Apple Computer, Inc. vs Microsoft Corporation - Research Paper Example

? APPLE vs. MICROSOFT APPLE vs. MICROSOFT “Apple was founded in Cupertino, California on April 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne” (Apple Inc. History, 2008). On the other hand, “The Microsoft name was registered with the secretary of state of New Mexico on November 26, 1976. Microsoft’s first international office was in Japan and found it on November 1, 1978” (The History Of Microsoft, 2010). In other words, both Microsoft and Apple established during the same period and the rivalry between these two companies started from the beginning of their introduction itself. Currently, Apple and Microsoft are world’s leading companies in the computer industry. Microsoft is headed by Bill Gates whereas Apple’s CEO is Steve Jobs. Many people believe that the competition between these two companies is actually the competition between these two charismatic leaders; Bill Gates and Steven Jobs. Microsoft succeeded in monopolising the operating system market in the world with the help of their renowned Windows based operating system. On the other hand Apple tried to conquer the global consumer electronics market with the help of diversified products. Apple faced many ups and downs in their history since its introduction. It faced stiff challenges in the 1990’s; however it was able to bounce back with the help of innovation and change management principles implemented in the organization during the latter periods of 1990’s and the at the beginning of the twenty-first century. On the other hand, Microsoft has not faced many challenges during their last 35 years of history. However, at present, Microsoft is facing several challenges from companies like Apple, Google etc. This paper compares the performances of Apple and Microsoft since their introduction. The first thing we all know is that during 1995-97, Apple lost control of the business market. IT managers needed something Apple wasn't able to supply: a capable back office system with authentication and management tools. Apple appeared to be ambivalent about this loss of the business market, and a series of poor CEOs failed to understand the evolution of business requirements and failed to bring clarity to Apple's vision (Martellaro, 2006) The battle for dominance between Apple and Microsoft was intensified in 1990’s. Apple introduced their Macintosh OS in response to Microsoft’s Windows in the 90’s. However, Apple failed to capture the market whereas Microsoft did succeed in monopolising the operating system market. Apple’s failure in providing the necessary solutions to the IT managers, opened many opportunities to Microsoft which they accepted with both hands. A series of windows based products like Windows 95, 98, 2000, XP, Vista etc entered the market which helped Microsoft to monopolize the operating system market. Microsoft did everything possible to sustain their monopoly in the operating system market. They have introduced many application software which are compatible only with the Windows operating system. For example, the MS Office package including software like MS word, MS excel, MS power point, MS access etc are compatible only with Windows operating system. Majority of the global computer users were badly in need of this application software and Microsoft was able to maintain their supremacy with the help of these software packages. Another business strategy successfully implemented by Microsoft was their meaningful collaboration with Microsoft chip manufacturers and other business associates. For example, Microsoft established business collaboration with Intel, one of the prominent microprocessor manufacturers, for making microprocessor chips suitable to run their Windows operating system. The collaboration between Intel and Microsoft made it impossible for Apple to break their dominance in the operating system market. On the other hand, Apple tried to resist the pressure of Microsoft by establishing collaboration with another microprocessor manufacturer, Motorola. However, Apple- Motorola collaboration failed to prosper like the Microsoft-Intel collaboration. The monopoly of Microsoft in operating system market, forced Apple to think differently in terms of introducing new products rather than concentrating fully on the operating system market. Apple realized that it is difficult for them to beat Microsoft in operating system market, since Apple succeeded in maintaining or strengthening their monopoly in the OS market. However, at the beginning of 2000, Apple bounced back with the help of their i-series products such as iMac, iPhone, iPod, iPad etc. iPads and iPhones were introduced without 3G facilities initially; however, after reading the pulses of the market well, Apple incorporated such facilities also later. At present, Apple Inc surpassed Microsoft in market capitalization and they became the second biggest company in the world just behind Exxon mobile. (Warren, 2010) Moreover, Apple became the most valued technological company in the world at present, again pushing Microsoft behind. “Apple's market capitalization - the sum of its outstanding shares multiplied by its stock price - finished at $222.07 billion, ahead of Microsoft's at $219.18 billion Wednesday, May 26, 2010”(Kim, 2010). Apple Company is currently operating internationally and has more than 200 retail stores in different countries. Apple utilized the globalization opportunities well to spread their wings across regions and countries. Krazit (2008) has mentioned that the “Wall Street is expecting Apple to report earnings per share of $1.07 on revenue of $6.9 billion in 2008”. He has also mentioned that Apple is a company which is under-promising and over-delivering (Krazit, 2008). Timmer (2009) has pointed out that “Apple’s revenue crossed $ 10 billion mark in the first quarter of 2009 which was a big change from the last quarter $ 7.9 billion mark” (Timmer, 2009). Mac OS has grown from 6.38 in 2007 to 7.57 in 2008 and 9.63 in 2009 whereas globally it grew from 2.5 in 2006 to 3.4 in 2008. Apple on July 21, 2008 announced their financial results for its fiscal 2008 third quarter ended June 28, 2008. The Company posted revenue of $7.46 billion and net quarterly profit of $1.07 billion, or $1.19 per diluted share (Apple Reports Record Third Quarter Results,2010) The above statistics clearly suggest that Apple’s businesses were never affected by the recent recession. While most of the customers stayed away from the market, Apple was able to maintain its growth rate which is a significant achievement. On the other hand, Microsoft cannot claim such growth rates in the recession period. Like most of the other American companies Microsoft also suffered several setbacks during the recession period. Apple delivers more than what they promise to their customers, which is the major reason for the popularity of Apple brand all over the world. On the other hand, same thing cannot be said about Microsoft at present. Microsoft claims their new versions of operating system as entirely new products. However, these new versions of Windows operating system are only the mere modifications of the older versions. Windows users forced to purchase these updated versions as new products and Microsoft is charging heavily for these updated versions of Windows. On the other hand, Apple users are getting more than what they expected for the money spent. All the new products from Apple exceeded the expectations of the consumers which helped Apple to surpass Microsoft both in market capitalization and reputation as the most valued technological company in the world at present. Another reason for Apple’s success is their ability to introduce new products at the right time. Bill Gates introduced tablet PCs around a decade before. However, it failed to prosper in the market because of the less uses of such PC’s during that period. Apple on the other hand introduced the tablet PC’s only recently and these products are selling in large volumes at present. iPads (Apple’s tablet PC) are selling worldwide at a rapid pace and it is bringing more market share for Apple currently. Apple’s ability to think differently all the time brought many benefits to them. They believe in leadership rather than followership. Nobody can accuse Apple for stealing the ideas of others or for exaggerated claims on their products For example, “Apple scored a runaway hit with its digital music players (iPod) and online music store (iTunes)”(Apple Inc. Cupertino, CA United States, n. d.). They have rightly calculated that the mechanical faces of computer industry should be changed and more aesthetic looks should be provided to it in order to make it more attractive to the customers. They assumed that a partnership between the music industry and computer industry will bring the computer industry more close to the layman. The above assumption was right and Apple products started to reach even laymen. The easiness in handling of Apple products made it popular among even uneducated people. Apple has made lot significant changes in their business approaches which helped them to expel Microsoft from the top spot. Apple polished its looks and changed their name from Apple Computer Inc to Apple Inc. Apple changed its name because of their desire to expand or diversify their business portfolios computer business to other consumer electronics product areas. iPods, iPads, iPhone etc were some of the diversified product ranges introduced by Apple at the beginning of 2010. The introduction of iPod music player in 2001 was a big success for Apple. iPhone was the first touch screen phone introduced in the market. While prominent mobile phone manufacturers like Nokia, Sony, Samsung etc failed to read the market trends well, Apple was able to do so and the result was the introduction of iPhone. The success of these products forced Steve to change the of Apple Company from Apple Computer Inc to Apple Inc. The old and new logo given below reflects the changes happened in Apple for the last few years. (The Evolution and History of the Apple Logo, 2009) On the other hand, Microsoft failed to read the market well. They concentrated mainly on their existing products. Even though they tried to enter into other areas they failed miserably. For example, Microsoft tried to enter the search engine market. Currently Google is dictating this market. Microsoft tried to acquire Yahoo in order to raise challenges to Google. Moreover they tried to establish business relationships with Amazon.com also. However, none of their efforts prospered properly. Microsoft products are still unusable for layman. Only educated people with basic computer knowledge can work on all of Microsoft’s products. Microsoft failed to realize the attitude and changing needs of the consumers and they calculated that their monopoly in the operating system market may help them to maintain their top spot in the computer industry. Microsoft is facing lot of legal battles with respect to antitrust from its competitors. Microsoft is more interested in protecting their interests which brought many criticisms not only from the public, but also from the courts. “Liberalization means the gradual decrease of control on the part of Microsoft with regards to source codes and other computer programs because of the recent antitrust rulings made by the U.S. Supreme court” (SWOT Analysis of Microsoft, 2009). Globalization brought many changes in business policies and laws and many people believe that Microsoft cannot survive in the future world with the help of their existing business policies. Linux like free operating system software is currently raising many challenges to Microsoft’s supremacy. The main advantage of Linux is that it is free and the customers can have even the source codes of the program. One of the major disadvantages of Apple is the fact that it failed to develop a top management team to succeed Steve Jobs. Apple’s business strategies are revolving around the charismatic leadership of Steve Jobs. A kind of one man show is going on in Apple Company at present. Nobody knows what will happen to Apple once Steve Jobs decides to step down. In fact Apple faced major troubles earlier when Steve Jobs quit Apple temporarily. Apple sorted out the problems by recalling Steve Jobs. On the other hand, no such worries are there for Microsoft. Microsoft’s top management team is capable of handling any situations even in the absence of Bill Gates. Microsoft’s activities are not relied on the services of Bill Gates alone even though Bill Gates has the last word in the policy making. In short, Apple faces leadership challenges whereas Microsoft has no such worries at present. To conclude, both Microsoft and Apple are the most valued technological companies in the world at present. The competition between these two companies is getting stiffer as time passes. Till the dawn of twenty first century, Microsoft kept its supremacy intact. However, Apple succeeded in expelling Microsoft from the top spot and currently they became the most valued technological company in the world. Apple’s ability to introduce new products at the right time brought them dividends in the market. Microsoft failed to recognize the market pulses properly and they stuck with their existing products and failed to grow just like Apple. References 1. Apple Inc. History. (2008). Retrieved from http://www.ipodtopctransfer.com/news/apple-inc.html 2. Apple Reports Record Third Quarter Results. (2010). Retrieved from http://www.apple.com/pr/library/2008/07/21results.html 3. Apple Inc. Cupertino, CA United States (n. d). Retrieved from http://www.hoovers.com/company/Apple_Inc/rtjcci-1.html 4. Krazit, T (2008). Apple's Mac Strength Could Keep Tech Industry on a Rol. Retrieved from http://news.cnet.com/8301-13579_3-9926068-37.html 5. Kim R. (2010). Apple Passes Microsoft As Top Tech Company, Retrieved from http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/05/26/BUDJ1DL0IU.DTL 6. Martellaro, J. (2006). Hidden Dimensions -- Apple's focus vs. Vista Vision. Retrieved from http://www.macobserver.com/columns/hiddendimensions/2006/20060403.shtml 7. SWOT Analysis of Microsoft, (2009), Retrieved from http://ivythesis.typepad.com/term_paper_topics/2008/01/organization-an.html 8. The Evolution and History of the Apple Logo. (2009). Retrieved from http://www.edibleapple.com/the-evolution-and-history-of-the-apple-logo/ 9. The History Of Microsoft (2010). Retrieved from http://www.webhostingreport.com/learn/microsoft.html 10. Timmer, J. (2009). Apple's Growth Takes a Hit, But Not a Dive. Retrieved from http://arstechnica.com/apple/news/2009/01/apple-earnings-take-a-hit-but-not-a-dive.ars 11. Warren, C. (2010). Retrieved from http://blogs.forbes.com/velocity/2010/05/27/apple-passes-microsoft-as-most-valuable-tech-company/?partner=yahootix Read More