Microsoft to be hit by an Apple?

Robert X. Cringely makes some interesting observations on the current state of tension between Microsoft and Google.

On the one hand, he makes a good point that Google are still running fit on adolescent energy, and relates to an enlightening comment by Max Levchin on product development:

Google won’t buy Skype. Google prefers to build rather than buy. And when they do buy, what they are buying is market position, and generally at a fairly low price…

What Google WILL do is roll-out incremental products at a blinding pace. Not long ago, PayPal co-founder Max Levchin explained to me that rapid development is an important key to market dominance.

“What you want to do,” he said, “is listen to your customers and bring out every two weeks improved versions that would each take your competitor two months to complete. That’s when you are on a rocket — they can’t keep up so they can’t compete. They lose hope and pretty soon you have the market pretty much to yourself.”

However, after showing how Google can threaten Microsoft profits, Robert then rounds off with a claim that it is actually Apple who are all set to deliver a royal kick to the nuts.

As he puts it:

Microsoft is woefully late with its next Windows upgrade, while Apple is far ahead with even the current version of OS X. Apple is moving to Intel processors and hackers have already shown that OS X can run fine on non-Apple hardware. But Apple doesn’t want to give up its profitable hardware business to compete head-to-head with Microsoft. And remember, Apple totally dominates the portable music player market and will probably sell 25 million iPods or more this year.

Every one of those iPods is a bootable drive. What if Apple introduces OS 10.5, its next super-duper operating system release, and at the same time starts loading FOR FREE the current operating system version — OS 10.4 — on every new iPod in a version that runs on generic Intel boxes? What if they also make 10.4 a free download through the iTunes Music Store?

It wouldn’t kill Microsoft, but it would hurt the company, both emotionally and materially. And it wouldn’t hurt Apple at all.

However, what Robert is perhaps over-simplifying and not factoring into his equation is the very dynamic nature of the internet and its markets itself - just as Google may be the adolescent company running on young energy to establish a market share to mature over, so is the internet still less than an adolescent medium, with the different corporates falling over each other to develop most profitably.

It is the immature nature of the internet itself that allows the markets to be so dynamic - and it is that level of dynamism that means that just because Apple may be able to deliver one kick at Microsoft, doesn’t mean to say that Microsoft can’t give Apple a bigger kick in the groin.

The New York Times, in one of those annoying good articles that will soon be closed to non-subscribers, makes a great point of showing Apple’s vulnerability in the music markets - on the one hand, Apple is facing a tantrum from the music industry giants, as Sony and BMG withhold distribution rights unless Apple concedes to a variable pricing structure instead of a flat 99c pricing model.

Perhaps more seriously though:

Even some music executives who favor altering the iTunes service doubt that they will be able to force Mr. Jobs’ hand by withholding their music. Instead, they are counting the months until the major wireless phone carriers enter the business of selling songs to mobile phone customers. Since there are many more mobile phones in use than there are iPods, the industry thinking goes, the arrival of a broad mobile music market will erode the leverage Mr. Jobs now holds.

And we all know whose digital format that music will be available in. Microsoft.

Apple can offer all the iPods they want, but Microsoft will regain a heavy share of the market precisely because they have spent so long making themselves not simply a key part of the digital age, but especially an essential component of digital media.

This is what Google are fighting so hard to become a part of, not simply to rival Microsoft for that battle’s sake, but simply because Microsoft have already laid so many foundations in so many key places.

Meanwhile, the internet remains an immature market…