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back to article Who's got more cash? Apple or Microsoft?

Recent figures from Microsoft and Apple reveal some interesting changes to how the companies compare financially. Apple's earnings may be closer to Microsoft's than you think. Apple's PC and server sales still account for a small fraction of the worldwide market. And even if you go by Apple's latest official quarterly earnings, …

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Coat

Underdog

I think I liked good-old Apple more: it was a lovable cute puppy in old days... Now it turns to a devious moloss eyeing your throat.

Ok, ok... mine has a bunch of cans trailing behind

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Anonymous Coward

Analysis

"How long before Apple catches up completely?"

As long as it takes them to get a monopoly (>70%) in pushing their OS on all new PCs. It will never happen, because their USP is they control the hardware which means they have very few compatibility issues but that limits the market share, which in turn means less available software (e.g. games - even America's Army [Free] is no longer supported on Mac!) on their niche platform. Revenue from other sources will never be significant enough to out pace the licensing fees once Microsoft persuade India / China and other countries to buy their software - these markets are enormous.

I assume those figures included all MS revenues - e.g. Windows Embedded, CE etc. and also the dividends from shares in companies they own.

Interestingly, their share prices appear to be tracking each other over the past year. Perhaps the author could compare ROCE, levels of gearing and other financial information to give a fuller picture.

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Bronze badge
IT Angle

Surely that's not the big news

The big news recently was that VW quietly became the richest company in the world, in terms of share value at least. That's right, not an IT company, a car company. The best bit of it is though that it cost a bunch of hedge funds $18bn when the share price rose sharply rather than the fall those short selling scum were expecting. Hopefully it will bankrupt the buggers.

Yeah I know, my post doesn't have an IT angle.

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Anonymous Coward

The whole picture?

While I admittedly prefer Mac OS X and Linux to Microsoft's offerings, I think you need to add the likes of HP and Dell to get a better picture of where the whole PC vs. Mac thing is. Apple is the only one really push the Mac OS, but you have a lot of PC vendors also pushing Windows.

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Jobs Horns

Shift in the market

If we strip out of Microsoft numbers the business the figures will look outright scary. It is not just that Apple is not longer the underdog. It will be Microsoft holding under 25% of the private user market by revenue and profit which is outright scary.

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Jobs Horns

Apple. Underdog. ??

Not since the launch of the iMac & iPod could Apple conceivably have been called underdogs.

They control both hardware & software & have vastly greater margins than mickeysoft.

All they need to do now is release (OK after fixing every hardware/driver issue) their O/S flavour, for the general market, to become the micropolist of the future.

PS iTards (love it) should go back to their constituencies & prepare for government.

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Boffin

Market Cap vs. Liquidity

For Jobs & Co. to have US $4bn *more* stuffed between the mattresses than Ballmer's Behemoth shows just how much more nimble and trim Apple is compared to Microsoft.

Apple has a close to 4:1 market cap to liquid assets ratio. Microsoft's is more like 9:1.

I think a lot of this is due to the fact that Jobs isn't afraid to take an axe to under-performing products. For example, he cut PowerPC-based Macs out of the picture, and moved the OS X platform to Intel. It was painful in the short-term for users and app developers, but it has paid off in the long run. And having near-draconian control over the hardware that runs your OS helps, too...

Microsoft, on the other hand, has to write its OS to run across a wide range of hardware. In addition, it keeps dumping cash into relative failures like Windows Vista. And we all know how good that turned out to be...

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Gates Horns

What I take from those figures...

... from only twice the revenue in PC & server sales M$ makes nearly four times the profit... do we think we are being screwed yet?

... and from nearly 5bn in sales from God phones Apple makes less than 20% in profit - hardly heavenly in that market...

I'm no Apple fanboy, (never owned anything made by Apple), but I think I can see who is giving the market the fairest deal...

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Stop

I can remember when...

...$2bn was a lot of money.

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Gates Horns

MS spending a lot

When you look at cash positions, you have to consider the amount that MS has been spending recently on things like cloud data centers and R&D on its much larger range of applications. Just in data centers MS has spent at least $1BN in the last year.

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Coat

One day...

M$ always emulate Apple ideas about 2.5 years after dev, it would be interesting if Apple ever come out with a significant feature, that is user driven and very difficult to run on a Windows platform.

Of course I don't know what would fit the bill, but I would love to know if M$ have sleepless nights about the day they can no longer photocopy?

I'll take the coat that hasn't been done to death.

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Dividends

The difference in cash could be made up by Microsoft in a single year by not paying dividends (Apple doesn't).

And also that paying dividends at the same level would cost Apple about half as much (At currently depressed market cap).

Kristin's right to point out that M$ has a hefty profit margin going on. Higher than Apple, who are traditionally considered to be the kings of overpricing.

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Silver badge

Are they really competing?

They only really compete in the Vista vs OSX arena, otherwise they are pretty different.

Since Microsoft does not make hardware, their Cost Of Goods Sold (COGS) is far lower. All it costs MS to sell another software license is print another DVD for a buck or so. Selling another computer costs disk drives, motherboards, shipping,...

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Thumb Up

So Software sales is where the money is....

So basically these figures show that by not selling hardware and only sticking to software M$ make four times as much profit.

Time to tune up Snow Leopard for general release.

The sad thing is that even though Vista was disliked by consumers it was still a sales success due to the O.E.M market. If Apple can take a bite out of that market they would have M$ on the back foot.

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Jobs Horns

Didn't....

...MS have a $55bn cash reserve not so long ago? Umm...

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Alert

MS profit may be higher...

... but lets not forget that they probably ship 10x as many units to actually /get/ that profit. Which means that they make far less per item than Apple. They sell 1 Windows licence for nearly every computer sold. Then have a look at what percentage of people buy Office as well. And how many people have MS mouses, keyboards, consoles and games?

I'll stick to Linux, as I know what the profit margins /really/ are.

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@David Simpson

I just had a look at the Snow Leopard page over on Apple's web site, I wouldn't get your hopes up, they are only offering a Quantum Leap, not very much at all really...

Also, didn't they just release a new OS a couple of months back?

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Gold badge

Microsoft tax

Microsoft's figures aren't that great given that the purchase of pretty much any branded PC from a shop results in you paying the Microsoft tax (OEM licence).

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Coat

Just to point out...

Apple is as volatile as Steve Jobs.

As soon as he goes (which he will do sooner or later), their value will hurtle downwards. Microsoft however do not rely on Bill Gates nor do their share value.

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Gates Halo

Apple catching up with Microsoft??

I'm not convinced.

The mobile phone business is notoriously fickle and difficult to make a profit out of. Even the giants such as Nokia and Sony Ericsson have lean years (usually towards the end of a product cycle). Apple's PC business seems to be becoming even more obscure than it used to be, and Linux has run away with any potential business from the poor launch of Vista, which Apple should have been ready to cash in on.

Microsoft are taking an ever increasing slice of the Smartphone market (while cleverly staying away from the hardware business; more profits in software). The Jesus phone meanwhile uses proprietry (and heftily locked down) software in a single device.

As for the iPod+iTunes, as the industry moves towards more DRM-free music, and formats that are compatible with many devices, I believe their business model will become increasingly unsustainable. Do they have the ability to alter that model quickly enough and sustain revenue streams?

Mine's the one with the copy of Windows 7 in the pocket.

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Pirate

doesn't microsoft still own a massive chunk of apple

from when they bailed them out a few years back?

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Jobs Halo

@Stuart

"M$ always emulate Apple ideas about 2.5 years after dev, it would be interesting if Apple ever come out with a significant feature, that is user driven and very difficult to run on a Windows platform."

But they already have:

1] No registry that fills up with cruft and gradually slows the machine down to a crawl.

2] No BSOD.

3] Quiet operation (no noisy fans).

I think all of these fit the bill as described. The hurdle that Apple need to get over is a price entry point which is actually affordable and acceptable to the mass market. Making their new range of laptops more expensive, and have less features, suggests to me that apple aren't so bothered about the mass market.

If I was on the board of Apple, I'd be wondering if there was any mileage in partnering with a few approved 3rd party OEMs to deliver MAC-OS on cheaper hardware. Of course, this might take a chunk out of Apple's hardware sales, but it might also broaden the OS market considerably. Hmm.

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@Matt Bradley

Vista doesn't have noisy fans either.

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Stop

@frank

"doesn't microsoft still own a massive chunk of apple "

God I am getting SO fed up of cutting and pasting this response.

The very short answer NO.

The long answer.

In 1997 when Steve Jobs returned to Apple his mate Bill Gates invested in 150 Million Dollars of Apple's shares. At the time Apple had 3 or 4 billion in the bank. Apple's share price at the time of the investment was around 12 bucks a share. Microsoft sold their shares when the stock hit around 70 or 80 bucks (this after two stock splits) making Microsoft a tidy sum.

Back in 1997 Microsoft were being heavily leaned on because of their abuse of their monopoly position and keeping Apple alive at the time gave them someone to point at and say "look, Apple are selling computers, we're not a monopoly". Oh and the payment also resolved an issue where Microsoft were being sued for things such as using complete chunks of Apple video codec code - complete with comments - in their media playback software at the time.

So, Mr Frank, Microsoft do NOT own a massive chunk of anything Apple, save from all those ideas they continually rip-off a year or three after Apple release them.

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Joke

@Marmite Toast

Vista doesn't have any fans.

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@Matt bradley

Yes, that's right Apple doesn't have noisy fans, I wonder if you could tell me that the noise is that my G5 makes when it thinks it's going to do any work. It's a sort of whine and a whoosh at the same time, so loud that it spoils any video you are watching...

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Stop

What Microsoft not rulers of the universe?

That can't be allowed, Microsoft must always be number 1 in everything! They always have and always will be. There must be _something_ constant in this world. This is the last opportunity to unite and start fighting back!

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Tesco?

Tesco is bigger than Microsoft??

http://news.bbc.co.uk/1/hi/business/4435339.stm

Or am | missing something?

"The UK's biggest supermarket chain posted underlying pre-tax profits of £2.03bn ($3.83bn), up 20.5% on 2004."

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@Zippy et al

MS do have lower cash reserves than they used to - however, that's not always a bad thing, especially as they have been returning surplus cash to where it ought to be - the pockets of MS investors. They've spent about 15 billion on share buybacks and as someone else has pointed out, they actually pay dividends.

If I were a shareholder, I know which I'd rather see - money swilling round aimlessly, or being returned. If they aren't going to use it, give it back.

I only wish governments had the same attitude!

@stuart and matt:

Do you think Apple invented any of that stuff??

My Commodore 64, ZX Spectrum and (dear god) my TRS-80 had no fans. OSX is just Unix with a snappy GUI - and Unix has no BSOD (not that I have seen one in Windows XP, ever). The GUI of OSX looks suspiciously like SGI IRIX which is like 15 years old. The mouse was invented by Xerox. And they even stole their name (and logo) from the Beatles' record lable.

Oy vey!

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re: Zippy

Good points. How you use your money is a better measure of wealth than what you have stuffed in your wallet. Microsoft's investments in share buybacks (usually a good strategy in a down or uncertain market) are around $12 bil for 2008 (to date), $16 bil for the past year, and more than $35 bil over the past two years. Toss in the $1 bil or so per quarter that the company pays out in dividends and the comparisons to Apple look a bit different.

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@Norfolk Enchants Paris

"The GUI of OSX looks suspiciously like SGI IRIX"

http://www.mplayerhq.hu/images/screenshots/IRIX-01.jpg

http://www.mplayerhq.hu/images/screenshots/OSX-01.jpg

Sure, they've both, uh, got icons on the desktop. LOL!

"OSX is just Unix with a snappy GUI"

There's a lot more to OS X than BSD in pretty clothes, but you'd have to actually know something about the OS to know that.

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@Fraser

Your G5? How old is that, exactly?

I've yet to get into that territory, having only just started using my first Mac, so I guess I'll see what my machine is like after I've had it for 5 years. Although maybe I'll have replaced it by then... :)

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Anonymous Coward

Maybe! Apple! Should! Do! Something! With! The! Cash!

And save Yahoo! from the evil empire in Redmond Washington.

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@Matt Bradley

My first Powermac was a G4 and bloody hell was it ever noisy. So bad, in fact, that I couldn't use it at all. It was literally like having someone hoover in the room with you. Not good when you want to use your machine for pro audio work.

For 9 months Apple denied there was a problem. It got to the point where there was even a website dedicated to the problem and collecting people together to complain / file a class action lawsuit against Apple: See:

http://web.archive.org/web/20030202074321/http://www.g4noise.com/

That was 5 years ago.

G5's were also noisy, especially in warm summer weather. My three year old G5 packed in due to the water cooling system breaking down.

It's a good thing Apple moved to Intel chips as they run much cooler. No more noisy machines :-)

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Anonymous Coward

Fans? What Fans?

My Apple III did not come with any fans.

OK, I had to add those lil steel spring clips to stop the ceramic mil-spec chips popping out of their sockets, but that was a small price to pay for a systems with dual floppy drives, a workhorse hard drive and a colour monitor. That cast alloy case also was a light finger Louie deterrent, plus it could fall of the desk and hurt someone if you weren't careful *wink*

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