Apple (s aapl), for a long time, was the David to Microsoft’s (s msft) Goliath. It was a dynamic that suited Apple, as the company used its underdog status to attract customers who saw themselves as different and apart from the mainstream. It was the iPod that first signaled a change in this arrangement.
The iPod dominated. It became synonymous with “MP3 player” in the mind of the buying public. And that would start in motion the rise of Apple into the tech giant it is today. A tech giant, might I add, that as of yesterday is worth more in terms of market value than Microsoft.
At the close of Wednesday’s trading, Apple was valued at $222 billion, while Microsoft was worth $219 billion. Apple’s shares ended the day at $244.11, while Microsoft’s finished at a seven-month low of $25.01. And it isn’t only Cupertino’s successes, but also Redmond’s failures that are responsible for the new power dynamic between the two companies. Overall, Microsoft stock is down 20 percent compared to 10 years ago, while the value of Apple’s has grown tenfold over the same period.
Microsoft CEO Steve Ballmer appears to have his head in the sand regarding the significance of this moment in terms of the two companies. When asked for comment, he told Reuters news service:
It’s a long game, we have good competitors…we too are a very good competitor. We are executing very well and that is going to lead to great products and great success. I’m optimistic.
It sounds like Ballmer, once an outspoken and not very cautious CEO, has checked out, or is downright unwilling to look at the consequences of Apple’s success with the iPhone and now the iPad. Microsoft will continue to drift toward irrelevance as long as the attitude of business-as-usual prevails there. To quote Ballmer once again, “I won’t predict some massive change,” he said. “I don’t sort of foreshadow any change in direction. We just have to accelerate plans.”
I’m less concerned with what happens to Microsoft now, though, then I am with what happens to Apple. Unlike Microsoft, I think Apple has at its core a commitment to ongoing innovation, woven into the very fabric of the company by the strong oversight of Steve Jobs. And that will persist after he’s gone. But ongoing battles with Google (s goog) and Adobe (s adbe) tell a tale of a company whose industry agenda may still be geared towards being a niche player.
Apple is about control, even though Steve Jobs says quite the opposite in his open letter to Flash. Don’t get me wrong, I’m no big fan of Flash myself, but I do think that Apple’s intentions have more to do with controlling the nature and delivery vehicle of content than with encouraging openness. Otherwise it’d have backed Google’s VP8 open web video standard from the start. The kind of control Apple exerts works well for it as a niche player, but now that it’s arguably the most important tech company in the world, the same rules don’t apply.
Big stays big by being inclusive and cooperative, to a degree. Take Google, which works with so many partners it’s hard to keep track of, with the end goal of satisfied customers in mind. Microsoft, too, works with others more than it shuts them down, as long as the terms are favorable. Apple seems content to remain largely sheltered, even when it would be easier and more expedient to work with a partner. In fact, since the company started making its own chips with the iPad, it looks to be shutting down even further still.
Such an approach may provide some short-term gains, but rising competitors like Google will take advantage of the general bad feeling it will generate among other tech firms to form the kind of partnerships that helped elevate Microsoft to its loftiest heights 10 years ago. And Apple will still be at base camp, stubbornly refusing the aid of other climbers.
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