Apple collaborates with Microsoft to take on Google
In the previous article of this series, we discussed how although historically, Microsoft (MSFT) and Apple (AAPL) have been competitors in the PC era, the times have changed with the growth of smartphones and tablets. Now, Google (GOOG) rather than Microsoft is the main competitor to Apple, so it makes sense for Apple to collaborate with Microsoft. In this article, we’ll discuss the main motivation for Microsoft to collaborate with Apple.
Receive e-mail alerts for new research on MSFT:
Interested in MSFT?
Don’t miss the next report.
Google is posing a challenge to Microsoft as well
Google isn’t only the main competitor to Apple, but also a main challenge to Microsoft. Firstly, Google is way ahead of Microsoft in the smartphone operating system market. As the above chart shows, the smartphone operating system market is dominated by Google’s Android OS with a market share of close to 80%. Apple’s iOS is a distant second, with a market share of 15%, Microsoft is a distant third with a share of 3.3%, and BlackBerry’s (BBRY) share is less than 2%.
Although Microsoft acquired Nokia’s (NOK) mobile division a few months back, it may not make much difference to Microsoft’s position in the smartphone OS market. This is because, according to IDC, Nokia doesn’t rank among the top five smartphone vendors in the world, which is taken up by Samsung, Apple, Huawei, LG, and Lenovo. Owning Nokia would help Microsoft by making its operations more comparable to Apple and Google, which make their own mobile hardware. Plus, Nokia was considering adopting the Android operating system platform for its smartphones, which Microsoft wanted to completely avoid, as it would have made the Windows Phone 7 almost non-existent. In a way, Microsoft acquired Nokia to avoid further market share losses.
Secondly, Google Drive is a threat to Microsoft Office. Google Drive is not only free but also provides its users with 15 GB of free cloud storage, so it has the potential to take business away from Microsoft. Offering Office on the iPad would help Microsoft expand its reach. Keeping these factors in mind, it made complete sense for Microsoft to collaborate with Apple as a challenge to Google.