Microsoft Can Beat RIM, But Stands No Chance Against Apple

NEW YORK (TheStreet) -- I'm no longer excited about my long position in Microsoft (MSFT).

In fact, if I based the decision to hold the stock solely on the company's ability to execute, I would take profits now. I stay long because forthcoming, albeit hollow, catalysts should drive MSFT higher.

For example, Windows Phone will overtake Research in Motion's ( RIMM) BlackBerry in the U.S. by November, according to StatCounter).

But once Q1 2013 hits, we'll see different numbers. We'll see that Microsoft's mobile efforts failed. Hopes will fade, taking its stock as well as Nokia's ( NOK) down.

Despite lofty iPhone 5 expectations, if I had to bank on anybody delivering strong holiday-quarter 2012 results, it would be Apple ( AAPL), not Microsoft.

We could spend hours on the reasons why. Here are two that do not receive much press but help illustrate the fundamental wall that blocks Microsoft:

Office for iPad

We hear very little about Microsoft releasing Office for iPad. Most people think it will happen this fall.

Advocates argue that Office, not Windows, propels Microsoft's future, therefore the company must offer it across not only many desktop, but many mobile platforms.

I disagree. If Microsoft relinquishes the one meaningful advantage it actually has over Apple and Google ( GOOG), why enter the tablet space at all?

If Google did not provide Android to anybody willing to run it, Microsoft might stand a chance. Apple, however, has real, product-based advantages over Microsoft.

Outside of Office and its Xbox-driven living room success, Microsoft simply cannot compete from a consumer standpoint. Granted, we have not seen full-fledged versions of Windows 8 yet, but it's not likely to chip away at Apple's design, utilitarian and coolness advantages.

In enterprise, Apple already crushed RIM. If Apple can pitch iPads with Office to business, what can Microsoft tout to set the Surface tablet apart? The keyboard? That didn't stop IT departments from abandoning BlackBerry. The ability to sync the Surface tablet with the Windows Phone you don't own and your company will likely never adopt? Enough said.

Windows Phone Apps Are Awful

I own a Nokia Lumia. The Windows Phone 7.5 software it runs is impressive. I assume 7.8 will be better. Windows 8.0 will be even better. In fact, it has to be beyond impressive. It requires an attention to detail we only really see from Apple. At Microsoft, that precise focus on the platform does not exist. At least not yet.

Case in point, Microsoft calls the Windows Phone version of the App Store "Marketplace." It not only includes apps, but uninspiring selections from Nokia and AT&T ( T) as well as games, music and podcasts.

As you explore the Windows Phone Marketplace, you can't help but wonder if Microsoft is serious. There's not a nicer way to put it -- Windows apps are terrible.

Consider the music and video app category. It's an embarrassment. The only two worthy streaming apps I could find are Spotify and Slacker. There's no Pandora ( P), which tells you all you need to know about Windows Phone relevance.

While I can get along without Pandora on my smartphone, I cannot get past the seemingly endless reel of complete trash Microsoft puts in its place. Search "Pandora" in the "Marketplace" and you receive results for hundreds of useless apps. And just to insult your intelligence, Microsoft serves knock-off apps called "Pandora," "Pandoras" and another titled "Pandora's Wallet."

The same type of song and dance applies to countless other Windows Phone app searches. What Microsoft lacks in relevancy and quality apps, it attempts to make up for with quantity.

Apps may or may not lead to smartphone sales. But that's not the point. Microsoft needs to use Office to go for Apple's throat.

Even that probably will not work, but it's about all it has. And, if Redmond does not have people in place to properly vet the quality of its app store, where else could Microsoft be dropping the ball as it attempts to take on Apple in a space where it sorely lags behind?

At the time of publication, the author was long MSFT and NOK.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Rocco Pendola is a private investor with nearly 20 years experience in various forms of media, ranging from radio to print. His work has appeared in academic journals as well as dozens of online and offline publications. He uses his broad experience to help inform his coverage of the stock market, primarily in the technology, Internet and new media spaces. He has taken a long-term approach to investing, focusing on dividend-paying stocks, since he opened his first account as a teenager. Pendola, 37, is based in Santa Monica, Calif., where he lives with his wife and child.

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