Taking Stock: Are you a Mac or a PC?

Dear Mr. Berko:
I was thinking of buying 200 shares of Microsoft, but my brother, who knows more about investing than I do, said to buy Apple because they make a better product. He also thinks Windows will eventually go out of business because the Apple system is superior, doesn’t need frequent updates or maintenance and is easier to operate.
In fact, he wants me to get rid of my PC, which has Vista, and get a new Mac. What do you think?
P.O., Aurora, Ill.
Dear P.O.:
Microsoft’s Vista reminds me of Ford’s Edsel, which was designed by a committee frolicking in a giant tub of peanut butter wearing Batman uniforms while singing: “Dem bones, dem bones, dem dry bones...” And the difference between Microsoft’s (MSFT – $27) and Apple’s (AAPL – $263) operating systems is like the difference between driving a Stanley Steemer truck and a Mercedes-Benz.

MSFT continues to bring out a couple hundred new operating systems every few years, creating an “obsolescence factor” requiring myriad updates that pollute your hard drive and cause your PC to run at half speed. Eventually, you get frustrated and buy another PC with an MSFT operating system, and another and another.

Most professionals will tell you that Apple’s system is superior to MSFT’s by orders of magnitude and is easy as pie to operate. And the proof is that Apple’s Mac revenues are booming.
MSFT is getting lazy or perhaps arrogant.

As of August of this year, AAPL has cornered 91 percent of the market for computers that cost $1,000, while Windows-based desktop PC sales are crashing, according to NPD Group, one of the top survey firms that provides consumer information to retailers and manufacturers. The conclusion is if you want an “el cheapo” PC, buy something with MSFT Windows.

Warren Buffett (who is joined at the hip with Bill Gates) doesn’t own a share of MSFT. The head of technology of a large Midwest industrial company tells me that he is disgusted with MSFT and but for the cost would switch to AAPL in a Michigan minute. Buffett is mindful of this trend, and this is a major reason that, while revenues and earnings have doubled in the past eight years, MSFT’s share price has traded flat as a pancake.

Using Windows Mobile, like other Windows systems (including Vista), is like pushing a rope uphill. And Hewlett-Packard, among the first to partner with MSFT, has defected and is using Palm webOS because it’s superior. MSFT is losing out on the mobile device market.

APPL’s iPad is a huge hit because consumers want a system that they can depend on, rather than a Rube Goldberg program that must be constantly updated and secured. The iPad and other mobile devices easily transcend Windows. Folks who buy an iPad don’t make a conscious decision to switch from Windows, but they certainly will use their PCs less and less.

And when that PC dies, it won’t be replaced. And that’s not good for MSFT.

Cloud computing is also a threat to MSFT and strikes directly at Windows. Cloud computing allows users to access data and applications from a multitude of platforms that are more effective than Windows. Early evidence of cloud’s effect on Windows is the resurgence of Apple’s Macintosh.

Eventually, Windows must fold its tent and steal silently into the night. And this is one of the main reasons that MSFT shares probably won’t move much higher unless Yahoo (YHOO – $14) makes an offer to take over the company. APPL is eating MSFT’s breakfast, lunch and dinner, and I wouldn’t touch the stock with a pogo stick.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. Visit Creators Syndicate Web site at www.creators.com.
© 2010 Creators Syndicate Inc.


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