Yesterday Apple overtook Microsoft as the world’s most valuable technology company. According to the New York Times, Apple shares are now worth $227.1 billion versus a measly $226.3 billion for Microsoft, You may think Apple is winning because Apple’s products are better. 
You may even think Apple is winning because Apple’s marketing is so great. HOWEVER, the truth is that Microsoft made a series of strategic blunders that have blunted it’s once-unassailable market position, giving Apple the opening it’s needed to push past.
Apple is now doing so well that it has to explain to the government why it’s so handily beating its opponents, while Microsoft is now so embarrassed at being surpassed in market cap that it has to explain to its shareholders what it plans to do to right the ship. But while the answer to how Apple managed to grow larger than Microsoft is fairly straightforward, it’s not the answer that immediately comes to mind: sure, Apple’s diversification into everything from music players to cellphones to music sales to tablets has given the company a wider revenue base upon which to capitalize. But Microsoft has also moved into every one of these markets and failed each time, so it’s not as simple as the fact that Apple has broadened its product line. Why is it that the iPod worked and the Zune didn’t? Is it because the iPod came first and cornered the market before the Zune got out the door? If so, then how does one explain the dominance of the iPhone over Windows Mobile phones, when the latter have been around longer? And how about the iPad? Microsoft has wanted to go there for what seems like a decade, and then newcomer Apple steps in and steals the whole market?
Microsoft’s original strategy in the eighties and the nineties, and a highly successful one at that, was to cater to the technology geeks who made the buying decisions on behalf of the non-geek majority. That meant making sure its products were suitable to the corporate IT geeks who not only directly influenced the buying decisions for their companies, but also indirectly influenced the home purchases of their non-geek coworkers who invariably turned to them for advice. And it meant catering to geek technology pundits, upon whom regular non-geek folks also relied upon for buying advice. And man did it ever work when it came to getting people to adopt not only Windows, which was a geek’s warped vision of what a consumer might want in an operating system, but also Office, which represented such a warped vision that it took the concept of typing words on a screen and hitting the print button, what should have been the simplest (and least expensive) task in all of computing, and instead turned word processing into something that cost hundreds of dollars and involved having nineteen toolbars on the screen.
