Two tech titans are still brushing off their confetti and digesting their cake after a pair of weekend milestones. Microsoft marked its 35th birthday on Sunday. Apple turned 34 late last week and then, Saturday, unwrapped its iPad.
But as the two rivals rumble toward middle age, their brands somehow seem years apart. Among many consumers, their corporate images represent a clash between frumpy and fresh.
Microsoft, to some, appears a tad flabby in the middle — a Chrysler Town & Country driver with a 9 p.m. bedtime. Apple, in some eyes, looks sleeker and younger — a hipster in ragtop Beemer packed with chic friends sporting mobile toys.
And as predawn queues formed Saturday to snatch the first iPad tablets from store shelves, Apple perhaps even bolstered its fashionable geek cred.
In marketing, “we have an expression for it — the ‘coolness factor,’ ” said Ellen Lytle, a former advertising exec before becoming a graphic design professor at colleges in Kentucky, Ohio and Georgia. “Microsoft has no ‘coolness factor’ and Apple is all about it.”
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With its iPod, iPhone and its latest gadget, “Apple has embraced its perception as a niche company, and has maintained complete control over all hardware — which tends to be how people make their lasting, visual snap decisions,” said Daniel Ruby, research director at Chitika, Inc., a Westborough, Mass.-based online advertising network.
Microsoft, meanwhile, allowed Hewlett-Packard, Dell and Gateway to determine the look and feel of many of its products, Ruby said, and that “is the single biggest factor in their perception as the middle-aged company with a paunch and a minivan.”
Branding sense means dollars. On current accounting ledgers, Microsoft overshadows Apple: Microsoft’s market cap is $256.97 billion; Apple’s is $214.09 billion. But Apple is getting awfully big — awfully fast — in Microsoft’s rearview mirror. Consider that a decade ago Microsoft’s market cap was almost $590 billion and Apple’s was about $16 billion.
And just last week Apple surpassed Wal-mart to become the third biggest company in the United States. Microsoft is ranked second, behind Exxon.
If iPad is a consumer smash, some market analysts envision Apple’s stock price touching $300 per share. (Apple’s shares are $236.1 in midmorning trading on April 5). If that happens, Apple’s market cap would reach $270 billion, eclipsing Microsoft’s — if its cap were to remain stagnant.
Market cap, one method for measuring a company’s value, may represent the real chase. Among some tech insiders, however, bets on the ultimate winner are all over the board — with many prognosticator linking their forecasts to the potential rise of the iPad — or to long-term, lukewarm reactions to the new tablet.
“The difference between the two companies is that Apple has been fearless about transformational change while Microsoft has been reluctant to leave its past behind,” said Casey Ayers, president of MegatonApps in Jacksonville, Fla. His company soon will release its first iPad app, “Multitaskers” which includes a calculator, ruler, lantern, stopwatch and five more functions.
“Microsoft has always been loath to change and risk alienating some of its customers, but its inability to leave the past behind has left their product line bloated and dysfunctional,” Ayers said. “Yet iPhone completely changed the mobile space forever. Apple doesn't blink at making unpopular decisions if it believes they will result in a better end product. ... It's just a matter of time now before Apple blows past Microsoft's market cap.”
But the opposite-trending market caps are merely snapshots of a point in time — not the finish line, argues, Marco Tabini, CEO of Blue Parabola, a Toronto IT consulting company.
“Apple ... grows and evolves by leaps and bounds; they need to continuously push products that must be perceived as breaking new ground in order to sustain their momentum,” Tabini said. “And while they've done an excellent job so far, sooner or later they're going to have to switch gears. Microsoft, on the other hand, has already been through that phase and has established a solid market position and a business model that now tends to grow in a more evolutionary way.”
“Has Apple closed the gap? Sure. Great advertising, fantastic product,” added Nelson Bates, an Orlando, Fla.-based web entrepreneur and author of “Best Website: Simple Steps to Successful Websites.” “But (Apple has) a long way to go to dislodge Microsoft's 91 percent market share hold ... (Microsoft) knows Apple is there. They're not scared just yet though.”
Will Apple — via iPad — eventually pass Microsoft in market cap? “I don't think it will happen,” Bates said. “Microsoft has proven to be a tough competitor and it would take a nasty trip-up by them to aid in closing the [$42.8 billion] gap at a time when Microsoft has actually regrouped nicely.”
Indeed, Microsoft has taken a crispy bite out of Apple’s fan base with its popular iPhone Bing app and has “made strides” in the branding battle, Bates said, with its “Windows 7 was my idea” TV ads.
“Apple has landed some fantastic punches in the last four years, but the new ads Microsoft has ... are finally on par with relevancy and hipness presenting their software in a much more personable way,” Bates said. “It's no doubt a brilliant fight between ad agencies” — Microsoft’s Crispin Porter + Bogusky versus Apple's TBWA\Chiat\Day.
But this epic image war — Apple versus Microsoft, Mac versus PC — is not, at its core, simply about what’s cool and what’s not, contends Jean Westcott, co-author of “Digitally Daunted: The Consumer's Guide to Taking Control of the Technology in Your Life.” The two companies are simply fighting to lure two distinct, critical demographic groups.
“Among the next generations, GenX and the Millennials, there is not a clear line between cool and uncool. It is two different types of appeal,” Westcott said. “MS is coke, Apple is Pepsi. MS is McDonalds and Chipotle, Apple is Burger King and Baja Fresh. MS is Ford, Apple is VW. It is two different camps and each thinks of itself as being smarter than the other.”
So while Apple cheered its opening weekend of iPad sales, what wish Microsoft should have made when it blew out its birthday candles Sunday?
“More than anything, Microsoft's birthday wish should be for fearless leadership,” said app maker Ayers. “Without someone at the top who feels an urgency to constantly innovate in meaningful ways, Microsoft will shrink and become less relevant with each birthday to come.”