It was 1975 when Bill Gates founded Microsoft to develop and sell the BASIC programming language for the Altair 8800, a microcomputer based on an Intel CPU. The following year, the first Apple fell from the tree … or emerged from Steve Wozniak's Los Altos bedroom. Priced at $666.66, the first Apple computer ran on BASIC as well, and wasn't even fully assembled – it lacked a keyboard, monitor and even a case. Fifty of the early models were sold to a local retailer, giving Apple's founders enough capital to keep their fledgling company afloat.

Apple Computer, Inc was incorporated in early 1977, and within a few months the two-man company, consisting of Wozniak and his partner, Steve Jobs, released a second machine, the Apple II. The company's early strength was in software: with an open architecture platform, the Apple II won popularity among business customers for running the first office spreadsheet program, called VisiCalc. The Apple II also sported a color screen and hard disk drives, as opposed to the then-popular tape drives and grayscale displays. Yet even as the first platform with a useful office app, Apple was still the third-place computer maker, trailing Tandy and Commodore.

By the time of the release of the Apple III in 1980, Jobs and Wozniak were already facing stiff competition from Microsoft, which had recently partnered with IBM and achieved terrific success in the lucrative corporate market. This is when Apple gained its legendary foothold in the education market by donating computers to public schools and loading them with the education-oriented LOGO operating system. As Microsoft flourished, Apple's presence in the education market was vital to sustaining the company's growth.

By the early '80s, Xerox had allowed Jobs and the Apple team to spend time inside their computing labs to look for inspiration. There, Jobs saw what was arguably the world's first graphical user interface – icons and menus, as we know them today, with no coding knowledge required. Jobs was convinced that the GUI was the future of personal computing, and set about making the next Apple, dubbed Lisa, a GUI machine. All Xerox asked in return for its GUI secret was $1 million in pre-IPO Apple stock, which, in perhaps the most short-sighted business deal in the history of the industry, would later net the company a paltry $18 million. They grossly undervalued the whole "point and click" interface, which would go on to dominate personal computing unilaterally.

Apple's Lisa was indeed a breakthrough in user interface, but sold poorly because of its nearly $10,000 price tag. By 1983, Microsoft had purchased and developed its own popular command line operating system, MS-DOS, which ran a handful of Redmond-made applications like Microsoft Press. While Apple struggled to figure out a way to market its new user interface economically, Microsoft was emerging as a major player in the software world. In fact, the January 1983 issue of Time Magazine named the computer "Machine of the Year" for 1982, featuring a desktop on its cover with an article about the rise of the PC followed by one about Jobs' role in the revolution. Personal computing had arrived.

It was only with Apple's second GUI effort, the cheaper Macintosh, that Apple earned a spot alongside Microsoft as a permanent fixture in the PC industry. Much of the hubbub was due to Apple's groundbreaking “1984” television advertisement during Super Bowl XVIII, which depicted the Macintosh as a maverick that subverted the Orwellian “Big Brother.” Microsoft released its first GUI OS in 1985, calling it Windows 1.0, but it wasn't until Windows 3.0 was released in 1990 that Windows became an Apple-killer. By that time, the development of third-party office suites steadily improved the success of the Windows platform, but several of these companies cried foul when Microsoft's own Office suite seemed to use unfair inside knowledge to outperform its competitors.

By the late '80s, Microsoft gained steam and Apple suffered from internal conflicts that had culminated in Jobs' resignation in 1985. From that point onward, Apple and Microsoft pursued essentially parallel strategies, licensing their operating systems to “clone” computer makers, and making beige-box PCs. Yet Apple's clone machines often undercut the prices of their own product line, which was already confusing and arcane to consumers. Cheaper and more prolific Windows PCs saw more success on the retail floor, and Apple's stock – and market share -- began to slide.

On August 24, 1995, Microsoft released its wildly popular Windows 95 operating system. The software, with its innovative “Start” bar and bundled software, immediately changed the way people used computers, and sold more than 1 million copies in the first four days on the market. Meanwhile, Apple languished at the fringes of the market, allying itself with IBM and Motorola to produce a new set of processors, dubbed PowerPC, that they hoped would turn the company's fortunes around. Yet as they did so, money-wasting projects like the Newton handheld threatened to suck the company dry.

These days, music artists get a huge boost if chosen to headline a flashy iPod commercial, but few remember the media blitz surrounding Microsoft's Windows 95 release. The commercials featured the Rolling Stone’s Start Me Up. The Empire State Building was lit up to match the blue-yellow-red-green windowpane logo, and Microsoft even produced a 30-minute orientation video featuring Jennifer Aniston and Matthew Perry, who were just at the beginning of their Friends fame. Microsoft was at the top of its game, and Apple seemed all but forgotten.

In 1997, the panicking Apple board decided to purchase software maker NeXT, founded by Jobs after his departure from Apple. Jobs was reinstated as interim CEO, and changes within the company were swift. Within the next two years, Apple announced it had received $150 million dollar from former rival Microsoft in non-voting stock, and managed to launch an online store and a wildly successful new computer called the iMac. It was a fresh and more attractive take on the original Macintosh, in signature Bondi Blue translucent plastic. The first truly Internet-specific computer, the new model eschewed some industry standards embraced by PCs such as serial ports and floppy drives, opting for CD drives, and Ethernet and USB ports. Later rolling out a candy-colored set of the computers, Apple made personal computing fun, winning the hearts and money of younger computer buyers.

Under Jobs, Apple also concentrated on acquiring an array of professional and consumer-oriented software companies that would later lead Apple to regain its dominance in creative computing markets. Applications like Final Cut Pro, iMovie, iPhoto, and iTunes were sleek, attractive, easy to use, and worked well with Apple's hardware – a sharp contrast to many PCs, which required tedious driver installations and third-party software just to make their best features functional.

Microsoft’s ever-growing empire suffered a backlash in the late '90s when the Justice Department filed a motion in the Federal District Court demanding that Microsoft uncouple its Internet Explorer browser from Windows, to be fair to rival browser-maker Netscape. Then in 2000, the company suffered from an antitrust ruling that demanded it be split in two; the decision was later overturned. While Microsoft nursed its legal woes, Apple worked on releasing its new OS, called Mac OS X, which had grown out of Jobs' pet project at NeXT. Its open, Unix-based architecture was stable, secure, easy to use, and marked a turning point in the philosophy of personal computing. But with Apple's market share at less than 4 percent, it would be years before the industry took notice.

Apple successfully conquered the MP3 player market with its release of the capacious, hard-drive based iPod in October 2001. It soon became all but impossible to walk a block in a major American city without seeing white headphones in someone’s ear. Apple did it again last June, when it released the iPhone and upended the mobile phone industry.

By the time Microsoft made its foray into the digital music player market, the iPod and iTunes combo had staggering market share, and the scale to produce more capable players at a cheaper price. But the Zune's tepid reception has been outshone by the remarkable success of the Xbox, released in November 2001. For Microsoft, the video game formula was working; the company went on to release a number of successful game titles including dorm-room favorites such as Age of Empires and Halo.

Securely back on its feet with the success of the iPod, iMac, and iLife software suite, Apple has once again taken aim at Redmond with its “Mac vs. PC” campaign, which has challenged the way consumers identify themselves. Two years ago, Apple launched the first in this series of television advertisements featuring comedian John Hodgman as a stodgy PC user and actor Justin Long as the hip Apple enthusiast. The ads targeted a younger, cooler audience -- but risked coming off as snarky. But with each successive quarter boasting record sales for Apple, the gamble looks to have paid off.

Microsoft is once again playing catch up with Apple with the release of Windows Mobile 6.1 on the much-hyped HTC Touch Diamond phone. Windows-enabled phones like the Touch Diamond may have beaten Apple's iPhone to 3G network speeds, but the iPhone has set a standard for touch-screen operation and multimedia that Windows Mobile is still scrambling to equal. Even more hype surrounds the upcoming Windows Mobile 7, which promises to add the capability for multi-touch and motion gestures, as well as a Vista-like redesign to its operating system. Apple, however, has raised the stakes again with the announcement of its 3G iPhone, which will feature Exchange-like functionality with “push” e-mail, calendar, and photo galleries, all marketed with Apple's trademark consumer-friendly bent.

In the last decade, Apple's stock has risen from $26 per share to over $180, after splitting once in 2005. Microsoft's, on the other hand, has dropped from $83 to just under $30 in the same period. Yet Redmond still has the larger market cap at $254 billion (compared to Apple's $154 billion), and the Macintosh's market share, while growing, hovers at a paltry 6%. Whether Microsoft's next revision of Windows, due out in 2010, will recapture some of the excitement of Windows 95 – and ameliorate some of the fallout from its much-maligned Vista – may determine the victor of the next stage in the platform battle. The only certainty is that this rivalry is far from over.

Apple vs. Microsoft — Who is Winning the Epic Battle

It was 1975 when Bill Gates founded Microsoft to develop and sell the BASIC programming language for the Altair 8800, a microcomputer based on an Intel CPU. The following year, the first Apple fell from the tree … or emerged from Steve Wozniak's Los Altos bedroom. Priced at $666.66, the first Apple computer ran on BASIC as well, and wasn't even fully assembled – it lacked a keyboard, monitor and even a case. Fifty of the early models were sold to a local retailer, giving Apple's founders enough capital to keep their fledgling company afloat.

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