Thursday, May 31, 2007

Apple, Microsoft & Schumpter- Steve and Bill Onstage Together

This morning's CNBC programming was heavy with clips of last night's Wall Street Journal-arranged hour and forty minute joint appearance by Steve Jobs and Bill Gates, hosted by two of the paper's columnists, Kara Swisher and Walt Mossberg.

Throughout this morning, I've seen the various clips of the two complimenting each other, discussing Apple's "PC Man" advertisements, and commenting about current technological trends.

As I listened to guests, on-air anchors, pundits, etc., all comment on the event, one thing was clear to me. These two people don't compete with each other anymore. One doesn't even really work now.

The fact that this event could even be staged tells you all you need to know. Active, competitive rivals don't typically sit around in plush leather chairs and exchange jokes and pleasantries about the "old days." Steve Jobs and Bill Gates, as software and/or hardware company CEOs, are now irrelevant. So was most of what they said last night.

Jobs has morphed Apple into a multi-pronged, digital entertainment and communications device manufacturer. Gates retired from his now-moribund software giant. Neither is changing the world with his company's work on PC-related efforts now.

Of course, CNBC's anchors stoked the fires, breathlessly asking,

'So, what does this mean for you as an investor?'

Fortunately, a few of their guests correctly replied, "nothing."

One CNBC anchor even opined on the two old rivals teaming their companies to "take on" Google.

As if.

Apple's taking advantage of the internet-oriented consumer base that Google has fostered. Microsoft is hopelessly behind. The two together have nothing that could possibly threaten Google now. They just compete in totally different product spaces.

This joint appearance by Jobs and Gates is a validation of Schumpeterian dynamics. In the 1983 clip of the two of them the last time they shared a venue, one can feel a bit of the old excitement of the nascent personal computer age. IBM's PC was just a few years old, and Jobs needed Gates & Co. to design software for the Macintosh.

That world is long, long gone. Apple PCs can run Windows operating systems, and the iTunes store was built to connect to a Windows world.

What this event demonstrated is that companies are a lot like athletes. They have a prime, then they age and die. CNBC commentators notwithstanding, neither Apple, nor Microsoft, is likely to be an investment in anyone's portfolio for their personal computer-related activities anymore.

The technological action has moved on, bypassing both companies' computer system-related efforts, as Schumpeter predicted.

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