Analyst: Apple and Google should watch out for Microsoft

Saying that Microsoft will crush Google, and muscle out Apple, Charles Sizemore believes Apple’s model is unsustainable and that Google does not have much of a model at all.

Charles Sizemore is the Principal of Sizemore Capital and that firm has taken a long position on Microsoft (fair disclosure). In a written article contributed to NASDAQ, Sizemore reasons that Apple’s draconian requirement that it control every facet of its ecosystem puts the company at a direct disadvantage to “a more flexible Microsoft.” Microsoft appears to be putting energy into exploiting some of those weaknesses with the Surface Tablet, rumored Surface phone and with the possible mainstream OS updates through Windows Blue.  With Nokia, HTC, Samsung and others jumping on the Windows Phone bandwagon he believes the mobile phone market will look markedly different this time next year.

Google has been criticized for its apparent inability to handle the high demand for the LG Nexus 4.

Sizemore then digs into Google and its Android ecosystem hard, especially Google Play, which he refers to as a “shoddy attempt to compete with Apple’s iTunes.” He admits the oddity of his claims given that he too is an Android user. The thorn in his side is that there is no SD card support for syncing content from Google Play. These problems do not exist with Apple and Microsoft he says (never mind that iPhones do not have SD card support at all) is because those are “real companies with real business models.”

Where Apple and Microsoft charge for some services, and thus render support, Sizemore says that Google’s model of giving most consumer products away for free and therefore the company does not take its own products very seriously. At least Sizemore is not forecasting a collapse of Google’s stock. He merely claims no way to gauge the long term prospect of its advertizing model.

We actually enjoy the dynamics we read about from various analysts. Many can be thought provoking, some entertaining, and others downright silly. Throwing down the axe on an entire ecosystem over SD card support does ring as a bit out in left field because not all Android handsets have a storage issue. Where Sizemore does make a valid point is in the no-cost model that Google has for many of its services. As the online advertisement landscape changes, and arguably delivers less revenue over time, Google’s ability to adjust through that change will be the critical factor. Another area where Google has astonished us has been in its inability to process high-demand traffic for orders of the LG Nexus 4. 

Apple's UI for the iPhone will be 7 years old next year.

With regards to Apple, there is no denying that it is still in the midst of a transition, which many of our readers believe will not hold a rosy future for the company.  Apple’s challenges lie deeper than that though. As Apple has polished its hardware design and OS experience (which also needs an update), its services outside of iTunes are at risk of being overwhelmed.  What Sizemore also overlooks is Apple’s seemingly insatiable appetite for litigation as it wages its “thermonuclear patent war” with Samsung.  When those pressures combine along with Apple’s total control policy over its entire line-up, top-to-bottom, it makes one wonder how or where Apple will make the first break out of that mold.

Unfortunately for Sizemore, while he establishes his arguments against Apple and Google, he does not reinforce any arguments in favor of Microsoft.  Therein lies the rub in the great mobile platform contest.  While one might assume that these perceived weaknesses in Apple and Google translate directly to strengths for Microsoft, that is not necessarily the case.  While touting a less than favorable experience Google Play in syncing music and video content, Windows Phone 8 does not sync Xbox Video content at all.  Moreover, while there is a healthy list of manufacturers building Windows Phone 8 hardware, omitting the reality that Samsung is a market leader due to a line-up of remarkable Android offerings is a bit narrow of a vision. 

In looking at the three models pragmatically, where do you see the weaknesses in Apple, Google and Microsoft? Where do you see the strengths?