At the Core of Why Apple is Outperforming Microsoft

Rob Enderle

If I were to describe two companies, one that is heavily leveraged by partners with global consumer and corporate scope and another that is largely U.S.-centric and largely limited to the consumer market, you might assume the first company was more successful. And up until the end of the past decade, you would have been right by choosing Microsoft. However, the past decade was clearly Apple's, and the smaller company in terms of growth and mind share clearly outperformed the company that should be vastly more powerful.

 

I think this comes down to two things that define Apple's success: It is focused on a clearly defined customer and it tries fewer things, but provides enough resources to ensure their success. Let's explore that as we wait for the historic launch of Apple's risky Tablet.

 

Apple vs. Microsoft on Products

Looking at the consumer space, Apple has launched a lot of products in the past decade. The iPod Shuffle and Nano, the iPhone/iPod Touch, AppleTV, and the iMac refresh were all major launches. The company switched to Intel for PCs. Each product had its own moment, each came with a demand-generation marketing campaign and only AppleTV failed. Only Jaguar was a major release, with the other operating system releases being minor, and Apple grew in PC market share throughout past decade.

 

During this same time in the consumer market, Microsoft launched Origami, Zune 1, 2 (two sizes) and Zune HD (each dramatically different), Xbox and Xbox 360, Tablet PC, Media Center, Media Extenders, Home Server, Pocket PC 2000, 2002, Windows Mobile 5.0, 2006, 6, 6.5, Portable Media Center, Mira (wireless tablet), Plays for Sure (preceded Zune), Media Room, Home Media Extenders, Auto PC and Sync. We should likely add that Windows XP, Vista and Windows 7 were all major releases for the consumer segment (XP replaced ME). And I'm sure I've missed some things because there were so many.

 


To my count, Apple launched seven products, six of which were successful and one, AppleTV, did better than most in its class, but didn't meet expectations. Microsoft launched 26 major products, two of which did well and dominated their segment (XP and Windows 7), Xbox 360, Zune HD, Media Room, and Sync did reasonably well, and most of the rest did not do well at all. About six products out of 26 did well or reasonably well compared with six out of seven for Apple. That's the same number of successful products, but Apple's six took the company higher than Microsoft's likely because Apple put its entire support behind seven, while Microsoft diluted its support across 26.

 

This gives us a success rate of 86 percent for Apple and about 23 percent for Microsoft. Had Microsoft done fewer products, but provided them better resources, its hit rate certainly would have been higher.

 

Microsoft was First, Apple Better

If you look back at a number of products Microsoft created, it often had the idea first, but simply couldn't get the complete product to market or create the demand needed to move it. Pocket PC and Portable Media Center clearly preceded and anticipated both the iPhone and the iPod Touch but didn't enjoy the focus Apple's products had, and Origami and Mira anticipated the pending Apple Tablet by nearly a decade, but Mira was crippled by being PC-focused. Origami was delivered unfinished, was never completed, and was under-marketed.

 

You could argue that Microsoft beat Apple significantly in creativity in these cases, but it showcased that it doesn't matter who gets the idea first, but who delivers it to market successfully.


Lessons Learned: Is Google More Like Apple or Microsoft?

It is interesting to watch the oft-repeated mistake of scattering the market with products, thinking surely one will be successful. It reminds me of something one of my combat instructors told me about focused effort when I was taking training in Arizona with automatic weapons.

 

He said that if you take the time to aim and focus on your target, you'll win (meaning being left alive) more times than if you just spray bullets in the general direction of a target. Evidently with products, too, concentration and focus make a bigger difference then just tossing lots of stuff into a market. Apple has clearly demonstrated that.

 

Google seems to be more on Microsoft's path than Apple's. Its list of products either out or in the pipeline is daunting, but its ability to drive these markets successfully seems increasingly questionable. Google has the Android platform, but it isn't a huge success yet, and the company has clearly damaged its potential by already releasing news on ChromeOS . Its Nexus One got a lot of positive buzz initially, but it felt like the company had moved on long before it was a certified success.

 

This suggests Google is repeating Microsoft's mistakes -- mistakes likely to be very expensive. That's something <strong>Google's CEO should be thinking about</strong>.

 

Wrapping Up

The mistake and lesson here, which is one that can be applied broadly to business decisions, is "if it is worth doing, it is worth doing well." I'd also add the word "completely." There are also three pillars to a product: the physical product, the services that surround and assure the customer experience, and the demand-generation marketing that convinces people that it is something they want. Apple is strong on all three pillars. Most others fail on most of them, and that is why Apple's success is relatively rare in the market.

 

You'd think this wouldn't be a hard lesson to learn, but watching companies like Sony and more recently Google, evidently it is harder than I think. At the core of the difference between Apple and Microsoft aren't resources, intelligence or creativity, it is focus. Microsoft plays, but Apple plays to win.



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Jan 25, 2010 9:38 AM a. asdf a. asdf  says:

__"This gives us a success rate of 86 percent for Apple and about 23 percent for Microsoft."

I don't know if cumulative success rate of all the Microsoft & Apple projects is an accurate measure, I would rather see the total Return On Investment of those projects, even though Apple probably leads that category too.

In the end, a major part of Apple's success comes down to aesthetics and ease of use. People want to buy something that looks nice first. Nobody is going to buy an ugly computer, car, TV, no matter what the specs are. And they want something that is intuitive to use.

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Jan 26, 2010 1:55 AM Rob Enderle Rob Enderle  says: in response to a. asdf

It's a case of focus, both companies had the same number of successful products in the segment but Apple's 6 got most of that company's attention Microsoft's was vastly more diluted and folks tend to remember the failures and can't as easily pick out the successes.  In the end it is more about perception, particularly when it comes to valuations, and Apple creates the perception of a successful company better than Microsoft does even though Microsoft is arguably much more powerful.   

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