The great divergence: Apple iPhone and Microsoft Surface

The great divergence: Apple iPhone and Microsoft Surface

Summary: Both Apple and Microsoft were prepared to reinvent computing with multitouch in June 2007. However, only one of them delivered and it changed the trajectory of both companies.


When the news broke recently about Microsoft launching an $8,400 version of its multitouch tabletop, the Microsoft Surface, I couldn't help but shake my head and remember how much promise the Surface had when it was first unveiled over four years ago at the D5 Conference.

That was the same D5 Conference where Microsoft's Bill Gates and Apple's Steve Jobs made their historic joint appearance (right). But, in retrospect, the Jobs-Gates interview wasn't the only historic thing about D5. If there was a single moment where the destinies of Microsoft and Apple diverged, it was D5.

Nearly all of the buzz of D5 was centered around two products: 1.) The Microsoft Surface, which Steve Ballmer unveiled to the public on the opening day of the event, and 2.) The iPhone, which Apple had announced earlier in the year and which was about to go on sale a month later.

There was a sense that these two products were ushering in a new era in computing where multitouch devices would finally displace the old keyboard and mouse as the easiest and most common way for the masses to interact with computers. That optimism would later get tempered among technophiles -- especially when tablets launched a few years later -- but, at the time, multitouch had the tech world dreaming big dreams.

Tech enthusiasts were already anticipating that Apple would eventually bring the iPhone's touchscreen interface to the iPod and to an Apple tablet (there were already rumors). Of course, Apple did both -- the iPod Touch and the iPad -- and they turned into wildly popular products. Some even suggested that Apple would turn Macs into touchscreen devices. That never happened, but with oversized trackpads, Mac OS X 10.7 "Lion," and a full array of new touch gestures, Apple has taken some baby steps toward bringing multitouch to the traditional computer.

It may be difficult to believe today, but at the time of D5 it was generally expected that Microsoft would take the Surface and run with it to build a line of multitouch products to revolutionize desktop computing. It looked like the two big computing giants who had done battle at the birth of the PC were about to go head-to-head again to take the PC to whole new level

For Microsoft's part, while the tech world was jazzed about the Surface, the excitement wasn't about the Surface itself, but the fact that Microsoft was working to embed computers into natural surfaces so that the future of the PC might soon break out of the model of dedicated machines sitting on top of a traditional desk.

"The view is that every horizontal and vertical surface will have a projector," said Gates at D5. "Your desk can be a surface that you can sit and manipulate things." In other words, the desk itself would become the computer instead of the computer sitting on top of it.

Unfortunately, that vision turned out to be too abstract and expensive to implement. The Surface itself barely trickled its way into the market, mostly in a few casinos in Las Vegas (until the recent news about broader availability). Microsoft never translated the Surface's technology to its core product lines. The company's one big multitouch project turned out to be the HP TouchSmart line of touchscreen appliances, which no one ever really figured out what to do with.

Microsoft would later bring multitouch devices like the Zune and Windows Phone 7 to market, but these were essentially "me too" products that followed in the footsteps of Apple's devices. Microsoft completely missed its big opportunity to take the PC market by storm with multitouch.

In the meantime, Apple has sold over 250 million iOS devices -- iPhone, iPod Touch, and iPad -- and overtaken Microsoft as the world's most valuable technology company.

Although the divergence between Apple and Microsoft began at D5 in June 2007, when both companies had a promising multitouch future, it took years for the events to play themselves out. It wasn't until three years later on May 26, 2010 when Apple ($222 billion) passed Microsoft ($219 billion) in market value (a.k.a. market capitalization) that the tech world did a double-take and realized that Apple's decade-long comeback was no fluke. It had turned the tables on its old nemesis.

To put this in perspective, when Gates and Jobs shared the stage at D5, Microsoft was worth about $300 billion and Apple was worth about $100. As I write this article (November 21, 2011), Microsoft is valued at $210 billion and Apple is worth $343 billion. Take a look at the chart below, which shows the market value of Microsoft and Apple, from June 2007 to September 2011. (I recorded the market cap in three-month increments based on the stock price on the first day of the month.)

Some of you will say that the stock market is not necessarily a fair indicator of the value of the two companies. After all, the stock market is a future indicator. It is totally based on how the public feels about the future of a company. Fair enough, then let's look at the quarterly revenue of the two companies.

What we find is a similar story. In June 2007, Microsoft was making about $14 billion per quarter while Apple was making $5 billion per quarter. In Q3 2010 -- the quarter after Apple passed Microsoft in market cap -- Apple also passed Microsoft in quarterly revenue with $20 billion for the quarter compared to Microsoft's $16 billion. The disparity has only increased since then. In the most recent quarter, Q3 2011, Microsoft made $17 billion and Apple made $28 billion. In the chart below I've compiled quarterly revenue for the two companies for every quarter since Q2 2007 when Jobs and Gates did their thing at D5.

All that said and even with tablets eating away at the PC business, I don't think things are totally hopeless for Microsoft in terms of innovating in multitouch. Its vision of touch-based surfaces was simply an idea that was ahead of its time, and there's evidence that there are still people inside Microsoft thinking about and working on this stuff.

But, the company still desperately needs a product leader. My ZDNet colleague Ed Bott and others seem to think Windows chief Steve Sinofsky is that guy, but I'm not convinced yet that Sinofsky is a breakthrough innovator. I haven't seen anything in Windows 8 that makes me think it will change the way people use computers for the better. I still think Microsoft's biggest opportunity is to grab leadership in PC-smartphone convergence, even though I doubt the company will have the courage to do it since it would mean potentially cannibalizing some short-term Windows sales. But, if Microsoft doesn't make that kind of bold move, it certainly won't be in the same league as Apple again, at least not any time soon.

This was originally published on TechRepublic.

Topics: Microsoft, Tablets, Software, Operating Systems, Mobility, Apple, Laptops, iPhone, Hardware, CXO, Windows

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  • RE: The great divergence: Apple iPhone and Microsoft Surface

    I never thought of Surface as anything more than a research project. I mean they were never going to ship an $8000 limited function computer in great numbers, even if the tech behind it was fantastic. If only they had been on the ball a bit and got a Windows 8 like tablet out 3 years ago based on surface it would have been great.
  • Why I moved to Apple

    Back in the days, before the iPhone, I had a Windows Mobile device. However, I was not happy with the device, mainly because of the poor and old fashioned UX. So I sent an email to Steve Ballmer with a few ideas on improving their products. I mean they did say that they listened to their customers. He responded, saying that they're working on something. However, it's been about 5 years and MS moved way too slowly.

    In the interim, I purchased an iPhone, iPad and MacBook Pro. Microsoft is suffering from the problems that the pre-1997 Apple suffered from, which is a lack of focus. They have way too many people working on way too many projects that don't work together very well. Visual Studio and Expression Blend is a perfect example. They chose Windows 8 over "Courier" (Windows CE-based), but Windows Phone is based on Windows CE. Windows 8 destroyed the desktop experience for the sake of mobility. Thankfully, Apple didn't make the same mistake.

    As a .NET developer, with year of experience on the Microsoft platform, I became frustrated enough to ditch it all and build my skill set from scratch on a whole new platform. I know of many other developers whom did the same. It's no mass exodus, but Microsoft's lack of focus is turning many developers to other platforms, which will eventually make the MS platform irrelevant. In 2011, you can pretty much use any device you want, and Windows matters even less with every passing year.
    General C#
    • I know how you feel...

      @General C# I write software and run my own algos. I was looking forward to seeing what Windows 8 would be like. I needed to upgrade about 10 machines and had to make the hard decision if I should or not. When I saw the pricing of Windows 8, the features and the break with .NET (yes yes "C#" still exists, but ask Visual Basic developers on how .NET worked out for them) I had to look for another solution. End result Linux, and OSX. Linux or XUbuntu is very very usable, and for the other stuff I run OSX, iPhone, or iPad.

      Microsoft lost me as a developer and as a client. Its a shame actually... The irony is that ten years ago like yourself I talked to Microsoft (meetings with Visual Studio managers in Redmond). They listened, but promptly ignored me. I said then, "if you guys don't pay attention to Open Source and e'la you will get into major problems." I think I was right...
      • RE: The great divergence: Apple iPhone and Microsoft Surface


        We basically know you are lying since no pricing information has been released about Windows 8, but nice try though :-)
  • Dumbing down...

    The biggest problem I see with Apple's approach, is that they are dumbing down the whole experience - and Microsoft and Linux seem to also be playing copycat here!

    As to multi-touch on the desktop, it is inpractical. The Touch as a desk replacement might work for some tasks, but 90% of the work I do still needs a keyboard and I get narked when employers try and fob me off with a laptop style keyboard for my desktop machine, so there is no chance in hell, that I would swap to a touch keyboard.

    The same goes for the display. Looking down at the desk all day is bad, I had to look down at monitors, because they were too low and I got chronic back ache as a result!

    Making touch monitors? My two monitors are well over a metre away from my desk, so that would mean standing up every time I wanted to point at anything.

    Until we get over the sitting at a desk and having to type to enter large amounts of text, touch is going to remain a niche product.

    Google's and Apple's speech tools are far more interesting than multi-touch for day-to-day use - although speech is also not really a solution for a busy office or street.

    Don't get me wrong, we have been making touch terminals for the best part of a decade, touch certainly has its uses, but the desktop is not the right place, at least not in the form that Apple and Microsoft have developed.
    • RE: The great divergence: Apple iPhone and Microsoft Surface


      "The biggest problem I see with Apple's approach, is that they are dumbing down the whole experience - and Microsoft and Linux seem to also be playing copycat here!"

      Why is making something simpler a big problem? Sure, tech pros may be annoyed by the inability to get under the hood, but the average user (an overwhelming majority, by the way) has no desire to tinker with the underpinnings of the OS. It's cliche, but things that "just work" appeal to the masses. Even as an IT professional, as my personal life becomes busier (wife, house, kids, etc.). I find myself becoming less interested (in regard to my personal tech) in getting under the hood. I want my personal tech to work for me. My time is valuable, so if Apple can give me some of it back by making their platform easy, I have no complaints.

      The age old argument against Mac was the lack of applications in contrast with Microsoft, it was never the user experience, except maybe in tech circles. Apple solved that problem by creating a whole new market. Apple sales combined with the fact that MS, Google and now Amazon are all doing their best to mimic Apple speaks volumes about their strategy.
      • RE: The great divergence: Apple iPhone and Microsoft Surface

        @piousmonk [i]Why is making something simpler a big problem?[/i]
        Making it simpler isn't a big problem, [i]that[/i] should be lauded.

        Making simpler != dumbing down

        Paring back a process and making it simpler and easier to use is one thing. But Apple, Microsoft and Google seem determined to take the user experience back to the 1980s, by making everything full screen - in some ways, the Metro for Windows 8 that Microsoft have shown is even worse than what Apple have been doing.

        My workflow involves me hopping between several applications. On an iPad (or OS X in Full Screen mode or Win 8 with a Metro App), I can see the current app, full stop, end of story. On Windows and OS X not in full screen mode, I have my reference windows open and I work in my "input" window, which is left-middle of the dual-screen set-up. I can refer to 3 or 4 different sources as I write, without having to hop between applications or tabs and try and remember what I have just read, so that I can use it as a source in what I am writing (copy and paste won't work, as I am writing my own synopsis, not just copying a bunch of stuff.

        For simpler workflows, that might be fine, but for workflows like mine, making it simpler doesn't involve dumbing down the user interface, that is going in the wrong direction.

        [i]Sure, tech pros may be annoyed by the inability to get under the hood[/i]
        Again, you misunderstand dumbing-down. Making it simpler, so that I don't have to go under the hood is fine. Removing the hood release, so that it isn't possible to get under the hood, if the fanbelt breaks, is something else - just look at how well Audi's A2 sold!

        My Toyota "just works" 99% of the time, but when the mechanic forgot to put the oil cap back on after the service, at least I could stop and put the cap back on.

        I also find myself less interested in getting under the hood. I have real work to do. When the computer gets in the way, because it has been dumbed down, instead of making things simpler to use, that is when I get annoyed.

        I use OS X, Windows, Linux, Android, iOS and Windows Phone 7 on a daily basis. Between OS X, Windows 7 and Linux, there isn't much difference in productivity, currently, but the trends of Lion and Windows 8 are disturbing, as they seem to be determined to reduce productivity in the name of simplicity. Having apps full screen on a 3.5" mobile phone or a 7-10" tablet might work, it still "sort of works" on a 13" laptop, but on a larger screen or multiple monitor set-up it a) looks stupid and b) reduces productivity.
      • It's a problem for people like the parent because when computing

        becomes simple, people like the parent are no longer held up as tech geek gods.
    • I believe Windows 8 will usher in an era ....


      ... in which people begin to use touch based desktop monitors, which recline like drafting tables, and allow inputs via touch and styluses. Now if drafting tables have been around for literally thousands of years, I believe it is a good bet that the new touch based desktop computing model, will work well for most people. With attention to improving the user experience of soft keyboards on mobile phones, most people have moved away from physical keyboards on these devices. I believe similar attention to the soft keyboard experience on the PC will yield the same result, and allow innovations on keyboard input not possible with physical keyboards - which have shown very little innovation over the course of hundreds of years. I believe people will work faster and be more innovative under the new computing model, because it will be more natural and intuitive, and accommodate scenarios not possible before.

      Apple has done extremely well because of UX innovations it brought to mobile computing. However MS is now bringing UX innovations to all its customer facing software (along with support services) that promise to overshadow what Apple is currently doing, and will do in the future. I therefore believe MS has an even brighter future than Apple, and we just have wait and see things play out.
      P. Douglas
      • RE: The great divergence: Apple iPhone and Microsoft Surface

        @P. Douglas Yes, I think, for some applications, tilted monitors or draftsmen's table like displays might work fine. But there are few use cases, currently, where this would be practical. For the average user, this would still get in the way, when they need to start typing or entering large numbers of figures into a table etc.

        As I say, it will work for niche markets, but we first need a functional replacement for the keyboard (i.e. 99.999% accuracy), before touch on the desktop will become a reality for users that currently need to type a lot.

        I use my smartphone for browsing news stories etc. on the road and the odd tweet. But if I want to bash out a bunch of tweets or make a forum post, write a document etc. I'll wait until I can get to a real computer with a real keyboard, because the process on a tablet or smartphone is too cumbersome, when typing more than a couple of sentences.
      • For the great majority of users ...


        ... the draft table arrangement should work. I admit straight, typical, long typing on a soft keyboard will not be as fast doing the same on a physical keyboard. But regular typing coupled with picking cleverly predicted words / phrases at the top of a soft keyboard, could narrow or even eliminate the gap. (E.g. when I program, I hardly do any regular typing. Most of the time, I pick class members from lists presented by Intellisense in Visual Studio, or copy and paste variable names or sections of code, throughout my program. This allows me to assemble programs much faster than if I typed out code directly.) Also in most cases outside of vanilla word processing, using custom soft keyboards (e.g. in a spreadsheet program, having large soft keyboards with numbers and special characters) would result in better user experiences, and overall increased productivity. E.g. look at the spreadsheet program Numbers for the iPad, and its use of custom soft keys.

        Therefore soft keyboards can trump physical keyboards over time, by allowing users to assemble their texts quickly, by heavily relying on users selecting words and phrases from good prediction engines. Soft keyboards will also make for an overall smother, richer, user experience - rather than having users constantly switching between touch mode and traditional GUI mode. Even scenarios where the tactile feedback of physical keyboards are important, can be addressed various way. E.g. when transcribing a document, it would probably be easier and faster to take pictures of the document, and have software automatically convert them to text.
        P. Douglas
      • RE: The great divergence: Apple iPhone and Microsoft Surface

        @P. Douglas [i]But regular typing coupled with picking cleverly predicted words / phrases at the top of a soft keyboard, could narrow or even eliminate the gap. [/i]
        I don't think I'lll be able to maintain my 70 words per minute on a touch keyboard, even with word predcition - mainly because I generally don't look at the keyboard or display/active window as I am typing... The keyboard replacement needs to be tactile or it needs to do away with typing altogether.

        In VisualStudio, I can usually type the correct method or property name quicker than VS can display possibilities. It is useful, when it is a more obscure method, that I don't know, but for general coding, it is quicker to type than to hunt-and-peck through dropdown lists.
      • My guess is that the majority ...


        ... of users will move away from physical keyboards over time - because they can't type 70+ words per minute, and aren't so attached to them. (I myself max out at about 45 words per minute, when typing.) As for die hard physical keyboard enthusiasts, I believe that integrating physical keyboards at the bottom of large touch screens (or allowing them to be clipped on securely, or flipped over into position) could accommodate people who are really attached to physical keyboards. This arrangement would allow users at desktops to remain in touch mode, while still being able to type on physical keyboards.
        P. Douglas
    • RE: The great divergence: Apple iPhone and Microsoft Surface

      @wright_is <br><br>Did you know you don't have to go full screen? I use Lion, and run several apps on two screens all the time, none of them full screen.<br><br>On my laptop I have have different apps on different desktops, and it's just a swipe to go from one to the next.<br><br>You haven't actually used Lion, have you?
      • RE: The great divergence: Apple iPhone and Microsoft Surface

        @msalzberg Yes, I know that you don't have to go full screen, which is why I explicitly wrote "in full screen mode...", as opposed to just "in Lion..."

        [i]On my laptop I have have different apps on different desktops, and it's just a swipe to go from one to the next.[/i]
        And how do you refer to a document on one desktop, whilst typing into another app on another desktop? ;-) That was my point.

        [i]You haven't actually used Lion, have you?[/i]
        Yes, I have. I have a 24" iMac, which is how I know that a lot of apps, like Safari, look damned silly in full screen mode - and which is why I never use an application in full screen mode, with the exception of Apeture.

        But it is this trend of forcing full screen mode on us that is worrying. For a long time, Apple were very sensible and said "full screen? Only a loon would use full screen for everything, we'll make the window as big as it needs to be, to fit the content it is displaying." Now, they seem to be saying "hmm, full screen mode works well on an iPhone, its pretty good on an iPad too, so it must be brilliant on a 27" iMac!" *eeerp* No!

        In Lion, it is an option. As long as it remains that way, I'm happy. As soon as it starts getting forced on me and ruins my workflow, I'm not going to be a happy bunny.

        Windows 8's Metro interface looks even worse, as it is designed to make everything full screen, with the option of 2/3 1/3 for viewing 2 apps at the same time. That I am currently using 5 different reference and information windows, plus my main work window won't work with Metro, as it is currently displayed in the developer preview.

        The problem is, the blogosphere and the major news sites and magazines are all going "ooh, shiny shiny tablet" and ignoring desktop users with large or multi-monitor set-ups and how well Metro will work in those circumstances and how it will impact their workflow.

        For media consumption, it might be fine, for generating spreadsheets or documents based on information from mutliple sources, it [i]could[/i] be a nightmare, but nobody seems to be looking at how professional workers will be affected, because ooh, look shiny shiny tablet!
      • RE: The great divergence: Apple iPhone and Microsoft Surface

        @wright_is<br><br>I guess I just don't get your point. You complain about full-screen apps, and then admit that you don't have to use them full-screen. That was a mighty long rant about a non-existent problem. <img border="0" src="" alt="wink"><br><br>How do I go from document to document? Swipe left, swipe right. Remember, I'm talking about a 13" laptop here. No external monitor. It's a way for me to work away from home on my laptop and still have Vectorworks, Excel, Filemaker and OmniGraffle open and instantly accessible instantly. At home I can spread it out over two screens; on a commuter train, I can't. The new features of Lion make using multiple apps on a single 13" screen much easier.
      • RE: The great divergence: Apple iPhone and Microsoft Surface

        @msalzberg [i]I guess I just don't get your point. You complain about full-screen apps, and then admit that you don't have to use them full-screen.[/i]
        I was talking about the general trend, which seems to be pushing the tablet experience onto platforms where it doesn't work.

        As I said, Apple don't force it upon us, yet, but if nobody says, hey, wait a minute, that doesn't make sense for writing an e-mail on a 27" screen, it *might* be forced upon us in the future. Hence, speaking up now, before it is too late and saying that full screen mode doesn't make sense for most applications on a large display.
  • Not necessarily divergent views

    Both views were of software controling the interface, doing away with unecessary buttons. Difference is Apple took existing technology and brilliantly executed, to bring it into ordinary folks' hands. Microsoft, on the other hand, came out more with a flying car concept, an expensive one at that.
    There may come a time, in the future, where our tables and walls are all running Surface like computers, Star Trek Next Generation like technology. That time however is not now.
  • Microsoft need product managers who understand consumer markets

    A major problem with Microsoft's forays into consumer markets has been the management dominance of engineers and business managers, as opposed to people who understand consumer markets and what drives them. Microsoft's core customers -- businesses and PC vendors -- base their buying decisions on profit maximisation, which is something Microsoft's engineers and business managers understand. Consumers don't think that way. They care more about things like aesthetics, simplicity, status and fashion than they do about technical specifications and TCO.

    Successful marketing to hardware vendors and business customers has enabled Microsoft to overwhelmingly dominate PC operating systems (Windows) and applications (Office), to the point that there hasn't been a viable competitor for 20 years (despite its recent recovery, Mac OS still has a smaller global market share than in its heyday of the early 90s). Microsoft have also quietly become dominant in servers. As recently as 2004, Unix was the leader in the server market by hardware revenue. Windows took the top spot in 2005, and with its share of global hardware revenue reaching 45.5 per cent by 2011Q2, is on the verge of capturing a majority (and possibly reaching a tipping point, as it did on PCs in the early 90s).

    At the opposite end of the spectrum, there's Apple. Steve Jobs was never an engineer, and nor was he ever successful in marketing to profit maximising businesses. However, he understood how to turn the latest technology into beautiful products that consumers would want to buy. Not being an engineer was even an advantage at times, since it allowed him to make unrealistic demands on Apple's engineers. This led to disasters like the Apple III (the first product really managed by Jobs), with many more to follow, but it also allowed Apple to create products that engineers simply couldn't have imagined. I don't think Microsoft have ever had anyone like that.

    For consumer markets, I think Microsoft need to form close partnerships as a technology provider to consumer-focused firms, and give them the leeway necessary to build products that consumers will want to buy -- in contrast to the PC market, where Microsoft have long sought uniformity (which is what business customers want). Their first step in this direction seems to be the Nokia partnership (assuming Nokia can return to form). It isn't clear how much scope Nokia have to tailor Windows Phone to their needs, but the public rhetoric at least suggests it's considerable.
  • Message deleted

    P. Douglas