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

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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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 June 06, 2014, at 11:43 AM, johnAu wrote:

    Your argument has a major flaw which shows how little you know about software development.

    Regarding Office 365 for the IPad. An engineer doesn't just flip a bit and magically, a Windows platform app runs natively on an IPad.

    To produce Office 365 for the IPad, a significant number of developers had to work for at least a year to produce the product. Given that it was announced and released early in Nadella's run as CEO, it is clear that the development effort began under Ballmer. He would not sign off on a project like that unless he had already started negotiations with Apple.

  • Report this Comment On June 06, 2014, at 12:09 PM, GameBot wrote:

    This is simply silly.

    The only people who think Apple and Microsoft are or have been enemies in the last couple of decades are consumers, and bloggers who are looking to write up a story.

    Apple and Microsoft signed cross licensing deals years ago. They have had hardly any overlap competitively speaking and often work together. MS has been supplying software to the Apple market for decades.

    Sure there are times they compete, and yes Steve and Steve could both be show off jerks. But they are at worst frenemies and at best allies fighting a common cause (anti google alliance ).

    The global market for software, hardware is huge, bigger than any one company, to maintain a position of strength modern tech companies need partners and lots of them.

  • Report this Comment On June 06, 2014, at 10:52 PM, FoolishNerd wrote:

    I read the article right after watching the WWDC14 keynote presentation from beginning to end. The title caught my eye because I thought it was appropriate, however, the content of the article was both superficial, misleading, and simply missed the point. In other words, I would have written an entirely different article with the opposite conclusions than those presented by this author.

    As an investor I would like to get some "expert" analysis of an event as complex and rich as this WWDC14 keynote was, alas I seldom can find anything worth my time to read. I honestly wonder if this writer even watched the thing!

    Increasingly, I find that the only source of information is the original source. Everything else is click bait, short side investors spreading FUD, or lazy writers who appear to fit the facts from the event into their predefined narrative. I often wonder if some of these guys write their stories in advance of the event and then only scan quickly through a recording to get some quotes.

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