The battle of ideas

The Microsoft and Apple feud is about more than market share. It's about ideas, strategies and ultimately, personalities.

Mr Wizard: Steve Jobs, chief executive of Apple, has transformed his company by driving it to release a string of iconic products.
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The battle between Microsoft and Apple is about more than market share. It is about ideas, strategies and ultimately, personalities, with both companies led by larger-than-life chief executives. Often, the broader public sees it as a small and trendy underdog mounting a low-intensity, high-profile campaign against the dominant mainstream. In the technology world, it is viewed as a tightly controlled, closely integrated "ecosystem" of software and hardware challenging a broad industry coalition.

Both Steve Jobs, Apple's co-founder and chief executive, and Steve Ballmer, Microsoft's chief executive, who replaced the company's founder Bill Gates in 2000, released company-wide memorandums in the past month. They reveal a stark difference in how the two leaders - and their companies - approach their businesses. When Mr Jobs returned to the company in 1998, he found a business that had retained its essence but lost its drive and energy. But he was, in corporate terms, on a hot streak, having executed a masterstroke of entrepreneurship during his time away from Apple.

During his decade in the wilderness, he invested US$218.9 million (Dh220m) to acquire Pixar, which was at the time a small animation company. He grew it into the most profitable Hollywood studio in history, and would later sell it to Disney for $7.4 billion, earning him a seat on the Disney board and becoming the entertainment giant's largest shareholder. On rejoining Apple, Mr Jobs worked a similar transformation, driving the company to release a string of iconic products, from the colourful, futuristic iMac desktop computers to the iPhone.

From the beginning of his second act, he announced a clear strategy - that Apple computers would become the centre of their users' digital lives, incorporating their music, photos and home movies. In the late 1990s - the pre-iPod years when digital cameras were a luxury - the strategy seemed questionable; today it is conventional wisdom. At Microsoft a different operating reality created a different type of leader. The company gained a virtual monopoly in computer operating systems and office software, generating a flood of revenue that made its founders and early employees some of the world's richest people.

Its dominance of these two key markets gave the company enormous power. Any time it incorporated a new program into its offerings, it inevitably flattened independent producers of similar products. From spreadsheets to instant messaging and web browsing, the company has mastered the art of swallowing entire market segments. It is this difference that is clearly spelt out in the memos send out by the two bosses last month. Both were leaked to the technology media, and both are revealing of the differences between the two companies and leaders.

In the memo sent by Mr Jobs, Apple's weak performance in launching MobileMe, a new web-based personal information service, is treated as an opportunity for reflection and refocusing. The botched launch "clearly demonstrates that we have more to learn about internet services", said Mr Jobs. "And learn we will." MobileMe was launched simultaneously with the new iPhone and the associated software and online application store that came with it. "It was a mistake," said Mr Jobs, to launch so many new products at once, because "we all had more than enough to do, and MobileMe could have been delayed without consequence".

The whole service, he said, "was simply not up to Apple's standards". This is Apple in a nutshell: a small, focused business that works to gain new ground by launching products leaps and bounds ahead of the competition. In entering digital music, it went from offering nothing to launching first the iPod, the world's most successful music player, then the iTunes Music Store, the world's most popular digital music retailer. It has had massive success with the iPhone as well.

In contrast, Microsoft views almost every single commercial market associated with computers as its natural territory - land that it must conquer. In his memo to the company, sent at the end of July, Mr Ballmer said Microsoft would, among other things, out-innovate Google in search, build a tighter software-hardware ecosystem than Apple, make the best mobile phone operating system and become the number one enterprise software company, eclipsing businesses like Oracle and SAP.

Mr Ballmer dismisses the results of Google's famously minimal search system as "a white page with 10 blue links", saying Microsoft will outshine the market leader by providing "customers with a customised view of their world". It is this kind of ambition that helped Microsoft become the giant it is today. But it also led to the bloated Windows Vista operating system, which took five years to develop, was released in six different configurations and could barely work on anything but the most powerful new machines.

Both companies have huge roles to play. Microsoft is home to many of the world's brightest software engineers, and remains responsible for how the majority of the world experiences personal computers. Apple redefines industries and brings early-adopter technologies into the mainstream. But as computing becomes a more fragmented, customised, web-based experience, with new markets emerging on a monthly basis, who would you place your bets on: a perfectionist firm that apologises for - and learns from - their errors, or an overreaching empire?