Microsoft vs. Apple vs. Google: Differing Visions

Wednesday May 30th 2007 by Rob Enderle
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The companies are taking very different approaches to winning market share, with very different results.

At the Wall Street Journal’s “D: All Things Digital Conference” Steve Jobs and Bill Gates will be on stage for what may be the last time. Increasingly both are being upstaged by a couple of kids out of Stanford who, much like their predecessors did a couple of decades ago, had a vision and executed on it sharply, and appear to be increasingly more relevant to us on a day-to-day basis as a result. Surrounding Google is Open Source, a movement that Microsoft is attempting to embrace, Apple is running away from, and Google is using very profitably.

Let’s take a look at the three companies and weave in the Open Source movement this week.

Apple: It’s all about Jobs

This bleeds through several of the unauthorized Jobs’ biographies that Apple’s successes, and to some extent its failures, are all about Jobs. Steve, with all of his faults, can grasp quickly the core aspects of a successful product and communicate them very well. In addition he has a passion for excellence in his staff and has demonstrated a capability to drive them to do things that should have been impossible. But, at the core of all of this, is that Apple is a product company and lives, or dies, on the success of its lead offering.

Currently the lead offering is not a PC but the iPod, and Apple has even removed the “Computer” part of its name to reflect this change. But a product like an iPod has a limited run, something Sony (Walkman) and Palm can attest to. Eventually the market grows tired of it and moves on to the next big thing and, it is generally another company that provides it.

AppleTV has not been a hit (to be fair nothing else in that category including Microsoft’s offerings have either) and Apple is now betting on the iPhone.

This could be a serious problem for them because the iPhone breaks some known rules with respect to what has been successful historically. It has poor battery life compared to the iPod (and no replaceable battery), it is relatively large, it costs nearly 4 times what other phones in its class cost, and it uses a touch screen, which is known to be unacceptable for those that text messages. Like other Apple products it has a very clean UI and Industrial Design and it will be backed by Jobs, but it showcases Apple’s “do it alone” disadvantage. It mirrors to some degree the same mistake Sony made when they first tried (they later successfully partnered with Ericsson) to go after the cell phone market alone. In an established market, you don’t need to learn by experience.

With Leopard, slated to be Apple’s run at the Enterprise, we may see this same problem in spades. The Enterprise market is very mature and Apple is no longer considered an Enterprise class vendor. To make a similar move a few decades earlier Microsoft partnered with IBM, and a decade ago Palm did as well, even more recently RIM partnered with a number of enterprise firms (these partnerships did not go well) to help them penetrate this space.

IT doesn’t want vendors who learn on IT’s nickel, but Apple’s partnership history is horrid and they are unlikely to even try to partner to penetrate the Enterprise. In addition IT wants roadmaps, and a partner in future versions of offerings with vendors they work with. But Apple, as a product company, is scared to death of leaks, for fear someone else will get to their goal first. And so the company won’t work with IT, or anyone else, in this way. Therefore it simply may not matter what Leopard is, without the critical surrounding Enterprise Partners and disclosures it will not meet IT’s need.

Apple’s strength, a sharp focus on product, is also its weakness because it prevents the kind of collaboration needed to grow outside of its niche and rise to what otherwise would be its potential.

Microsoft: Strong Vision, Bad Focus

Microsoft is in many ways the nearly polar opposite of Apple. Early on Bill Gates drove the company to be a part of as many things as possible. The company became what it is, for good and ill, largely as a result of an IBM partnership which both got them into the enterprise and infected them with practices that had crippled their predecessor.

This showcases one of the problems with learning from someone else. You don’t often know which part of the lesson should be retained and which part discarded so that you avoid the mistakes the teacher is currently making. In Microsoft’s case it was the IBM practice of avoiding accountability and institutionalizing management that turned out to be the communicable disease that should have been, but was not avoided.

Still, while this has certainly hurt the firm and its image over time, its financial performance remains very strong and, still, in most parts of the world most people are touched by the company’s offerings.

Microsoft is clearly an enterprise vendor but, like IBM before them, the question is "are they looking ahead to even more influence or back at greatness that will never again be achieved?” In many ways Microsoft is at a turning point, trying to remain relevant and even important in a world that increasingly seems focused on something other than software.

Microsoft has tried to emulate to some degree companies like Sony with the Xbox and Apple with the Zune. But they learned that other more focused companies like Nintendo with the Wii and SanDisk with the Sensa did it better with vastly less resources.

While Microsoft fully understands what it takes to move in areas where Apple cannot, in many ways it is still tied to the problems that resulted from its first deep contact with IBM. And unless it can cure itself of this IBM-sourced illness Microsoft’s long-term future won’t look anything like its astounding past.

It is attempting to do just that with its own movement to Open Source and major restructuring in a number of divisions. Recently I saw a product that gave me hope that Microsoft was, in fact, getting better. Unlike so many offerings from Microsoft of late it felt complete, well designed, solidly executed. I can’t talk about the product yet, because it is unannounced, but if it is an indicator of things to come (and not just an isolated case) the company may be getting better. For their sake I hope so because they don’t have a lot of time, and their partners are still dependent to some degree on Microsoft.

Google: The New Superstar

It must be difficult for both Apple and Microsoft’s CEO to look at Google and remember what it was like when they were the stars of tech. Much like an aging award-winning actress who now plays only supporting roles, both Apple and Microsoft’s stars have paled under the brilliance of young Google’s rising star.

Google, so far, has avoided both the problems associated with Apple’s and Microsoft’s models. By initially not focusing on large business they didn’t have to form a deep partnership nor emulate a predecessor and have created a work environment envied by Apple and Microsoft employees alike. In addition, they quickly realized (and maybe always did) that, to make a difference, it wasn’t about a single product but about control of the revenue stream.

This was more of a blend of Microsoft’s wanting to be in everything and Apple’s “do a few things well” product strategy. Google has a limited offering but it touches the majority of people who search on the web and increasingly Google gets a piece of the related action.

Google has also resisted the temptation to focus on Microsoft. This kind of focus nearly killed Sun and was core to Netscape, Google’s direct predecessor, making a series of terminal mistakes. Instead Google focused like a laser on customers and in locking down their revenue stream with a strategy that could, if they aren’t blocked by anti-trust government response, lead them to the kind of dominance historically enjoyed by IBM, and currently still enjoyed by Microsoft.

While they have yet to make much of a mark with their secondary software products, like Google Apps, it is their nearly complete rejection of the current technology market and its offerings and their ability to milk the Open Source eco system that may go down in history as a best practice.

However, they have yet to really face a trial by fire. And while they have, so far, succeeded at being unconventional there are indications that they may be too attached to doing everything different than is prudent. Also the excessive wealth that their founders have gained over a very short period of time may, itself, be becoming a distraction and creating internal strife in the company.

One of the outcomes of this strife is likely to be employees taking unfair advantage of the company’s very liberal working policies which, historically, can lead to a cascading reduction of these privileges, increasing moral problems, and an inability to execute. All avoidable, but the skill set needed to avoid it is not common and does not, to my knowledge, exist within Google. (It is sad but, to a large extent, HR in general lost the ability to deal with this class of problem in the ‘80s, and managers are simply not trained to pick up that slack).

That’s only a possible future and there is nothing to say this future has been set. Still it would be wise to look for the symptoms: increasing employee turnover, severe product failures, employee lawsuits, any signs of employee violence, or any sudden pull back in entitlements or employee benefits – all would be likely early indicators of problems. Until then, Google (despite some doubts) actually appears to be in good shape.

Comparing the Visions: New vs. Old

In many ways Google’s new vision that advertising can pay for most anything mirrors the history of media where advertising largely did pay for everything. Granted there is a limit to this because someone actually has to buy something so that the related company can afford to advertise. Their future is a world where they aggregate the advertising dollars and provide largely free or subsidized products to end users. Not too dissimilar to network TV and only at risk if the products are inadequate or the advertisers move to another medium (much like they are with the web today). A hybrid of this model may work with enterprise IT buyers, who would like to spread the cost for software acquisitions to other departments. But this has not been demonstrated successfully yet, and until it is, Google’s enterprise future is uncertain.

Apple is nearly the opposite, in that you buy a product and with it you get low cost or free features and services. iTunes is one of the services and iLife is one of the features. This mirrors in many ways how we buy most things except razors and cell phones. Apple’s future is one based on having at least one successful flagship offering or line, like the iPod, but the iPhone’s future is uncertain while the eventual drop of the iPod from star status is not. Also uncertain is Apple’s ability to sell into the enterprise, because with that class of buyer, it isn’t the product but the relationship that counts. Apple is historically really bad at relationships. Apple is showing signs of being on a bubble and bubbles have a tendency to pop; on the other hand, Apple is really good at this bubble thing – and the iPod has already been a success longer than most have thought any product in this class could be.

Microsoft is a company in transition. Microsoft is an eco system company and one that sells to both consumer and enterprise customers today. Highly diverse and with an increasing history of execution issues on point products, but successes in establishing (and owning) standards, the company is struggling to adjust to a changed world and the changes being made to address it.

It stopped chasing IBM some time ago yet is still burdened with IBM-like practices and an internal environment which may be out of date when compared to Google. It too often seems to be trying to chase product companies and forgetting that licensing and partners are what made it great. Still, it is trying to adopt but the one guy who has previously spearheaded its adaptation, Bill Gates, is leaving. In short, unlike its predecessors, it is trying to evolve and is finding evolution to be a very painful process, but likely preferable to the alternative of obsolescence.

Overall Google’s issues are in front of them and they don’t need the enterprise to be successful; they are growing incredibly fast. This, in and of itself, is a big risk but the company appears to be in the best shape today even though they aren’t a viable enterprise choice. That actually may not matter, and recall that Netscape largely died because they focused on the Enterprise rather than their existing customers and market.

Apple seems to focus excessively on Microsoft, and Microsoft on Google and Apple. It is interesting to note that the seeming most successful of the three is only focused on its customers and market expansion. That’s actually old school Microsoft, and to use a Star Wars phrase, maybe the student has now become the master.

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