re gloss
Asked whether Apple had the jump on multitouch, Ballmer evades:
There's a lot in Windows 7, and our goal's got to be, with our hardware partners, to produce fantastic PCs. ... We'll sell 270m PCs a year, and Apple will sell 10m. Apple is fantastically successful, and so are we.
As usual, Ballmer's numbers are interesting. The 270m OS licenses MSFT expects to sell (MSFT doesn't sell PCs generally, PC makers do that) aren't broken into categories that would help listeners understand how many machines are handheld inventory control systems, how many are notebook/tablet convertibles for use managing patient records (and unlikely to run any other third-party application), how many are ATM machines, and so on.
MSFT's trailing twelve month income attributable to common shares seems to be about $16B, whereas Apple's is about $4B. The 270m-to-10m comparison doesn't really capture the effectiveness of the two companies' different business models at wringing profit out of units. To hear Ballmer, you'd think earnings at Apple would be a few millions.
I'm interested to see what the next few years brings. Apple has until 2010 (the expected date of MSFT's Windows 7, though we know how that can move) to leverage anything it can to gain share where long-term revenues will flow from regular upgrades in market segments that buy and buy and buy all the livelong day (e.g., large enterprises), before MSFT breeds a new pig to replace the one it's currently foisting on its vict-- ahem -- customers. MSFT has many smart people, and they aren't unaware how to code or how people like to use computers. Given enough time (and maybe given competent leadership) I'm sure MSFT could wrangle a solution that could offer feature and performance competition with whatever it needed to beat. The company just seems to be dancing with two left feet in casts of late, though, and seems to expect to prevail over competition out of a religious conviction of their inevitable victory rather than from some realistic plan to identify and meet some serious consumer demand.
Ballmer and Co. will surely keep pumping out hundreds of millions of OS licenses a year. My question is what share they can keep of the highest-end segments of the market, where folks want to do diverse things with their machines and will be buying third party software and shelling out upgrade fees rather than junking their soon-dead boxes for a new pile of fire-sale OEM-prepared white-box schlock.
When I see Apple releasing iPhone with 3-D/5.1 surround audio for games, I see Apple positioning its products to go after all sorts of market segments where there's money and upgrades and high performance and add-on software and service sales. I have no idea how Apple will turn the availability of improved under-the-hood dev tech (CoreData? CoreAnimation?) into real-world, delivered applications ... but if Apple's share of the high-end market is really exploding like some of the recent reports suggest, perhaps Apple is closer than I thought to seducing developers into targeting its platform with the main thrust of development. That would, in my view, signal the end of the hegemony enjoyed by the Win32 API and its relatives.
However, we're a long way from that. In 2001, Carmack of Id said he hoped to release simultaneously on Win32 and MacOS X, and I still have the sense Apple's game title catalog lags in both time and performance with "originals" targeting a MSFT platform.
Having read Carmack's critique of a then-new graphics card and discussing drivers, though, I wonder whether Apple is targeting different users with its drivers than vendors are targeting with drivers released for the MS-Win market. In other words, are conformance compromises made for performance on Win not acceptable on MacOS, given MacOS' effort to target creative professionals with a high demand for visual correctness? Would Apple be doomed by drivers to performance issues? Or is the MacOS design and better utility of multiple processors likely to ensure that a made-for-MacOS game would be quite a bit better, and that it's only monolithic ported-from-MSFT titles that lag in performance?
Who knows. I do see Apple gaining mindshare and selling more machines than folks expected, and I don't see Apple yet dipping into loss-leader territory in Macs. I see Apple's profit growth doing well, and its per-unit profit growth being aided by things like AppleCare and the App Store and its own application suites and upgrade revenues from iLife and so on. I expect the earnings gap between the companies to become more modest, even though MSFT prints an order of magnitude more Certificates of Authenticity than Apple ships whole computers.
It'll be an interesting game to see played out. Both companies are now pretending there's no longer an OS war and that MSFT has won, even as Apple seems to be fighting tooth and nail to claw back the very best part of the market for keeps. Ballmer pretends to be unconcerned about Apple's various consumer and portable initiatives, passing them off as curiosities that can't impact MSFT's huge-volume marketing machine, and Apple pretends to be uninterested in warring over OS, game consoles, or the like.
And beneath the pretense, I see there is war renewed.
Take care,
--Tex.
