Microsoft Lacks Apple's Polish

Right now, Microsoft is well on the road to creating confusion with Vista, as it's offering three consumer versions of the upcoming operating system, Home Premium, Home Basic and Ultimate. Microsoft made a similar error with the Xbox 360 (a mistake that Sony (SNE - commentary - Cramer's Take) is quite foolishly copying with the PlayStation 3) by creating two different versions of the gaming console.

Apple can simply say that you can do everything you want with a Mac, no premium or ultimate anything required, except for the price of course, which is not a barrier for Mac enthusiasts. Interestingly enough, Microsoft is well aware of its inept marketing strategies, as evidenced by this YouTube video created by Microsoft employees.

Apple, on the other hand, continues to streamline its selling processes. The continued expansion of the iPod, the iTunes online store, and the Apple store base enable the company to successfully cut out related parties and partners along the way, and make a potent play to control users' living rooms.

Who needs a retailer to sell computers when you have an Apple store? And who needs to buy CDs at Best Buy when you have iTunes? Apple is also selling televisions shows via iTunes, and it is not hard to imagine movies, possibly in high-definition, coming through the same pipe very soon.

Depending upon pricing and revenue sharing terms with content owners, downloads or streams of high-definition movies could be a huge potential moneymaker for Apple because of the confusion over next-generation DVD formats. By this time next year, it could be quite normal for a consumer to go to an Apple store to buy a Mac, go home and connect that Mac to a home theater, which might actually have an Apple LCD television, and watch a movie purchased through iTunes.

In addition, Apple eventually could add digital cameras to the mix, and even mobile phones, possibly in the form of a mobile virtual network operator, or MVNO -- a company that resells wireless services under its name, but uses the network of another mobile-phone operator. All these possibilities represent chances for Apple to use its strong brand name to tap into multibillion dollar commodity markets with highly differentiated, higher-priced products.

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In keeping with TSC's editorial policy, Michael Comeau doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Comeau is a research analyst at TheStreet.com. In this role he performs stock analysis for TheStreet.com Breakout Stocks, and is also a regular contributor to RealMoney.com. Prior to his arrival at TSC in June 2004, Comeau worked as a Consultant to Toyota Motor North America, performing in-depth research on automotive industry issues, primarily in the areas of alternative engine technologies, competitive analysis and macroeconomics. His primary market interests include consumer technology, specialty retail, and small-caps. Comeau received a bachelor's degree in Finance from Brooklyn College, and has completed Level 1 of the CFA program.. He appreciates your feedback; click here to send him an email.