Hardware and Software

Throughout their histories, Microsoft and Apple have had different strategies. Microsoft sells only software (WIndows, Office) but Apple sells hardware too (iMac, iPod, iPhone).

For a long time, Microsoft had the better strategy. It could focus on one thing - software - and build a dominating position in the space where most of the technology innovation happened. It could then dominate an ecosystem of hardware partners to help grow the PC market at double-digit growth.

Times have changed, leaving Apple's approach looking better (at least on the client side):

• New form factors arose - e.g. the smartphone - that require different types of software, focused on battery power and communications
• Hardware innovation became as important as software innovation, for example the iPhone touch screen, camera phone, satellite navigation, and Wii controller, leaving Microsoft struggling to catch up
• The establishment of common standards (e.g. HTML, ODF, USB) and common user interface paradigms removed barriers to change for the end user
• Open source competed with much proprietary software, but not with proprietary hardware
• PC operating systems became commoditised; what you really need is a good browser, and a few basic productivity apps

The biggest change is surely the internet - the client OS is becoming the browser. That means on the client side, hardware is just as important than software.

News in: Microsoft reconsiders its software only approach.

An integrated business model of making both device and software could make sense, executive tells investors at tech conference. Microsoft said on Tuesday that it is "not unreasonable" for the company to introduce a mobile phone combined with features of its Zune digital music player to compete with Apple's iPhone....

If that's true, Microsoft will have to turn the company on its head (again). And what about making their own laptops and PCs? Somehow I can't see it...