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Microsoft vs. Google and Apple

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While it's probably able to withstand Apps, Android, or the iPhone, Microsoft may not be able to handle it all at once. Goopple (Google + Apple) may be its deadliest opponent ever.

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Editor's Note: This is Part 1 in a multi-part series. Click here to read Part 2.

I pity boxing fans. The one match they all want -- Floyd Mayweather Jr. vs. Manny Pacquiao -- is the one they just can't have. Mayweather has a tendency to throw up a roadblock to the fight at every possible turn, even recently saying that he's going to take a year or two off from boxing, leaving at least a $30 million payday on the table as a result.

But there's hope for those itching to see a good old-fashioned brawl, and I'm not talking about the Ultimate Fighting Championship.

I'm talking about Microsoft's (MSFT) fight for the future against its deadliest opponent ever -- Goopple. No, not Google (GOOG). Goopple.

Google + Apple (AAPL) = Goopple

Goopple is the deadly monster borne of Google and Apple's threats to Microsoft's multi-decade dominance in operating systems and applications. I didn't invent the term Goopple, though I hope to popularize it.

Microsoft has been the market leader in these businesses for decades, mostly because its upward momentum was never disrupted by any opponent, including the likes of Netscape, Lotus, IBM (IBM), the Linux community, the Federal Trade Commission, and the European Union.

Goopple takes a barbell approach to attacking Microsoft's software dominance.

Google gives away a lot of stuff for free. Consumers get killer apps like Docs, while electronics manufacturers have access to its Android mobile operating system and the upcoming Chrome OS. Google is also building a very solid enterprise business with its bargain-priced Apps. In other words, many of the things Microsoft charges for, Google gives away for free in order to serve its own long-term advertising end game.

Conversely, Apple targets and dominates the high end of the computing market, with more than 90% market share in computers priced over $1,000. And despite a sole devotion to high-priced products in a lousy consumer environment, Apple is actually gaining market share and increasing margins via the power of its seemingly magical brand.

The Mobile Battleground

While the Goopple juggernaut is a major threat to Microsoft on the PC side, the larger tech battleground itself is shifting. Growth in computing is moving from PCs and traditional mobile phones to smartphones and tablets, where Microsoft is lagging Apple and Google by a multi-year margin.

According to Gartner, global smartphone sales grew by 49% in the first quarter of this year to 54.3 million units, dramatically outstripping the 24% growth seen in PCs and 12% increase in the non-smartphone unit shipments.

And where are all those new smartphone sales going? Yes, you guessed it, to Goopple. Both Apple's iPhone and the endless wave of Google-Android powered phones are steadily gaining smartphone market share at the expense of Research In Motion (RIMM), Nokia (NOK), Palm (PALM), and especially Microsoft. And as more and more consumers stuff their smartphones with apps, the more attached they become to their current choice of platform.

Microsoft's best hope to regain ground in mobile is its Windows Phone 7 operating system, which should reach store shelves by December. Essentially, Microsoft will have taken more than three years to respond to the iPhone threat.

The tablet market could also keep Microsoft behind. Apple sold 2 million iPads in less than two months, effectively legitimizing a class of gadget that seemed more tech-blog friendly than market-friendly. That's a far faster rate of sales than the iPhone and iPod at their respective releases.

And what's more is that many traditional Microsoft hardware partners are seeking alternate software solutions. Dell (DELL) is embracing Android in many of its new mobile devices while Microsoft's number-one customer, Hewlett-Packard (HPQ), recently acquired Palm to secure the latter's webOS operating system.

As in smartphones, Microsoft is playing catch-up in the new tablet market, only recently announcing the tablet-friendly but unfortunately horribly named Windows Embedded Compact 7 OS.

So... Is Microsoft Screwed?

The simple answer to this question is no. Commentators and analysts have lamented the death of the PC for years, but PC sales have easily outpaced expectations in the last two cycles. Microsoft is still making tons of money, and not everyone is willing to pony up the $1,000 required for entry into the Mac world.

Nonetheless, there's a reason Microsoft's stock price has essentially stagnated through two fairly strong PC cycles. Storm clouds are appearing where there were none before. Google Apps alone isn't enough to take down Microsoft. Neither is Android and neither is the iPhone.
But they're all coming at once and they're not letting up, and Microsoft's stock price implies that the threat to Microsoft is becoming more real by the day.

Windows 7: A New Hope?

The good news is that Microsoft has woken up and embraced quality control. Windows 7 is very good -- much better than I wanted it to be. Windows Phone 7 also looks very good, as do the demos for CE7. I'm Mac and I'm proud, but I'm not going to deny that Microsoft has gotten its stuff together when it comes to making stuff that doesn't break.

But is that enough to head off Goopple at the pass? Stay tuned for Microsoft vs. Google and Apple, Part 2, and find out!

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