Ugh, ugh, ugh, ugh, ugh.
That’s my reaction to stories like this from Quartz that say Apple is the new Microsoft.
The New York Times said the same thing earlier this week, when it said Tim Cook was the new Steve Ballmer.
An, you know what? I thought the exact same thing back in December. I was going to write it out. I was going to be so clever. I was going to point out that Apple’s stock is probably going to trundle along, stuck in a $400-$500 range for the next 10 years, just like Microsoft.
I didn’t write it though. The simple reason I didn’t write it? Apple is not the new Microsoft.
There is a very important difference between the two companies: Microsoft has totally whiffed on the innovations that changed the technology industry, whereas Apple produced the industry-defining innovations.
In the last 10 years, there have been two major changes in the technology industry. The first is the rise of the Internet. And the second is the rise of mobile.
Google has been the biggest winner from the rise of the Internet. For many people, Google’s search engine the entry way to the Internet. All surfing on the web is done through Google. This is very powerful, and highly lucrative.
Microsoft noticed Google’s power a little too late. It tried to catch up with Bing. It failed. Instead, Microsoft has burned over $12 billion on its online operations in the last seven years. What does it have to show for this? Almost nothing.
Google’s search engine remains dominant on the desktop. And on mobile, which is the future of computing, Google has something like 90% of the market.
Search isn’t the only place Microsoft whiffed when it comes to mobile. It pretty much missed the entire rise of mobile computing as we now know it.
When Apple released the iPhone, Ballmer famously laughed at it:
There’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get.
Ballmer wasn’t entirely wrong, of course. People didn’t buy a $500 iPhone. They ended up buying $200 iPhones. And lots of them. So many that Apple’s iPhone business became bigger than all of Microsoft.
The sad thing is that two years after those comments, he was still in denial about the transformative power of the iPhone, saying:
“Let’s face it, the Internet was designed for the PC. The Internet is not designed for the iPhone. That’s why they’ve got 75,000 applications — they’re all trying to make the Internet look decent on the iPhone.”
Again he’s not entirely wrong. But, his attitude is wrong.
And his attitude was wrong, yet again, when Apple released the iPad. He laughed at journalists and analysts who brought it into meetings. He said it’s just another PC.
The iPad wasn’t just another PC. It’s the new PC. Microsoft is scrambling to catch up with the Surface, but the Surface isn’t gaining traction.
What’s even worse for Microsoft, is that it started with a big Surface. Right as its big Surface hit the market, Apple sold the iPad Mini for $329. We’ve seen estimates that half, or more, of Apple’s iPad sales are iPad Minis. Turns out, people like the smaller tablets. Guess who doesn’t have a smaller tablet? Microsoft.
The PC industry is now collapsing. Sales were down 14% on a year over year basis in the first quarter, according to IDC.
There are two reasons the PC industry is collapsing: the iPad and Windows 8.
IDC says Windows 8’s tile design is scaring off users. This isn’t the first time a Ballmer-led Microsoft has produced a bad version of Windows. It did the same thing with Vista.
When Vista was around, though, there weren’t viable alternatives to Windows, so it was OK. Now, there are, and it puts Microsoft’s core business under attack.
This a very long way of saying that Microsoft make major mistakes, and missed major trends in its own industry. Apple has not, yet.
Apple could end up with the same problems. Perhaps Google Glass is the future of computing and Apple’s iWatch will be a dud. Or maybe iCloud will be a total failure, and Apple will just shovel money into it like Microsoft shoveled money into Bing.
If that happens, then the Apple-Microsoft comparisons are apt.
Today, six months after Apple stock reached a peak, it’s way too soon.
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