Are the Tables Turning for Microsoft Corporation and Apple Inc.?

The iEverything CEO wasted no time bashing its long-time rival at the annual development conference, but why?

Jun 6, 2014 at 11:16AM

Fans of either Microsoft (NASDAQ:MSFT) or Apple (NASDAQ:AAPL) are well aware of the longtime animosity between the two companies, and their respective founders. Former Microsoft CEO Bill Gates and his cohort Steve Jobs at Apple made no secret of their feelings toward the other. Over the years, some of the quotes attributed to each regarding the other have become the stuff of legend. For example, Gates once said of Jobs that he was, "fundamentally odd" and "weirdly flawed as a human being."

Not to be outdone, Jobs was quoted as saying his old rival would be, "a broader guy if he'd dropped acid once or gone off to an ashram when he was younger." The mutual animosity certainly didn't change when Microsoft named Steve Ballmer CEO, and Apple subsequently tapped Tim Cook as its new chief. But with Satya Nadella taking over at Microsoft and implementing significant changes, the tide is beginning to turn.

Not your father's Microsoft
Ballmer took much of the blame for Microsoft's longtime slump, and rightfully so. The day last Aug. that Ballmer announced he would retire, Microsoft's stock shot up 7%. Clearly, investors were ready for a change, and they have it with new CEO Satya Nadella. After a mere four months at the helm, Microsoft has made huge strides in its transition to cloud, big data, and a devices and services company.

From its new Surface Pro 3 tablet hybrid, to alignments with longtime rivals to offer more comprehensive cloud and mobile solutions, Microsoft is well on its way to reinventing itself under Nadella's guidance. Can you imagine Ballmer sitting down with Cook to hammer out a deal to offer one of Microsoft's signature products, Office 365, to iPad users? Not a chance.

With the changes at Microsoft, particularly installing Nadella as head honcho, it's not likely you'll hear much negative Apple rhetoric coming out of Redmond, Washington anytime soon. That's not Nadella's style, nor does he have to: he knows Microsoft's results will speak for themselves, just like Apple's once did.

The new Apple?
When Nadella opened his first presentation as CEO with the announcement that Office was coming to Apple's iPad store, it was clear that things had irrevocably changed at Microsoft. And judging by the response -- there were 27 million downloads of Office for iPad within the first month and a half -- everyone was a winner.

The success of Office for iPad is what made Cook's statements in late April so intriguing. Though Cook grudgingly admitted that Office is, "a very key franchise," and he "wholeheartedly welcomes Microsoft to the app store," he couldn't resist taking a dig at Apple's old rival. Yes, Office is extremely popular, but should have been made available sooner, according to Cook. Not exactly a warm-hearted welcome.

The Office for iPad dig wasn't too bad, though it begs the question, why? However, the manner in which Cook opened Apple's recent developer's conference is even more baffling. Referencing the adoption of Apple's OSX Maverick operating system for Macs, Cook pointed to a chart showing the relatively slow adoption of Microsoft's Windows 8 OS, "joking" that iFanatics may "wonder how that [OSX adoption rates] compares to Windows? I knew someone was going to ask!"

It's strangely compelling that Apple, which sold more than 16 million iPads and nearly 44 million iPhones last quarter alone -- both numbers that dwarf comparable Microsoft results -- still feels the need to open its own iLovefest with negative Microsoft rhetoric.

Final Foolish thoughts
Don't expect a lot of Apple bashing from Nadella; not only is that not his style, he doesn't need to. The tide is turning, and Cook's continual negativity makes it clear he senses it, too. As for Apple's Worldwide Developers Conference, iFans got a couple of redesigns and software updates. A new iPhone, iWatch, or iAnything? Nope, just some Microsoft bashing.

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Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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