Apple and Microsoft were both birthed by the creation of the PC. Apple first, and then Microsoft, and the two firms were then known as the “Pirates Of Silicon Valley” even though Microsoft was up in Seattle.
Apple has primarily remained a hardware company, shifting impressively to consumer devices, and their most potent product is no longer the PC; it is the iPhone. Both companies embraced the then IBM model of lock-in and focused initially on revenue and market expansion, which isn’t unusual in a new company. Both also had an initial concern concerning those that pirated technology, even as they were accused of pirating technology from others.
But just as IBM faced challenges in the early 1990s, causing them to abandon lock-in as a strategy, so Microsoft did with a massive anti-trust loss that began a massive change in that company. Apple faces one of many anti-trust issues as I write this, but they largely remain the hardware-focused, lock-in vendor that they always have been, which is at least partially to blame for their anti-trust problems.
In no place is this difference more evident than at Microsoft Build this week. The theme is again “developers, developers, developers,” but I doubt any firm can now match with the extra benefit of focus and execution.
Let’s contrast Apple and Microsoft this week.
Apple vs. Microsoft
We begin with the revenue model, which is still essentially hardware-based on Apple’s side but has always been more software-focused and now more cloud-focused on Microsoft’s.
For Apple, developers are a revenue source. With a lock-in strategy, the core vendor is king and everyone else is a potential revenue source, not a partner, not even a customer, just a source of money. Thus Apple focuses on charging as much as possible in their app store, is infamous for mistreating partners like Qualcomm and Intel, and finding new and creative ways to mine its users for more money.
Apple can’t do enterprise because volume discounting and critical platforms like Linux and practices like Open Source are mostly bad jokes to them. But Microsoft embraces the enterprise, has pricing models uniquely designed for them, and treats developers more like partners in terms of executing for the future. While Microsoft had anti-trust issues when they were practicing lock-in, just as Apple does currently, no one seems to consider them as a problem and their developers seem to love the company.
Apple is all about hardware churn and can seem to move faster to new concepts because they don’t care if they obsolesce the hardware still in place. Microsoft, at Build, bragged you could still run obsolete products like Microsoft Money ’95. The nice thing about a services model that Microsoft has been rapidly adopting is that churn often only increases costs, not revenue, so it isn’t a core part of decision making while backward compatibility remains critical.
At Microsoft, their Open Source efforts, interoperability, and acceptance of popular developer platforms like Linux make them not only very different from the old Microsoft but massively different from Apple as well. Microsoft seems to now grasp that their success is directly related to the users’ success, companies, and, yes, developers that use their platform, creating a symbiotic relationship with all three showcased at Build this week.
Apple is more focused on getting people to buy the latest Apple gadget and finding ways to monetize those that want to sell to their users. Apple even argued in court that they should get the same subsidy from game developers that those developers pay to console companies even though, unlike those companies, Apple sells their devices below cost.
The difference between Apple and Microsoft is more than skin deep. While both companies started very similarly, focused on growth and excessively focused on revenue and profit, Microsoft fundamentally changed to focus more on services, developers, and the evolution of edge-to-cloud computing. Apple is still primarily focused on those old revenues, profit, and device churn. This lack of change on Apple’s side results in some initial developer revolt and an increased risk of a devastating anti-trust judgment, much like both IBM and Microsoft once endured.
The result is that Microsoft is undoubtedly a less stressful and more fun place to work than Apple is now because they don’t have the regulation and litigation exposure they once had. But, in the fight for the future, Microsoft’s strategy puts them in a more collaborative and less stressful place than Apple’s massive profit focus.
The firm’s fundamental difference is that Apple is still locked into the ugly model that created the company. At the same time, Microsoft has pivoted to the new Open Source, interoperable, and developer-friendly future that the rest of the tech market is headed.
In short, while Tim Cook as good or better a pirate than Steve Jobs ever was, Satya Nadella has moved on, and at Build this week, the Developers appear to prefer Satya’s more collaborative and cooperative vision of the future.