Microsoft

* * * * * * * * * * DESCRIPTION * * * * * * * * * *

Revision Date: October 22, 2008

Microsoft Corporation provides software products for computing devices worldwide. Its Client segment offers Windows product family that comprises Windows Vista; Windows XP Professional and Home; Media Center Edition; Tablet PC Edition; and other Windows operating systems. The company's Server and Tools segment provides integrated server infrastructure and middleware software that support software applications and tools built on the Windows Server operating system. This segment offers Windows Server operating system; Microsoft SQL Server; Microsoft Enterprise Services; product support services; Visual Studio; System Center products; Forefront Security products; Biz Talk Server; and MSDN. Its Online Services Business provides an on-line advertising platform for publishers and advertisers; personal communications services, such as email and instant messaging; and online information. It offers Live Search; MSN; MapPoint; MSN Internet Access; MSN Premium Web Services; Windows Live; MSN Mobile Services; AvenueA Razorfish media agency services; Atlas online tools for advertisers; and the Drive PM ad network for publishers. The company's Microsoft Business Division provides Microsoft office product set comprising enterprise content management, collaboration, unified communications, and business intelligence products; and Microsoft Dynamics products for financial management, customer relationship management, supply chain management, and analytics applications. Its Entertainment and Devices Division offers the Xbox video game system, including consoles and accessories, third-party games, games published under the Microsoft brand, and Xbox Live operations. This division also provides Zune digital music and entertainment device; PC software games; online games; Mediaroom, an Internet protocol television software; mobile and embedded device platforms; and Surface computing platform. Microsoft was founded in 1975 and is headquartered in Redmond, Washington.

Apple

* * * * * * * * * * DESCRIPTION * * * * * * * * * *

Apple aims for nothing short of a revolution, whether in personal computing or digital media distribution. The company's desktop and laptop computers -- all of which feature its OS X operating system -- include its Mac mini, iMac, and MacBook for the consumer and education markets, and more powerful Mac Pro and MacBook Pro for high-end consumers and professionals involved in design and publishing. Apple scored a runaway hit with its digital music players (iPod) and online music store (iTunes). Other products include mobile phones (iPhone), servers (Xserve), wireless networking equipment (Airport), and publishing and multimedia software. Its FileMaker subsidiary provides database software.

Once the world's top PC maker, Apple has been relegated to relative niche status in a market dominated by Microsoft Windows-based PCs. But the company continues to lead the market in terms of design innovation. Apple's computers run its proprietary UNIX-based operating system, and the company cites the integration and interoperability of its hardware and software as the key advantage over Windows-based PCs.

The uniqueness of Apple's computers is a double-edged sword for the company. The graphical interface and form factor of Apple's computers reflect the aesthetic of Jobs, who has long championed the importance of visually attractive, user-friendly design. The features that distinguish Macs have allowed the company to maintain a loyal following willing to pay premium prices and overlook any interoperability issues with Windows (a factor that Apple largely addressed with its OS X operating system). However, despite market share gains made in recent years, Apple still trails far behind top Window-based PC vendors such as Hewlett-Packard and Dell.

Only co-founder and CEO Steve Jobs may have expected the level of success the company's music-related products have enjoyed. Since debuting the iPod in 2001, Apple has provided regular feature updates to the line, including touch-screen displays and wireless capabilities. In 2003 Apple announced the launch of an online music service called the iTunes Music Store that lets computer users purchase and download songs for 99 cents each. Apple has since expanded the offerings to include music videos, audiobooks, movies, television shows, and other content. The company has also launched international versions of its music store. In 2008 Apple became the top music retailer by volume in the US market, surpassing Wal-Mart.

Early in 2007 the company finally unveiled a long-rumored Apple mobile phone -- the iPhone -- that combines features of a high-end handset with those of an iPod. AT&T was named the exclusive carrier for the phone in the US market; international carrier partners include O2 and T-Mobile. Having already captured a significant share of the smart phone market (where it competes primarily with RIM), the iPhone received an update in 2008 that included faster network speed and a lower price tag. Likely looking toward the development of its iPhone, Apple purchased P.A. Semi, a fabless developer of low-power processors, in 2008. iPhones and related products accounted for 6% of Apple's revenues in fiscal 2008.

Apple shares a long and thorny history with Microsoft. Although it provides an alternative to Microsoft's omnipresent operating system, Apple's relative size and market share restrict its threat to the software giant's stranglehold. The companies have long maintained a working relationship; the Mac-compatible version of Microsoft's popular office suite is a key software title for Apple, and Apple has scored crossover hits with Windows-friendly editions of iPod and iTunes. Soon after Apple released its Safari Web browser, however, Microsoft announced it would cease development of the Apple version of its Internet Explorer. In 2006 Apple released software that allows its computers to run Microsoft's XP operating system.

In an effort to boost brand awareness and its appeal among consumers, the company has opened more than 200 Apple retail stores across the US, and more than 40 more internationally. Apple generated about 20% of its sales through its retail channel in fiscal 2008.