Apple vs. Microsoft: Why Apple Is Losing This Decade

Friday Oct 28th 2016 by Rob Enderle
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It all comes down to the customers

Even comparing Apple and Microsoft is getting difficult because much of Microsoft’s advancement is with Azure and Apple has no counterpart. And Apple lives off the iPhone, while Microsoft, at least for now, is mostly out of the phone business.

However, where the two companies do overlap now is with focused PC hardware. This week we saw hardware launched by both Apple and Microsoft, and the two firms can be compared financially as well. On this last, Microsoft is once again on a roll, and Apple is struggling to find growth. After watching the two firms' hardware pitches, I can point to one huge difference that likely speaks to why Apple beat Microsoft last decade and why Microsoft is outperforming Apple now.

It comes down to customer focus.

Surface Launch

Microsoft’s launch was a Windows update focused on creators, an update to the creator-focused Surface Book and a new all-in-one called the Surface Studio, which is also focused on creators. This last product was tightly targeted at those that animate, draw, engineer and edit visual content. Throughout the pitch, Microsoft tied each one of the features to a need identified by the target audience. For instance, the product collapses nearly flat to enable better drawing and collaboration at the desk. The Surface Dial (a new puck-shaped user interface) improves creation speed, and the unique 4.5K display provides one-to-one resolution to print (so you see exactly what you get).

Validating these points were a number of third-party customers who spoke to each feature as one that met a specific need. Whether true or not, this showed a very tight connection between the targeted customer for the device and the design of the device.

On the Surface Book, which is really more of a general-purpose high-end laptop, the number it highlighted was customer satisfaction. This product currently ranks higher than any product from any other vendor regardless of OS. In my opinion, customer satisfaction should be the most important measure of any product. Microsoft increased the performance but also pointed out the most important metric of any notebook: the battery life at 16 hours.

Apple Launch

Apple has traditionally had the same core customer group that Microsoft was targeting—although you could argue that when Steve Jobs ran the company he appeared to be the target customer. This concept of a super-customer CEO actually played really well because folks seemed to identify with him, and he drove the choices when it came to features. Even so, during his tenure, the profile of the core business Mac user didn’t change; it largely remained creatives.

At its launch, Apple didn’t open with a creative product—it opened with a new TV app. That had folks on Twitter using the word "boring," which wasn’t a good start. When Apple started showcasing the new features, it focused on how thin the new MacBook Pro laptops were, the increase in performance and a new targeted function bar/screen. There didn’t seem to be a strong connection to any user needs driving the change, however. I doubt the touch bar overcomes the lack of a touchscreen for creatives.

It held the battery life off until late, and it was just 10 hours, showing a distinct change in focus. Apple went thinner, and the tradeoff was no increase in battery life. Microsoft kept the dimensions the same, which allowed it to up battery life through a combination of improvements in the Intel Skylake processor and more efficient space usage. Apple's product is half a pound lighter than the 13” Surface, but the Surface should outperform it in both performance and battery life. The MacBook Pro is less expensive than the Surface Book but far more expensive than the Surface Pro.

But the thing is, none of this seemed user-driven. While Microsoft tied its changes back to user needs and maximizing customer satisfaction, Apple just did what most vendors do and simply focused on the changes and specs. (And a lot of the folks covering this launch really didn’t like the new butterfly keyboard.)

Apple had no updates for much of its product line and no counterpart for the Surface Studio.

The Difference Is Customer Focus

Without Steve Jobs, Apple seems to be struggling with how to advance its products and staying connected to its users. It should own creatives, but after Jobs, it seems to be taking this audience for granted. Since Satya Nadella took over for Steve Ballmer, Microsoft has refocused down on users, and the Surface updates and launch seemed far more focused on this core audience than Apple’s was.

In the end, I think that is why Apple seems to be struggling: it has simply lost connection to its customer base. One of the Cnet reporters that were covering the Apple event live said it best when she pointed out that it used to be that you’d walk out of an Apple event thinking you had to have one of its products, and out of a Microsoft event wondering how you ever stayed awake. Now the positions appear to be reversed, and folks are less than excited about the multi-function F key replacement, given it’s been years since this product has been significantly updated.

The lesson here is that customer focus is king. With Nadella, Microsoft has it back, and with Cook Apple has lost it. And in my opinion, that is largely why the two firms have switched places.

Photo courtesy of Shutterstock.

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