The Macalope Daily: What fight are you watching?


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What fight are you watching?

The Wall Street Journal would have been better off checking itself. Instead it has, indeed … [pause for dramatic effect and finish with a hoof flourish] … wrecked itself.

“Upside: Why Microsoft Beats Apple”

We haven’t heard from Bret Arends in a while, but he’s a repeat offender. Back in March of 2011, Arends was trying to tell us how the Motorola Xoom was a better deal than the iPad. So you know you’re going to get some top-notch anamalyzing as he tries to tell us how Microsoft is a better deal than Apple.

Microsoft could be the better value. Not only is it cheaper than Apple relative to its earnings per share, but Microsoft’s business also has greater strengths, and better prospects, than the market appreciates.


Granted, when these two have gone head-to-head in the past, Microsoft has come off worse—in tablet computers, music players and smartphone software. Apple desktops and laptops also have gained market share in the past decade, albeit from a small base.

But otherwise, Microsoft is aces! For example, it’s totally winning the war on good product names.

But today, Microsoft’s prospects look better than its market valuation reflects. And while Apple stock also seems reasonably valued, its business is more vulnerable than many realize.

Oooh, this is going to be soooo gooood …

Microsoft’s strengths include a broad range of “sticky” products—ones users are reluctant to change.

As opposed to Apple, which only has user satisfaction rating consistently higher than everyone else in the industry.

Wait, what?

You know, Bret, just saying things does not make them true. Or make them make any sense at all.

Windows operating systems provide about a quarter of revenue, and business software such as Office about a third. Another quarter of sales come from servers; the rest, from Xbox computer games and other sources.

Now Microsoft is introducing its Office suite of products—Word, Excel, PowerPoint and the rest—to a new market of touch-screen tablet users.

Yeah! How's that going?!

"Windows 8 Sales Well Below Projections, Plenty of Blame to Go Around"

"Windows 8 — Disappointing Usability for Both Novice and Power Users"

Oooh. Yeah, that's how that's going.

Microsoft recently unveiled tablet software, called Windows RT, that received good reviews.

Well, except for this one. And this one. And this one. And …

Whatever, those are probably all Apple fanboys and we all know that good reviews automatically mean lots of sales and, besides, Apple products are never reviewed or sell well THE END.

More important, Microsoft’s new Windows 8 operating system has been completely redesigned for a new generation of touch-screen tablet computers being rolled out by the likes of Samsung, Toshiba and others.

Partners that Microsoft is blaming for lackluster Windows 8 sales.

Your point was, again?

Yet [Apple] is overwhelmingly dependent on two products: the iPhone and iPad, which together accounted for 69% of revenue last quarter.

Ah, fun with numbers! Let’s have some more fun with numbers! Like maybe by pointing out that while these two products do make up a lot of Apple’s revenue, they’re still doing quite well. iPhone revenue was up 56 percent from the prior year and iPad revenue was up 9 percent.

Meanwhile, Microsoft’s server and business products were responsible for 58 percent of the company’s revenue last quarter and while server revenue was up 8 percent, business revenue was down 2 percent. The Windows division, which makes up an additional 19 percent of the company’s total revenue was down 33 percent.

But clearly it’s Apple that sucks.

Yet neither the iPhone nor the iPad is as revolutionary as they once were.

Again, this is true because it’s a thing I just said. Also, I will assiduously ignore the fact that, while Apple has a history of introducing revolutionary and popular products, none of its competitors can do more than copy it with any modicum of success.

Touch-screen smartphones are now common, and tablet computers are flooding the market. Goldman Sachs Group forecasts a total of 117 million tablets will be sold world-wide this year, rising 44% next year.

In such circumstances, companies typically end up competing on price. Apple’s margins can’t remain completely immune.

Just like how netbooks destroyed the MacBook Air.

Wait, let me start again …

Actually, you know what, Bret? Just quit while you’re behind.

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