Microsoft-Apple redux: the empire strikes back

NEW YORK —

It used to be that Microsoft was the evil empire, and Apple the scrappy underdog. Now the roles are reversed, and Microsoft is challenging a dominant Apple, which has staked its claim as the leader of the sizzling mobile sector for tablets and smartphones, as well as the biggest seller of digital music.

Microsoft, still the biggest force in the PC market with its Windows operating system, is making a new, belated effort on Apple’s turf. The Redmond, Washington-based giant has launched its own branded Surface tablet with prices and specifications similar to those of the iPad, and a new Windows 8 operating system designed for tablets.

Microsoft also is making an aggressive push in mobile phones with its Windows Phone 8 platform being used by Nokia, Samsung, HTC and others. And it has created its own music service as an alternative to Apple’s iTunes, with 30 million songs and additional features offered by Internet radio operators.

Microsoft is the challenger now, and it is taking a lot of pages from Apple’s playbook, Microsoft is learning from Apple about the advantages of  having control of the integrated stack,  meaning software and hardware, along with other services to keep users within the company’s ecosystem.

Kash Rangan, analyst at Bank of America/Merrill Lynch, said Microsoft appropriately priced the new tablet starting at $499, the same as the entry-level iPad. This will avoid cannibalization of products which impact the Windows franchise. And because Microsoft will include its Office software in the tablets, they appear less pricey to users relative to iPads.

In music, Microsoft is making a new offensive with its Xbox music service more than a year after it pulled the plug on its Zune digital media player, a would-be rival to Apple’s iPod. With the various initiatives, Microsoft is seeking to build an ecosystem like Apple, which can deliver the devices and services to remain connected to consumers.

By 2016, we believe that Microsoft will have about 27 percent of tablet unit sales, but only about 14 percent of smartphone sales and some of us are very skeptical they’ll even get to 14 percent.