I think Chris Baines is wrong. Apple (Nasdaq: AAPL ) is a better buy than Microsoft (Nasdaq: MSFT ) . Price isn't the issue. Nor is shareholder-friendliness. On each of these fronts, Mr. Softy is unquestionably the better buy. But Apple is the better innovator of these two, an advantage that Chris erroneously dismisses as transient.
"Apple must continue to innovate to fend off competitors, but history says that its odds of doing so indefinitely are next to none," he writes.
Really? How do we know Apple has to keep innovating? And, what's the context? What, precisely, does "innovating" mean? Does it mean bettering existing products? Or does it mean creating entirely new product categories? Without answers to these questions, there's no basis for claiming that Apple will one day stop pleasing customers.
What innovation at Apple looks like
Let's begin by looking at history. Tune-ups are what have transformed the Mac maker into a full-fledged iEmpire. MP3 players existed before the iPod. Smartphones existed before the iPhone. And tablet computing as a concept not only predates the iPad, but was also around when Sony was still making the Walkman.
To see how innovation works at Apple, take a look at the iPod. What really changed? Sure, the scroll wheel added elegance to the interface and the iTunes Store made buying music by the track simple, but are either of these breakthroughs in the classic sense? I'm not so sure.
For a more recent example, consider the iPad. Size is what really differentiates it, and the bigger form factor has put competitors on the defensive. Dell's (Nasdaq: DELL ) Streak was the New Tablet Thing in May, only to become the Old Tablet Thing a quarter later.
We've no specifics for Dell's planned successor to the Streak -- all we know is that it's coming, which tells me Dell knows the Streak was never much of an iPad killer. You know what else it tells me? That Apple understands usage and experience better than its rivals, including Microsoft.
Hey, kettle! It's me, pot ... you're black.
Yes, I know, now I'm the one engaging in platitudes. Allow me to introduce some anecdotal evidence to support my point.
Months ago, I wrote that my 2G iPhone was dead. Turns out it's anything of the sort, thanks to a surprising replacement program Apple has put in place.
Specifically, Apple will replace a dead battery in a 2G iPhone by giving you ... a new 2G iPhone. I had no idea this was even possible. But according to my local Apple Store representatives, it's not only possible, but it's also the best choice economically for the company.
They say it's cheaper to use spare parts to construct a new 2G handset for me than it would be to fish out and replace the battery in my old one. Ordering the new model took minutes; getting it took two days. I paid a little more than $80 for the new iPhone, and it's been working great since.
Does anyone else see this as an innovation? I do. For $80, I can wait and see what Verizon (NYSE: VZ ) comes up with when it introduces an iPhone for its network. I also have time to examine Google's (Nasdaq: GOOG ) planned improvements to Android. Apple has given me choices, including the option to wait for the right moment to ditch AT&T (NYSE: T ) .
This idea isn't new. Press reports say Apple has been toying with creating its own SIM card and is negotiating with Verizon over the cost of not doing business with Sprint Nextel (NYSE: S ) and T-Mobile.
In each case, Apple is doing what it has always done: get closer to users, address their fundamental needs, and then freeze out partners and competitors. Mobile carriers could suffer dwindling profits as a result.
The Foolish bottom line
When it comes to Apple, innovation is a relative term. CEO Steve Jobs and his team have demonstrated a knack for innovating throughout his years at the top. Their secret has been to divine a better way for users to interact with electronic products.
So to say that Apple can't keep innovating is to say the company will, at some point, stop paying attention to what customers want. Maybe. But Paris Hilton could also one day be president of the United States. It's possible; I just wouldn't bet on it.
Now it's your turn to weigh in. Would you buy Apple or Microsoft right now? Let us know what you think using the comments box below.
Interested in more info on the stocks mentioned in this story? Add Appleor Microsoftto your watchlist.