Microsoft vs. Apple vs. Google: Inside the Battle Royale: Page 2

An inside look at the titanic competition that is shaping the future of technology.
Posted September 20, 2011

Rob Enderle

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Advantages: Microsoft maintains a dominant or leading position in PC operating systems, personal productivity applications, gaming systems, servers, corporate email, and browsers. Microsoft’s partner relationships are the strongest in the segment and they have the strongest penetration of embedded systems of these three vendors.

They are deeply entrenched in most businesses and homes, making them relatively difficult to displace. And their user interface, Metro, is arguably the most advanced.

Disadvantages: Their goals are in conflict and the company is both massive and complex, making it almost impossible to manage successfully. Valuations have been flat to declining and key employee retention has become a major problem for the company.

Executive leadership has focused excessively on cost reduction, which tends to contribute to a history of uncompleted and poorly marketed offerings. They have nearly lost their leadership position on browsers, are losing leadership on desktop operating systems, and have lost share on smartphones against gains by both Apple and Google due largely to this lack of focus and underfunding.

Over the last decade, Microsoft’s CEO has become increasingly isolated from the company and has had to fire a number of top executives for cause, possibly including attempted corporate coups against him.

Finally, their most costly battle, against Google – largely using their Bing service – appears ill-advised given its cost and Google’s home turf advantages.

Bottom Line: Who wins?

Apple is in by far the best shape due to the fact they are the most tightly focused and least complex of the companies. This makes them more agile.

However this agility is offset by a broken executive leadership due to Steve Jobs’ departure. And the company is measured not just on good results but on outstanding results, which they may shortly (within the next 12 months) be no longer able to achieve.

This will put pressure on the board to replace the executive leadership and Jobs, who will see the recent charitable giving decision by Cook as a personal affront, will likely move to replace Cook. This disruption and conflict will further weaken the company. Apple needs to either replace Steve Jobs’ unique skills or change the company so his skills are no longer needed. Otherwise they will face a long slide from their current position at the top.

Google is in the second best position, largely because their advertising revenue is not yet being challenged by Apple and Microsoft’s efforts are still not doing the firm significant damage.

However they face an increasing likelihood of regulation and their Android partners are becoming increasingly disloyal. They are consuming massive amounts of capital on what appears to be non-strategically aligned efforts. These efforts are contributing to their underfunding other efforts and search could, as a result, become vulnerable to the coming wave of targeted applications (Facebook etc.).

Finally, their inexperienced executive management is one mistake away from an avoidable catastrophe that could take them out of the fight. Google needs to focus and decide on one clear set of interlocking goals and begin showing some maturity by avoiding obvious mistakes and fully funding initiatives or its best days will be behind it.

Microsoft is the only company bleeding dominance in areas where they have it significantly. This suggests they need to move to a protect strategy and shift resources to either protect their core products or restore market share for them.

Most troubling are the smartphone and browser products which have been bleeding share badly and remain massively underfunded against this critical threat. However, tablets have started to cut sharply into Windows share as well and the loss of dominance in all three areas would be a critical strategic loss to the firm representing tens of billions of dollars in revenue and profits.

Both Windows 8 and IE 10 are very competitive, but the core issue is one of leadership, focus, and funding. And if that issue isn’t more effectively addressed Microsoft will continue to lose strategic battles to both Google and Apple.

Microsoft’s executive leadership needs to step up or step out before these dominant leadership positions are lost. Otherwise they may be lost for good and Microsoft will slip into a steep decline.

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