MICROSOFT CORP.

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Microsoft's ambitions are anything but small. The world's #1 software company provides a variety of products and services, including its Windows operating systems and Office software suite. The company has expanded into markets such as video game consoles, server and storage software, and digital music players. Microsoft has reached settlements to end a slew of antitrust investigations and lawsuits, including agreeing to uniformly license its operating systems and allowing manufacturers to include competing software with Windows. In 2008 Microsoft made repeated efforts to acquire Yahoo! but was rebuffed by that company's board of directors.

While desktop applications and platforms remain the cornerstone of its operations, Microsoft has expanded its product lines, which include video game consoles, digital media players, enterprise software, computer peripherals, software development tools, and Internet access services.

Microsoft has also put many of its legal woes behind it, having reached major settlement agreements with Netscape (paying the company about $750 million); Sun Microsystems ($1.6 billion in addition to royalty payments on certain technologies); Novell ($536 million to settle a suit tied to Novell's NetWare software); Gateway ($150 million); IBM ($775 million and extending $75 million in credit towards Microsoft software deployment); and RealNetworks ($761 million in cash and promotions).

Microsoft has also grudgingly agreed to abide by a 2007 antitrust ruling from the European Union that resulted in the company sharing communications code with rivals, selling a copy of Windows without Media Player, and paying a $613 million fine.

By transforming itself from a traditional software provider to a broader technology services and media company, Microsoft hopes to position its operating systems, software, and services as a de facto standard for accessing, communicating, and doing business over the Internet.

In an attempt to keep pace with Google and other competitors in a consolidating online advertising market, the company acquired aQuantive for about $6 billion in 2007. Later in the year Microsoft reached an agreement to acquire a minority stake in social networking site Facebook for $240 million; the deal expands the pre-existing advertising partnership between the two companies.

In early 2008 the company moved to beef up its enterprise search offerings by offering to acquire Fast Search & Transfer ASA (FAST) for about $1.2 billion; FAST specializes in specializes in Internet search technology and business intelligence applications for enterprises.

The company has also partnered with mobile devices makers such as Hewlett-Packard and Motorola to develop handheld computers and mobile phones that utilize Microsoft Windows Mobile and Windows Media software. As part of this push, Microsoft acquired ScreenTonic, a provider of mobile advertising products and services. It also purchased chat specialist Parlano and online mapping services provider Multimap in 2007. Microsoft also acquired Danger (maker of the software for T-Mobile's Sidekick devices) in early 2008.

Microsoft's bid to acquire Yahoo! in early 2008 would have marked the company's largest acquisition in its history, as Microsoft has typically avoided pursuing huge deals in preference for smaller, selective purchases. Yahoo!'s board of directors refused multiple offers from Microsoft (including proposals to buy certain parts of Yahoo! such as its search business), insisting that the offers undervalued the company.

Bill Gates owns about 10% of Microsoft; CEO Steve Ballmer owns nearly 4%.

APPLE, INC

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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.