Stock performance isn't just about existing products, or how popular they are, it's about how successful the company is at making profits from their products, and their revenue growth, all relative to the market needs of the customers. Look at a 10-year chart of Microsoft stock and you'll see an incredible climb (with 9 splits!) that far surpasses Apple's performance.
A stock's price does not necessarily tell you how large or successful a company is. To calculate market cap (roughly the overall worth of a company) you multiply current share price X outstanding shares. Microsoft's market cap is nearly 3 times that of Apple, and since they have 10 times as many outstanding shares, MSFT's $40 stock price is enough.
http://finance.yahoo.com/q/ks?s=aapl
http://finance.yahoo.com/q/ks?s=msft
All of that said, I do think much of Apple's recent growth has come from the iPod and other product innovations. They've created impressive new markets, and new revenue streams (thus, big growth), whereas Microsoft had the market for business software pretty well saturated years ago. Since they're such a large company, they'd have to find a really big win (or a lot of smaller wins) to make a very dramatic jump.
It sounds like you ended up on some unlucky short-term trends with both stocks, because over the long-haul they've both been big successes.