Back to the future: Apple and Microsoft on collision course, again

CNET
(CNET) Two decades and four U.S. presidents ago, Apple vs. Microsoft was worth watching. Since then it's been a snooze.

That's about to change.

This fall consumers will be able to choose from the widest-yet assortment of smartphone and tablet devices because Microsoft, a company that has been an also-ran in mobile computing for too long, has picked itself off the mat.

In a Lazarus-like revival, Microsoft is winning acclaim for its latest mobile operating systems for tablets and smartphones. No. 1 Apple is not sweating any of this now as it preps for the presumed iPhone 5 and iPad Mini launches this fall. But for the first time in a long while, Microsoft is making a game of it and merits consideration as an alternative to Google's Android for those who eschew Apple. Given recent history, how many of you really thought this day would arrive?

Apple: Up, down, up
When these two companies first locked horns at the dawn of the PC era, Apple and Microsoft more or less were on equal footing, though that did not last long. By virtue of going with Microsoft's DOS operating system, IBM and the clone makers effectively decreed which company was destined to become the tech industry's top dog.

The 1984 introduction of the Macintosh, which Apple hoped would be its breakout consumer computer, made things interesting for a while, but Apple lost its way after sending Steve Jobs packing in 1985. The company proceeded to knock out more expensive computers that people other than creative souls simply did not want to buy.

Before long, Microsoft surged far ahead and the so-called operating system war between Windows and Mac was mostly in the minds of headline-happy magazine editors. In reality, Microsoft had trounced Apple in the desktop business and the only unanswered question was how long it was going to take before Apple went out of business.

Steve Jobs
By 1997, Jobs was again CEO of the company he co-founded and Apple was back in business, but with a small "b" compared to Microsoft. At the end of its fiscal year for 1997, Apple had lost $1 billion on $7.1 billion in mostly hardware sales. For its fiscal year, Microsoft posted revenues of $11.36 billion with $3.45 billion in net income selling software bits.

But the tables turned with the advent of what Jobs would later describe as the "post-PC era." It was a crucial time period and Microsoft missed the significance of the iPod and later, the arrival of iTunes. Microsoft was also missing in action when Apple unveiled the iPhone in January 2007 - and then another game-changer in the form of the iPad in March 2010.

While Microsoft continued to dominate the desktop and business markets, Apple went on to lead the pack in mobile, which is where the proverbial puck was heading.

Apple has sold more than 85 million iPhones since its inception, including 26 million in the second quarter of 2012, good for a 16.9 percent share of the worldwide market, according to IDC. Even though it doesn't have the biggest share of the global smartphone market - that title goes to Google's Android with 68.1 percent, according to IDC - Apple still extracts enormous profits compared with Samsung and other rivals.

When it comes to the iPad, it gets even better. Apple has more than double the share of the competing Android tablets, according to Gartner. Gartner expects Apple will finish out the year with a projected 73 million units, which would be good for a 61.4 percent share. That, by the way, is in a market segment Apple did not invent (though it certainly made it relevant and wildly profitable.)

But in this second decade of the new millennium, Apple will be in for stiffer competition. Google has armed its partners in a bid to slow the company's mobile momentum. With the iPad Mini allegedly in the wings, Google has even advertised its Nexus 7 tablet on its sacred, advertising-averse home page. Amazon is about to launch a new Kindle Fire tablet, and now, the big dog Microsoft is entering the field with its armada of partners and marketing machine.

Different era, a different Microsoft
Just as this is not the Apple of yore, neither is this the same Microsoft, which has suffered through what Vanity Fair described in a company profile as a lost decade. No kidding. Settling into a complacent middle-age, Microsoft bore little resemblance to that once-scary company that demolished Netscape. Mocked for its slow-paced updates to its core operating system - for good reason - Microsoft has been been a joke line when it came to personal technology's two most important and fast-growing markets: tablets and smartphones. Even worse, it was being ignored in the conversation, as per this 2010 think piece about the eventual winner of the "great mobile war."

But persistence is an attribute that has served Microsoft well. This was always a company with deep pockets that won by staying at it through many failing iterations of a product, such as the Xbox, which took years to pay off. History may be repeating. Despite the ne'er-do-well caricature, Microsoft has responded with incarnations of its operating system for phones, tablets, and the desktop that so far has escaped the usual crucification from the tech elite. Some of this may be nothing more than the residue from years of lowered expectations. Also, Microsoft has been out of the leadership discussion for so long that it benefits from being the underdog to Apple's iOS platform and Google's Android.

But this is more than a case of Microsoft engineers inventing products that don't suck. Based on the early reviews, Microsoft's mobile OS is shaping up is a winner. Users will have final say but the early look reveals good technology that's fresh, new and - very important in our increasingly litigious times - appears nothing like iOS or Android.

Microsoft's Surface tablet
Microsoft's Surface tablet
Microsoft
The build-up in advance of Windows Phone 8 - the next major version in Microsoft's mobile reboot - began Wednesday at the IFA show in Berlin. Samsung showed off what officially was the first Windows device to run the newer software. Next week Nokia is expected to show off some of its own upcoming Windows Phone 8 devices, (AT&T is rumored to be the lead carrier for them.) And ZDNet reports that HTC is expected to have its own Windows Phone 8 handsets by mid-September.

Not to be ignored is Microsoft's Surface tablet, Microsoft's answer to the iPad, and the ever-growing sea of tablets that run Android. The device, which was introduced at a flashy press conference in Hollywood earlier this year, will land on the same date as Windows 8. One version is expected to be a more price-friendly version running Windows RT on top of ARM chips. The other, likely a bit pricier, will run Windows 8 Pro on top of Intel "Ivy Bridge" processors.

Undoubtedly, the Surface was as much a wake-up call to partners to invent better designs as it was a demonstration of Microsoft's own technology chops. Microsoft might eventually throttle back if its OEMs do engineer Windows 8 devices that are as good - if not better. But like Apple, Microsoft is confident that it has a winner on its hands.

It's too early to tell how the new Windows will resonate with customers, but this fall is shaping up to be a lot of fun. Apple is well armed in the next few quarters to maintain its momentum. In its last fiscal quarter, ending June 30, Apple had $35 billion in revenue and $8.8 billion in net profit, as well as more than $117 billion in cash and securities. With the iPhone 5 and iPad Mini expected to have fall debuts, Apple will likely have its greatest quarter ever.

This much is clear: the two most important technology developers in the history of the technology industry are set for another collision course. Just like old times. And, the new kid on the block - Google - is hoping they are too busy battling each other to notice Android incursions. Get out the popcorn and pull up a seat.

This article originally appeared on CNET.

  • Charles Cooper On Twitter»

    Charles Cooper is an executive editor at CNET News. He has covered technology and business for more than 25 years, working at CBSNews.com, the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet. E-mail Charlie.

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