How profitable Apple was blindsided by a sinking Microsoft

In a technological age where anyone can say anything to anyone in the world at any time, there are bound to be abuses. So it is with Rob Enderle, the principal analyst of the one-person technology pundit company known as the Enderle Group.

Just in case you thought that Apple’s Steve Jobs had cornered the Reality Distortion Field field, remember that copy cat crimes abound in the tech industry.

The Enderle Group provides an unparalleled look inside breaking technology events to identify the core reasons that buyers and builders of technology should care.

Technology events? Sure. During a worldwide recession cum depression, Apple sells more products than ever, has higher revenue than ever, and higher profits than ever. Microsoft? Not so much, since the Windows maker’s revenue and profits are down. Again. How does the Microsoft-infested-and-invested media explain things?

Microsoft Corp. benefited from increased consumer demand for personal computers and videogames, helping offset weak business spending that pulled its quarterly profit down 18%.

Profits were down and investors benefited. Explain that, in light of Microsoft’s virtually flatlined stock price over the past five years.

The software giant’s results provided some additional optimism that a recovery is beginning to help the technology sector and that Microsoft has strengthened its mix of products after stumbling with the Windows Vista operating system.

Uh huh. And how is that such good news that MSFT goes up instead of down, yet is eerily the same over the past five years?

The results, which followed two of the worst quarters in the Redmond, Wash., company’s history, were a welcome change for investors, who bid Microsoft shares up 5.8% in afternoon trading Friday to $28.12 on the Nasdaq Stock Market.

Now we have three worst quarters in Microsoft’s history compared to the three best quarters in Apple’s history. How do the technology pundits, many seemingly on Microsoft’s payroll, respond?

How Microsoft blindsided vulnerable Apple with Windows 7 from none other than the nemesis of logic and reason, Rob Enderle. Wait for it. Here it comes. Hear it? It’s called sour grapes.

Their big news this week was a couple of PCs, a new keyboard and a multi-touch mouse. This last will likely go down in history as one of the lamest devices yet as they should know, given the iPhone, that touch is connected to the screen and not anything else.

Except, of course, that over half of all PCs sold are notebooks, many of which now use touch trackpads. Users love ‘em. Rob does not. Instead of competent and insightful analysis, all Rob can do is hurl insults.

They likely would have done better putting fir on the damn thing and building it to fart the star spangled banner at least that would have been patriotic.

And people pay this guy for his knowledge and experience. Wait. There’s more.

Windows 7 is coming out of the gate with only one known issue… In edition (sic) Microsoft didn’t blow their entire budget before the product actually hit the stores and has a substantial sustaining marketing budget. This means, this time, both the product and the marketing program is in relatively good shape and instead of being tired and vulnerable, Microsoft is ready for war.

That’s good to hear since, well, you know, revenue is down (again) and profits are down (again) and Apple has as much money and nearly as much market cap as Microsoft. It’s not as though Microsoft didn’t have any money to spend to compete against Apple the past 10 years. Alright, it’s war. Is Apple ready for war?

Steve Jobs and Apple clearly planned for the same traditional behavior and were completely unprepared for both the quality of Windows 7 and the fact Microsoft has a war chest this time.

This time? Microsoft has had even more money than now, and probably has more than most countries of the world (including the U.S.). But now Microsoft is somehow ready for war? That means Apple must be the poster child of beleaguered companies, right?

Verizon, Google and Motorola have opened a second front with the Droid iCan’t campaign (this is actually rather funny) that targets the iPhones weaknesses. None of these companies has any love for Apple.

Duh. How can poor Apple compete on so many different fronts? Oh. Wait. They’ve been doing that for years already. Mac vs. PC. iPod vs. Zune and some other media players. iTunes Store vs. what? Amazon? iPhone vs. BlackBerry, Nokia, Motorola, Microsoft, et al. How has Apple performed to date against all that competition and all those fronts, Rob?

This combination of the Microsoft budget and the Droid attack splits Apple’s resources and focus and makes it vastly more difficult for the firm to respond timely or well. The end result is an unprecedented exposure.

Unprecedented? 1997 was unprecedented in Apple history. So is 2009. Apple seems to have rebounded nicely while every one of those competing companies has faltered. Is there a lesson to be learned from how Microsoft supposedly blindsided Apple with Windows 7?

Even when you are on top it is very foolish to under estimate a competitor with Microsoft’s resources because they can actually get it right, and picking too many fights at once can take out the most powerful of entities just as it took out a nearly unbeatable Germany in the second world war.

They can get it right? When will they start? Windows Mobile? The money-losing XBox? The money-losing Zune? Or, the desperation of Windows 7?

I love the juxtapositioning here. Apple is on top. Like the Nazi regime of WWII. Beleaguered Microsoft has become the underdog who must have allies to defeat the enemy. Google, Verizon, Motorola et al, are the allies aligned against poor, defenseless Apple. Is there no way that Cupertino’s darling gadget maker can, you know, make it against such odds?

With Steve Jobs in Apple the firm can respond to threats like this one very quickly but only if they see it coming in time. I think they are likely to repeat the 1995 mistake and that means they probably won’t be either quick enough or effective enough to dodge this bullet. However, this is Apple after all and this fight is still young, it would also be very foolish to count them out early.

Weasel.

Let me look to the future, say, the end of 2010, not quite 18 months away. The world will be climbing out of a recession and prosperity will be visible. Microsoft’s revenue and profits return. Meanwhile, what of Apple, Inc.? May I suggest, Rob, that record revenue and profits during a recession might bode well for continuing record revenue and profits out of the recession.

Looking back, Rob’s record for identifying trends and performance is abysmal. Looking back from the future I suspect it will be the same.