Technology changes quickly. Five years is an eternity. Five years ago there was no Windows XP, only a beta of Mac OS X, no iPod, no iTunes Music Store. Stocks were flying high (about to fall).
What’s the Five Year Report Card say about Microsoft’s performance in the market? How about Apple?
Five years ago Apple began the launch of Mac OS X and a new era at Apple. Five years ago Bill Gates stepped down from the CEO position and moved up to Chairman and Chief Software Architect (co-founder Steve Ballmer took over as CEO).
Five years ago Microsoft owned about 95-percent of the world’s market for computer operating systems, thanks to the success of Windows, Microsoft Office.
Five years ago Apple was struggling to make their next generation OS a reality, struggled to make a profit, struggled in the arms race of CPU mhz and ghz.
What’s happened in five years? Plenty. More than plenty. A simple report card on the past five years comparing Microsoft to Apple reveals one thing: change. In this case, substantial change.
How do the two compare? What criteria should be used? Here’s my take (with some help from Tera) on Microsoft and Apple over the past five years.
This category is a no brainer. Microsoft shareholders cannot be happy. In five years, during what amounts to a down market, Microsoft has gone down, Apple has gone up.
Apple’s stock is trading in record territory, in large part to the success of the iPod, which didn’t exist five years ago.
To be fair, Apple’s stock began it’s record breaking climb only in the past few years. Still, Apple gets an “A” and Microsoft gets a “C-” for stock performance.
This category is defined as ‘how the public generally perceives the company’ and Microsoft doesn’t fare well here, either. Apple is the media darling and Windows customers exposed to 20-million chic iPods tell the tale. Microsoft is Goliath, Apple is David (David won, by the way).
The media buzz over Mac OS X Jaguar, Panther, Tiger, iPod, iTunes, iTunes Music Store is overwhelming considering Apple’s market share. The buzz on Windows XP, Windows Media Center, Windows Longhorn/Vista is like a paraphrase of the proverbial tree in the forrest; ‘if it falls, does anyone care?’
Microsoft, in a mere five years, has become embattled on all fronts. Security problems with Windows has created millions of customers who hate the company, hate Windows, hate Bill Gates. That’s not likely to change soon.
In the meantime, Apple’s legions are growing and probably more devout than ever.
Apple gets another “A” for PR, while Microsoft gets a “D+”.
Outside of the whole Mac vs. Windows issue, no topic generates more discussion than so-called ‘product innovation.’
Apple touts itself as the innovator, Microsoft the copier (‘Redmond, Start Your Photocopiers…/). While some definition of ‘innovation’ may be required, Media pundits generally agree that Apple is putting out more new products with pzazz, [censored], and attractive wares than Microsoft.
What about Microsoft’s Xbox? That’s a new product for Gates’ company, but hardly innovative. Even the use of “X” in Xbox and Windows XP seems like it came from Jobs’ minions at Cupertino.
Windows XP and Microsoft Office? Iterations of an old theme. How about .Net and Longhorn. Puhleeze. We can all spell .Net but can’t give a definition as to what it is.
Longhorn? It died, only to be reborn in Windows Vista, a seven-flavored Hydra operating system that looks more and more like Windows XP Service Pack three with Mac OS X icons.
In the meantime, look at Apple’s last five years of products. iPod, iTunes, iMac G4/G5, iTunes Music Store, Final Cut Pro (obtained from Macromedia), Logic (obtained by buying eMagic), Mighty Mouse, iLife Suite, iWork Suite, Motion, iPod mini, iPod shuffle, iPod nano.
I’m sure there’s more, but you get the idea.
To be fair, Apple’s list is impressive but some would argue not fully ‘innovative’ (we’re back to that definition thing again).
Still, Microsoft earns a “C-” while Apple gains at least a “B+” just for how well everything works together.
Is there anything over the past five years that Microsoft has done well that Apple has not? Yes. On to Page 2 for the gory details. Click Here for Page 2.
Continued from Page 1…
Cash in the Bank
Bill Gates has more money than God. Microsoft has more money than that; $20-billion or so, even after giving back $30-billion or so to shareholders.
Apple has a measly $8-billlion in cash. Neither company has any debt to speak of, so the sheer numbers give the nod to a good grade to Microsoft, an “A+” vs. Apple’s “A-”.
Granted, there’s not much room between an A+ and an A-, but there’s big distance between $20-billion (or $50-billion if you count what they gave back) and $8-billion.
Just note that 99-percent of the Fortune 1000 are drooling over Apple’s numbers, so it doesn’t seem fair to award AAPL a “C” for outstanding performance. I’m not grading on a curve.
Product Market Share
Five years ago, Microsoft was the undisputed king of market share, by nearly any definition. What’s wrong with 95-percent? Other than those pesky governments and their anti-trust lawsuits.
Apple? Five years ago the death-knell bell ringers were out in force, heralding the Microsoft mantra, and proclaiming the imminent death (once again) of Steve Jobs’ beloved company.
Today? Apple’s market share is growing. Sales are growing at two to three times the industry rate for computers. In music, Apple owns the player market, the downloads market, and the mindset of music buyers.
Microsoft? They’re losing market share in every category except game consoles (zero or so five years ago). Linux has eroded the server market share.
Windows is being ditched for anything else, sometimes for nothing else; just being ditched.
The combination of open source (say, ‘free’) tools and applications has certainly slowed Microsoft’s services and tools juggernaut. Apache is the most popular web server. PHP is the most popular applications ‘language.’ MySQL is the most popular web database.
Those tools are free and more than good enough, they’re very good. While Microsoft’s tools are also good at what they do, they come with a price.
For market share grades, Apple gets a “B+” mostly because of steady improvement, while Microsoft gets a “B-” because they’re looking more embattled than a leader.
Cool and Charisma
No, this category isn’t thrown in just to add another arrow to Apple’s quivering quiver. ‘Cool’ defines attitude and culture and seems to translate directly to stock price, customer perception, and eventually sales and market share.
Microsoft gets a “C” (Tera told me to be kind) and Apple gets an “A”.
Why? You have to ask? OK, settle in for an answer:
Cool is iPod, iPod nano, iPod shuffle, iTunes, iLife, iMac G, PowerMac G5, Final Cut, iTMS, record stock price, Tiger, Dashboard Widgets, Spotlight, and Xbox.
Not Cool is Windows XP SP 127, Longhorn, viruses, spyware, pop-up ads, BSOD (blue screen of death), et al. You get the idea.
As far as charisma is concerned, grab any online video of Bill Gates and Steve Jobs.
Products and Features
I’m giving this one to Microsoft because, invariably, their products are more numerious and have more features than grains of sand on a beach.
If sheer numbers of products and features are the criteria, Redmond’s pulsating code monkeys win the show, best of breed, an “A”.
Now, add quality and usability to the mix, and the grades change. This may be the most subjective of the categories, so the grade may vary user to user.
As both a veteran Windows and Mac user, let me generalize. Apple passes, Microsoft fails. Why? In general, Windows users switch to Macs, not the other way around.
Surprised? Obviously, much has changed in the past five years when comparing Apple to Microsoft. The report card is very mixed for Microsoft, most poor grades.
For Apple, it would have been difficult to predict today’s reality five years ago, but it’s obvious that Apple is clicking along and doing well.
Ron has set up a Forums topic for discussion. Feel free to add your own category and grades. Oh, don’t hesitate to offer a look into the future. What do you think their grades will be five years from now?
PS – ‘There you go, Tera. This one’s for you.’