A Threat to Apple? Microsoft's Grand Strategy vs Product Tactics
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Microsoft (NASDAQ: MSFT) seems to be challenging Apple (NASDAQ: AAPL) in the tablet market space. Apple with its uber cool iPad and seemingly unassailable market dominance does not look like the weak sissy in the school yard that everyone can punch out whenever they want.
So what does Microsoft see that they can take down and create some shareholder wealth? The contrast is more about the strategic battle than any specific shoot out on product features. Apple has its fabled eco-system of developers who feed into the iPad value proposition. Much momentum comes from this without any overt moves from Apple. Others just feed into it. Apple can be expected to constantly release new and improved offerings and thereby maximize revenue over and over and over.
Microsoft on the other hand is supposedly moving closer to Yahoo! (NASDAQ: YHOO) and reportedly will take over their search engine and create a mash-up with Bing. (BTW you have to love the pictures on Bing). So with the obvious exception of Google (NASDAQ: GOOG) they will become very strong in search. Apple as cool as the iPad is, does not rely on Safari to the same extent. Search revenues for Apple are low to the point of being strategically non-existent. As we all know it's all about search revenues. Investors do not really care how slick the iPad is. What we do care about is how many search dollars are generated.
As best can be determined from the rumours about Apple nothing major is coming from Safari. Despite the huge cash position of Apple not much R&D dollar has been allocated to turning Safari into something stronger.
We all glibly talk about the post PC environment where it's all hand-held and mobile. Microsoft needs to get a large piece of that to maintain a strong hold on devices to make sure they are well entrenched after Google. Microsoft thrived because everyone put their browser in. Now with iPad and Apple in a near monopoly position they need to be throwing some competitive punches.
Will they blow away Apple in the next year or two? No. Can they make Apple change its offering and maybe pull a punch or two? Certainly. The strategic battle is about tipping points and leverage. So when you look at the Microsoft product it will not be primarily about customer experience. It will be about what can Microsoft do to make Apple changed.
The battle is in the back room strategy sessions. The noise will be in the consumer market place as we all slavishly expect new offerings.
One day Apple's trajectory will bend. Nothing goes in a straight line forever. This could be the beginning of change.
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