Why Apple is beating the crap out of Microsoft.

The PC is so over.

The recent joint interview with Steve Jobs and Bill Gates at D5 highlighted for me what makes Apple a great company, and why Microsoft continues to struggle on all fronts except Windows and Office.

Both leaders are visionaries, that is for sure. In fact Gates built the first software company when nobody knew what a software company was, and subsequently conquered the market. His approach to selling DOS and then Windows to anybody that would buy it made sense in the early days. But he was lucky as well. Lucky that Apple didn't pursue the same 'license the OS' strategy, because if it had there's no doubt that Apple would have a larger share of the PC market than the 5% it now enjoys.

But like Steve said at D5, the era of the PC is largely over. Most innovation now is happening on what he calls post-PC devices, like music players and mobile phones. And that is what Apple is focusing on.

Microsoft, however, still doesn't get it and I believe the lack of understanding comes from the top. Gates still maintains that tablet PCs are going to take over the world, that Microsoft will eventually dethrone Google to be the new leader in search, that Zune will eventually rival the iPod for market share and that Microsoft has already conquered the smart phone market. Somebody please tell the man he is dreaming.

Let's take search as an example. There seems to be market consensus that Microsoft has to be, or is expected to compete in search. Why? What core strengths does Microsoft have that gives it the ability to compete in search? If you ask 'what are Microsoft's core competencies?', the answer is surely writing desktop software (and of course it's arguable whether they are actually good at that, or just good at marketing it). It's not search. And I don't think it ever will be. Microsoft needs to ask itself what value they can add, apart from being a competitor preventing Google from getting lazy.

Microsoft has a lot of money so the market expects them to compete in all areas but I don't think it's a winning strategy. Throwing money at a technology problem often leads to an inferior solution, and that's precisely why Apple's approach to developing products makes more sense.

Apple knows that its core strength is writing and designing software and wrapping it in sleek (but nowadays relatively generic) hardware. If Apple wanted it could also throw money into areas like search and gaming but Jobs is more disciplined then that.

Microsoft's approach is to add everything to a product - throw it all in and let the consumer work out what they want. Its business philosophy seems to follow the same path: let's do everything badly and hopefully something will be a winner.

Apple knows what to leave out - and that's where the skill is. That's why more and more consumers are choosing Apple.

When I think about the iPhone and compare it to Windows Mobile the difference is chalk and cheese. Windows Mobile is a sloppy product. No matter which way you slice it, it's still a complete disgrace.

The 'innovation' over the years from Windows CE to version 5 and 6 leaves a lot to be desired. With Windows Mobile innovation is often little more than a new desktop pattern or a new 'theme'. It's pathetic. It still takes far too many clicks to do the simplest thing like sending an SMS.

I think it's lucky that the market for phones is so fragmented and that consumers haven't been forced into buying smartphones yet. That's why Microsoft doesn't have nearly the clout it holds in the PC industry - most people don't need a smart phone. A simple Nokia or Sony Ericsson does the job for most people.

With the release of the iPhone, Apple is literally changing the industry. The difference is like moving from text based input system (like DOS) to a graphical user interface. But this time around consumers are more wary of simply accepting Microsoft's answer, and so the Windows lock-in that the PC industry takes for granted doesn't apply.

Consumer electronics are already too complicated and consumers know it. Post-PC devices need to be tightly integrated, and at the moment, the only company that does this, and does it well is Apple.

http://apcmag.com/6357/understanding_your_strengths