Microsoft's Shifting Strategy in Response to Apple

[TPALTony]

I don't get it. Apple has a tiny 8% share of the market. Why is MS so obsessed with trying to kill Apple. They have a government approve monopoly why bother with Apple?

Because apple has MIND share right now. People looking to buy a computer THINK of Apple. They never used to. You ignore that problem and before you know it they have 15% market share, then 25%, then oh #$#@ we're not even the majority any more! That would take a long time to happen, but as business strategy goes, Apple are worth paying attention to. They have gotten the complete experience RIGHT for the majority of people. iTunes and iPod for instance. How many cars can you buy that are "zune ready"? Versus iPod ready? They are leveraging that and getting computer traction (particularly with intel switch.) They are beating up on Vista and getting away with it because no one is bothering to answer... Apple has Microsoft on the ropes in terms of consumer perception. Size is irrelevant to that.

Mind share today is market share tomorrow, if you deliver on your promise...

 

[ssteve]

Ahhhhh Yes.........

Yet another original idea from Redmond...................... I really wish Apple could be more like Microsoft.... Maybe someday..... LOL

 

[Aznsensation45]

LMFAOOO!!! a zunephone... lol. your a funny one Ballmer...

oh. by the way. i got my new iphone yesterday..it's tight

 

[137489]

Interesting....

End-to-end huh.

hmm - little PC hardware companies going out of business due to MS saying, sorry your hardware is not up to our requirements; therefore you can no longer legally run Windows on your machines. MS starts suing clone makers.

hmm - Microsoft being sued again by all the PC makers they stop doing business with.

Microsoft sued by all the companies and servers who build computers in-house or order special components.

lets face it, I do not see this as flying. People are switching to Apple, because Apple does it right. Microsoft changing strategy in the midst of a vista flop and still behind on Windows 7?

Also, will this start driving up the cost of a PC, making a mac look even better? Especially if Apple starts lowering prices?

This is going to be interesting to watch, as it develops........

 

[IJ Reilly]

Every situation is unique, and could thus be considered a quirk. Every business opportunity is different. Another industry will not have the same circumstances, but there will probably be another set of quirky circumstances present.

Every success represents some combination of skill and serendipity. I'm not sure why Microsoft's success is only the product of historical 'quirks', but Apple's must be totally the opposite.

Sure, but I think you're missing the point. Where is Microsoft if Compaq doesn't figure out how to legally clone the IBM-PC hardware? Are they anything even remotely like the company they came to be? Of course not. Even more importantly, this was the birth of the so-called "component model," on which Microsoft's entire success was constructed -- and which it turns out had only one really successful implementation, for historical reasons which are unlikely to be duplicated ever again. You might ask yourself how that came to be, especially since Microsoft seems to be struggling currently with how to move beyond this very limited model.

We can also stand back and appreciate the irony. For years Apple was goaded into attempting the "component model," and when they did, it was a huge failure which nearly sunk the company. Now we see Microsoft trying to figure out how to implement the far more traditional "end-to-end" model that Apple has used successfully to build their business.

 

[iSlave]

ZunePhone???? Fakkk Orrrrffff!!!! Wahahahahahahahaha!!

 

[twoodcc]

haha, wow, you just gotta love Ballmer. we'll see what microsoft does

 

[babyj]

Seems like a normal press release from Ballmer - all hot air and ideas with little in the way of substance. It would be good news for everyone if they could match the 'end-to-end experience' that Apple do, but this will be a major task and you have to wonder how much success they are likely to have.

On a hardware front they need to work harder to ensure compatibility, maybe some kind of certification process with a requirement of the vendor to provide updated and fully working drivers within certain time frames. Maybe a similar process for ready built systems which actually means something, unlike the 'Vista Ready' fiasco that hit a lot of people.

The software side of things will be even harder. They need to start with core functionality in Windows and then find some way of forcing software houses to write better software. Though I haven't used Windows since XP so I don't know what things are like now, they may of improved.

If Microsoft can start competing on the main selling points Apple have, it will push Apple to innovate further - which would be excellent news for Apple users. Though to be fair, Apple have been doing a pretty good job without any real competition with their model.

 

[Virgil-TB2]

WinMobile is a failure

They do. Within 5 years Apple could easily be selling 200 million iPhones a year, unless someone steps up to the plate and competes with Apple. If that is android then there are 200 million phones running an open-source OS in daily and obvious use, so Microsoft *does* have to compete here.

If Apple's selling 200 million iPhones and say 20-30 million Macs a year that gives them almost as large a share on both OS's as Microsoft Windows will have.

I meant "not in the same business" as in Microsoft is not a hardware company, not a media device company, and has never made a phone before.

It's reasonable to suggest (as you do) that because they have a software product that runs on phones they should compete on that playing field, but after so many years and so many versions of Windows Mobile, a counter argument to be made is "Why are they even in this business?" (phone software). Microsoft only "has to" compete in this market if you buy into that crap about how they must dominate any and all computing related markets. Only Microsoft believes in that imperative, so only from their point of view do they "have to."

By any rational measure, Windows Mobile is a failure, and has had many kicks at the can sort of speak. The rational choice for a company with it's fingers in so many markets would be to drop Windows mobile completely.

It's as if Toyota decided it wanted to compete in the electric train market as well as cars, tried to make a good train many many times over a ten year period and failed every time. Then they announce that they need to drop a few more billion on it because they don't think they can leave this market to "their competitors." The key point is that there are no competitors, because they were never *really* competitive in the market.

In the same way, Microsoft thinks it has to "win" in this and many other markets, when in fact they aren't really competitive in the first place. It would be more accurate to look at these kinds of ventures as "failed attempts at entering a market" as opposed to failing to compete in a market they are in. They never got out of the gate on a lot of this stuff and some of their best "successes" were purchased, not earned.

It's time for MS to wake up and smell the coffee, and admit that they have failed in some areas, cut them away, and move on with what they do best.

 

[(L)]

Sounds good to be honest. Instead of bitching about it all the time, perhaps Apple fans will learn to appreciate Windows for improving.

Look at it this way, if MS improved a lot, so they had minimal driver issues, everything pretty much worked, etc. Apple would have to seriously start working. Because to be quite honest they're coasting at the moment.

I don't fully disagree with you, but you know Apple IS making a giant new campus, right? Even if Windows redid everything, Apple can't just wave a magic wand and knock it up a notch -- in a sense expanding like they are is one way of working harder, but it's not like they've been consciously slacking.

 

[ProwlingTiger]

Zune phone? Do they still even make Zunes? Oh thats right, I forgot Gamestop now sells them....or rather displays them, as I cant imagine them selling any.

Microsoft will never get its user experience right.

 

[Breegy]

What I don't understand is: why is Microsoft and Ballmer so worried and so dead set on beating out competition? If they really are 30-1, why should they care?

That's like Wal-Mart being worried that my local Sweetbay is going to run it out of business.

They just want a monopoly over the market. It's stupid. It's not like the Gap is trying to get kids to stop shopping at American Eagle. We can chose what we want and everyone should be happy. Maybe they're worried because Apple is more customer-friendly and not so evil-seeming, like the cashiers at American Eagle are friendly, and the ones at the Gap are airheads (not judging where you shop, just a random store comparison). Bill Gates was a good guy and he did a lot to help charities and will continue to, but now that he's leaving, I think Microsoft is in for some rought times ahead. But if the ratios is really as Ballmer describes it, why is he even bothered?

I think someone is on an ego-trip because some better quality product maker is making him self-conscious.

 

[importluva]

Competitive pressures are not the engine of Apple's quality.

"Competition is good because it pushes Apple" -- this Economics 101 idea is always being touted throughout the MacRumors forums. I think it's worth saying that competition is not what drives Apple/Steve Jobs. They want to make the best products. Not "slightly better than the other guy" products, the best ones. They are not driven by what's out there, or with keeping up with the Joneses. They do not "get nervous" when a competitor adds some feature or reduces the price of something. They do not "worry" that their products have to be up to par with everyone else's. They do not improve a product to compete, they improve it to make it better. Sure, Apple has to play in the same market like everyone else and I'm not suggesting they can totally defy the laws of competitive economics... but I am suggesting that it's not what drives them, and it's not what inspires them, and I don't believe it's what constitutes their decision-making.

Competition is relevant for all those companies' missions of delivering "better." But competition is irrelevant to Apple's mission of delivering the BEST. If they were the only computer company on earth with a 100% monopoly, I believe they/Steve would still be constantly improving their products in trying to deliver the best. That is what drives them.

You argument is fundamentally flawed. Business management 101 will tell you that the purpose of a business is to make profit, not necessarily to be the best. Apple is a business like any other and that is their biggest purpose.

Apple is successful because they know which segments of a market they want to target to make the most profit. They are subject to pressures from competition just as much as any other company and a lack of competition will do to them what happened to microsoft.

In other words, their best interests now happen to coincide with what is good for the markets but that will not always be true.

 

[AppleNewton]

and his figures seem slightly jaded considering a number amount of people run Windows XP/Vista on their MAC.

 

[Agathon]

I wouldn't worry about this. Microsoft are constitutionally incapable of producing anything decent. Even the Xbox 360 is marred by the fact that the hardware is poorly ventilated.

 

[BongoBanger]

Because apple has MIND share right now. People looking to buy a computer THINK of Apple. They never used to. You ignore that problem and before you know it they have 15% market share, then 25%, then oh #$#@ we're not even the majority any more! That would take a long time to happen, but as business strategy goes, Apple are worth paying attention to.

Doubt it. Despite an intensive advertising campaign, MS shooting themselves in the foot and Vista being savaged by the tech press they increased market share by a mere 4% in the US and about "5 globally. Most people still don't think Apple and probably never will.

They have gotten the complete experience RIGHT for the majority of people. iTunes and iPod for instance. How many cars can you buy that are "zune ready"? Versus iPod ready?

Their iPod ready because it has 70% of the market. If they didn't the auto manufacturers wouldn't care.

They are leveraging that and getting computer traction (particularly with intel switch.) They are beating up on Vista and getting away with it because no one is bothering to answer...

Until now.

Apple has Microsoft on the ropes in terms of consumer perception. Size is irrelevant to that.

Nope. It's taken a bit of a kicking but, as mentioned, Apple's capitalisation of this has been underwhelming. In addition, Apple are creating their own problems now and not receiving good press for it.

Mind share today is market share tomorrow, if you deliver on your promise...

To a limited degree. It's not enough by itself though.

 

[madmaxmedia]

Sure, but I think you're missing the point. Where is Microsoft if Compaq doesn't figure out how to legally clone the IBM-PC hardware? Are they anything even remotely like the company they came to be? Of course not. Even more importantly, this was the birth of the so-called "component model," on which Microsoft's entire success was constructed -- and which it turns out had only one really successful implementation, for historical reasons which are unlikely to be duplicated ever again. You might ask yourself how that came to be, especially since Microsoft seems to be struggling currently with how to move beyond this very limited model.

We can also stand back and appreciate the irony. For years Apple was goaded into attempting the "component model," and when they did, it was a huge failure which nearly sunk the company. Now we see Microsoft trying to figure out how to implement the far more traditional "end-to-end" model that Apple has used successfully to build their business.

I don't miss your point, or even really disagree with you. My perspective is a bit different, but I don't think we are seeing different things. I posted some examples of what I thought were fortune rather than skill for Apple.

I just don't think the component model is more a quirk than any other particular 'model'. I distrust anyone who touts any 'model' as some sort of template for success. Models are what analysts come up with after the fact, to explain why company A succeeded or company B failed.

Your example of Apple copying Microsoft and licensing their OS is very apt. I think Microsoft turning around and copying Apple with the Zune represents the same flawed thinking. In both cases, the 'model' didn't work because fundamental situations were no longer the same, and just as importantly the actual products were no better than before. That's where the sh$t hits the fan.

I don't think Microsoft succeeded because of their model any more than you do, which is to say I completely agree with your statement that any revisionist history of patting yourself on the back for developing some sort of new model or worse yet, a 'paradigm', is for the birds (or for press releases.) But I don't consider Microsoft's success a 'fluke' either. Rarely does anyone have it that easy in business, that they can become hugely profitable through absolutely zero effort or work on their own.

 

[pkr]

A big part of the computer market has changed; its less about just selling/having a computer and more about the experience. Apple saw this coming and established their strategy from the get-go. Balmer has sorta, kinda figured it out.... but confesses that he's still a sucker for the old days. As for "no compromise" ... he's full of sh*t - it ain't gonna happen - that's just the b.s./salesman in him talking.

 

[madmaxmedia]

It's time for MS to wake up and smell the coffee, and admit that they have failed in some areas, cut them away, and move on with what they do best.

I think one of their biggest problems is that they don't even know what they do best anymore.

They have an extremely talented work force, with absolutely horrible leadership. Gates was no visionary, but Ballmer is a change in an even worse direction.

 

[Agathon]

Business management 101 will tell you that the purpose of a business is to make profit, not necessarily to be the best.

People who believe that are setting themselves up for failure or mediocrity. Great businesses focus on making great products. People want great products. They don't care whether you make a profit or not.

 

[toujames]

Zune phone Vs. Iphone: the iphone will probably have some features that the zune phone wont have and some features that the zune phone has that iphone doesn't. Anywho, your choice got harder just like the PS3, Xbox, and Wii.

 

[dsachdev]

As a loyal Apple devotee who's always dissed Microsoft, but who is also severely dissapointed in Apple lately (MobileMe disaster, 2.0 firmware bugginess, etc.), I'm looking forward to what MS has to offer in the future. I hope they can start kicking some ass, and force Apple to really get on their "A" game again.

Why not look towards Ubuntu as great choices moving forward rather then Microsoft?

 

[Eraserhead]

By any rational measure, Windows Mobile is a failure, and has had many kicks at the can sort of speak. The rational choice for a company with it's fingers in so many markets would be to drop Windows mobile completely.

I see your point that they haven't done well in the phone market so far.

However I think Microsoft will find it difficult to compete successfully in their core market (Desktop computers) if they don't have a strong product in the mobile phone market. Applications on the iPhone will generally work better with the Mac giving it a "killer feature" over Windows.

I think competing in the mobile space is more important than the Zune, and the Xbox and the Live stuff. The difference with Google (for example) is that they are an advertising/internet company and its difficult to see how that can easily directly compete with Microsoft Office/Windows.

It's as if Toyota decided it wanted to compete in the electric train market as well as cars, tried to make a good train many many times over a ten year period and failed every time.

To give it an analogy the iPhone is more like a Hybrid Car than a train.

 

[sanford]

I will never understand, never, ever, why MS, with the resources they have, they don't say, Okay, we've had a good run, our attempts at expansion have failed either outright or financially, we need to focus on our two triumphs: maintain Windows OS dominance in medium-to-large business computing environments; and leverage the large installed base of Xbox 360 into a profitable GAMES division (media service via Xbox Live being a perk, a necessary me-too, not an attempt to beat Apple in the media distribution and presentation racket).

Ballmer should remember that Apple is now winning over Microsoft in mindshare, but hey did not win on the Mac, they did even win with Mac OS X, they won going into areas MS has either not entered, entered only as a vendor of proprietary formats and software, or had merely "dabbled" in, again providing only, say, smartphone OSes to multiple hardware vendors with a symbiotic approach to the market, lacking a cohesive strategy for dominating that market by, for example, creating a gotta-have-it OS update for a hardware vendor willing to exclusively commit to Windows Mobile.

Basically, either go to ground or go somewhere new. (No, Ballmer, giant Minority Report touchscreens do not count as "somewhere new". The Japanese made a killing taking other societies' companies technological innovations, and miniaturizing and refining them to the point these things were convenient, sometimes virtually transparent, and widely affordable. This doesn't work in reverse. Taking existing technology and putting it in giant, ridiculously expensive and impersonal devices that require paying a couple of hefty guys to relocate is not a viable business model today.)

But Ballmer sends out a memo that should be entitled, not Zune: The Phone, but Zune: The Philosophy. Synonymous with Project Crash & Burn. Go to ground or go somewhere new, Ballmer, or you will lose the family farm, son.

 

[bytethese]

I've brought this up before but all Apple needs to do is add more little radio button build to order options. I'd give up CPU clock speed for a dedicated GPU on my Macbook.

It's like Apple doesn't want my money...

I don't have a problem with longevity it's hardware choices.

Yeah, I totally agree. There just aren't many BTO options at all. I too want a dedicated GPU on my Macbook.

Isn't that an option on the Macbook Pro? Just buy a MBP instead of a MB.