The roots of their bitter rivalry go back decades to Apple co-founder Steve Jobs' claims that Microsoft copied many key aspects of Apple's software on its way to becoming the world's preeminent PC software supplier.
Things between the two rivals appear to have cooled lately. Microsoft largely missed the boat in mobile, while Apple repeatedly revolutionized the space to great success. However, though Apple is likely to remain well ahead of Microsoft in this new computing paradigm, don't expect Microsoft to sit idly by.
Microsoft's trade-in tactics
When it unveiled the new Surface Pro 3 in May, Microsoft leaned heavily on the idea that it was a "laptop replacement," rather than just a tablet. And now, Microsoft's putting its money where its mouth is.
For the month of July, Microsoft recently unveiled an new trade-in program in which it will provide customers who trade in select Apple MacBook Air models with a $650 in-store credit toward the purchase of a Surface Pro 3. Microsoft's least expensive Surface Pro 3 running Intel's i3 processor will retail for $799 before adding the extra cost of Microsoft's type cover, so Microsoft's seemingly willing to eat as much as 81% of the total purchase price for its least costly Surface in order to incentivize Apple MacBook users to switch from their current iDevices. If that's not wanting new customers badly, I don't know what is.
Microsoft brimming with brinksmanship
Point of fact, we've seen this kind of aggressive Apple poaching behavior before from Microsoft. Late last year, Microsoft offered potential customers a
$200 gift card upon trading in select Apple iPads for one of Microsoft's Surface tablets.
It's easy to dismiss this as an act of desperation on Microsoft's part. Moves such as these certainly make for good copy. But there's also a genuine business strategy behind Microsoft's explicit Apple poaching practices: It all comes down to Apple's uber sticky ecosystem and legendarily strong brand.
Apple's customers are famously loyal, and the sad fact is that Microsoft's fighting a genuine and significant uphill battle as it attempts to carve out a slice of the mobile computing market for itself, especially at the higher end where Apple's particularly well represented. Apple customer loyalty numbers vary from survey to survey, with some studies claiming brand loyalty as high as 80% and even 90%. But the overarching truism Microsoft's trying to counteract here is that once you go Mac, you tend not to go back. With these kinds of offers, Microsoft's hoping it's created a powerful enough economic incentive to break the bonds of Apple loyalty. Microsoft certainly has the financial firepower to try to subsidize users switching costs from Apple's MacBook to Microsoft's Surface Pro 3.
Ultimately, though, the sad fact for Microsoft in this scenario remains that consumers will only stay on a platform that can win on features alone, so Microsoft's subsidization strategy could only last for one device cycle unless it can strike a chord with the bulk of consumers that opt in to this program. Either way, this kind of move shows how badly Microsoft wants to crack Apple's valuable computing franchise with its Surface Pro 3. Does it stand a chance? We'll have to wait until next month to see firsthand.
Andrew Tonner owns shares of Apple. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple, Intel, 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.