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Apple Versus Microsoft: The Great War Enters a New Phase

Here’s where we left off in the 1990s: Apple CEO Steve Jobs, then with the word “interim” ahead of his title, conceded that the operating system wars were over and Microsoft was victorious. It doesn’t matter if Microsoft cheated to get there — and I think they did. In the end, Apple was doomed to be no better than second best, and, at that point in time accepted a $150 million dollar investment from Microsoft and a commitment to continue to develop Office for the Mac.

Now some felt, then at least, that Microsoft’s investment somehow rescued Apple from financial ruin, but that was simply not true. It was merely part of a deal where various disputes over patents that had consumed years of legal fights were all brought to successful conclusions.

Oh yes, Apple agreed to make Internet Explorer the default browser on the Mac OS, but we all know how long that lasted. But I’ve already written about the rise of Safari and whether the browser wars have flamed anew. Some of you think they have, actually.

In any case, Apple seemed doomed to niche status, until things changed drastically before Microsoft really noticed.

As Mac development moved at a reasonably rapid pace, Apple’s market share seemed to languish, although profits remained good. However, the arrival of the iPod put Apple in a whole new ballgame. Here’s where Microsoft’s traditional schemes to conquer markets simply didn’t succeed, or maybe they just reacted too late. But Microsoft has always had difficulty succeeding outside of its core market of applications and operating systems.

One day, Apple found itself at the very top of the digital music space, with more customers on the Windows side than on the Mac. iTunes, in fact, recently became the number one music retailer in the U.S., ahead of even Wal-Mart and Amazon.

Microsoft? Well, I think they got themselves pretty much blindsided here, because I don’t think they ever expected Apple to top them in any way. Their efforts to compete, first with various incarnations of their PlaysForSure DRM initiative, and finally with the Zune, were abject failures. Sure, I gather the Zune actually got itself a niche market of a few percent and is holding steady, but imitating a two-year-old iPod really isn’t the way to go.

As far as the iPhone is concerned, well, Microsoft is taking money from Apple to provide ActiveSync technology, which means that this hot-selling gadget will be a full citizen in retrieving Exchange email, calendars and all the rest. I just wonder whether Apple wants to do the same for Macs, or simply compete with various open source tools in Leopard Server.

Microsoft’s advantage, of course, is to sell more of those costly Enterprise server licenses, while the deal gives Apple plenty of credibility in its quest to convert big business from the BlackBerry to the iPhone.

At the same time, Microsoft’s Mac Business still makes plenty of cash selling Office for the Mac. What a strange relationship, though when money is involved, even supposed enemies can find ways to cooperate. The higher the figures, the easier it is to get along.

In the end, though, you wonder how the Mac versus PC wars will continue to play out over time. After all, sales of Macs are going through the roof, and it’s not just because of the arrival of the MacBook Air and the recent updates to the MacBook and MacBook Pro. Even though some of you have criticized Apple for supplying just glossy screens on the latest iMac, they are apparently selling quite well too, thank you. The iMac’s growing success comes at a time when sales of desktop computers are actually tapering off industrywide. So Apple has something good going for them.

While this is happening, what’s Microsoft doing about it? Well, it seems to me their attention is actually elsewhere, as Steve Ballmer continues his great quest to absorb Yahoo and provide real competition to the growing influence of Google.

Now it doesn’t appear to me that Apple has much of an interest in the outcome of the Microsoft and Yahoo skirmish, so long as the end result doesn’t somehow make Macs a poor stepchild in any new online or software products and services.

As to Google, the news about making its App Engine freely available to Web developers has to be causing Microsoft conniptions. Consider how Microsoft spent years pushing its .Net initiative — and, frankly, trying to explain what it is. Just how are they going to be impacted by the latest Google encroachment on their territory?

In the end, while Microsoft plays second fiddle in the great war to become an online powerhouse, Apple can do what it’s doing and get a higher and higher share of the personal computer market. I wonder if Steve Jobs and the rest of Apple’s executive team are hoping Microsoft will continue to focus the lion’s share of attention elsewhere. That could be the best news of all for Apple.