As much as the 25 year rivalry between Microsoft and Apple gets the headlines—Windows vs. the Mac—I think Microsoft secretly loves the Mac and prospers handsomely from a resurgence in Mac sales and market share. Otherwise, Microsoft hates Apple. Here’s why.
Microsoft, The Competitor
Outside of Windows, Office, and server tools, Microsoft hasn’t had much success, amid a number of high profile failures. MSN, Bing, XBox360 have lost billions of dollars. That’s not the case with Microsoft’s efforts to provide Office for the Mac.
Microsoft is highly competitive in many product market segments. Apple, the Mac, the iPod, the iPhone, and soon, the iPad, a thorns in Microsoft’s collective butt. They compete with Apple on many fronts, but, where they compete head to head, only have a lead in operating system market share; Windows PCs vs. Macs.
Why doesn’t Microsoft simply dump Office for Mac to put the skids on Apple’s flagship product? Two reasons: antitrust concerns (that nasty monopoly issue), and they make a lot of money on the Mac.
Numbers Don’t Lie
Let me keep the numbers simple. Microsoft probably makes up to $50 in revenue for every Windows PC sold in the world. I think they make about the same for every Mac sold.
Apple’s Mac sales rate is about 12-million per year. Microsoft Office retails for $150 to $500. Assume an average of about $250 per Microsoft Office for Mac sold. Also assume that Office goes on 20-percent of all Macs sold. That’s $50 in sales, on average, for every Mac sold; or nearly the same as Microsoft’s revenue per PC for Windows.
Even if the percentages are off by double, and Office sales on the Mac are less, revenue could still reach $500-million. In other words, Microsoft makes plenty of money even when a Windows user switches to a Mac.
The Really Bad Numbers
What about other numbers? iPod and iPhone? Microsoft cannot be too happy About Apple’s dominance in portable media players (iPod) and rapid ascension in the smart phone market.
Consider this, the iPhone sells for an average of over $500. That’s Apple’s sales revenue per iPhone sold. Microsoft, on the other hand, receives about $25 for every version of Windows Mobile sold to a handset maker, whether Motorola, HTC, Samsung, Nokia or whomever.
Apple’s iPhone unit sales and market share are now higher than Windows Mobile worldwide. That means Apple makes 20 times greater revenue for the iPhone than Microsoft does for Windows Mobile.
For portable media players, Apple commands a 70-percent market share for both players (iPods) and online music sales (iTunes App Store). In barely 18 months, Apple’s App Store has surpassed Microsoft’s smart phone application store by tens of thousands of apps, sales, and downloads.
To Microsoft, those are very, very bad numbers; so bad, that Microsoft may not be able to catch up ever—and if they do, it will be many years down the road.