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  • Yes, Microsoft Loves Apple’s — Money!

    March 25th, 2008

    When you see the names Apple and Microsoft, you are probably reminded of a great war between two technology giants, may the better company survive. Of course, in the real world, that’s not really what’s happening. In fact, these two companies have a long, if shaky history of actually working together when it suits their mutual purposes.

    Take the ongoing development of Microsoft Office for the Mac. Microsoft’s 200-member Mac Business Unit is regarded as the largest independent developer of Mac software on the planet. Whether you like Office or not, it is an industry standard, and the Mac version is generally regarded as, in most respects anyway, superior to the Windows edition. It’s also a cash cow for Microsoft, delivering an estimated $200 million in profits every single year. So Microsoft keeps it going.

    But make no mistake about it. Should the day come when Mac users prefer iWork or another Office alternative, you can bet that Microsoft will drop their Mac Office like a hot potato and redeploy the Mac BU to other departments in the company, or to the unemployment lines.

    Now Microsoft is eyeing the arrival of the iPhone with dollar signs in their eyes. First, they made a deal with Apple to license ActiveSync for the iPhone. This means, come the release of iPhone 2.0 firmware in June, that you’ll have full support for a company’s Exchange email. What’s more, they’re busy looking over the iPhone SDK for possible application opportunities — applications you’ll be able to download, for a price of course.

    Now doesn’t that put Microsoft’s own mobile initiative at somewhat of a disadvantage? Perhaps, but that’s no the point. You see, Microsoft earns the big bucks from Exchange Server licensing. In that universe, paying ten grand per company and lots more isn’t out of the question. So knowing the iPhone can access corporate email using Microsoft’s software will only encourage wider adoption of the package. So Microsoft’s bottom line is boosted. How much of an effect this might have probably isn’t certain, but as the iPhone spreads into the enterprise in the coming months, you can bet that corporations will seriously consider the Exchange alternative knowing it’s fully compatible.

    I only wonder, in passing, why Entourage 2008 apparently doesn’t deliver 100% Exchange support, but I suppose it’s close enough not to concern most users. Or am I wrong? Well, if I am, I know you’ll be happy to correct me.

    Another way Apple has really helped Microsoft is with the switch to Intel processors. Sure, that essentially killed development of Virtual PC for the Mac, but the truth is that Parallels acted so quickly in building a credible virtual machine alternative that Microsoft didn’t have time to compete. They don’t spin on a dime.

    But no matter. Every sale for Parallels Desktop or VMWare Fusion means a potential sale for a retail Windows XP or Vista license. No, not 100%. Some of you already have valid Windows licenses, or prefer to run a Linux distribution or a different operating system instead. But certainly a lot of Mac switchers require Windows, if only as a crutch. That’s good news for Microsoft, since it earns far more money from retail licensing than from OEMs, where PC makers pay a mere fraction of the regular Windows pricetag.

    So you can see that the greedy part of Microsoft’s leadership — and it’s a huge part — is enjoying the fact that more and more Macs are being sold at the expense of Windows boxes. Another factor: When it comes to something like Office for the Mac, support costs are far less too. That means that a larger portion of the dollars they receive can be used for purposes other than paying support people.

    Now when it comes to the renewed browser wars, just how do companies profit from something that’s supposedly free? Well, with Microsoft, by attempting to enforce proprietary standards, they increase sales for their own products. With Apple and Mozilla, they get a little of that pay-per-click money from using a search engine embedded in the browser. Apple restricts the choice to Google and only Google, whereas Firefox gives you Yahoo, Answers and some others. In each case, your use of those search engines and, one hopes, clicking on one of the ads that appear in a search window, helps enrich them even further.

    In short, neither Apple nor Mozilla are losing so much as a dime in providing free software. Together, they help enforce compliance with industry standards. As to Microsoft, well, one attempt to stem the erosion of Internet Explorer’s market share is version 8, now in public beta. That application promises improved support for those same Web standards. This means, if there’s widespread adoption of the new version of course, that Web developers won’t have to work so hard developing custom versions of their code to work in MSIE.

    Now I don’t have to do a lot to make my sites compatible. But I also have better things to do with my time.

    Meantime, so long as Apple can help enrich Microsoft, these two titular rivals will remain fast friends.



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    7 Responses to “Yes, Microsoft Loves Apple’s — Money!”

    1. Spencerian says:

      I agree. It’s really a win-win for both companies. Apple gains revenue from hardware, leveraging their software to make an attractive product. Microsoft leverages their enterprise domination with software with standards that most offices support, often taking advantage of any hardware available that can meet that purpose. ActiveSync support was a no-brainer, and a very good Apple decision to start the world of iPhone 2.0.

      I suspect that, based on MS official comments, that Microsoft, too, sees dollar signs for what it, too, considers a new platform. Unlike the Zune wars, Microsoft knows how crowded that market is and would rather enter the fight as supplier to the iPhone, as it does to many many other phones.

      Microsoft’s real challenge is not to create iPhone apps so attractive that their own smartphones are left pale by comparison. But then, it’s not the first time Microsoft would drop its own standards in favor of another (i.e., PlaysForSure). Or, perhaps they feel they can influence the market by showing (through iPhones) that, “Hey, Windows Mobile and our apps would look better if your phone would actually work like an iPhone.”

      For now, I suspect MS will develop happily in both camps, watch the winds of change, and adjust their financial-development sails as needed.

    2. MichaelT says:

      I think the biggest advantage Microsoft attains through the iPhone is that now Steve Ballmer doesn’t have to carry around a Zune. He can carry an iPhone instead, and not feel guilty, since it has Exchange. (And the iPod, which he’s probably always wanted anyway!)

      As for the browsers, I look forward to seeing IE8 come out. If it is truly standards compliant, then it will slowly kill off the old proprietary-driven sites and we’ll all get along much better. I hear good things about IE8, and making its behavior the default (instead of defaulting to IE7 behavior) shows that Microsoft is FINALLY putting standards above money. Or at least they’ve realized what they’ll have to do to compete against the other browsers.

      I don’t know whether we need IE (I guess more competition is a good thing), but as long as I don’t have to worry about how my sites look in IE compared to standards-based browsers, I welcome it.

    3. Aaron says:

      Gene,

      Just a point of clairfication, ActiveSync will not only work with Exchange but will work with other Mailservers that support the ActiveSync protocol.

    4. Gene,

      Just a point of clairfication, ActiveSync will not only work with Exchange but will work with other Mailservers that support the ActiveSync protocol.

      Sure, but the emphasis is on Exchange, of course. 🙂

      Peace,
      Gene

    5. Seth says:

      Hey Gene,

      As an IT administrator and MS Office deployer, I’d have to disagree with your statement in the beginning about Mac Office being better than PC Office. Powerpoint desn’t have all the toys on Mac. Excel has way more functions. Word? Macros. And Outlook vs. Entourage? No contest in the business world. Entourage is way dumbed down – almost like Outlook Express.

      Microsoft builds great products for Mac but they always cripple them so that the Windows alternative is better – and they always will. However, until a Mac Office suite (iWork?) comes along and makes a better Office, we are stuck.

    6. Spencerian says:

      Hey Gene,

      As an IT administrator and MS Office deployer, I’d have to disagree with your statement in the beginning about Mac Office being better than PC Office. Powerpoint desn’t have all the toys on Mac. Excel has way more functions. Word? Macros. And Outlook vs. Entourage? No contest in the business world. Entourage is way dumbed down – almost like Outlook Express.

      Microsoft builds great products for Mac but they always cripple them so that the Windows alternative is better – and they always will. However, until a Mac Office suite (iWork?) comes along and makes a better Office, we are stuck.

      It should be noted that, before Windows existed, Microsoft Word and Excel existed. For Macs.

      In my opinion, much of the functionality wars happen due to standards in-fighting. PowerPoint is the best example as it is the least compatible sibling of its Windows counterpart. Microsoft and Apple use different graphic and multimedia formats, requiring PowerPoint to try (and fail) to support QuickTime and Windows Metafile/WMF data. Exchangeable files between a Windows user and Mac user are often mangled because of this. Vestigial results of the old OS wars, it seems.

      But the question Seth asks has some validity, although my experience tells me the likely answer: Why aren’t the Windows and Mac versions of Office in full parity?

      Anyone who’s used Word for Macintosh 6.0 can tell you the answer to that question. Microsoft applications port very, very poorly historically. When ported, they are limited in features or function as either the frameworks used in Windows don’t exist (or work slowly or erratically) on the Mac side. The old Windows Media Player for Mac could open files and stream a bit, but was a poor showing to its Windows version.

      In a way, with the exception of Entourage, it’s probably a good thing we don’t have complete parity. Microsoft code also historically introduces system vulnerabilities that were easily exploited through malware…a condition that doesn’t yet exist in Mac OS X.

    7. I remember the Word 6.0 debacle well. I was writing a book, with a chapter on Word tips, and Microsoft gave me prerelease versions to use. I complained about problems, mostly on deaf ears. Of course, the customers complained and finally they listened, more or less.

      Then again Office 2008 applications take as long or longer to launch that Word 6.0, even on the fastest Mac Pros on the planet. 🙁

      Peace,
      Gene

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