Regardless of what I wrote last week, which focused on Apple’s problems coming out of the Red Hat event, Apple is on a roll. It’s expected to gain substantial share this quarter because Snow Leopard will make it into the quarter and Windows 7 won’t. However, in October, Microsoft is planning to come back with a rush, and next year will bring its not-so-secret weapon: the Apple-targeting Microsoft store.
What is interesting about these stores is that if you buy one through one of them, it will turn the PC experience into something vastly more similar to an Apple experience — and that will likely mean open conflict. Given that the stores will often be next to each other, life could get rather exciting in some high-end malls. In addition, Google will enter next year, and given its CEO was booted off Apple’s board, Google will likely want to pound on both Microsoft and Apple, which gives us the potential for a global vendor conflict. A Tech World War 3, if you will.
I’ll address that developing storm this week in SWOT format (Strengths, Weaknesses, Opportunities, Threats) and close with my product of the week: It lets you listen to cool tunes while cooling off — and it isn’t an iPod.
Apple: It’s All About Perception
Apple’s greatest strength is its ability to control the perception of its offerings. It tends to use a variety of means, including its fans, to shout down dissent and cover up any problems the company has — and every vendor has problems. This doesn’t mean Apple doesn’t have a quality product. It does — it is just that through its excellent marketing, it manages the perceptions of its product so well that disadvantages are downplayed and advantages are amplified.
Apple’s biggest weakness is that it often reads its own press and actually thinks a problem that does exist isn’t something it has to worry about. Last week’s Black Hat coverage is a case in point. Most Apple users are not aware of the security shortcomings of their platform. Even though there are mitigating tools to be had — many for free — they don’t use them, because Apple has created a false sense of security. This inability to see threats and properly prioritize them is likely Apple’s greatest exposure.
It has a significant opportunity to create a new PC-like market around smartphones and smartbooks. Its rumored iPad could create the core of a new PC market — and put Apple at the top of it. This, coupled with the iPhone, likely ranks as its greatest near-term opportunity.
Apple’s biggest threat is Steve Jobs’ health. The company remains tied to a model he created, which puts him at the hub of all things Apple, and it has yet to figure out how to replace him — and he clearly isn’t in great shape. His departure or inability to do the job he has been doing for much of this decade likely represents Apple’s greatest threat, followed by the security exposures listed above.
Google: It’s All About Free – and Killing Microsoft
Google’s greatest strength is its hold on the majority of advertising dollars spent on the Web. This generates a substantial amount of cash it can then use to create products it offers for free. Free is very hard to compete with, and this financial advantage is unmatched in this, or any other, segment.
Google’s greatest weakness is the perception of inadequate quality. People equate “free” with low quality and generally connect price to quality level. Free things are perceived to be junk. This perception isn’t helped by the fact that Google has a rather mixed product quality history. Or that “free” doesn’t throw off the kind of cash Google needs in order to market at Apple’s level and enhance the perceptions of its offerings.
The possibility of taking the desktop away from Microsoft is likely Google’s biggest opportunity. The Microsoft base is vulnerable to change, as Apple has been demonstrating, but Apple is too pricy and too vertically integrated to take full advantage of this demand opportunity. 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.
You don’t replace a vendor by creating the impression that what you are offering for less is still not worth what folks are paying for it. The fact that the majority of folks don’t think many of Google’s free products are worth the price is more than problematic.
Microsoft: It’s All About Owning the World
Microsoft’s greatest strength is the infrastructure it has built around its offerings, most of which are interdependent and difficult to extract piecemeal. In many ways, Microsoft is the new IBM, in that 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 the company an entrenched advantage that’s unmatched by the other two.
Microsoft’s greatest weakness is a poor understanding of those it depends on — from the OEMs that sell its products to the people who buy them. Microsoft can do more to upset more people critical to its survival over a short period of time than any company I’ve ever followed, and often with no matching justification. This lack of understanding has critically hurt its image, reduced the effectiveness of its sales efforts, and been a major contributor to what has been a comparatively lackluster decade for Microsoft. In short, too many of its customers are unhappy.
Its biggest opportunity is transforming the company into one that is relevant and vital again during the next decade. Decades of work have created an installed base of products that — if used effectively together — not only would create a near-impassible barrier to entry for competitors, but also reestablish a level of loyalty the company hasn’t seen in over a decade.
In effect, Microsoft’s biggest opportunity is to become a company again rather than a set of less than cooperative divisions.
Its biggest threats are the excessive focus on pricing and cost-cutting, as opposed to building real, sustainable value across the company. This financial focus is both starving working groups and alienating large customers and OEMs which are increasingly looking at alternatives to Microsoft products.
Microsoft is at high risk of losing its franchise, as a major portion of the market may refuse to move off XP unless it is to a platform from a company like Google or Apple.
Wrapping Up
Each company is facing a future of unprecedented opportunity and is likely focused on the others as its primary threats. However, for all firms, I think the actual threats that are most critical are internal and that a little soul-searching could make each more competitive and successful.
Apple, with Steve Jobs, has the biggest single problem with no obvious solution. Its hope is that Jobs hangs in long enough so that one can be developed.
It is also interesting to note that money is at the core of both Google’s and Microsoft’s exposures. Google needs to find a way to make what it offers worth something, and Microsoft needs to focus more on providing value and less on a tax-like pricing strategy.
Finally, if every firm maintained what it did well but copied their competitors where they were better, all would improve their futures substantially.
Product of the Week: Finis SwiMP3 v2
There is only one music product I’ve ever used that really works when you swim and that is the SwiMP3 player from Finis. On land, it sounds like crap — but in the water, it provides a level of sound quality unmatched in any other in-water solution.
This is because it uses bone-conductive technology, and you do need to learn that the thing doesn’t actually go over your ears for it to work properly. It doesn’t have a display, and it works like an iPod shuffle, and it costs about US$150 and only has a relatively tiny 256 MB of storage. Still, that is 60 songs at an average length of four minutes, or about four hours of music, and it has eight hours of battery life.
Since this only really works if your head is in the water, this is probably enough for everyone except a professional distance swimmer.
I have a swim spa at home — kind of a water treadmill — and my wife uses it far more than I do. It actually has a built-in stereo and underwater transducers (which cost a fortune) but she prefers the Finis over using it when she is swimming, and I agree — the Finis sounds better.
It’s summer. Getting wet and listening to good tunes is cool, making the Finis SwiMP3 v2, which is a nice improvement over the V1, my product of the week.
Rob Enderle is a TechNewsWorld columnist and the principal analyst for the Enderle Group, a consultancy that focuses on personal technology products and trends.
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As usual, Rob oversimplifies things by relying on the same faulty logic he has used for years. He cites no statistics or research to support his silly, shallow and flat-out wrong conclusions. One of his most consistent errors is assuming that Apple and Microsoft have remotely the same business model, or even sell the same widgets. Based on that assumption alone, none of his conclusions hold up, from Apple being "overpriced", to Apple’s success being due to its marketing, to Microsoft’s stores being in direct competition with Apple’s. Even if you assume Microsoft can execute a strategy around retail stores (which I personally doubt, given it’s inability to do anything competent these past few years), buying a Windows-based PC at a Microsoft Store isn’t going to begin to "…turn the PC experience into something vastly more similar to an Apple experience". Rob cannot admit that Apple’s products are successful because they are designed and engineered to be compelling and easy to use. This is just more drivel from a wholly-incompetent pundit.
You may be right, however I can recall some of my peers saying the same thing when Apple went into retail. Microsoft has Apple as an example while Apple had to build their concept nearly from scratch.
Initially I actually think increased traffic may benefit both by drawing more to the co-located stores. Long term, and without Steve Jobs, price will likely be much more difficult for Apple to overcome.
We’ll see though, at the moment the Apple stores are real and executing very well and the Microsoft stores are vapor. I still wonder if Microsoft will do what they will need to do to win here, I think they can, but can and will are often distinctly different words.
The Apple stores will be full and the Microsoft stores will be empty. Not in the first week of course, there will be loads of Microsoft approved videos of queues of happy Microsoft punters waiting for the store to open. Because that is what the Apple fans do for free. So Microsoft will have some of that as "publicity". But then when the customers actually figure out that the stores have very little in terms of actual products to sell the visiting numbers will wane rapidly. Microsoft will make claims that their stores are "experiential" but the visitors will do all the experiencing pretty quickly and move on.
So what we will get is a huge fanfare from Microsoft, a new logo, and then it will eventually recede to a nothing thing, I give ’em about 18 months before they decide to pull the plug.