Apple and Microsoft do not compete

The tech press has been building the case that Apple is "going for the enterprise market" and that Microsoft is "responding". I'm not convinced of this argument.

The evidence is thin. Exhibit A for Apple is the new iPad Pro, which has a larger screen, a faster processor, and an optional keyboard. The thinking is that this new iPad Pro competes with Microsoft's Surface tablet -- which it does -- and therefore Apple is in direct competition with Microsoft.

Exhibit B is Microsoft's partnership with Dell to sell computers to enterprises. Here, the thinking is (apparently) that Microsoft would only make such an agreement if it felt threatened by Apple.

Such competition may make for good news, but it makes little sense. Apple and Microsoft are in two different markets. Apple sells hardware that happens to come with some software; Microsoft sells software that happens to run on hardware. Its true that Microsoft is moving from the single-sale model to a subscription model, but they are still selling software. (Primarily. Microsoft does sell the Surface tablets. They are a tiny portion of Microsoft's sales.)

Microsoft and Apple are building a synergistic system, one which sees Apple selling hardware and Microsoft selling software. Enterprises may wish to purchase iPads and iPhones for their employees and still use Microsoft apps on those devices. Enterprises have a long history with Microsoft and lots of documents and spreadsheets in Word and Excel. Apple may have Pages and Numbers (its competing word processor and spreadsheet), but they are not the same as Microsoft's Word and Excel. The future (for enterprises) may very well be Microsoft apps running on Apple hardware.

One might assume that Apple has the upper hand in such a hardware/software combination. I disagree. While apps run in the iOS ecosystem at Apple's whim -- Apple can revoke any app at any time -- such a move would not benefit Apple. Enterprises are bound to their data first, their software second, and their hardware last. Apple could "pull the plug" on Microsoft apps, hoping that enterprises would switch to Apple's products, but I think the reaction would be different. Enterprise managers would be angry, and the target of their anger would be Apple. They would view Apple as selfish and dangerous -- and purchases of Apple equipment would drop to near zero.

Such a situation does not mean that Microsoft can be a bully. They have improved their reputation by expanding Microsoft software offerings to the iOS and Android platforms and maintaining a long relationship with the Mac OSX platform. They cannot arbitrarily "pull the plug" on their iOS apps. Such a move would be frowned upon. (They could, however, discontinue their support of iOS in response to arbitrary moves by Apple, such as a change in iTunes charges.)

Apple and Microsoft are not in direct competition. (Despite competing hardware and software products.) They stand to gain much more by civilized behavior.