Microsoft is GM. Apple is BMW.

by Steve McKee

Microsoft is GM. Apple is BMW.April 26, 2010 was a big day for Apple. That was the day it surpassed Microsoft as the most valuable technology company.

Kids who have grown up with the iMac, iPod and iPad may greet the news with a yawn. But those of us who remember the early days are somewhat stunned. Who would have thought ten years ago (let alone twenty or thirty) that Apple, which proudly refused to compromise its way to market share, would ever overtake big, bad Microsoft?

Nobody knows what’s going to happen from here, whether this is a temporary blip or a permanent changing of the guard. But as I look at the future prospects of both companies I can’t help drawing a parallel to similar organizations in another rapidly-changing, highly-competitive sector.

Microsoft is GM. Apple is BMW.

Microsoft, like GM, is big, covers just about everything, and makes products that work well most of the time but have a spotty quality reputation and for the most part don’t excite anyone. Apple, like BMW, sticks to its core competency, is relentless about design and performance, and as a result is able to command a premium price.

Microsoft, like GM, seems to think building better products is enough, not understanding (or in denial about) the legacy of mediocrity associated with its brand. Apple, like BMW, is completely clear about the power and value of its brand and the vital importance of remaining true to it.

Take two stylish new cars, identical in every respect. Badge one with one of GM’s brands and attach the BMW brand to the other. Which one will people prefer? For which will they pay a premium? Do the same with a new computer or wireless device using the Microsoft and Apple logos, and ask the same questions. The difference is attributable to the brands, the meaning and value of which are driven by the quality and performance of the products to which they’ve been attached over the decades.

I don’t suggest anyone write Microsoft off. The company is run by really smart people, and it’s possible they have the next killer app in the garage right now. But Apple is smart, too, and it understands the whole-brain dimensions of its industry better than anyone.

None of us – and none of them – can predict the future. But I have more confidence that Apple and BMW understand people better than Microsoft and GM. For companies whose focus must always be on the next generation, that’s the holy grail.

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Steve McKeeSteve McKee is a BusinessWeek.com columnist, marketing consultant, and author of “When Growth Stalls: How it Happens, Why You’re Stuck, and What To Do About It.” Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

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  1. You’re half right there. Microsoft is a ‘value’ brand and Apple is a ‘premium’ brand. But as with GM and BMW, there are buyers who will slavish pay premium prices for something which is barely or not at all superior to the value product.

    Not to say that sometimes or often the premium product is better, but certainly not always.

    And your example of having two identical cars with GM or BMW badges is brilliant: yes people will choose the BMW, but why? It costs more and has a better image, but the GM car will do everything the BMW does just as well. A wise buyer will look at performance, value, specification – and image last.

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