Microsoft Will Lose a War With Apple; So Will Google

NEW YORK (TheStreet) -- Last week, I told subscribers to my weekly options newsletter that it was time to bail from Microsoft (MSFT).

Here's exactly what I wrote on Wed., Oct. 4:
I am close to taking the small profit and unloading MSFT. I will write about the stock this week on TheStreet , but I'm no longer bullish. If it closes below $30, I would definitely sell. That said, there's probably no reason to wait, though it might make for a nice trading stock once Windows 8 comes out and provides some news-driven artificial bumps.

My kid could have seen it coming.

On the Oct. 4, MSFT closed at $30.03. On the 5th, it finished below $30.00 (at $29.85) and it's been all downhill from there.

There's not a nicer way to say it. The stock is trash. And the company that floats it is little more than a receptacle -- the black bin, not the nice blue one for recycling or the green one for compost.

The one-trick revenue pony known as Google ( GOOG) doesn't rank far behind.

Both companies will have their heads handed to them in what amounts to self-constructed "battles" and "wars" with Apple ( AAPL).

As great as Apple has been, you really have to chalk up some of its success to pathetic competition. Most of the "opposition" doesn't even deserve a mention. They're akin to the high school football team that shows up to a game without enough players to field a team. They take the field and the referees just sigh and send everybody home.

Outside of Samsung, you have Microsoft and Google. While you have to call them Apple competitors, there's little reason to respect them in the process.

Consider recent developments.

Microsoft CEO Steve Ballmer recently noted that his company will continue to look more like Apple. In fact, it might follow up xBox and the Surface tablet with a smartphone. He's even using the word "ecosystem" now.

Earlier this week, TheStreet's Chris Ciaccia noted reports that Microsoft intends to make Office available on iOS and Android devices.

During an All Things D interview, Google Chairman Eric Schmidt almost made me spew my morning beer out my nostrils in laughter.

Schmidt told Walt Mossberg and Kara Swisher that "The Android-Apple platform fight is the defining fight in the industry today." He then called "you guys" -- you know, us peasants -- the beneficiaries, citing lower prices.

These are the men we have leading Apple's most formidable competitors. I've just turned super religious. God help us all.

Let's deconstruct this tripe.

First, Tim Cook and Amazon's ( AMZN) Jeff Bezos should send a team of toughs after Ballmer for using the word "ecosystem." He doesn't have one. He has xBox. That's it. Windows is not an ecosystem. It's as much of an ecosystem as Android is, particularly if Microsoft intends to farm it out to anybody willing to sell it.

OK, maybe, technically speaking, Windows and Android are ecosystems. But they're not very good ones. And they're nothing like Apple's and Amazon's. If the strategy beyond the two platforms does not change soon, they never will be.

Ballmer and Schmidt look almost as bad as Netflix ( NFLX) CEO Reed Hastings, who argued that HBO and his company are peers and close competitors. That's a classic case of self-constructing your image.

You know, the idea that I can go on my Facebook page and tell all my "friends" that I look like Ashton Kutcher and then reasonably expect Demi Moore to show up -- naked -- at my door.

Microsoft and Google, in their own ways, say, yeh, us and Apple, we battle, we're alike. And we're supposed to assume that it's true.

Microsoft has absolutely zero confidence in its plan to sell hardware and create an ecosystem like Apple's. If it did, it would not need the cockamamie idea of opening Office up to iOS and Android mobile devices. That's what you call a backup plan.

Microsoft needs this contingency in place. Simple as that. If it kept things closed, revenue would drop precipitously because the Surface tablet and any other hardware running Windows 8 that it or its partners produce will not sell enough units to support mobile Office as a Microsoft-only platform.

Along similar lines -- the nerve of Schmidt referring to Apple vs. Android as some sort of industry-defining fight. Was he really serious? And why didn't anybody call him out on that line?

Apple fights this phantom battle with one hand tied behind its back. It does not farm its OS out to the world. Imagine if, tomorrow, Apple said to all hardware producers, you can have iOS. Android's market share would plummet. And no tech geek can tell me otherwise.

Put Microsoft on Research in Motion ( RIMM)-watch.

The only thing that keeps me from saying the same about Google is that, in many ways, the company does beat to its own drummer. It dominates search and does a nice job diversifying what is, for all intents and purposes, its sole revenue stream -- advertising.

That said, when Apple stumbles, as it did with "MappleGate," and when it falls, don't blame Google or Microsoft. It will not have been either company's fault.

At the time of publication, the author held no positions in any of the stocks mentioned in this article.

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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