Microsoft-Apple redux: the empire strikes back


12:10 PM October 27th, 2012

By: Rob Lever, October 27th, 2012

WASHINGTON – It used to be that Microsoft was the evil empire, and Apple the scrappy underdog.

Now the roles are reversed, and Microsoft is challenging a dominant Apple, which has staked its claim as the leader of the sizzling mobile sector for tablets and smartphones, as well as the biggest seller of digital music.

Microsoft, still the biggest force in the PC market with its Windows operating system, is making a new, belated effort on Apple’s turf.

The Redmond, Washington-based giant has launched its own branded Surface tablet with prices and specifications similar to those of the iPad, and a new Windows 8 operating system designed for tablets.

Microsoft also is making an aggressive push in mobile phones with its Windows Phone 8 platform being used by Nokia, Samsung, HTC and others.

And it has created its own music service as an alternative to Apple’s iTunes, with 30 million songs and additional features offered by Internet radio operators.

“Microsoft is the challenger now, and it is taking a lot of pages from Apple’s playbook,” said Roger Kay, an analyst and consultant with Endpoint Technologies Associates.

Kay said Microsoft is learning from Apple about the advantages of “having control of the integrated stack,” meaning software and hardware, along with other services to keep users within the company’s ecosystem.

But he said Microsoft has “constraints” because its updates must remain compatible with older devices, making the task more complex.

“Microsoft can write software which is as good as Apple’s but it has to be free of the constraints,” Kay said.

“Apple can and has said to customers, ‘Throw out all your old devices, because we have new ones.’ Microsoft has been at a disadvantage.”

He said Microsoft has the potential for a fresh start with the new tablet, which integrates hardware and software called Windows RT in a new product.

But the tech landscape is far different than in previous Microsoft-Apple clashes. Amazon claims some 22 percent of the tablet market, and Google and its partners using the Android system are a major force in mobile.

But Microsoft appears to be digging in for the long-haul by getting into tablets, the mobile market and music.

Kash Rangan, analyst at Bank of America/Merrill Lynch, said Microsoft appropriately priced the new tablet starting at $499, the same as the entry-level iPad. This will avoid “cannibalization” of products which impact the Windows franchise.

And because Microsoft will include its Office software in the tablets, they “appear less pricey to users relative to iPads,” said the analyst, who expects about 5.2 million of the Microsoft devices to be sold over the coming year.

In music, Microsoft is making a new offensive with its Xbox music service more than a year after it pulled the plug on its Zune digital media player, a would-be rival to Apple’s iPod.

However some analysts said the new service might fare better.

“The service takes aim at a fractured digital music landscape (where) consumers have to use multiple services such as iTunes, Pandora and Spotify today and do not have one simple destination that allows them to do everything,” said Richard Greenfield at BTIG Research.

With the various initiatives, Microsoft is seeking to build an “ecosystem” like Apple, which can deliver the devices and services to remain connected to consumers.

“People are looking to buy a complete package, that’s what they buy when they go to Apple,” said Jack Gold, analyst with J. Gold Associates.

Frank Gillett at Forrester Research said that while Microsoft is used on some 95 percent of PCs, its share of all “personal devices” — which include PCs, smartphones, and tablets — is only around 30 percent.

The new initiatives “will simply stop the shrinking, maintaining Microsoft’s share at about 30 percent,” he said.

“By 2016, we believe that Microsoft will have about 27 percent of tablet unit sales, but only about 14 percent of smartphone sales — and some of us are very skeptical they’ll even get to 14 percent.”

Gold said while Microsoft may not be able to dominate in tablets or phones, its strategy appears to “kickstart” the market to keep the Windows platform relevant.

“You never want to sell Microsoft short,” Gold said.

“They have a lot of resources and they’re not a company that gives up. They are applying significant amounts of resources to transition the company to address the new market realities. And they’ve reinvented themselves several times already.”

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  • bgcorg

    Microsoft is definitely into a new battlefield and, as a new entrant, is closely watched.  But, it has survived the challenges of time and now see the tablet and smartphone markets as a new battle to be won.  Those who want MS applications, including MS Office, while on the move will find this a welcome development.  Likewise, those who want compatibility in the software they use in the office and offf the office will be attracted to the new strategy adopted by Microsoft.  I, for one, am looking forward to learn the new Windows 8 platform in smart tablets.

    • chopot ka

      MS Office is already irrelevant at least in my case, I’m very much cloud based. I use Google docs all the time, so it does not matter what platform I’m using, whether it’s a smartphone, tablet or PC, as long as I’m connected to the net (which I am all the time except when I’m sleeping), and as long the browser supports it which I’m sure all browser does except the obsolete ones like IE6, I can do everything whether it’s the office or school.

      • Edward

        Good for you, but most office workers specially those who are not in the field of IT are more comfortable using MS Office since it has been there since when they started to learn the PC. 

  • chopot ka

    This article is obviously paid for by MS, so let’s set things straight, if written objectively, the real score would be as follows:
    Smartphones, Android is the market leader while Apple is the market
    challenger, MS can’t even be considered a market challenger for obvious reasons. MS smartphone market share is insignificant as of this writing, even Gartner’s market prediction for the new Windows OS for smartphones was dead wrong. The more appropriate term for would
    be market follower or come-backing new entrant, but I doubt if there is
    such a category.

    In the tablet market, Apple lords it over, while Android is the challenger, and as for MS, they’re again a market follower.

    No one would argue that MS is still the leader in the desktop arena, unfortunately smartphones and tablets already outsold and outgrew them, and sad to say the PC era is about to end, i.e., at least in the consumer segment. Even with MS bullying PC strategy i.e. UEFI, I doubt if that can reverse its misfortunes.

    My 2 centavos worth!

    • Edward

      is it really true that PC era is about to end? Go to private and government offices employees  are still using Personal Computers or laptops in doing their work. Most tablet users used tablets mainly for surfing or playing games. What else can you do with your tablet? If your work is inclined to animation and editing videos can IPAD applications match the complexity of MAYA or Adobe Premier? This is just an example there are many IT works which you need more than a tablet to accomplish.

  • Ai

    Right now, it is still a 2-way battle folks. Apple vs Google in the mobile space. MS is trying to play catch up to a battle that started 2+ years ago. Am just wondering what will happen now since MS is going to compete against its OEM customers ..or is MS trying to show how the battle is done for its customers?

    Either way, the Americans will always end up as the winners.

  • Ricci Santiago

    i wonder what will happen to MS and how can they overcome Apple, they didnt even mention Google/Android yet, they have to overcome these 2 foes – lets wait and see…

  • NixonE

    Sa  TORQUE  na lang tayo..Mabuhay ang Pinoy!!!!

    • bubu

      Made in china din po ang torque, myfone, cherry mobile at ang ibat ibang akala ay local fones. Generic fones lang po ang tawag dyan at mura lang sa china. Nilagyan lang nila ng sariling tatak at magandang patalastas at nauto na ang maraming pinoy.

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