Apple Isn’t Hurting Microsoft, Microsoft is Hurting Microsoft

on October 29, 2013
Reading Time: 6 minutes

We always hurt the ones we love, and nobody loves Microsoft more than Microsoft. In a recent blog post, Frank Shaw, the company’s Corporate Vice President of Communications, took aim at Apple’s October 22nd keynote–specifically the part where Apple made its iWork suite of productivity applications free for new Mac and iPad/iPhone buyers.

Now, since iWork has never gotten much traction, and was already priced like an afterthought, it’s hardly that surprising or significant a move. And it doesn’t change the fact that it’s much harder to get work done on a device that lacks precision input and a desktop for true side-by-side multitasking.

There are many parts of this post that read like Shaw wrote them half curled up on his bathroom floor, slowly rocking himself back and forth, so it’s entirely possible he couldn’t see the differences between his company and Apple. I’ll try to spell them out.

Apple is not a software company. It is a hardware company that makes software. Want to know why Apple didn’t release a cheap-o plastic iPhone running lower-end hardware for the Chinese market as so many tech pundits wrongly assumed would happen? Margins. And because Apple derives so much of its profits from hardware, it’s able to give away its operating system and first-party apps without taking a significant hit. In fact, it may help boost sales of desktops and laptops if potential customers learn they won’t have to shell out money every time they need to update.

On the other side of the coin, there’s Microsoft, which obtains a solid chunk of its revenue through software (Windows and Office), as well as through its enterprise deals. There is no right way or wrong way here. Both methods are completely valid as long as one knows what one is doing. This is where Microsoft starts to fall apart.

Since Jobs’s return to Apple in the late nineties, the company has been primarily a consumer electronics company. The iMac, iPod, iPhone, iPad, MacBook, and all the rest were designed for average consumers (read: non-enterprise customers). That’s not to say businesses haven’t benefited from these devices, but they were not the original targets. Apple knew that in order to penetrate the business sector, it had to become a hit with consumers first, which it inevitably did and led to a massive increase in the BYOD trend.

Unfortunately, Microsoft hasn’t had as much success in the consumer market since the early 2000s. What was once a major player in the smartphone arena pre-2007 lost out on market share and customer loyalty when the iPhone hit the scene. The soon-to-be-ex-CEO’s arrogance at the time also did not help things. Microsoft introduced tablets in 2002 and they went very few places except certain industries, like engineering and medicine–and they weren’t even that widespread there, either. It wasn’t until Apple unveiled the iPad, complete with its own App Store, that non-business consumers saw the benefit of a personal touchscreen slate device.

It’s not the nineties anymore. Microsoft can’t rest its laurels upon its ubiquity, especially in the new areas being dominated by Apple and Samsung. In the phone and tablet markets, Microsoft is, sadly, irrelevant. But why? Where did it go wrong? It wasn’t just because it skipped a few cycles and emerged on the scene later than it should have. And it’s not because Microsoft isn’t capable of making good hardware. It comes down to one simple problem that has held the company back for a long time: Microsoft refuses to choose.

Apple chose to focus its products on the consumer market. Even its Pro desktops and laptops, which are used in high-level industries like video and audio production, are accessible enough for customers of all types, not just professionals. Its operating system, Mac OS X, is a one-size-fits-all regardless of your needs (servers excluded). There are no versions for “Home”, “Business”, “Home Plus Except on Weekends and the High Holy Days”, et al.

Microsoft, however, tried to have it both ways. It wanted to retain the grip it had on the consumer space in the 1990s, while also catering to its loyal business users and what it got was an operating system and a tablet/laptop (tabtop? laplet? tabletoplet?) with an identity crisis. By refusing to make a decision as to which direction the company should go–consumer vs. business–it alienated both segments equally.

Windows 8, specifically the RT version, doesn’t know what it wants to be. Is it a touchscreen OS? If so, why does the user have to access legacy Windows to run certain apps? And if old-style Windows is there, why doesn’t it run regular Windows applications like Windows 8 proper does?

As for the Surface, Microsoft can pretend its creation is a tablet all it wants. Frank Shaw’s imagination certainly hasn’t slowed down:

And it’s why the Surface is the most productive tablet you can buy today. We also knew that it would make our competitors take notice. That as consumers got a taste of devices that could really help them get things done, they would see alternatives as being more limited.

If you watch the video Tim Cook introduces about 62 minutes into the keynote, it really drives home the fact that the iPad is as productive as its owner wants it to be. The device is not limited by an extra attachment, nor must it be situated in a single position in order to be useful. Would combine operators be able to manage their machines if they had to balance their tablets on their laps with a flimsy keyboard attached? Are desktop tap targets still as tappable when you’re trying to see them while navigating a shipwreck? How long will you be able to hold a Surface one-handed while drawing plays on the sideline so the rest of your team can see?

The reality is the Surface tries to be a laptop and it tries even harder to be a tablet, but it doesn’t accomplish either particularly well. The running joke among the tech press has been that Microsoft’s “no compromise” approach is actually one big compromise. The sad reality is that it’s not a joke. The other reality facing Microsoft is that one of its two major cash cows is no longer the reason people buy its devices.

[The Surface and Surface 2] come with full versions of Office 2013, including Outlook, not non-standard, non-cross-platform, imitation apps that can’t share docs with the rest of the world.

You used to buy a Windows PC because everyone had Windows PCs. All the major programs were written for Windows and it became the de facto standard for almost every office and home on the planet. Windows ran the world and because of its wide reach, we all grew accustomed to the Office suite of applications. Writing a report? You used Word. Needed to do a presentation on plant life in the rainforest? PowerPoint and its atrocious sound effects were there to add glass-shattering emphasis to that clip art on slide two. Your email was stored in Outlook and your numbers were crunched in Excel and there was nothing you could do about it because nothing else came close to the power and reach of Microsoft Office.

Then came the iPad.

Netbooks all but died out. PC sales declined. Customers opted for small and lightweight vs. big and cumbersome. And all the while, PC makers and Microsoft assumed customers would come crawling back because the iPad was for fun, not work.

While Apple may not have the most capable productivity software suite around, its App Store has opened the gate for independent developers and larger software houses to fill the gap left by Microsoft’s absence. No one seemed to care that Microsoft Office was missing and they certainly weren’t won over when it finally arrived for only the iPhone and as a subscription service.

As for the other work you’re able to get done on the iPad, name an industry and you’re sure to find an app (or six) that perform the work as easily, if not more so, than their desktop counterparts.

Apple chose to attack a market it knew it could penetrate by creating beautiful, focused products that ran easily accessible software. Does Apple make the best software? Not always, but the user experiences afforded by its devices combined with fabulous third party software more than make up for its shortcomings.

Microsoft chose to hit two different segments at once. Windows 8 promised the same great taste people have enjoyed for over 20 years with the new shininess of Metro. Its refusal to commit to one OS, or at the very least one OS per form factor a la Apple, left a sour taste in customers’ mouths. They were confused and angry and Microsoft was forced to back-pedal on some of its more “egregious” decisions. Businesses are just starting to upgrade from XP to Windows 7 and it doesn’t look like Windows 8 is even on their radars.

On the hardware side, the Surface hit the same flat notes as Windows 8 did. Customers didn’t want a heavy, widescreen tablet with a bulky cover they couldn’t operate with one hand. Oh, but it has Office? How about OmniFocus? Editorial? GarageBand? The countless niche apps one may need to perform certain specialized tasks? Microsoft has yet to learn that productivity does not begin and end with Office.

So, with Microsoft’s dominance waning and its software sales slipping, where does it go from here? It could prove worthy competition for Android in the low-end smartphone market, but it will still continue to struggle against Apple in the high-end. But other than that gamble, there’s nothing about the company’s current consumer strategy that’s hope-inducing–and yours truly is doing his best to remain hopeful. Some might chalk it up to a lack of focus or too much focus on the wrong things, but Microsoft’s biggest challenge right now is making up its mind.

Its dominance in the business sector is still relatively unchallenged, but times are changing and the Surface isn’t generating the numbers it needs to thrive with consumers. Which market does Microsoft want to focus on? Until it’s able to answer that question with anything other than “both”, it will continue to stumble along. The question then becomes for how long?