Apple is not the startup eater that Microsoft is. Nor is it the wontonly-investing-into-ill-fated-projects type of company it used to be (and Microsoft remains).  When things change at Apple–like the introduction of new projects and initiatives, the world stands alert and gets excited.

Why? Because Apple, while breaking new ground at what often seems to be a snail’s pace–that is, folks always talk about things they wish Apple would do but Apple never does–Apple has identified sharply-defined, effective market verticals to embrace while stockpiling tons and tons of cash.

Microsoft once had 64 billion (with a b) in the bank. Today, they have 25 million (with an m). Meanwhile, Apple’s billions grow.

So, for Apple shareholders, the question is whether to be happy with the cash position or to begin wondering what their investment is going to DO with all that cash.  I mean, does Apple start taking bigger risks now? Or are things like a video-game console or a car-puter still too risky for Mr. Jobs?  Yet the paths to these ends are obvious.

The iPod Touch is already the basis of a car-puter. All it takes to complete that puzzle is GPS hardware.
And the Apple TV, for all its simpleness, already has graphics, storage, and memory horsepower to compete with the PS3, Wii, and Xbox. So could Apple do these things, with all the cash they have? Sure.

But will they?

Part of the reason Microsoft is where they are today is their history of arrogant rampantness. Yeah, we can dominate any vertical, right?  Not so, apparently. The Xbox isn’t the cash cow MS would’ve liked. Neither, then, is Windows Mobile. For that matter, neither is the Mac Business Unit.  But Microsoft dived right into these things believing that only dominance across the board would guarantee survival in the long term.

It turns out that you only need to dominate a few things–like music distribution–to survive, and, in Apple’s case, to flourish.  It’s still better to innovate than absorb, and creative thinking beats strategic thinking.  This is how Apple is beating Goliath: instead of fighting the battles Microsoft picked, they’ve created their own battlefield, and its name begins with a lower-case “i”.