Apple, Google & Microsoft – The Truth

You have been told many times that “Apple is taking Google on” or “Microsoft is going after the iPad” or any dramatic headline that pits the big 3 together. Truth is, none of these 3 are competing directly. The tech news industry simply wants to create a sense of drama for the sake of readership. I will attempt to clearly define what each company is primarily interested in and what their prospects are.

 

Apple - Hardware giant

Apple – Hardware giant

 

Apple 

Primary Interest 

Apple is primarily concerned with hardware. You might be reading all about iOS, OSX, apps and the like but that is not the primary interest of Apple. Apple is concerned of how many actual phones, tablets and PCs they sell. (Yes, Macs are PCs because PCs are personal computers. After all, Macs can run Windows as well. The publicity campaign was just a marketing gimmick.) As such, they are very concerned about the profit margin on each piece of hardware they sell.

This is also why Apple makes really good hardware. It is their core speciality. Tim Cook is no visionary but is a supply chain guru and this is exactly why he took over Steve Jobs instead of Johnathon Ives (who is more like the Jobs). Because Apple is very concerned on how well their hardware look and perform, they prefer a closed software environment of which they can completely optimize it so that their hardware shine. As such, you will never see iPhones run anything else than iOS. Apple = high profit margin hardware.

Competitors 

Apple’s main competitor is Samsung. Yep, not Google nor Microsoft. Neither of these two are hardware companies. Obviously, HP, Acer, Asus and any hardware manufacturer are also competitors but the big one is now Samsung. Samsung is by far the leader in hardware by virtue of numbers but Apple ships hardware that return higher profit margins.

Prospects 

Apple is at the peak of what they envision. They have successfully managed to extract high profits from every product they sell. I am pretty sure they will not move into the TV market unless they find a way to gain high profits from it. In fact, you might see Apple leave the Macbook Air / Ultrabook market because that segment is very competitive as seen in WWDC 2012’s lowering of MBA prices. It is very un-Apple like to cut prices for this reason.

Apple is just in for hardware profits. They do not care if they have the largest market share or not. Every device they sell must return a sizeable chunk and if there’s a hardware segment they see a huge profit opportunity in, you bet they will be there soon.

 

Google - 'All your internets are belong to us'

Google – ‘All your internets are belong to us’

Google

Primary Interest 

Google has a wide interest range that focus on only one area – Web Services. They started off as a web advertisement firm and focused first on search because that was where the advertising dollars were. Then, they realized that the amount of statistics they got from search could be augmented with email and so in came GMail. Google is interested in any web service of which they can index the behaviors of their users in order to provide a customized web experience. They want the internet to be your second home and they want that home to be called Google.

Search, GMail, Plus, Docs, Calendar, Android, Wallet, Maps, etc are all targeted to ensure they provide for every facet of your web experience. They want to be the end all of web services.

Competitors

Google’s immediate competitor is Facebook. Not Apple or Microsoft. Many, many tech writers and enthusiasts often love to pit iOS and Android. The truth is, Android is out there to ensure that there is a strong mobile front end for their Web Services. It is there to protect Google in case iOS or Windows Phone decides to turn off access to Google. This is also why Google is willing to give out their Android source code for free and sell the Nexus tablet at cost price. They want your web experience to be fully invested in Google.

Facebook is their largest competitor because Facebook does more than provide social connections. This is why Facebook is the sole company that completely blocks Google in its web experience. In fact, it’s protocol is also opposite to Google. Google profiles you over a long use of their services. Facebook makes you submit your profile to them (your Facebook page) and then run their services (advertising, product placement, search, etc) based on these profiles. Facebook wants to keep your experience within Facebook while Google wants you on theirs. Facebook is has not reached its potential yet, but when it finds more ways to make use of your FB profile, it will emerge a strong competitor to Google. In terms of business interest, it is Google vs. Facebook.

Microsoft and Apple are currently playing nice with Google. Google search is usable on iOS and Windows but as Microsoft moves towards Bing and Bing Apps; and Apple starts rolling out its own Maps, Google’s own domain is threatened. This is in the distant future though. Apple and Microsoft’s web ventures have largely been negative.

Prospects 

While Apple is at its peak, Google is just at the beginning. More users are now embracing the internet and are more willing to trust cloud services. Google’s products are gaining acceptance in this change of consumer behavior (e.g. rising popularity of Google docs among mainstream users). Google has the brightest future of the lot but this is will probably be realized in 5-8 years or so.

 

Microsoft - High risk grand master plan

Microsoft – High risk grand master plan

Microsoft

Primary Interest 

Microsoft is a queer creature. It was easy to simply tag Microsoft as a software company in the past century. After all, Microsoft was first to build a business model around selling software. It was insanely profitable because there is nearly no marginal cost in producing more copies of the same software. This is also what made Bill Gates the richest man on earth and Microsoft to be tagged M$. But things have changed.

Microsoft first moved into hardware with the XBOX in 2001, the same year Apple started focusing on consumer hardware (iPod and later iPhone and iPad). It took Microsoft a few years but the XBOX outstripped Sony’s dominant PlayStation and relegated Nintendo as a budget console maker. While doing so, it continued working on software. Microsoft then moved into web services with Bing in 2009. In 2010, Microsoft signalled its intention to re-enter the mobile space with Windows Phone. So what is Microsoft’s primary interest? Most analysts are puzzled as well and this has led them to call Microsoft vision-less. That question is best answered with Windows 8.

Microsoft is aiming to create a unifying platform for work and entertainment on your devices locally. MetroUI is a visual landmark of its unification process. Windows on the desktop, laptop, tablet, phone and XBOX will all run the same UI. In short, Microsoft wants you to be using its software on every platform and does not bet as big on the web as Google does.

Microsoft has only gone into hardware (not counting peripherals) twice. XBOX and the Surface. It made the XBOX not because it is interested in hardware but because that is the only viable way of entering the TV market. Apple TV and Google TV have largely failed because it was unable to make the needed content deals that are monopolized by cable companies. Microsoft bypassed that by entering TV via an easier method (gaming). The gaming console industry makes its money on games sold and not consoles sold. Thus, Microsoft kept selling the XBOX at cost (or under cost) just like what Sony does and rake in the profits via games sold. It had no choice but to get into hardware or it would not have a chance at the TV sector. The Surface also doesn’t represent a change in strategy, it is simple a model that Microsoft want its manufacturing partners to adopt. It’s a Google-esque move à la Nexus.

Microsoft remains firmly a local software company. Local here refers to something that runs off your hardware and not on the web.

Competitors 

Microsoft has no direct competitor in its prime vision. No other company is as ambitious (or crazy) as Microsoft in the local software scene. But it has multiple competitors in each segment. Apple in mobile platforms and Sony in the gaming crowd. It’s important to note that Microsoft doesn’t see Apple as a threat on desktops and laptops because Macs can run Windows and that’s all they care about. Microsoft’s Bing is, of course, in competition with Google but it isn’t putting all its eggs on the web the way Google does.

Prospects 

It is risky to make an educated guess on how Microsoft’s goals will play out. At best, they will dominate all your screens in 3-5 years. At worst, they will turn out like RIM (sorry Blackberry fans). Microsoft’s end game is very ambitious but that also leaves them open to a death by thousand cuts. Microsoft is taking a huge and risky bet on the future. We will find out in 2 years if Metro UI catches on. If it does, Microsoft will resume its gigantic status for a few years before everyone moves to the web.

 

Summary 

Here is everything above in a table form for easy comparison. It is clear here how often tech journalists are short sighted in their analysis and articles.

Company Primary Interest Supporting Instruments
Apple Hardware(e.g. MacBook, iPhone, iPad, iPod) iOS, MacOS, iTunes, iCloud
Google Software (Web)(e.g. Search, GMail, Docs, Maps, etc) Android, ChromeOS, Nexus devices
Microsoft Software (Local)*(e.g. Windows OS for all platforms) Microsoft Surface, XBOX

*Microsoft has plans for Software (web) but nothing seems concrete at the moment. If it does so, it will compete directly with Google.

 

Conclusion

I hope the above has shown why it really isn’t directly Apple vs. Google vs. Microsoft. Each of them are primarily interested and invested in a different area.

The takeaways are that Apple will be the giant for now. In 5 years time, it will all about web (Google) vs local (Microsoft). Also, if Microsoft manages to make Bing anything close to Google – there will be a direct conflict between Google and Microsoft on the web in future.



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