understand, and never would admit even if he did, is that Apple's success comes from the fact that people want their products. Apple is dominating open markets full of competitors. They take the time to develop world-class products that people want. Apple pulls people in by offering appealing products and have woven their products and brand image into popular culture all around the world.
Microsoft only knows how to push, not pull. Their old marketing model was to push software into enterprises because it's the de facto standard. Then they'd push upgrades into their existing customer base because corporate IT had no choice. Then they'd push their half-assed versions of competitors' features into the consumer market (remember "embrace and extend"?)
When you're a dominant player, a near monopoly, all you need to do is push. When you're a smaller company trying to compete, you need to pull. Ballmer will never understand that quality products pull customers in to a brand. He still thinks that just being big ("we outsell Apple 30-to-1") is enough to get people to buy Zunes, just from some kind of '90s Windows sales inertia.
Wrong.
Apple already dominates the portable music player market. So are they pushing or pulling? They're still pulling. They revise their iPod lineup every year, improving them relentlessly. They aren't just sitting there on their market share and milking the old designs for as long as they can. They're investing engineering and design time on the next generation.
Good luck trying to copy that, Ballmer. You'll be well past retirement age before Microsoft can even change course, let alone get up to speed and start chasing Apple. Just like Vista, MS is too big, too slow, too full of legacy garbage to be responsive and adaptable.
Spot on
I completely agree with the above post.
I think you have it wrong as
I think you have it wrong as it has nothing to do with Microsoft wanting to copy Apple's development process. When he talks about the vertically-integrated model he's talking about control of the platform. It is a lot easier to develop a quality experience when you have complete control of the hardware platform. The reason Apple has put in the artificial restrictions to try and prevent OSX from running on hardware other than Apple is not simply to sell more hardware but rather to control the experience. If all of the sudden there were millions of users installing OSX on their old Toshiba, Dell, HP, Lenovo, white box, etc.... machines the reputation of "it just works" would suffer greatly.
I don't know what Microsoft has planned but my guess is that they will work with closely with a vendor or two on a version of Windows or a product where the vendor is very limitied on what hardware is used is locked down and Microsoft has a hand in writing or verifying the quality of the drivers is good. Microsoft takes a lot of heat from people about OS problems a lot of which has more to do with the (lack of) quality of the hardware/drivers. The fact of the matter is that if one has a PC where the individual components are on the HCL as Vista certified their experience with the OS is going to be magnitudes better than someone using a PC whose hardware is not.
This is a myth that lasts and
This is a myth that lasts and lasts.
Microsofts systems are QUANTITATIVELY inferior in many ways. The reason Windows is perceived as bad, is because it is. The engineering of OS X involved using a stable core developed and revised by academia over decades. The engineering of the UI involved ergonomic measurements and analysis of human computer interaction by psychologists. I don't pretend to know the development process at MS, but looking at programming API's and interface design choices, it seems that there was no clear methodology developed by experts.
I suspect that somewhere in the development chain of command a giant bugbear sits, making irrational decisions. Without collecting data and consulting with professionals, including engineers, programmers and psychologists, it is only logical that the quality of MS software is low.
I would like to reiterate that I don't know how MS makes it's decisions, but if it listens to trained experts... man, they hired the wrong ones.
I wouldn't disagree with you
I wouldn't disagree with you about the core or the UI methodology but that is not what Microsoft is referring to when it says its going to work on more vertical integration.
That said I think you are dead wrong when you say that Microsoft isn't collecting data, consulting with professionals, etc... They are and they do. One other difference that has a lot to do with how decisions are made is that Apple's focus in on the consumer where Microsoft's bread and butter is providing enterprise clients. It's a foolish strategy IMO but that is why there are multiple interfaces for Windows and add-ons like Media Center, etc... If Microsoft was smart they'd split Windows into two versions - a consumer version updated yearly focusing on things important to consumers and a business version released every three years or so with the focus on being the best enterprise client possible. Trying to straddle the fence of being a enterprise client and consumer OS really hamstrings Microsoft from being exceptional in either role.
GM (Toyota) Versus Porsche
It's an old analogy.
The last thing Apple wants to be is the GM/Toyota of the Software or PC industry.
Been there. Done that. (Or tried Ms. Lisa)
It is much more profitable and fun to be Porsche than GM on any day.
MSFT only cares what Apple does NOT because they may lose the title of World's Largest Software Company but the real issue is because they COVET.
"What do we covet Clarise? We COVET what we see, everyday."
Thank you Dr. Lecter.
Apple is the 911 or Smart Super Model or whatever you come up with object of affection and desire that turns everyone's heads.
But financially, Apple is hardly more than a thorn for MSFT and let us NOT forget the MSFT MAC BU is THE MOST PROFITABLE BU AT MSFT!
So what is it then?
Will the world suddenly have an epaphonic collective conscious moment and suddenly scorn windows for OSX???
No.
But Apple gets all the attention. All the love. All the accolades. (mostly...)
And MSFT?
They sit, Ebeneezer like, and covet from Redmond.
They covet from when this all started.
They covet from the top down.
Apple is the high school sweetheart that married another guy.
And they still pine.
And they are still mad.
Because they still want Apple and the love they used to have.
But is gone.
So they sit.
Stare.
And Covet.
I changed
A week ago yesterday I purchased my first Mac. While I am still getting used to the switch, I am more pleased with this product than I was my windows based system. This time I bought a Macbook, in a couple of months we will be buying an iMac. There is a difference. While Mac is not perfect, it is better than the alternatives.
Microsoft fears true innovation... not luxury computing
I don't think Microsoft has much to fear from Apple outside of the ipod/iphone markets (only real innovation). OSX is based on Mach/BSD and even more outdated than the VMS like NT kernel. Yellow box and Win32 APIs are from a similar age. The Mac desktop (this includes notebooks) is pretty much dead as well. You can make them sparkle. You can fill them with sunshine... that does not make them innovative.
Conclusion, like Microsoft, Apple is a dinosaur when you consider products outside of their ipod/iphone divisions.
The real threat is Google (or another company like it). This of course is a good decade away from being fully realized. By than both Apple and Microsoft will have made this transition and will not be dinosaurs anymore (or they will both be dead).
You are rigth MS is more
You are rigth MS is more innovative then Apple
http://www.youtube.com/watch?v=QT6YO30GhmQ
Mac is on the BSD kernel. And unlike the NT kernel it is constant being develop.
The time it takes MS to make a new version of Windows, Apple makes 4 version of OS X, and MS only came whit a version of windows that was bad copys of OSX featurs.
Google (and companys like it) is online based companys.
You still need a OS to get online.
And I still like the idé that I can use my computer whit out having a internet connection.
And the idé that my data is on my mashine and not on some companys mashine.
Microsoft is just unbelievable
They make as much revenue as Google and Apple put together in any given quarter and yet they allow fear to drive there actions, now more than ever. This constant crusade to destroy Google and Apple dominance is insane. They should be on a crusade to create the most amazing online experience or handheld gadget humanly possible. People know good when they see it, touch it, and use it. Google and Apple both have earned there successes through great innovations, great products, and great services...Microsoft can attribute the bulk of it's success not to consumer choice but to automatic OEM installs of Windows. That won't necessarily last forever.
Pure, unadulterated, fanboy
Pure, unadulterated, fanboy delusion is what this is. It'd be great to see Apple become king of the mountain but that's extremely unlikely and I'm sure the boys in Redmond aren't sweating it. Apple's own insistence on selling it's products at the industry's highest prices will ensure that it will never be a serious threat to MS. Most people out there don't know a damn thing about OSX and sure aren't gonna spend hundreds of extra dollars on a gamble to see if they like it.
Apple will continue to steal a few Windows users here and there but they'll never made a serious dent until they start offering a lot more budget conscious products. Not only because the economy stinks but because the average Joe doesn't do jack but surf and check email. To those people, Windows is good enough to get the job done. We all know Apple ain't gonna drop it's extravagant prices to the same level as their competitors. They never have.
Gamers won't buy'em because the best games still run on Windows and you need to buy a copy in addition to the computer itself to play.
Fan boys please. Get a grip.
Pure Unadulterated, Fanboy 2
I cant believe that you people think that M$ is running scared of apple. Your daft, until apple stop having a closed system most people will not switch to them. Until the OEM installed units from different manufacturers are readily available apple dont stand a chance. M$ can continue to stuff up the next version of windows and even the next but for as long as the high and mighty continue to run around with their noses in the air they will never realise what they are missing out on. Apple is not perfect and as a critical user rather than a fanboy they have more wrong then they have right as far as I am concerned. This fashion effect will not continue forever. Fashion is fickle, and unless apple change they will go the way of the flared pants and platform shoes.
I certainly hope you MS
I certainly hope you MS fanboyz are right.
Waaaaaaaay to many people are buying Macs these days, it's not as exclusive as it used to be...
Ballmer is a slob and a
Ballmer is a slob and a moron. He wants to "drive" and "push" developers to follow Microsoft's whims, rather than creating and expanding great platforms that are attractive to developers. From a consumer standpoint, He wants to "redefine the meaning and value of Windows" rather than do more to address Vista's glaring problems. In other words, he want to change peoples minds rather than fixing up the crap they are selling.
And what is his big "beat google" strategy? Buy up other companies that are already losing to Google? I can't see why Microsoft even wanted Yahoo in the first place, but I guess Ballmer is already looking for the next wounded search company they can rebrand as "Your Personal Windows Online World" or some other such nonsense. I think Yahoo really would be great if it just had that logo with the four colored boxes on it! Seriously Ballmer?
Which leads me to my next point. Ballmer seems to be a branding retard. Is everything Microsoft produces Windows somehow? What the hell is the difference between "Microsoft Live" and "Online Services"? I thought Live was an online service.
@Ballmer - invent names that mean something. Invent products people actually want. Do it better than the competition, or don't do it at all.
Meanwhile, you don't need to invent anything to compete better in your "Live" business. Let people send Hotmail email to their computers and phones with POP3 instead of forcing them to pay for stuff the competition is giving away for free. Thats just one way to give a better "end to end" experience. Unfortunately, competing seriously requires making a few "compromises", and giving consumers what they actually want. If not the free market will eventually kick your ass.