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

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.

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.

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.

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...

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...

I can remember when...

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

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.

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.

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.

Didn't....

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

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.

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.

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.

doesn't microsoft still own a massive chunk of apple

from when they bailed them out a few years back?

@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.

@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.

@Marmite Toast

Vista doesn't have any fans.

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!

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.

@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.

@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... :)