I saw on Twitter this morning that Apple has passed Microsoft in market cap. This is a momentous occasion and a testament to the extraordinary talent and vision of Steve Jobs. But the real challenge starts now for both companies. Apple needs to unveil a cloud strategy fast. I have written about this before (sorry, no links this morning - I am on Blackberry only), but with the progress on Android and its improving cloud to device capabilities this is critical. The fact that a brand new iPad has to be connected to iTunes before doing anything is not sustainable. Having said that, the device is so sexy that people (myself included) are willing to make that effort for now.

Microsoft at the moment seems completely irrelevant in mobile and has just reorganized its consumer division. But its problems go deeper (and higher) than that. It doesn’t appear that Ballmer has an understanding of the tectonic shifts at work or how to get Microsoft to maintain or re-establish leadership in critical areas. In addition to being nowhere in mobile, Microsoft is also behind with respect to a coherent cloud strategy for either consumers or developers.

That leaves Google as being potentially best positioned. It has a strong core cloud offering that integrates well with mobile. The biggest challenge for Google will be to manage the dance with carriers and handset makers in a way that prevents a fracturing of Android. If they can succeed with that *and* get a good Android tablet to market some time real soon, they will be formidable. So for now I am bullish on GOOG, neutral on AAPL and bearish on MSFT.

I saw on Twitter this morning that Apple has passed Microsoft in market cap. This is a momentous occasion and a testament to the extraordinary talent and vision of Steve Jobs. But the real challenge starts now for both companies. Apple needs to unveil a cloud strategy fast. I have written about this before (sorry, no links this morning - I am on Blackberry only), but with the progress on Android and its improving cloud to device capabilities this is critical. The fact that a brand new iPad has to be connected to iTunes before doing anything is not sustainable. Having said that, the device is so sexy that people (myself included) are willing to make that effort for now.

Microsoft at the moment seems completely irrelevant in mobile and has just reorganized its consumer division. But its problems go deeper (and higher) than that. It doesn’t appear that Ballmer has an understanding of the tectonic shifts at work or how to get Microsoft to maintain or re-establish leadership in critical areas. In addition to being nowhere in mobile, Microsoft is also behind with respect to a coherent cloud strategy for either consumers or developers.

That leaves Google as being potentially best positioned. It has a strong core cloud offering that integrates well with mobile. The biggest challenge for Google will be to manage the dance with carriers and handset makers in a way that prevents a fracturing of Android. If they can succeed with that *and* get a good Android tablet to market some time real soon, they will be formidable. So for now I am bullish on GOOG, neutral on AAPL and bearish on MSFT.