Market Strategy: Apple vs. Microsoft

There are those clever Mac vs. PC advertisements that Apple runs, but let’s talk about the big differences between computers.

This was brought home to me when I tried to do something that is a real snap for me on the Mac side. I reinstalled the operating system on a Dell XPS 200 desktop system. Easy-peasy on your average Mac, but a day-long expedition on the Windows side.

MacBooks in Apple StoreIt all boils down to the completely different market strategy that Apple uses. Apple takes a vertical approach to the computer industry. Not only does it build computers, it creates an operating system and software that runs on those computers, and (this is a new thing to us old Apple hands) it sells you the computer and software at an Apple Store.

Microsoft just sells software: It doesn’t make computers, and it doesn’t have it’s own retail stores all over the country. It does not have something like the iTunes Store, and it has no equivalent to the iPhone.

How does Microsoft survive?

First, a history lesson: Standard Oil practiced vertical integration. The Rockefellers owned the oil fields, the oil wells, the oil refineries, the fuel distribution network, and the gas stations where their products were sold. At every step along the way – from crude oil in the ground to gasoline in the tank of the car of the American consumer – Standard Oil owned it all.

Apple is organized in a similar fashion. This is an advantage to computer users, because while Apple enjoys a monopoly in its hardware and software combination, it does not hold a monopoly in the personal computer field.

Monopoly

Microsoft does own a monopoly in terms of its stranglehold in the operating system market. It you want to make computers, Apple will not let you license Mac OS X, but Microsoft will license Windows.

Instead of Apple’s vertical marketing, Microsoft has a pursued a horizontal monopoly on the PC market. As a result, Windows is the most widely used operating system for personal computers. The vast choice involving the many different types of computers using Windows is in sharp contrast with Apple’s simplified model line up.

Apple’s vertical approach means that the software it writes is designed for the hardware it makes. The old line is true – “it just works” – because the software and hardware are built by the same company.

Windows has to work on all sorts of hardware, and therein lies the rub. The reason my software reinstall on the Dell was long and time consuming (we are talking multiple discs here) was that in addition to putting Windows on the computer, I had to reinstall all the drivers. Apple is able to place all of its drivers on the install disc, because it has a known piece of hardware to run on. In the Microsoft world, the software has to be customized for all the different types of hardware it might be installed on.

That is the reason that Microsoft survives in spite of the fact that (IMHO) Apple has a better operating system and hardware. But there are some chinks in Microsoft’s armor. Apple has been enormously successfully in the past few years (many of us graybeards can remember Apple being on death’s door in 1996-98) and has gained market share as many new personal computer buyers view it as a viable alternative to the Microsoft hegemony.

Linux for Old PCs

And there is always Linux for Microsoft to worry about.

I recently installed Ubuntu on the Dell XPS 200. It is snappier than Windows, and I don’t have to deal with product registration numbers, legal restrictions, and installation headaches.

What Ubuntu also does is open the door for me to start to recycle old Windows hardware. If someone gives me an old Windows laptop, I can install Ubuntu on it for free. A whole new universe opens up!

But, as always, so little time, and so many old computers to recycle.

Keywords: #applemarketing #microsoftmarketing #monopoly #verticalintegration #horizontalintegration

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