Analyst Opinion - While many of us are consumed by Apple’s WWDC 2008, we have to remind ourselves that there is another big (actually bigger) event going on Microsoft’s TechEd. In many ways, these two conferences define both companies and reveal how different they actually are: TechEd is for IT buyers and Apple’s conference is focused on developers. Microsoft has about 10,000 attending its event Apple reports about 5,000 at their event both numbers are impressively large.
I am actually writing this article from TechEd in Orlando, Florida, while being wirelessly connected so I can observe what is announced at the WWDC. And because I am at the Microsoft event and not at the Apple event, I will focus more on what Microsoft is presenting today to what is initially an audience of Analysts as the main show doesn’t kick off until tomorrow. (Apple WWDC coverage on TG Daily can be found here.)
Apple and Microsoft shifts
Right off the bat, Apple is focusing on its desktop and cell phone platforms announcing Snow Leopard and the second generation of the iPhone while Microsoft is focused on its server offerings - and mentioned its desktop and cellphone offerings only in passing. A lot of what Microsoft concentrates on at this event is software oriented architecture, which reflects a major change in how the company builds and deliver solutions. WWDC is a showcase of a shifting focus for Apple from PCs to cellphones, which reflects how Apple builds and delivers applications as well.
The biggest ongoing shift at Microsoft is the focus on interoperability. Microsoft AdCenter, Windows Live ID, Virtual Earth, Popfly, Biztalk, SQL, Windows Server Active Directory, Silverlight, Visual Studio, .Net, and Exchange are all being discussed as major parts of the Microsoft’s cloud-based service oriented architecture strategy.
Spearheading the interoperability is a guy named Samir Ramji who has a passion for the concept of "open" applied to code disclosure and collaboration. He represents a powerful new transparency force in Microsoft, which is gaining momentum, while the ownership beliefs remain dominant. But you hardly can miss this change as one of the most significant these days at Microsoft.
Both Apple and Microsoft are talking about interoperability, but it is interesting to note that Microsoft isn’t making fun of the companies or technologies they are interoperating with, realizing that buyers simply want their stuff to work. Apple, while clearly interoperating with Microsoft, is throwing out phrases such as "ActiveStink" (hinting to Microsoft’s Active Sync) while they showcase new services. This suggests both firms are in different places with respect to professional buyers. Microsoft has learned the hard way that attacking folks they need to work with is a bad idea when talking interoperability. It appears that Apple still needs to learn this lesson.
Moving to the web, Microsoft accelerates Apple retrenches
Tim O’Brien, the senior director of the platform strategy group at Microsoft, pointed out that the company is moving aggressively to a software-as-a-service (SaaS)model. Apple’s effort to make future iPhone applications only available on the web (through Safari) did not work and the company is clearly now operating on a more traditional-device centric application model. To Apple’s credit, leadership quickly realized they had screwed up and shifted resources to creating one of the highest quality developer processes - one that puts Apple in the loop to ensure quality.
This is particularly interesting, because Apple generally gets it right first when it comes to devices and normally has enough control over their environment to drive most major changes before the rest of the industry can execute. In this instance, they did not and this was used as an example of why Microsoft is not exclusively moving to SaaS, but using a blended approach with a large number of Microsoft developers focused both on client side development and the more trendy service-oriented architecture efforts. Effectively, Microsoft appears to have learned a fundamental lesson by watching Apple fail and didn’t need to learn this one the hard way.
Read on the next page: Microsoft in the cloud; Apple in transit
Microsoft in the cloud; Apple in transit
Examples of cloud-based offerings from Microsoft now include Windows Live, Office Live, Microsoft Dynamic CRM Online, Office SharePoint Online, Exchange Online, Office Communications Online, Office Live Workspace, Xbox Live, Windows Live OneCare, Exchange Hosted Services, and Forefront Security. Building blocks for the future included Live Mesh, Silverlight Streaming, Virtual Earth, SQL Data Services, and BizTalk Services. These components last are in various forms of pre-release phases (mostly beta cycles) with product releases scheduled for the next several months.
Perhaps the better comparison here would be with Google and not with Apple, because Google is thought of as a company that exists in the cloud and is aggressively building out cloud-based offerings. Google has an advantage as they can start from scratch and don’t have to be worried about cannibalizing existing revenue streams. Microsoft continues with the advantage of breadth and a much richer number of applications and platforms that can be moved to the web. The presentation covering this topic demonstrated the positional advantage an entrenched vendor can have, if it aggressively goes after a new opportunity. While Microsoft is by no means out of the woods, this long list of in-process and converted applications demonstrated that Microsoft is not being beat and, in terms of web application depth and maturity, the company may have a clear lead.
Apple really doesn’t yet have much in terms of hosted or web based applications yet and I wonder if that does not represent a significant and increasing disadvantage. However, Apple seems to be addressing this by making use of Microsoft’s own efforts with the recent licensing of Exchange technology as an example. However, without Flash or Silverlight, I doubt that will be enough. It is interesting to note that Apple is aggressive with regard to advanced push technology to deal with its severe battery deficiency. But this feature will not be available until September, which indicates that it is a difficult feature to get done.
On the other hand, Apple will be implementing a Microsoft Mesh-like capability that aggressively uses the cloud and is more advanced in use than what Microsoft has in production (Mesh appears to be more advanced, but is still in beta).
These two events aren’t very similar, they are both very targeted at completely different groups and they showcase the strengths of each company. For Microsoft, this is in the back office, on servers and tools where interoperability and security are critical. Microsoft’s own financials indicate they are doing well here and the growth numbers, at least with regard to revenue and profitability, suggest they are the company to beat.
For Apple, they are the master of marketing and personal technology. They did not talk much about Snow Leopard yet and we do not expect the software to come until late 2009. Interestingly, the 3G iPhone appeared to be both a home run and late. It hit on price and capability but much of this capability won’t show up until September and the phone itself won’t show up for another month.
Analysts in Orlando are challenging Microsoft on most major points and often seem unconvinced even though it really does look like the company has established leadership in many areas and Microsoft has a number of corporate customers here that appear to validate this leadership. Apple has announced a major product, which will incomplete when it arrives and about a month late, yet none of the initial coverage showcases this. That is the power of Steve Jobs and Apple’s ability to control the news that surrounds their activities.
Microsoft could learn a lot from Apple in marketing, excitement building, and product presentation. Apple could learn a lot from Microsoft in terms of interoperability, security, and cloud computing. If either company fully embraced the strengths of the other, the result would likely be really interesting, and perhaps unstoppable.
Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently he provides his services to most of the major technology and media companies.