...this one is gonna be fun.
Ps - where have the hater/boi icons gone?
Let historians note that on Friday, June 3, 2011, Apple surpassed the market capitalization of Microsoft and Intel combined. This milestone comes to us courtesy of MacDailyNews, which notes that as of the close of Friday's markets, Microsoft's market cap was $201.59bn and Intel's was $115.21bn, putting the combined value of …
"Not really much to see, Apple's profits are still below Microsoft's alone..."
Not in the most recent quarter - http://www.businessinsider.com/chart-of-the-day-net-income-apple-vs-microsoft-2011-4
Something that reporters could take heed from the story on the above link says:
"When Steve Jobs announced that investment on stage a big Apple event, he said, "We have to let go of this notion that for Apple to win Microsoft has to lose."
It was a prophetic statement, as is evident in the chart below. Microsoft's profits aren't collapsing as Apple's rise. Microsoft's last quarter was one of its best."
"Pick your definition of market share to move your choice of OS into the lead."
If I pick "embedded devices", then Linux leads. If I pick "desktops," then Windows leads. if I pick "music players," then Apple leads. This article isn't talking about demographics at all, but number of dollars made.
But as to your point - Windows fanboys tend to scoff at embedded devices as "not really computers," which is probably why Windows has only a tiny sliver of that market. And Apple fanboys don't like to talk about it, because they're not really sure what OS anything has unless it's stamped with a big picture of an apple...
Go away back to your basement and don't darken our door again. This is about MARKET CAPITALISATION, not market share.
It's about what some jumped up stockbrokers thinks each is worth as a WHOLE - most stockbrokers know their iPhone runs Linux and Microsoft because it connects to their email and all smartphones run Linux, even the Apple ones, don't they?
Apple has BRAND VALUE far in excess of Intel and Microsoft, boosting the stock price. Linux has even less brand value than Microsoft.
As an aside, if you want to properly compare, Red Hat has a Market Capitalisation of 8.13bn. Do your own research to find ALL the Linux distributors listed on an approved exchange to get the total Cap for Linux.
To be fair to all those pundits who predicted Apple's death, the predictions were based on the assumption that Apple were competing with MS on the desktop.
Although I believe Apple have increased revenue (& market share ?) on the desktop, they're main money/growth areas have come from products that didn't exist at the time: iPod, iPhone & iPad.
Apple's growth has come from finding and exploiting new markets.
How many new markets has MS discovered and exploited in the same time ?
The following will be a mixture of discovery and exploitation, heavily weighted towards exploitation particularly through borg-ing smaller companies who discovered the tech.
*cough* Xbox, kinect, surface, the first (admittedly poorly performing) tablets, AJAX, LDAP, charging for DLC *cough*
TL;DR MS still exploits many new tech trends, just as most tech companies do. I just wish surface would hit mainstream instead of being a super expensive corporate toy.
Where pundits got it wrong was assuming Apple were competing with Microsoft, or competing for platform market share. That's only really in the mind of fanbois on either side. Apple and Microsoft are in different (but related) markets. Apple is primarily a hardware company, Microsoft is primarily a software company.
Apple's focus is on making good quality hardware, providing a good user experience and making a good profit. Giving Mac OS X or iOS a large share of the OS market may be a step on the way to achieving those goals but isn't a goal in its own right.
That's why Apple are relaxed about you installing Linux or Windows on your Mac (you've bought their hardware) but are dead set against you installing Mac OS on other hardware (they don't care about software market share, they do care very much about being able to differentiate their hardware offerings from the competition). Also, what's the point of having 90% of the market but making 5% at most of the profit? "We're making a loss on each unit, but at least we're making it up in volume". I think not. Much better to have 5% of the market and 90% of the profit, surely?
Apple's competitors 10 years ago weren't Microsoft or Intel but were PC manufacturers like Dell and HP and Lenovo and Sony. 5 years ago it wasn't Microsoft but mobile phone and MP3 player and portable games console vendors. Now Apple's focus has shifted again and they're into digital goods and advertising and their main competitors are Google and Amazon, but again, Microsoft is a relatively minor competitor.
Apple's hardware are devices they think that will best run their software. Device is just a platform to run their software. Even Sony can't understand why people chose ipod instead of their excellent audio quality devices/phones. Ipod=hardware that runs Apple ipod software. Even the dumbest ones were chosen because of software while others were playing "video on 0.5 inch screen" tricks.
Funny is people forget what exactly SJobs bring to Apple in addition to cool product announcements.
It was NeXT OS and the vision/style coming with it, multiplatform and scalability.
And yet, Google, ultra modern company almost made mistake of making Chrome x86 only with stupid old school asm trickery and Mozilla almost followed it. They should both thank to Android plans.
Theres a bubble in some IT stocks at the moment. I'm not sure Apples share price is an accurate reflection of it turnover/profit compared to Intel/Microsoft who have a very solid business in comparison. Alot of that price is in the image not the reality.
Apples recent success has been through being first to market with a decent smartphone OS and the tablet form factor which is probably still a bit expensive to be a truly mass market device. So its not comparing like with like - compare Apples desktop OS revenues, or its Office productivity sales with Microsofts, or its chip manufacturing business with Intels and theres not much to gloat about?
But yeah - they are much better at designing and marketing consumer devices than pretty much anyone else at the moment but thats never been Microsoft or Intels core competency.
And are you sure Linux isn't number 2 in the market if you count Android and all the other devices with some variant?
The financial markets have a measure called the price/earnings ratio (see http://en.wikipedia.org/wiki/Price-Earnings_Ratio). You get a bubble when a company is over valued (a PE ratio of 25 or more). Apple's PE is somewhere around the 14 mark, smack in the middle of the fair value range and the historical average for all companies since 1900. Intel and Microsoft are both in the 9.something range, which marks them as either slightly undervalued or that the market doesn't rate their long term potential.
For that well put informed opinion. Sense at last. Re: MS share price. MS's PE at the 9 something mark. I agree with your analysis. They are either undervalued, or the market simply cannot see the strategic upside. But these things can change quickly. MS are currently in a lull with being behind the curve re: tablet devices and in between OS releases. How much is this currently the Balmer effect.
I wonder where the index would be tomorrow if it was announced Bill Gates would be coming back to take charge. Not that I'm a Bill Gates fan, but there can be no doubt he had a real edge and drove the company places. At least he was prepared to make "bet the farm" decisions.
Apparently you've completely failed to grasp what PE represents. Think of it as "cost of money" going one way, or interest rate going the other. If a company DID EXACTLY AS WELL as it did last year then a PE of 13.9 represents a 7.2% yield on investment. The market takes a view on the future of a company and the risk of them getting more or less than 7.2%, and compare that with the cost and risk of other shares.
So PE doesn't assume linear growth, or growth at all. It's a measure of how well a stock is expected to do relative to the market (and from that how much money investors expect to make). Lower PEs indicate a lower chance of growth, higher a higher chance.
Apple doesn't rely on being thought of as the underdog, and they haven't for quite some time. They sell to the premium market on the basis of design quality an ease of use. They still pretty much own the personal music player market based on that, along with tablets, and have a good slice of the smartphone market (despite Android, or perhaps because of it, sales have been growing at a healthy rate). Macs are now a sideline. In these other markets Apple is a major player and is making big money.
Litigation? Thats pretty much a cost of doing business in the US, especially when a company is doing well in valuable new markets. Other players want a slice of the action. Pushing and shoving results.
The markets have factored all of these elements in. As risks convert to certainties you can expect some movement either way, but the idea that the stock price is grossly out of line is quite honestly laughable. Either that or you should be making big money as a market analyst (and we know that ain't going to happen don't we).
"So PE doesn't assume linear growth, or growth at all. It's a measure of how well a stock is expected to do relative to the market"
Is the P part in PE not justified by the market assuming a level of forward earnings discounted to the present thereby arriving at a price? i.e. people buy the stock at that price because they think it is a fair representation of the value of the company, that value being its discounted future earnings. Ergo growth is being assumed.
Couple of good posts there. Just one small point I would take issue with:
"[Apple] still pretty much own the personal music player market based on that, along with tablets, and have a good slice of the smartphone market (despite Android, or perhaps because of it, sales have been growing at a healthy rate)."
Apple dominate the music player biz, but it's a stretch to say they own it. Philips, Sony, Archos, and Sansa all have their hooks in there. Simialrly, and whatever you think of them, cheap tablets from a range of manufacturers are gobbling up the tablet market. And iOS has just been overtaken by Android phone sales, I unerstand.
> Theres a bubble in some IT stocks at the moment. I'm not sure Apples share price is an accurate reflection of it turnover/profit compared to Intel/Microsoft who have a very solid business in comparison. Alot of that price is in the image not the reality, Mark 110
"Microsoft generated a net profit of $5.23 billion whereas Apple’s net profit was valued at about $5.99 billion" ..
Besides P/E ratio, a more accurate assessment of current stock price is forward-P/E which, as implied, measures price vs estimated future earnings (usually 1-year down the road). Using this, AAPL has a FP/E of 12 versus just under and just over 9 for MSFT and INTC respectively. By comparison, GOOG's is 13 and BIDU's is almost 34. Of course, this is only one of numerous metrics but you can safely say no one formula can fairly value a stock's price. If there was, it would be quite a predicable and monotonous stock market.
I just don't get how using a Mac makes people feels like they are Apple's'shareholders.
Sure, they do profit. With LESS volume than some competitors, wich means higher margins.
So basically, they sold overpriced sexy products and people are happy about Apple results?
Seems to me the whole thing is about Apple's products cleverly designed to makes you *feel* different.
And fanbois are happy with that.
You hit the nail on the head. Apple's products are cleverly designed. They feel different because someone has put the effort to actual care about how people use these things.
They may be controlling, they may be borderline communist in their ideals, but they certainly design the frustration out of the software and hardware, and design in beauty. No one can deny their products are beautiful, and are, solely responsible for the current designs of Windows, Android, KDE, etc, etc, etc.
"They may be controlling, they may be borderline communist in their ideals..."
If you are going to use loaded words, please use them correctly. Unless you've seen a completely different Apple than I have in the last several years, you probably meant to say borderline "fascist," not "communist."
AC asks why people are happy paying for overpriced sexy products? Well, duh, isn't that obvious? Forget your blinkered look at commodity lowest price technology products and look around you in real life. Why does anyone pick a Rolex rather than a Casio watch, an Armani suit rather than one from C&A, a Mercedes rather than a Chevrolet, Prada sunglasses rather than Boots own brand, a Sony TV rather than an Alba, a house in the posh end of town rather than the run down end?
They're all sexy overpriced products and collectively we all LOVE to spend our money on them, or aspire to them if we can't afford them now. Why should consumer electronics products be any different?
Even people living off benefits buy Apple gear. Along with bling, 60" plasma TVs, fags, and enough booze so they don't recall the scrap they had in the street last night when they were thrown out of the pub.
Meanwhile, hard working people who can't afford to buy Apple gear within their means are very happy with Wintel and Android products. Not that they necessarily want Apple stuff anyway. It's not exactly value-for-money when compared to Wintel/Android products.
But you have to give Apple credit for being the ones who popularised smartphones and tablets with innovative designs. (They did not invent either)
Microsoft and Intel must be very embarassed by this latest news. C- boys. Must try harder.
"They're all sexy overpriced products and collectively we all LOVE to spend our money on them, or aspire to them if we can't afford them now."
Speak for yourself in that tired tradition of "Keep consuming, Britards! And why not indulge yourself like Posh and Becks? Spend more money on stuff... we're all sinking!"
You did manage to touch on something that's been widely reported already: Apple's financial characteristics are more like luxury vendors like LVMH than technology vendors like Intel.
You are using over generalization.
Not everyone think like that, hope like that, dream like that.
Those who favors Apple because it has some kind of social recognition associated with it just don't know WHAT they are actually buying.
They buy an image, hyped and overpriced.
They don't buy the technical product.
That's why i stick with what i've said:
They are not Apple shareholders, they both a social recognition (not a computer), and feel different because of that.
This purely emotional behavior shows in their commitment with Apple financial results.
If you check gross profit on products: Intel has higher gross profit than Apple. Many other tech companies have higher gross profit than Apple.
Apple has an average gross profit on 22% on their products. Apple have over 50 billion in cash in the bank. These does also generate profits. Together with their cash profits is about 32% per sold item.
Different segments in a company have different margins. A guess is that Microsoft Office unit has a gross profit of 90% and have a loss on other segments.
...but perception is reality.
Barking over and over than underpowered low spec, low margin bottom feeding machines are somehow better *just* because they're cheaper is nonsense. In the end people will pay for perceived value, if the level of value is there they won't pay and as far as I'm aware most Mac owner repeat purchase?.
I'd wager that Apple competed at the bottom end box shifting end of the market, OS X would run as poorly as W7 does on such hardware. The choose not to and so deliver a better user experience.
In the end as a consumer (be it cars, white goods or anything else), you get what you pay for and not everyone wants the same value propostion...
Apple always uses off the shelf and cheap chips as long as they serve their purpose of running Apple experience.
I really know Apple hardware and I have even seen realtek, motorola software modem chips, el cheapo Taiwan sound chips.
If you can admin a Mac Mini latest gen and run bootcamp, install windows 7 and all the drivers you will see what I mean. Poor machine becomes a joke.
Windows and especially chip/software 3rd party vendors who really seem to lose their minds are the problem and it even includes big names like Sun/Oracle. Even they add a needless startup item java update checker while Windows has its own "cron" used by Apple and it keeps running 24/7.
They basically sell an experience and a philosophy that computers should not be different from any ordinary home device.
In addition to that, they have "easier to use" UNIX desktop, even certified and NeXT running on it.
I thought Linux guys understood their mistake on desktop and... Gnome removed close/minimize buttons to save desktop space on a damned minimum 1024x768 desktop! Without asking anyone that is.
I won't buy anything Apple soon but I still use my powerpc macs so sorry not joining your Apple hate. Of course I hate mac fan(atic)s more... That is the reason I may move to windows 7+openbsd virtual on a commercially supported virtual machine.
If you think millions of people including very clever and creative types buy high margin Apple just for image, you remove freaking close/minimize buttons and keep blaming dumb people.
MS does stupid mistakes at core level. I bet Ballmer will personally fire you if you came up with "lets remove close button" idea. For example, instead of making NTFS less fragmenting, cleverly acting on Windows, they added low IO priority and zero detail defragmenter. That is just one of their mistakes. Apple guy knew what he was talking about. HFS+ does fragment too but doesn't do it nearly on purpose. It is just logic. No spec change needed. Just know where heads are and try to predict user behaviour. No magic and your "dumb" user will notice it doesn't slow down after millions of file operations, years of usage.
Ummm didn't much of this come about after apple moved over to intel chips?
Isn't it time everyone just gave up on this and spent their time on something more productive that "company x" is better than "company y".
Both companies do different things, and with the things they overlap on ms does some better and apple does others better.. Can't we just accept that and move on?
Since 1984, I have run my business on Macs. I've had about 40 over the years. In all that time, I have had one power supply failure and one Powerbook screen go stripy and had to be replaced. No old Macs were scrapped, every one was sold-on and got a good 'used' price. I have never needed 'support staff' to maintain them. I have never had a virus or other malware.
They might cost more at the outset but that does not mean 'expensive'!
1. Requiring a large expenditure; costly.
2. Marked by high prices
Nowhere does it doesn't mention total cost of ownership, over the lifetime of the item. I get your point, but I think you're stretching the definition to fit your argument.
For the record, I'm a several generation iPhone and Macbook owner, and I'd still call Apple gear more expensive, but I don't mind, cos I can afford it.
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