Despite New Tablet Competition, Wide Gulf Separates Microsoft and Apple

Here's what Surface and Windows 8 say about why the companies are still very different animals

October 26, 2012 RSS Feed Print

Microsoft CEO Steve Ballmer gives his presentation at the launch of Microsoft Windows 8, in New York, Oct. 25, 2012. Windows 8 is the most dramatic overhaul of the personal computer market's dominant operating system in 17 years.

Today, customers can get their first taste of Windows 8, heralded as Microsoft's most sweeping overhaul of its popular operating system since Windows 95. The new system designed for a more tablet-centric marketplace is being released today, along with the Surface, the company's new tablet.

With the Surface, Microsoft puts itself in more direct competition with Apple, which announced its latest tablet offering, the iPad mini, this week.

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The companies are now competitors in computer, tablet, and phone markets, but are still separated by a wide gulf in many ways. Here's what the Windows 8 and Surface releases say about the disparities that remain between these two very different companies.

Different Kinds of Loyalty

Loyalty and Apple seem to go hand in hand — look no further than the long lines that greeted the iPhone 5. But Microsoft has its own broad customer base — Windows runs on more than 90 percent of desktops, according to technology data provider NetMarketShare. That familiarity brings with it its own type of loyalty that cuts both ways.

"Apple's customers are so loyal. And the loyalty that Apple has is second to none in the computer business," says Al Gillen, an analyst specializing in operating systems at technology market research firm IDC. "Microsoft has been loyal to its customers. That's a reason to believe that its customers will remain loyal to Microsoft."

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He says Microsoft's loyalty to its customers comes in the form of "backward compatibility"—allowing new systems and products to work with older products, like running an old version of Microsoft Word on Windows 7. That makes the transitional periods between Windows versions and new devices much longer than they might otherwise be, says Gillen.

"We're going to be talking about this transition years from now," he says, and the long transition won't come easy. "Microsoft being loyal to its customers has come with a considerable amount of pain and suffering."

While Windows RT (the Windows version designed specifically for devices like tablets that run on a specific type of processor) will generally not run old Windows programs, Windows 8 will allow many older programs to run, and it is still going to be possible to buy Windows 7 computers. The company was also careful to make Windows 8 less scary to change-phobes: a "desktop" mode allows the user to open a screen much like the one that Windows 7 and XP users see, minus the start button.

In contrast, he says, Apple tends to make a cleaner break from older technologies.

"Apple has a history of walking away from applications, walking away from personal devices," says Gillen. "It's just the way Apple does business."

Apple Jumps First

With the iPhone and iPad, Apple introduced two revolutionary products. Microsoft followed behind much later with the Windows Phone and now Surface.

It's true Microsoft has some catching up to do in the tablet market, but Microsoft is proving that Apple doesn't have the monopoly on innovation. The Surface tablet can be purchased with a magnetic keyboard cover that helps to make the device something like a hybrid between a laptop and a tablet. In introducing the device, along with an operating system designed for touchscreens, Microsoft is showing it's firmly committed to changing its business model — and, given its massive customer base, how people compute.

"This is Microsoft's vision of what the next generation of computing is," says Michael Gartenberg, a research director at market research firm Gartner. "If you look at Surface, it's an entirely different kind of device: the merging of tablets and computer in a new kind of experience."

The rollout also means Microsoft is looking to change its image, Gartenberg points out, innovating not only its products but how customers see the company.

"That's how you're going to judge the success of this: not necessarily by how many units of Windows 8 they sell but more importantly, how they reintroduce themselves to consumers," he says.

Microsoft Isn't "Cool" (Not That It Matters)

If Microsoft is revamping its image, it signals that the company's image needed revamping. According to Gillen, Microsoft's long-standing, widespread success did not make the brand hip and coveted in the same way that Apple is.

"I have to say that Microsoft lost the cool factor a while ago, and I think that Apple has successfully absorbed the position as the 'cool' vendor," says Gillen. "In that context Windows 8 has a pretty tall order ahead of it: restore Microsoft's coolness."

Still, being fashionable can only take a company so far, he adds.

"For the vast majority of customers out there, I'd have to argue that cool is not as important as functional."

Business IT departments, for example, care far more about functionality than fashion. Given Microsoft's willingness to let consumers adapt slowly, not to mention the fact that Office Suite is so widely used by schools and businesses, even the learning curve of a new interface might not trump users' broader comfort level with Microsoft's products.

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Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter @titonka or via E-mail at dkurtzleben@usnews.com.