WW III has only just begun…
Today, Google owns internet search. Microsoft is a leader in operating systems and applications. And Apple rules high-end hardware, entertainment and media devices. That may well change. Fast. As each company encroaches on the other’s territory, which one will be best positioned in the future? And which one is most likely to fall? Importantly, will Google upstage Apple and Microsoft? Before we answer that, lets analyse the relative advantages of these companies.
Apple: Jobs-centric vision could skew growth
Steve Jobs has a passion for excellence in his staff that drives them to do things that should have been impossible. But, at the core of all of this, Apple is a product company and lives, or dies, on the success of its lead offering. It requires blockbuster hits in order to bring in big profits. Although Apple is riding high now, it is the most vulnerable of the three. That is because its success is built on the singular vision and talent of one person – Jobs. When Jobs leaves, those hits will stop coming. After he leaves, Apple could well experience a long, slow decline.
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. It mirrors the same mistake Sony made when they first tried (they later successfully collaborated with Ericsson) to go after the cell phone market alone. In an established market, you don’t need to learn by experience. You align and grow. But Apple’s partnership history is horrid. 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.
Microsoft: Has to evolve fast
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. But its IBM partnership was also its undoing. The IBM practice of avoiding accountability and institutionalising management turned out to be the communicable disease that should have been, but was not avoided. Today, Microsoft is a company in transition. It stopped chasing IBM some time ago. Yet, it 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 person 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.
Microsoft is clearly an enterprise vendor. It falls somewhere between Apple and Google. Unlike Apple, it doesn’t need big hits in order to grow. With a stranglehold on operating systems and productivity applications, and with solid enterprise tools, it will grow steadily. Google won’t be able to break its near monopoly. The instant success of Windows 7 is a case in point. In many ways, Microsoft is the new IBM. It is more tightly integrated into more businesses at more levels than any other technology vendor on the planet. This not only assures its survival, but gives it an entrenched advantage that’s unmatched by the other two.
Google: Has the edge
So far, Google has avoided both the problems associated with Apple 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 realised that, to make a difference, it wasn’t about a single product but about control of the revenue stream. 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. Google’s Chrome OS is both more affordable — on paper, as it doesn’t exist yet – and hardware vendor-independent. That gives Google the potential of outselling Apple and more seriously challenging Microsoft.
Google’s biggest threat is its own lack of focus, as it seems to be trying to do too many things at once, and too many of them have the feel of rushed and incomplete work. So far, Google has succeeded at being unconventional. But there are indications that they may be too attached to doing everything different than is prudent. But 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.
Rivalries and partnerships
While Microsoft and Apple are still bitter rivals, several recent events have inadvertently brought them closer together in order to fight their common enemy: Google. Rumour is rife that Apple and Microsoft are in talks to make Bing, the default search engine for the iPhone. Microsoft is also offering a bigger cut of iPhone search revenues to Apple than Google.
When Google CEO Eric Schmidt joined Apple’s Board of Directors in 2006, the move made perfect sense. But when he resigned in 2009, Google became Apple’s biggest adversary. Today, it is directly competing with Apple through the Nexus One, Google Chrome (Google Chrome), Chrome OS, and even possibly in the tablet computer space.
Conclusion
One look at the financials and you know who is closer to the finish line. With the year-on-year quarterly earnings growth of 416.2%, Google is way ahead of Apple (49.80%) and Microsoft (59.60%). But in revenues, Microsoft is still the leader at $58.69 billion. Not so far behind is Apple at $46.71 billion. Google’s revenue is exactly half of Apple: $23.65 billion. So while Google is still not much of a threat to Microsoft, it is an immediate threat to Apple as Google’s market cap of $170.75billion is dangerously close to its own – $177.66 billion.
Looking ahead, expect Google to thrive, Microsoft to stay the course, and Apple eventually to lose its Jobs-driven magic. If every firm maintained what it did well but copied their competitors where they were better, all would improve their futures substantially. And if age is any measure of maturity, and thereby future success, then Google comes up trumps. Its CEO Eric E Schmidt is 55 years while his counterparts are a fraction of a shade younger – Apple’s Jobs is 54 and Microsoft’s Steven Ballmer is 53. So it’s Advantage Google.
