Apple – a leader in hearts and minds; Microsoft – a leader by numbers

For years, Apple has been known as the true innovator in the technology space.  Their innovation spans far and wide and has conquered the hearts and minds of many.  Just ask any Mac user or anyone with an iPhone why they love their Apple product, and you will hear words such as “simplicity, elegance, style, usefulness, reliability, and the “hip factor,” among others.  Users of Apple products love their products.  Period.  They live and swear by them.  And even though the Macintosh market share has been steadily increasing over the last few years, Apple Mac computers will never be leaders by this metric; not if the company sticks to the same business model as it utilizes today.

On one hand is Microsoft: a technology company whose product is difficult to escape in everyday life.  Whether you’re on the web , at home , at the bank , or in the car , chances are Microsoft had a hand in designing the software which powers those items.  However, it is widely opined by tech analysts and experts that users of Microsoft products aren’t as enthusiastic about their products as users of Apple gear are.  Most of them “just use it,” as I had a friend explain to me why he uses Windows (or rather, a Dell PC with Windows pre-installed).  And as far as I can see, Microsoft will not be letting go of their software dominance.  Quite to the contrary, actually: they will grow the market share of their current market-leading products, and expand into new territory – and be dominant there as well.  Just to be on the same page, however, allow me to review some general marketing and business concepts before we delve into the good stuff.  Here we go.

Rule : A company’s market position influences its focus.  For tech companies, this is especially true.  Market share leaders focus on attracting new potential users, whereas smaller firms focus on attracting current users away from the market leader.

Interpretation : From that sentence, we can substitute some words with actual company names and come out with: “Microsoft, a market share leader in desktop, server, mobile, automobile, and embedded operating systems, focuses on attracting new potential users, whereas Apple, a smaller yet “more-loved by its users” technology firm, focuses on attracting current users away from the market leader (Microsoft).

Such market forces can be observed most prominently in Microsoft expanding into new, yet untapped geographical markets, and consequently attaining new customers/users there.  For example, efforts by Microsoft such as the availability of Windows XP on the OLPC XO and the availability of Windows on low-cost miniature (yet useful) notebooks such as HP’s Mini-Note and Asus’ EeePC give the company a chance to be the first official supplier of computers to technologically undeveloped nations.  That was a mouthful so let me break it down a bit.

Unrealized profits in the developing nations

Until now, Microsoft has not been achieving to the fullest potential the sales of the company’s cash cows – Windows and Office – to third-world nations.  That is, most commercial software that is being used and sold in such nations is pirated.  Microsoft is using a combination of forces to change this.  Windows Genuine Advantage is first to come to mind.  With the infusion of the aforementioned low-cost PCs and a new, low-cost, version of Windows (Starter Edition), Microsoft is making their software more financially appealing to residents of these countries.  Having access to low-cost and genuine software will allow tech users of these regions to choose such products and benefit Microsoft financially instead of the software pirates.  (As an aside, this has worked very well with music conglomerates and artists in the U.S.  The “overly-complicated” strategy is to make content easily accessible , affordable , and to treat your customers with respect - not with the automatic assumption that they are thieves and will do anything to steal your content.  Only then piracy will be eliminated.  Video companies still have not caught on to this ingenious marketing and sales technique).

OLPC

Out of the low-cost PCs mentioned above, one deserves some more discussion.  The OLPC (One Laptop Per Child) initiative is a non-profit organization that designs, manufactures, and sells the $100 XO laptop (pictured above).  The goal is to bring computing (in the form of the OLPC) to children in third-world countries.  Governments of such nations can purchase these sturdy, usable, and fun laptops for children and students.  Donations are also accepted on the OLPC site.  (My explanation is simply underwhelming compared to what the OLPC initiative’s goals and practices are.  Check out the OLPC project, located at laptop.org, to find out more about the OLPC initiative.)  Back on track: children in third-world nations will be able to use these low-cost, functional computers to better their education.  The huge detail that has to be noted here is the following: these children will be brought up using the OLPC.  Microsoft just partnered with the OLPC initiative to provide Windows on these laptops.  The end result is that an entire generation of children will be brought up using Windows.  If the light bulb hasn’t turned on yet, think about how much attachment and/or dependency these children will have on the Windows OS as they grow up.  Moreover, in five to eight years, Windows desktop OS market share worldwide will be growing exponentially from these two complimentary forces:

• Windows OLPC sales today and in the future
• Students using the Windows OLPC today will be buying and/or using another computing product with Windows in their future (after completing schooling and entering the workforce)

Meanwhile, Apple’s Mac will still be hard at work trying to chip away at its measly single-digit marketshare in the U.S., but doing absolutely nothing about third-world countries and those children’s computing education needs.

Say what you will about Apple:

• that it is a smaller, more concentrated company serving a differentiated and/or more concentraed market;
• that it would rather compete in the space of higher margins rather than the market share game;
• or that, by Steve Jobs, there are certain price points Apple will never compete in (the lowest ones, obviously)

Thus, the fact still remains that the desktop OS market will be, just as it is today, dominated by Windows.  Apple’s Mac may conquer the hearts and minds of its users, but when only a small fraction of the world is using the Mac, there is something to be said for the “numbers”.  (Hint: numbers tell most of the story).  All this will occur unless Apple makes a paradigm shift in their Mac business model.  But this topic is for another day.

Additional notes – please read this before leaving your comments and sending me any kind of mail

I wrote this post putting other third-world country topics aside.  I realize very well that basic needs such as food, shelter, and water (in no particular order and among others) must be met before questions about computing even begin to be discussed.  I, however, firmly believe that if computing is brought to a nation that has never been exposed to it, the nation will be on a more even playing field than it has been before.  Surely, computers and technology alone won’t make it fair: technology education is a requirement.

Posted in Apple, Business, Decisions, Marketing, Microsoft, Operating Systems, PC vendors, Software