What Happens When Huge Companies Continually Make Stupid Mistakes?

Let's face it: Apple (Nasdaq: AAPL  ) is one profitable company. Sure, it's had its ups and downs -- which company hasn't? But seriously, people, Apple has changed the way we interact with technology, and it's poised to continue that streak. No, it wasn't the first on the scene with a smartphone, but once the iPhone hit the market, people went nuts buying them. I know. I heart my iPhone.

And when a company is as profitable as Apple, it's not surprising that other companies want to mimic it in some aspects. But what happens when a company is so desperate to mimic another's identity that it loses its own? Case in point: Microsoft (Nasdaq: MSFT  ) .

Wait: That's a Microsoft store?
Depending on your location, and how often you frequent your local mall, you may have noticed that Microsoft's stores have gotten a new look -- and by "new look," I mean they look like Apple stores. From the glass front with white trim, to the tables displaying MacBooks -- I mean PCs -- Microsoft is "revamping" its image. In fact, when I walked by one of the stores with my husband, we both did a double-take when we realized it wasn't an Apple store.

Now, I may not be a brand expert, but I'm guessing it's not a good sign when a company decides to rip off another's look to improve sales.

Before you throw your rotten apples ...
To be clear, I am not saying Microsoft is the same kind of company as Apple. Microsoft licenses its software to companies such as Samsung and Nokia (NYSE: NOK  ) and is considered more of an applied software company. Apple doesn't sell its software and is more of a consumer-electronics company.

What I am saying, however, is that by so closely copying Apple, Microsoft is muddying its brand. And that, my Foolish friends, is not good.

No one wants a Folex
One of the things that makes a company a great investment for the long run is its brand. A strong brand leads to a strong customer base -- think Nike, Coca-Cola, and hey, Apple. A strong customer base leads to stronger sales and staying power --  -- something every investor can appreciate. So, by so closely copying Apple, Microsoft starts to look like the a Folex, a.k.a. a poor man's Rolex. And no one wants a Folex.

This isn't Microsoft's first mistake
If Microsoft's ripoff of Apple's look was the first blunder in its game, I'd be tempted to let it go. But it's not. Windows Vista, anyone? And who could forget Microsoft's purchase of Skype for $8.5 billion? Genius move there.

Oh, and then there's the Nokia partnership. It's speculated that Microsoft paid Nokia $250 million to run its software on the Lumia. However, the Lumia has been slow to sell, and Nokia is losing market share left and right. Add to that the announcement that Nokia is laying off an additional 10,000 employees (bringing the total layoff to 1 in 3), and you have the makings of a company in trouble. Ouch. Maybe not the best partner.

To be fair, Microsoft is still the big dog when it comes to applied software. But there have been more than a few mammoth companies taken down by stupid decisions -- banks spring to mind here -- and Microsoft's stupid decisions are costing the company both cash and image.

Foolish conclusion
I'm really hoping that someone at Microsoft sits up and takes notice of the stupidity running rampant over there. If not, I don't have much hope for Microsoft in the long run. After all, technology is all about innovation and user-friendliness -- two things Microsoft could use more of. Maybe Microsoft's new tablet, the Surface -- the Surface? Brilliant name there, guys -- will be a win. Not like it crashed during its first public demo, or anything. Oh, wait.

Still think Microsoft is a good investment? Want more information about key opportunities and risks facing Microsoft? Get a report by one of The Motley Fool's top equity analysts that does just that.

Fool contributor Katie Spence is thinking about getting her iPhone surgically implanted. She doesn't own shares of any company mentioned above. Follow her on Twitter, @TMFKSpence. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple and Microsoft and creating a synthetic covered call position in Microsoft. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.


Read/Post Comments (10) | Recommend This Article (12)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 27, 2012, at 8:18 PM, JuzzE wrote:

    Author needs to do a bit more homework before bashing MSFT.

    "It's speculated that Microsoft paid Nokia $250 million to run its software on the Lumia."

    No, Nokia is being paid $250M a quarter, and it's not speculation.

  • Report this Comment On August 27, 2012, at 9:04 PM, SkippyJohnJones wrote:

    @JuzzE - and what, that somehow makes Microsoft stronger? I'd take a one time cost over this recurring nightmare any day. At least the bizarre Barnes and Noble investment doesn't have to be discussed every 90 days until B&N's eventual, inevitable bankruptcy.

  • Report this Comment On August 27, 2012, at 9:28 PM, prenfool wrote:

    This article is mostly speculation. No facts or numbers. I'd think the Nokia partnership is a smart move. The Lumia sold very well and the consumers who have the 900 gave raving reviews. I had used a WP7 and I was impressed (comparing to the iphone, android phone I own). It is definitely innovative. Given the lawsuit against samsung/Android, the WP8 has a chance to grab a serious share of market. I am sure ATT and Verizon now can't wait to have some WP8 devices to compete with iphones. Also Nokia is a big player in Asia which most people in US forget/ignore. There is a huge growing smartphone market in China and Nokia phones are already everywhere. You may notice Nokia stock was on rise in the past few days.

  • Report this Comment On August 27, 2012, at 9:49 PM, WalkThePlank2 wrote:

    Quit complaining before I cancel my subscription

  • Report this Comment On August 27, 2012, at 11:25 PM, RandomMeaning wrote:

    The Microsoft Stores are a vanity project. Apple built stores because their products were marginalized by the retailers and hard to find for consumers. Microsoft products are . . . every where. Every office store, computer store, electronics store, and even mass retailers like Walmart. What's the point? Microsoft Stores just incur the high expense of maintaining a retail chain that competes with their own distribution network.

    Which brings us to hardware. More foolishness. For over a decade Microsoft wisely reaped the highest profits off of the software while their hardware partners fought it out in the low margin hardware business. Apparently Microsoft wants those pennies for themselves now, partners be dimmed. What Microsoft seems to have forgotten in their visions of margins dancing in their heads is that hardware is a burden and a risk. Just ask RIM with their PlayBook. And don't buy into the idea that "only Microsoft could have created the Surface". Setting aside whether or not the Surface proves successful in the real world, Microsoft could easily have handed off the design to one of their hardware partners (Nokia perhaps) to let them take the hardware risks while Microsoft could claim any glory the design may garner while sticking to the higher profits of providing the software.

    Microsoft is losing track of what brought them success in the pursuit of trying to take everyone else's success for themselves.

  • Report this Comment On August 27, 2012, at 11:36 PM, RandomMeaning wrote:

    Oh, and prenfool, how can you call WP7 a success when it is losing market share, never even surpassing the rather small previous generation (windows mobile incase you've forgotten)? It's almost amusing for you to talk about Nokia's power in Asia when Nokia is a mere shadow of the mighty company they once were . . . prior to their alliance with Microsoft.

    The rest of your post is . . . speculation.

  • Report this Comment On August 28, 2012, at 12:57 AM, TechTime wrote:

    SAVE IT!!!!!!

  • Report this Comment On August 28, 2012, at 2:01 AM, ajaykc wrote:

    Oh my god type article...I feel so wise after reading such an enlightening article. Thanks

  • Report this Comment On August 28, 2012, at 9:59 AM, prenfool wrote:

    @RandomMeaning. I am not sure where you get the idea that I called WP7 a "success". My point was Nokia made a very good phone Lumia 900 (I assume you never touched one) and may have a chance to come back. My comments are of course all speculations and personal. I do apologize I didn't put a footnote to clarify. I am however glad you find it (almost) amusing. Unfortunately I can't say the same about yours.

  • Report this Comment On August 28, 2012, at 11:07 AM, skyledavis wrote:

    How exactly is Microsoft the equivalent of a Folex? If you look at WP8 or Win8 and see an iOS copy, you're crazy. Sorry. And no, I shouldn't need to defend that comment. Anyone who needs it explained is gone anyway.

    So, that just leaves Microsoft stores. Which follows the same pattern as Sony stores, Samsung stores, and yes Apple stores. The trend has proven successful. A Microsoft store is less intuitive than a store from a hardware manufacturer (though the Surface makes a better argument for that), but at the end of the day devices sell because of the UI. And Windows is the UI on tablets, phones, and PCs. Having people show off the ease of use for the new Windows 8 tablets (while conveniently talking through the first-time frustrations and hopefully lowering those mythic "rage-quits") is a great move for Microsoft.

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