The Company You Don't Know

Apple’s clients got a brand-new operating system, cool new MacBook Airs and perhaps-not-quite-as-cool-however-whoa-no-optical-drive Mac Minis. In the meantime, tech and business reporters got a quarterly revenues report that had some of us making jokes about Steve Jobs diving like Scrooge McDuck into a room full of gold Krugerrands.

Microsoft released their quarterly revenues results, too. And they’re nearly as huge. Redmond made nearly $6 billion in net income on more than $17 billion in revenue. That’s a record quarter - and remember, Microsoft’s been making a lot of money for a long time, in much better economies than this - and a 30% jump in profits from 2010.

Now, here’s where it gets interesting: Microsoft scored its record quarter with usually flat growth in PC sales - where Windows and Windows Live revenue, its biggest business since forever, as a matter of fact dropped. Three months where the company didn’t release a significant new product. Three months where the typical Microsoft stories you read at Wired or elsewhere were about things like whether CEO Steve Ballmer should resign.

Apple crushed its quarter broadly speaking because it’s been selling new iPads faster than it can make them. It’s opening up enterprise and foreign markets where it’s never found success previously. Its most popular product is a store wrapped in gorgeous hardware its owners carry around with them everywhere they go.

Bloggers are writing Apple-inspired fan fiction faced with the prospect that the company like as not might use a fraction of its Scrooge McDuck money to snap up TV streaming service Hulu. I know it might not actually make sense! And some of the sources leaking this story might be trying to goose Hulu’s purchase price or Apple stock! Nevertheless who cares? It would be so awesome!

Ultimately, it doesn’t matter. When a company is as successful as Apple’s been lately, anything seems possible.

For a long time, it was the other way around. Microsoft couldn’t make a mistake, and Apple was on the ropes, with no hope nevertheless to innovate their way out.

Like nearly everyone else, I used nearly all Microsoft and PC-compatible software and hardware, however Apple was always more interesting.

But now, even as I use more of Apple’s stuff, I think I’m more fascinated by Microsoft - particularly the Microsoft that most of us don’t in the main think about.

Apple store

If you walk into an Apple store, particularly if you play with an iPad or iPhone, you get to see nearly everything that Apple does. It’s a monolithic company, built like a pyramid. All the pieces fit at the same time, even the imperfect ones. Everything compliments and supplements everything else.

Mighty Microsoft. The Microsoft everyone knows: Windows, Office, Internet Explorer, Hotmail. Boring, perhaps, nevertheless still mighty. Every new version, every interface quirk, is a big deal. Part of our common culture that lives and dies by the PC business. This Microsoft was largely flat this quarter. The growing-but-after all-not-profitable Online Services division, which includes Bing, straddles both Mighty Microsoft and

New Microsoft. The Microsoft for which a retail store would to tell the truth make sense: Xbox 360, Kinect, Windows Phone 7 - everything from the entertainment and hardware division, which had a gangbusters quarter.

Secret Microsoft. This is the Microsoft whose services you end up using as a consumer although you never see the word Microsoft - something that never happens with Apple. It’s as well the Microsoft that partners with enterprises and governments and other corporations. The Microsoft, for which, unlike Apple, business revenue is never a surprise.

Here are some better Secret Microsoft stories, which go a long way towards explaining why Microsoft continues to rake in money: Matt Rosoff observes that Microsoft’s quarterly report includes $17.1 billion of “unearned revenue.”

What’s “unearned revenue”? Money that Microsoft has collected up front for long-term government and business contracts, nevertheless which will be accounted for over the life of the contracts. So during Mighty Microsoft might not be showing big bank, Secret Microsoft just re-upped and/or upsold a whole bunch of the company’s best clients for the foreseeable future.

Subject close to my heart

Another Secret Microsoft story concerns a subject close to my heart, the alliance between Microsoft and Facebook. Tricia Duryee reports on Microsoft’s latest work with game developers for social networks.

I feel the same way about Apple and Microsoft. If you follow Apple, you get plenty of information about what’s happening right now in innovation for consumers. When you follow Microsoft, you start discovering a lot more about how the entire research industry works - and where it’s headed.