Apple vs. Microsoft Windows – lessons both failed to learn from each other

Often, it's execution, not concept. That's the problem...

Apple vs. Microsoft

Looking back both Apple and Microsoft (Disclosure: Microsoft is a client of the author) made pivotal strategic mistakes in their operating system strategies that the other firm did well.  In each case the company seemed to walk away with the idea that the strategy was bad when it was clearly, after analysis, that the execution was the problem.  Apple tried to both license the operating system in the 1990s and sell hardware, a practice that failed badly and Steve Jobs eliminated the effort.  

Microsoft tried to get the same operating system to work on PCs and Smartphones and that failed equally badly and has mostly been shut down as well.  However, the Microsoft Surface line of products has been surprisingly successful, and Apple’s sales of the iPad Pro, which is more of laptop than a tablet in use, has been doing very well showcasing that the idea was viable but the execution was at fault.

Let’s talk about the approach each firm took that was different than the other and why one firm could succeed after the other firm failed with basically the same conceptual idea.

Apple: you can license and sell hardware, but…

But the hardware should be well differentiated and high quality.  When Apple was trying to both license the MacOS and sell hardware the one thing we tend to forget is that, back then, Apple hardware sucked.  Even Steve Jobs, before he took the company back over, was outspoken about how badly it sucked.  So, folks started buying better built or cheaper hardware from third parties and Apple bled hardware sales.  

Steve had to shut down all those secondary suppliers because even with massively higher margins the operating system just wasn’t generating enough profit to sustain the company.  But the problem wasn’t the concept it was that Apple just wasn’t competitive at the time with the third-party hardware running the OS, something Jobs eventually fixed. 

Conversely, Microsoft Surface products are considered some of the best built in the segment, outranking Apple, and differentiated as the most Apple like of all the Windows products in market.   As a result, their hardware does just fine and their operating system revenue has been increasing as well.  This means if the hardware is in line with Apple’s current high quality effort you could both license the OS successfully at high margins and sell hardware.  The irony is that Microsoft is successful largely because they emulated Apple’s current quality.  In short, by emulating Apple they did what Apple could not. 

Microsoft: you can have an OS that goes from smartphone to PC, but…

Microsoft tried to have the same OS go from PCs to smartphones even going as far as buying Nokia’s business to get the needed Smartphone sales volume.  Not only was this effort unsuccessful for Smartphone it resulted in Windows 8, which was one of the least popular OS versions that Microsoft ever tried to sell.  This effort did massive damage to PC sales and sank the Microsoft’s Nokia Smartphone unit.  The effort pretty much died ugly. 

The problem was two-fold, taking something that was designed to run on a high-performance platform like x86 and ramming it down to a lower performance platform like ARM created huge performance problems.  One was there was not performance headroom for an emulator so the applications had to be recompiled and the other was that the apps were designed for performance and screen sizes the Smartphone couldn’t deliver.  

Instead of taking the MacOS and scaling it down, Apple took iOS and allowed it to scale up.  It is far easier to take something that was low power and put it on more powerful hardware than it is to take something that was high performance and get it to run well on a vastly lower power platform with a smaller screen.  In addition, Apple didn’t change processors so even though they could have run an emulator or virtual machine on an X86 version of iOS by using ARM on both they didn’t have to reducing the complexity and assuring the apps were fully portable without having to recompile them. 

Microsoft had two viable paths, come up with a new ARM based OS focused on the phone and migrate it up to PCs like Apple did or partner with Intel to create an x86 platform that would perform in a Smartphone.  Intel did create the latter but Microsoft never supported it and both Intel and Microsoft’s Smartphone efforts failed.    The irony here is that Microsoft’s success with Windows was due to historic partnership with Intel, both largely failed because they chose not to repeat what had been successful in the past.  In short, they failed because they didn’t emulate Bill Gate’s Microsoft. 

Wrapping up: execution over concept

This is a common problem, a firm comes up with a viable idea but doesn’t think it through or under resources it so it fails, concluding the idea was bad when, more often it was the execution.   IBM had the first idea for a Smartphone and Philips had an iPhone concept 5 years before Apple but Apple fully executed and became the most valuable tech company in the world.  Microsoft came up with the first high volume tablet but it sucked as a tablet while Apple did the iPad better.   GM had a viable electric car decades before Tesla out executed them and became the most valuable car company for a while.   Palm tried to license their Smartphone OS and failed badly only to watch Google do it and basically take the market away from Apple. 

The lasting lesson is rather than throwing out an idea when it fails, analyse the failure, and then conclude whether it is the idea, or the execution, that was the cause.  In virtually every case I’ve been brought in on it was the execution, not the idea, that was at fault. 

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