Why Microsoft is trying to emulate Apple

I happened to be visiting the Apple campus at a time in 1997 when the company was $1 billion in the red. Gil Amelio was the CEO and was tasked with cleaning up the missteps of Michael Spindler, the previous head of the company. The news that Apple was in such deep debt had everyone on edge, and the mood was pretty sombre that day as I spoke to many employees who were concerned about both their future and Apple's.

Rumours were circulating that Amelio had cut a deal with Steve Jobs' NeXT computer company, licensing its OS to serve as the underlying software architecture of its future operating system. Remember, Steve Jobs had been fired from Apple in 1984 and his NeXT computer company, which was his next venture, was not exactly successful. As you can imagine, the Apple employees had mixed emotions about Steve Jobs' potential return, even if it was just as a large shareholder.

I had spoken with the bubbly receptionist in the front lobby of Building One on the Infinite Loop at Apple's headquarters dozens of times over the years – she was the type of person that could make any visitor feel welcome – but I particularly recall our exchange on this day. She told me that Jobs' return would be great and that she had faith that he could help Apple make a comeback. At the time, I thought that this was just wishful thinking, but history shows that her instincts were right.

Starting in 1997 when Jobs actually took over as what he called "iCEO" (meaning interim CEO), he put Apple on a path not only to recovery but to unparalleled success.

And his approach was legendary. He hinted at his strategy during his MacWorld keynote in January 2001 when he explained that he envisioned the Mac at the centre of the digital lifestyle. It would serve as a vehicle to access content and manage other digital devices as part of a connected consumer experience. Then, on 23 October, 2001, he introduced the iPod and the concept of side-loading managed music from the Mac to the iPod, which underscored his Mac-to-digital device idea.

Right then, Apple began its climb to the company that we now know – one that delivers hardware, software and services better than anyone else. Six years later, Jobs expanded this vision with the iPhone and in 2010, he added the iPad to his managed devices offerings. With each launch, he started with the Mac as the focus and used side-loading to manage content. In 2010, he moved his vision from the Mac as the hub of the digital lifestyle to the iCloud. In the end, Apple owns the hardware, software, and services platform that all of its products are aligned with and makes the synchronisation and transfer of personal content seamless.

Soon, the industry began to understand full well Apple's strategy and, amazingly, not one PC company started its own hardware, software, and services ecosystem to potentially counter Apple. This is a key reason that HP, Dell, and most of the PC vendors are struggling today; all they can offer is the hardware, when the real way to own customers is to tie them to a platform through the OS and services.

Interestingly, two companies did go to school on Apple: Amazon and Google. While they don't rival Apple's great hardware designs, rich operating systems, and service offerings, they are at least racing toward a model that uses their services to help them own the customer.

This is why Amazon created its own tablet and I am sure it will add a smartphone to its hardware line-up in the near future (as rumours have suggested). Amazon and Google realise that tablets and smartphones are roadways into broad service offerings. Amazon, for that reason, is fine not profiting on its tablets because it makes the money up on the products and services people buy through the hardware.

Microsoft follows...

Now, 11 years after Steve Jobs laid out his plans for a connected world, Microsoft is finally going down a similar path. It started with the Xbox and made its own branded hardware, tying it to its Xbox online services. Its Surface tablet has been designed with this in mind, too.

In a recent note to shareholders, Microsoft CEO Steve Ballmer implied that Microsoft has to be more Apple-like, a clear nod to the fact that to be successful in the future, a company must control the hardware, software, and services it offers its customers.

For Microsoft, this is a tricky road to travel. Microsoft became a powerhouse off the backs of the PC companies and Intel and AMD, which supported its OS platform. But for Microsoft to truly be competitive, it should design and own the platform itself since it can't always count on its hardware partners for support. Indeed, many of its partners also have Android devices and their loyalty to Microsoft is not as strong as it had been when it was just a WinTel world.

The OEMs are already reeling because Microsoft made its own branded Surface tablet/hybrid, and its Windows Phone partners fully expect Microsoft to unveil a smartphone shortly. Personally, I would not be surprised if it announced its own laptop because Redmond feels its partners aren't totally committed given the dynamic changes in the market. Considering the problems of some of its PC vendors, Microsoft may even think that either some consolidation will take place or that some will get out of the PC business altogether, as IBM did in 2005.

This is why Microsoft wants to be more like Apple. Apple's formula for success today is also the formula for success in the future. Therefore, it is in Microsoft's best interests to drive down a path where it has full control of its hardware, software, and services. Apple has an 11 year lead on Microsoft, and Amazon and Google are also way ahead when it comes to a controlling ecosystem. But I believe Microsoft knows this is crucial to survive and in the future, it will be much more like Apple than the lone maverick it is today.

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