Yes, how is it that a company that's been around as long that's a market leader or second place in a large number of market segments can be so valuable? Truly, it's mysterious.
Remember that final scene in Pirates of Silicon Valley where it looks like MSFT is going to just destroy Apple? (hopefully remembering correctly) Bill Gates is laughing and Steven Jobs is looking sad and worried. At the time it seemed possible if not inevitable that MSFT would acquire Apple.
If I remember correctly around '98 MS did invest a significant amount of money in Apple (purchasing non voting stock). I think they offered to rewrite the Mac version of office too.
A few months later, Apple added Intel and Microsoft to the action. In later testimony, Apple showed that thousands of lines of "significant programming code" for video acceleration used in Windows came directly from Apple's QuickTime for Windows.
A couple of years go by and the companies were all kisses and hugs for the keynote address to the Boston Macworld Expo.
So, is there any ring of "irony" here as the reports make it sound? Not much to my ears. Microsoft and Intel got their fingers caught in the source code and paid for it. Microsoft hired a larger team of former Apple programers, which didn't help Apple directly, and Microsoft Office returned to being real Mac programs instead of lackluster ports.
> A couple of years go by and the companies were all kisses and hugs for the keynote address to the Boston Macworld Expo.
Totally remember seeing the video for that and the booing and gasping in the crowd was hilarious.
It was like Lando Calrissian in Empire Strikes back where he tells Han and the group he just made a deal to keep the Empire out for good and then the door opens and there's Vader sitting at the head of the conference table.
That's really interesting to see how he managed to pull off that presentation and keep it on track. More impressive than the "and here's the iPhone" in my opinion.
> The monopoly issues would have prevented acquisition.
Or forced selling off Apple's OS business, which would have been more dangerous to Microsoft if it wasn't tied to a firm that was dedicated to using it to sell hardware, and thus committed to restricting it to first-party hardware.
But the reality was that Apple had failed with Copland and had been shopping around for OSes because their OS was so bad. Apple's other spinoffs (Claris, Newton, Taligent) were also all failures, so there was really no risk that an Apple OS spinoff would get any traction. Even NeXT (the OS X we know today, and the brainchild of Steve Jobs) was on death's doorstep.
As an aside, it's truly remarkable that the amalgam of two near-dead companies (Apple, NeXT) could prove to be such a perfect mix of technology, skills, market and capital that it was able to grow into one of the world's largest and most successful companies.
Obviously it's not so simple—much of the credit goes to Jobs with the scar tissue of age and experience—but it's also true to say most of the essential puzzle pieces of success existed in one or other of these two companies. Apple had market share, loyal users, brand recognition, Jony Ive, and some good technologies; NeXT had Steve Jobs and a fully fleshed out UNIX operating system with all the trimmings.
The irony of (b) is that MS invested in Apple as a way to maintain a semblance of competition to shake of antitrust enforcement, and then Apple ate MS's lunch in whole segments.
If MS let Apple die then, and used traditional lobbying to avoid antitrust sanction, iOS might not exist and we'd all be on our Zune tablets.
Apple had sufficient capital at that time to execute Jobs' plan, especially since step 1 was to cut most of what Apple was doing.
The significant part of the MS deal was the patent cross licensing and commitment to continue producing Mac versions of Office and IE. Those created certainty in the market about the viability of the Mac platform. The investment was just to cement that commitment and certainty.
I'm sure there was an anti-trust angle, but also Bill Gates just really liked the Mac as a platform and did not want it to fail. He had one in his office at Microsoft from the day it was released.
I guess regulators are more tolerant when you're actually trying to save a competitor with a really fair deal, rather than purely attempting a takeover to kill them.
I believe the other regulatory trick that made it work is "non-voting shares". Microsoft had a big monetary stake but was given no proportionate power in the company's board.
No, we simply wouldn't be using tablets or the market would be much smaller.
In the 90s, MS attempted mobile devices using Windows CE (based on Windows 3.1—long after the release of Windows 95) and that went nowhere. Microsoft has always been the first for the longest time they were incapable of building things people genuinely wanted to buy.
If Apple didn't make the iPhone or iPad, all MS could do is rip off Blackberry. They wouldn't have made anything worthy of spurring the mobile industry we have today.
And Apple didn't really need that $200M from MS. Instead the investment had more symbolic value—signaling that Apple was still a viable company that had software support from the biggest tech company of the day.
Also, before Steve Jobs returned to Apple, Larry Ellison wanted to buy up shares for a hostile takeover and then install Jobs as CEO, but Jobs talked Ellison out of it.
> In the 90s, MS attempted mobile devices using Windows CE ... and that went nowhere
That's ahistorical. Windows Mobile shipped millions of devices. Their 2007 sales numbers were bigger than the iPhone 1's 2008 numbers.
In probably the biggest blunder in business history Microsoft decided to stop putting resources into Windows Mobile after version 5.0 in 2005. That allowed Apple to catch up by the time of their release in 2008. I've still never seen a good account of why they did that. If Microsoft had continued for those three years they might have been able to hold the iPhone off. Or at least Android.
Wasn't MS already in the middle of dealing with antitrust litigation as a result of bundling IE with the system? I can absolutely see them not being able to avoid more antitrust litigation if their only real desktop competitor died.
It's just that Apple led the last decade in many fields while MS was barely sustaining it's own. Different exercises, none is easy, but one is ultra visible and impact people emotion a lot more.
Barely sustaining if you only look at the public and flashy side of their business. They were still pulling in a lot of revenue and profit and were actually much more diversified that people gave them credit for.
True but that action in the shadow is what fuels the surprise. The consumer side has seen Surface (great job), but Windows is weird, Office can't improve much. They got the online version working neat. It's all cool, but it's not as ~innovative (I know apple knows how to make it even more flashy) as iphones and the likes.
Azure has sustained double-digit YoY growth for several years.
Even lowly Windows 10 is seeing modest growth.
They don't need to innovate to continue to print money for shareholders. The company is so diverse that they can write off a few billion in loses on, say, a phone division, and still enjoy double-digit revenue growth.
I believe you're referring to the "lost decade" under Ballmer where the stack ranking of employees led to a precipitous decline since all the teams were fighting each other and sabotaging each other's work.
I know, right? I was always wondering how it could be that a company which has virtually every single large corporation licencing its OS and Office products on a recurring basis, not to mention an increasing number of cloud services/storage, web servers, programming tools, and database tools could have eclipsed a company which has one main product that requires constant innovation to keep people buying.
Worldwide desktop government use of MS's operating system and office suite is above four nines. The Linux and Apple fanboys can tell you all the governments using their favorite OS as a desktop.
For the last few years, the companies at the top of the heap have all been consumer-oriented companies, and it's easy to forget that this doesn't necessarily have to always be the case. Microsoft itself is a household name for its consumer software products, so it's easy to think that their rise to the top would _have_ to be tied to consumer products too. From that perspective, these news are a bit of a head scratcher. The Surface line has been successful but not _that_ successful. Windows is as unexciting as always. The XBox isn't really a big thing outside the US.
The NY Times isn't a business-centric publication, so it's pretty much a given that their audience would leave the analysis at this point. The things that make Microsoft enormous are all hidden from their view.
Like a lot of business people, he did a great job of converting reputation into cold hard cash. The issue is that at some point bad reputation comes back to bite, Nadella has basically had to reinvent the company to get it back to a fraction of its former glory. Nobody lines up at night waiting to buy the latest version of Windows or Office anymore.
Why would they line up for them, though? The only time I can remember that was for Windows XP. Most companies use O365, which keeps the office desktop clients up to date, and when people buy a laptop it has Windows 10 on it.
The hype around the release of Windows 95 was really something. It was broadcast TV news segment worthy, back when the 6pm news was the news. Even new iPhone models get less hype than that. It’s hard to see Microsoft returning to those days. Windows is now just a platform for them to push enterprise software.
Microsoft cites expensive cloud integration in their quarterly reports as the reason for increasing profits. Almost $7 billion in revenue last quarter.
Actually the article is on point because IBM was king of the hill at one point, but isn't really all that competitive or innovative any more. MS has shown it has an ability to change direction.
Tell that to Red-Hat, the containers and managed OS layers people still copying IBM designs, the stuff going into their Java JIT/AOT compilers, or just the amount of patents they keep asserting each year.
IBM was acquired by a consulting firm (effectively, the other way around technically) and began to optimize for short term gain over long term gain. IBM still has developed a lot of technology (they can coast on old patents), but their ability to develop new technology is quickly eroding as they realize they can’t insource everything to India.
I can hear your snarkiness through this comment because we are all in the same industry. However, the average NYT reader probably hadn't seen or heard from Microsoft in a while to know that Azure is a big deal which is who this article was written for. Timely because of the stock price between them and Apple who we read not long ago were on course to be the first trillion dollar company.
That was just the market being overexcited, overvaluing it and artificially pushing it forward in order to make it that "first co. to hit $1T history." It didn't actually deserve/earn it, and immediately has slipped back to where it should have been in the first place (lost $150B in just 2 short months).
This wasn't some anomaly, AAPL stayed above $1T for an entire quarter, at times being above $1.1T and then only slid down recently when the tech market as a whole did. Trying to pretend Apple was never legitimately worth over $1T is ridiculous
There's more to it than just earnings and cash (other assets, liabilities, profitability, etc.). The thing is wall street is a reflection of the way investors see the future rather than the current value of the business.
And Apple telling investors it will no longer release individual product sales, like the iphone, was a huge red flag to wall street that there are problems brewing and things are cooling off.
But in terms of net stock equity, Apple is still about 3x MSFT, so I really honestly dont know what you are refering to, when list other assets etc. as Apple is 3x net.
In my humble opinion, apple stock is way cheaper than any other tech stock atm, when you look at the financials. (I own AAPL and will be buying more)
It's easy to understand the OP's feeling when you think about Apple creating what consumers have loved and MS has been dragging people around with their license and vendor lockins and slowing down innovations because they cannot innovate themselves due to all the backward compatibility issues that never ends. Only recently MS has been trying to give back to users with the new CEO.
But still no wonder how it rakes in so much when somehow people can't just give up on using Windows.
The iPhone ecosystem has the most lock-in by far and even has hardware and app store lock-in. People are forced to give up 30%. iPhone 4 was the last truly innovative phone, the changes after that have been either iterative or waiting for Samsung to take the risk on phablets and then making phones bigger. Apart from things like touch-id.
This story is much less about actual earnings, instead it's more about perceived future earnings.
Apple makes almost twice as much money as Microsoft does, but their valuations are similar. Thus the "market" believes that Microsoft's revenue is going to grow much faster than Apple's will.
As the article says, it appears to be the massive cloud revenue that has investors pumped. But much of that cloud revenue is probably Office 360, so is it really the type of cloud revenue people should be excited about? If it was categorized separately, I doubt investors would be so excited.
I suspect the answer is somewhere in the middle: Office revenue is a fairly mature business without the growth potential that AWS or Azure has, but Office 360 is a pretty powerful tool for Microsoft to use get companies to choose Azure over AWS.
Could Apple pull the same trick? Investors probably implicitly value App Store revenue as more likely to grow than hardware revenue so Apple could probably find ways to shift revenue from hardware to App Store. The next question is how much Apple cares about short term stock market shenanigans versus long term real growth. Apple employees hold a lot of RSU's so stock market shenanigans are well incentivized...
> Apple makes almost twice as much money as Microsoft does, but their valuations are similar. Thus the "market" believes that Microsoft's revenue is going to grow much faster than Apple's will.
The market for tablets is pretty much saturated, and the market for smartphones is no longer expanding at a breakneck rate. Laptops/desktops are not a growth segment, so Apple doesn't have huge potential for growth anymore unless they can find a new and very profitable product segment.
Apple isn't even really trying in any kind of serious way in the enterprise market, and their cloud efforts are only focused on supporting iOS for the most part. So where Microsoft (and Amazon) is poised for strong growth, Apple isn't even on the playing field.
I think back when the iPad 1 and 2 was gaining traction and getting businesses excited about tablets, is when Apple should've made a big push into enterprise. I think a lot of orgs (particularly gov't and hospitals) would've changed to being Mac shops if Apple offered the server, productivity, and desktop/device admin tools enterprise needs. But they largely ignored that opportunity and now the window is all but closed.
I know Apple's philosophy was to have a laser focus on what they do well, which was consumer hardware and software. But I think they had/have more than enough money to be a strong player in the enterprise market. What could have been.
Apple has 1 billion users that are relatively affluent, relatively fanatical and fairly locked in. I'm sure there are a bunch of good ways to provide value to these people (and thus extract money) other than just the phone upgrade treadmill. I don't know what they are, but I'm confident there are a few good ideas among the tens of thousands of Apple employees.
Really curious about where you got the data that Apple has 1 billion active user. I know they sold over a billion iphone overtime, but that's certainly not 1 billion different customers buying iphones. Also, I would assume a pretty big intersection of Mac or iPad users also own an iphone, so that wouldn't count as many customers either.
It is not good enough for company size of apple to just extract money. Apple needs to grow. Number of units sold is not rising fast enough or not rising at all. You can rise prices for 25% in one year or make consumers pay more but not indefinitely.
I would say the opposite. A lot of disappointment in their hardware lately, but required in order to use their software. iPhone users prefer iOS over Android, and Mac users prefer MacOS over Windows. I doubt most care much what device it runs on.
That's a fair point. Apple still delights a lot of their customers but there are still a lot of maddening UI/UX problems in a number of their products.
And iCloud is pretty far behind Google on consumer cloud services. And really, Google is only widening the gap.
I guess is there a reason to believe Apple would be good at providing enterprise IT or infrastructure services, especially when its become hyper-competitive? Delivering to enterprise is usually about customizing 10-20% around edge cases versus delivering one seamless, yet rigid experience.
When you're sitting on as much cash as Apple, they can find a way. It's just a question of whether they are willing to adapt their habits and philosophy to serve the enterprise market correctly. I think you hit on a key point, which is that enterprise customers need the ability to customize to get to that last 10-20% of use cases.
Right now Amazon and Microsoft have a huge lead in the enterprise cloud, but I don't think that lead is insurmountable. Apple would just have to find a unique angle they could exploit. Maybe come up with much cheaper alternatives to some of the Office 365 products and bundle it with open source SaaS/PaaS offerings.
I think you have a point, but I would probably point to Adobe as what Apple should have done in the cloud, or even something like Airtable. I think Excel is such a lock in for some industries and Google is already providing a free alternative in google docs. Apple probably had an opportunity in providing services for its designer/artistic focused customers as a starting point.
>But I think they had/have more than enough money to be a strong player in the enterprise market.
I've dealt with their business division(s) recently and it was nothing but headache after headache. Things didn't work (and no one knew why), opaque convoluted processes, weeks of waiting, 503 errors when trying to pay, etc.
The potential for growth is in raising the prices of its products. For example, the price of THE flagship iPhone has gone up by at least $100 for the past 2 releases. The MacBooks are also becoming more and more expensive
Sorry, not really on topic, but the market for tablets is really saturated? I can hardly find one that meets my goals, and the one I do like is Huawei (the M5 looks cool), which has a history of backdooring their products for Chinese spying purposes.
Personally I'd say that Office365 revenue is great revenue, as it's recurring and has good lock-in.
MS have wanted to get people onto subscription style licensing for a long time now (since at least the software assurance days) as it's predictable and repeating revenue.
The other element is the one you point out, companies that move to Office365 are more likely to choose Azure over AWS as there are synergies (like being able to us Azure AD for both) which make it a good idea.
The growth in cloud probably has a way to run as more companies come up to renew products and servers and move them to the cloud.
With Apple I guess the forward picture is more tricky. Their main hardware markets are a) getting saturated and b) getting more comptetive
For services, I'm not sure they have as great a story. I use iCloud as it works well with my iDevices but I'm not that wedded to it.
Why? It's hosted sharepoint and exchange and lync and active directory, AND development of sharepoint and exchange and lync and active directory. It's not just buying hosting from rackspace.
Office 365, OWA, SharePoint Online/OneDrive, AD, and Teams (VoIP) are absolutely a cloud service.
Exactly. Everyone reads "Office 365" and think that it only means Word/Excel/Powerpoint, when it actually includes Sharepoint and Exchange as well as OneDrive.
The cost and support savings for enterprises going from on-prem to cloud with stuff like Sharepoint can be huge. And Microsoft, for all its faults, understands the enterprise market in a way that Google and Apple definitely don't. I think Amazon has a better understanding of enterprise customers but they don't have the product offering to rival what Microsoft brings to the game. And because of the synergies Microsoft can offer, they can eat into the pie of other companies like Salesforce. Dynamics CRM isn't as good as Salesforce but it's easier to justify if you've already bought into the rest of the Office365 ecosystem.
I think Microsoft is poised for serious growth with their cloud offerings that is going to drive strong stock price growth for years to come.
OneDrive (formerly Live Mesh) is also a piece of software, a client windows, mobile, and web app. The mobile and windows apps SYNC data from SharePoint to either File Explorer or store it in the mobile app itself, for offline viewing.
cloud removes the friction. reserve a license, apply it to an account, they now have instant access to a "Project Server" or a "Dynamics Server" all within an hour.
Couldn't have written it better. Before the synergy was there because of the way Microsoft bundled licenses of their products. But you still had the hurdle of deployment and support of the on-prem products, which meant you had to either hire or allocate staff to administer those products.
Now that additional staff cost is gone, and stuff can be provisioned in no time at all.
that is not a change on the product. but on the client expectation.
We are talking about the Decision to go with microsoft or not today.
In the past clients would always deal with on-prem installs. But picking ActiveDir and Exchange was decided on their need of office.
Today, clients expect to create account, deal with SSO if they are big and that is it. Now picking microsoft offerings is still based on their need of Office.
As a user, I absolutely love MS Teams... it runs everywhere (as an Electron app) so I can use it on my hackintosh, android phone, laptop at work, etc. I can get on a voip meeting anywhere (issues getting my car to sync properly not withstanding). Totally replaces lync/skype imho.
OWA is okay, and I understand the changes in Outlook proper to be closer to that, and I know the reasons why (eventually consistent backend), but the Outlook app experience is a bit jarring on some instances, but getting better again.
I don't use Sharepoint (except via Teams' wiki) and don't use OneDrive much, but others in our org definitely do.
For any business with even a dozen employees on computers, Office 365 is definitely worth the cost of entry over trying to maintain those kinds of things internally. No affiliation with MS, and don't even run Windows where I don't have to, just appreciate the services for what they are.
I do wish that google would step up here a bit more, their solution is just so disjointed by comparison, and it's like they've got an identity crisis. MS totally leapfrogged them in terms of online document/mail solutions for business.
I would like to see better identity integration for Azure/AD with Apple and Linux desktops. Most of my experience with macbooks is middling to horrible, and Linux hasn't been a laptop/desktop option in any workplace I've been in using AD, which would be my first preference.
you dont store any files in the Teams files tab? Just chat and meetings?
If you store word, excel, powerpoint documents elsewhere than SharePoint, and your storage doesnt have versioning, its definitely worth moving your data over.
that's pure developer's prospect. For the users, Office 365 is cloud product which they daily used. Otherwise, how would you call Dropbox/Box a cloud provider?
Apple never did software well. They failed at writing their own operating system (Pink, Taligent) and had to buy NeXT. Now they're pushing Apollo-era Unix technology to its breaking point, while Microsoft moves ahead.
The UNIX heritage of macOS may be from the Apollo era, but so is the UNIX heritage of Linux, an operating system that pretty much powers the infrastructure of the Internet. Using macOS isn't so different from using something like Ubuntu Linux. There's a polished user interface and a UNIX-like system underneath that can be accessed with a terminal emulator. And Windows? Well, the guy who originally designed Windows NT was also involved with the Apollo-era VMS operating system, and incorporated a lot of VMS-like stuff in there. The NT kernel still forms the basis of Windows 10. TL;DR: Don't knock old things just because they're old.
The initial release of VMS was 1977, well after Apollo. And NT's initial release was first release in July 1983, leveraging the hard lessons learned from Unix and VMS.
Last Apollo mission was in 1972, so only 5 years after. I honestly didn't check the date of the last Apollo mission but I knew it was in the 1970s. Point is, both UNIX and VMS are ancient, and it doesn't matter, which was my entire point...
Azure itself is also growing, and Office 365 still has a lot of on-premise installations to pull over. So there's definitely room for Microsoft to grow.
And Azure has an insane amount of headroom to grow in to, if they do well. The market there is potentially huge, on the order of multiple times bigger than all advertising.
Top line (gross revenue) growth potential is massive. Bottom line (net revenue) growth is much more questionable. If you're just selling CPU cycles, that's a commodity in a market with strong competition keeping prices down. And Google/Kubernetes is working hard to turn the other value adds of AWS/Azure into a commodity as well.
They're not just selling CPU cycles though - they have a lot of PaaS offerings.
For example, an S1 App Service Plan is $73/m - and all that gets you in hardware is a measly 1 core and 1.75GB RAM. When asked by customers why the price is so high, they have said it's because they are not just selling VMs - the service has a lot of value. Although I do still think they are too expensive, especially at the lower end, I'd have to agree that Azure's App Services do provide a lot of value - they really are a joy to work with. I only wish they'd open source it so I could run it on IaaS!
Also, given their high VM pricing (IaaS), I'm guessing their margin on VMs is much higher than that of AWS or GCP.
Oh, and of course there is bandwidth. Bandwidth is cheap, very much a commodity - but not from Azure/GCP/AWS! Come to think of it, it is interesting that none of the big providers have made any effort to compete on bandwidth...
Microsoft has a huge portfolio of application with SaaS versions (from SharePoint through to Dynamics 365 CRM and ERPs) - Google doesn't play in those spaces at all.
But Microsoft is not competition free in any of those fields. The question then becomes how much of a bundling advantage Microsoft can give itself. Many of these competitors are or should be supporting Kubernetes to pursue a "commoditize the complements" strategy.
But the competitors in those fields say Oracle or SAP are minor players elsewhere. Microsoft's pretty open about SaaS > PaaS > IaaS - raw VMs/containers/storage is a commodity business.
One advantage that MS has with Azure over GCP and AWS is the reduction of friction in being able to create hybrid or transitional solutions. You spin up Azure SQL or a Storage account, and with the credentials, you can access and work against them from anywhere. With GCP or AWS, you're stuck trying to create byzantine permissions and/or requiring VPN solutions to get work done.
While it may be technically less secure, in many cases reducing friction and getting work done counts for a lot more, even if Azure does cost a bit more than other options.
That's not the end game. It's to develop services (apis) and sell access to them on a per use basis. Then youre wiring logic between the services. Neither Azure nor AWS nor Google want your code and containers to be portable between infrastructures. They want to offer the hard compute functions to you in rental form.
Google does want your code and containers to be portable between infrastructures. Kubernetes is very strong evidence of this intent. They appear to have decided that being the obvious place for Kubernetes hosting is worth more to them than competing against AWS & Azure in a world without Kubernetes.
I've taken the middle path: Typically I find I can build my apps using standard OSS tooling and just keep it CI'd into a self-contained container or packaged deployment. If I need to roll it out to GCE? Sure. AWS? Sure. Azure? Sure. All 3 at once? no problem.
The need to shim common things like "make image, deploy VM, set up VNET" is a pain and does marginally limit portability, but perhaps by nature of my only needing a small set of their IaaS style offerings (compute, networking, MAYBE blob storage/cache if I'm feeling fancy) I've found it rather straightforward to maintain portability through very minimal abstraction.
(Disclaimer since I'm talking about cloud stuff, MSFtie, opinions are my own etc)
Pretty much the same for us, the heavy lifting is done on in house servers but some of our external services are running on linode.
In either case everything is done via ansible/repeatable deploys (and some python and bash scripts).
Even our development instances are done using basically the same ansible setup as production (it catches more than I'd expect in terms of "that would have hurt in production").
For now it's a practical solution that leverages the skills I have and our projected scalability needs from year to year are low enough that I don't worry about it.
"Even our development instances are done using basically the same ansible setup as production (it catches more than I'd expect in terms of "that would have hurt in production")."
At the risk of a glib comment, the essence of your statement would be VERY high up on my "biggest lessons I've learned over the last decade" list, if such a thing existed.
The benefits of having your develop look as close as naturally possible to your production (and then abusing it in every way imaginable as one tends to during dev) are innumerable, and the strategy has caught so much on my end.
One thing I will say that I appreciate about Azure... is they do have an "easy" option for most of their services, that lets me access them as a client from wherever... so a locally running service can be backed by Azure Storage services initially, or for interaction in early development. The same goes for Azure SQL, etc. Yeah, it's a bit more pricey but the reduction in friction in a business setting is everything.
I think you're on point, and I think it bothers Amazon too. During yesterday's re:Invent keynote, the AWS CEO specifically called out that while Microsoft's cloud numbers were growing faster by percentage, their actual dollar growth was insignificant compared to the power of the force -- I mean compared to AWS.
"The next question is how much Apple cares about short term stock market shenanigans versus long term real growth."
Isn't that what Microsoft has been doing? Boring "businesses-y" stuff that surprise is growing whereas Apple is selling hyped, shiny objects that might fizzle but hasn't...yet?
The thing is that even if Azure took all cloud revenue, and the cloud continued to grow at projected rates it would be several years before the combination of cloud and traditional software exceeded Apple’s current revenue.
And realistically, Azure is not going to capture the majority of cloud market share any time soon.
It's pretty well known that Microsoft folds their office revenue into the cloud so I'd be surprised if it's fooling many investors sophisticated enough to differentiate the revenue.
My simple argument - Microsoft is actually focusing on "Developers, Developers, Developers" & what developers want instead of just lip service.
Focus on developers & they'll create awesome stuff with your product. IMO, Apple is where they are because they made a nice piece of hardware with a platform that allowed developers to make & sell apps on it. ITunes was great for musical devs & IPhone was great for software devs.
When OSX launched with a Unix platform, every hackathon went from Thinkpads to Macbooks over the course of a year or two. It was just more fun to make tech on them. I don't think it was intentional on Apple's part to target developers, I think it was a byproduct of the Next's team's passion for great tools that leaked into Apple's offerings. Apple would do well to make developers happy and to make creative pros happy. It's weird that we're forced to buy iMacs and Macbook Airs in 2018 to do our best work.
I did exactly this (well, "refreshed" vs. bought, as this is a company machine).
Could not be happier. Linux works great for what I do, I have a decent KB, no touchbar, no olympic sized trackpad that just gets in my way, actual PORTS I can use, *nix OS... totally happy.
I've been using Caps Lock as Esc for around a year now (and Shift + Shift for caps). It's a big ergonomic win for me on both my laptop and desktop keyboards.
I remember that too. suddenly everybody you saw had a Macbook. I always thought that part of the initial iOS success was that a lot of developers already had Macbooks and were ready to develop apps on it. I think we would have seen much less apps if the Macbook hadn't been that popular before.
If they continue to neglect the Mac platform and devs really start moving away from Mac iOS may suffer quite a bit. Microsoft would have a great opportunity to take over if they made the Surface devices a little cheaper and higher quality. My Macbook 2014 is getting a little old and I am really torn what to do next. The Surface devices we have at work are quite expensive and still not as good as a Macbook but the latest Macbooks are not that appealing either.
I picked up a Surface Laptop 2 a week ago, as a replacement for my older MacBook Air, and so far I’ve been pleased with it. The hardware may not have the fit and finish of a MacBook, but it’s still slim, lightweight and attractive in its own way. The screen is great.
And that keyboard...just works.
The article doesn’t mention the Surface product line, it doesn’t contribute much to Microsoft’s revenue, but it allows the company to present itself as a new Microsoft and demonstrate what’s possible with Windows.
If they only could build decent trackpads and gestures that work. On my Macbook I can work perfectly well with only the laptop and the trackpad but on Windows the trackpad doesn't feel right and the gestures are weird.
I'd suggest you consider the Dell XPS line whether you need 13" or 15" laptop. Both laptops have good battery sizes, surprisingly durable coating for what it is, good keyboards, trackpads, screens... And both have a fingerprint reader which works just as well as touch id on a Mac. Oh, and they are very repairable because they're designed to be serviced on-site, so even after warranty runs out, you can service them with quite cheap genuine parts (which are themselves abundant on ebay, amazon, parts-people, aliexpress).
I do have a bias in that I've been a happy user of the two generations of XPS 15 for three years.
The legacy is still there, many conferences and events are dominated by Macs, but it's not the 100% share it was a few years ago and the "get a mac" jokes mean something quite different now.
They used to be aimed at people struggling to get their Linux machines to connect to projectors, as Macs "just work". They're now aimed at people with Macs in dongle hell.
I think Microsoft's biggest mistake with Windows Phone was branding it with "Windows." I wish they would have called it an Xbox Phone and tightly integrated it with Xbox live. Early on, they could focus on getting some really great games built and the lack of "apps" wouldn't have been as big of a deal as it was.
On the other hand, I know a few big companies that initially went with Windows Phone only because of the "safe" image - no chance they would have done that with a gaming-related brand. The idea of going after the Blackberry-vacated market wasn't completely wrong.
The real issue was the repeated backward-compatibility break; it pissed off all their early partners and adopters and discouraged any serious investment in the platform. By the end, it wasn't a bad platform, but the trust was gone.
They had like, 30% on business.
WP was safer than Android, and cheaper than iPhone, and also had all Microsoft enterprise experience behind, with good MDM solution too.
It was relatively common here in Europe, where higher management was getting their Blackberries replaced with iPhones and everyone else below got to choose between Android and WP.
A telecommunications company starting with V used to do that.
They tried that with universal apps. No one was going to invest money on good games without the users being there and no users were going to buy the phone without the apps.
Even if Windows Phone had Nintendo level third place success, what would it have gained them? No company besides Apple and to a lesser extent Samsung make any real money on phones. I doubt the phone division even makes any really money, Samsung makes most of its mobile money from the parts it sells.
Google doesn’t even make that much from Android. They make some from Google Play Services and advertising but they also pay Apple billions a year to be the default search engine for iOS.
They could have branded with both, effectively... "Windows Phone" for Business; "XBox Phone" for Personal Use .. same OS and tools under the covers. Developers could target both, and users would just get their skin version on top of the OS.
XBox Phone would have sign in for an XBox account... Windows Phone would tether to an exposed AD/SSO login system for business use.
Google likely makes well over $10 billion a year from Android. Only when comparing against iPhone revenue or Google's own advertising revenue does it look small.
This is the best number I could find from the Oracle vs google lawsuit. Google didn’t dispute the number.
Thanks to a lawyer, we know now that Google has made $31 billion in revenue and $22 billion in profit from its Android operating system....
That’s over Android’s entire existence.
But if the $31 billion total is correct, Google has earned less money from Android throughout its existence than Apple earned from iPhone sales in fourth quarter of 2015, when it brought in $32.2 billion in revenue.
That's a pretty apple to oranges comparison. iPhone sales is selling physical hardware which obviously comes with a much higher total cost then just software. A much better comparison would be from how much Apple earns from it's app store and developer fees.
In the context of how much Microsoft could have made if it had come in as a successful third place, if Google can make only $31 billion over 10 years, how much could MS make in third place?
But to answer your question 11.5 billion last year
I think Microsoft's biggest mistake was trying to go to bat with the US carriers: trying to trade more control over things like software updates for terrible mistakes like timed exclusive releases with only one specific carrier. (Windows Phones were AT&T exclusive for bit; then there were various "flagship" phones alternating exclusivities between AT&T and Verizon depending on whom Microsoft needed to court better that phone hardware generation.)
Apple was able to do that because of a combo of first mover advantage and trend demand. Android didn't even bother, which lead to the obvious problems of the version diaspora of Android installs (who knew which phones on which carriers would get which updates and when), but playing ball with the weird control issues of carriers ultimately served Android pretty well in eventual market penetration, because the carriers were happiest to sell things they felt like they could control.
It’s slightly more complicated. In most major markets, the dominant carrier wouldn’t agree to Apple’s demands. So Apple made a deal with the 2nd or 3rd place Cartier. People wanted iPhones badly enough to switch carriers. Then Apple was able to make a deal with the dominant carrier.
I agree. I also think it hampered their early tablet effort. But I think what they should have done is taken Windows 8 and Mobile and called it "Surface OS" and focus it entirely on mobile. They wouldn't have even had to change much code-wise, just marketing and developer relations.
Windows 8 should have continued to be desktop focused (normal start menu, etc) but also able to run and develop the universal apps.
Microsoft and Xbox seem to have a distanced relationship. For example, Microsoft could figure out a way to allow XBox AAA games to run on all Windows 10 machines, while creating an edge over Sony's PS4, but Microsofot has only allowed XBox indie games that are already available on Steam. An XBox-branded phone would have this expectation.
This is no longer the case[1]. You can play many, previously console exclusive, titles on Windows (Forza and Gears come to mind) - albiet via the Windows app store.
That's what I was referencing to with games that are also available on Steam.
Microsoft isn't even attempting to join windows and Xbox, and is only selling games that developers already make available for windows - except as "Xbox play anywhere".
How could they have called it an Xbox phone when they didn't have any AAA titles to launch with?
I had WP7 back in the day when it seemed like IOS, Android, WP and WebOS could all share the pie. It didn't even have a file manager, something Androids came with on Day 1.
Luckily for Microsoft, there's many developpers that don't work on mobile. There's millions of developpers working for banks, governement, or other large organization, and many of them are choosing Microsoft technologies for their stacks. Mobile app had its gold rush in the early 2010s, but now Microsoft is investing into capturing developpers to use their cloud platform, and they are obviously doing very well in that area.
I am definitely not anti Microsoft, I’ve been developing with some version of Visual Studio for well over 20 years. But, it makes absolutely no sense to hang your hat on developing using Windows specific technologies in 2018. Even Azure is hosting more Linux VMs than Windows VMs. I’m at least moving toward .Net Core and if I were doing desktop apps I would use Xamarin.
But all of the money and energy is moving away from .Net. As much as I hate that JavaScript has taken over in mindshare, at least there is TypeScript.
Apple had first mover advantage into a niche they redefined: smartphone as touch screen based device with a software keyboard instead of a device with a hardware keyboard.
The real question for Apple in my opinion is: where will they go from here? Android is creeping higher and higher in the ecosystem and smartphones are starting to become good enough, just like PCs. They are a status symbols, which PCs couldn't be, but as they become so widespread, their status symbol value decreases.
People have been saying that Apple products are a “status symbol” since the iPod. How is a product owned by 45% of smart phone owners - at least in the US - a status symbol?
By product differentiation. People who do not want or cannot spend a lot of money buy an older generation (currently iPhone 7 and iPhone 8), people who can spend more buy the latest iteration. With the watch there is also a lot of differentiation, from basic bands, sports bands, to expensive metal or leather bands.
Though, I do not agree that people are only buying Apple for status. A lot of non-tech friends just find iPhones simpler to use, does not have preinstalled crap, and gets updated longer.
I bought a 6s in 2015. I kept it until earlier this year, replaces the battery for $29, bought an Apple battery case and gave it to my son. It runs the latest OS and is still faster than most midrange Android phones coming out this year.
I think they could carve out a niche as the phone manufacturer that respects people's privacy, but I'd be a lot happier to join their cheerleading squad over that if they weren't also constantly ratcheting up their prices. It doesn't sit well with Tim Cook's statements to the effect of privacy being a right and not a luxury.
- privacy focused
- arm processor design leader
- swift native apps
thats about all that differentiates it. the question is how long that will matter, and if or when the third becomes more of a hinderance. If Microsoft and Google continue to grow towards each other (teams being built on chrome, Microsoft treating android as its mobile operating system.)
I've been to Los Angeles last weekend and have seen homeless people at the subway stations entertaining themselves with their iPhones. Now tell me: how is owning an iPhone a "status symbol"?
> Android is creeping higher and higher in the ecosystem
It crept there about 7 years ago and is about 90% of the market now, why present tense? And it was good enough from like day 1, although the hardware was behind sometimes.
So I think it's fair to use the present tense, especially now that Apple will stop disclosing iPhone unit sales which indicates they are no longer growing.
I wonder whether we'll see a tipping point - especially in poor countries where the Android share is close to 100% - where developers start producing Android apps but not iPhone apps, and this affects the desirability of iPhone.
As a side note: I hate statista and hope it is removed from Google search because (a) 90% of the time when I try to access that page I see a "Exclusive Premium statistic" label that blocks 80% of the graph; (b) 100% of the time when I try to view the source figures of the graph I get the "Exclusive Premium Functionality" blocker.
Global Sales. Not Global Usage Shares. Android has a pattern of faster replacement cycle.
There are Currently 5B Mobile User World Wide, 3.3B Smartphone, 2.5B Android, 800M iPhone users. Both the Smartphone and iPhone user base are still growing. So Apple has roughly 25% of the world market share. This is not bad consider there are 500M+ Smartphone users in India which Apple has less than 2% market shares.
Looking at the trend line and from line of speech, I think most analyst ( Well, only a few really. Most of them don't care about its actual market usage. ) were predicting the 1B iPhone user base by 2020. Fueled party by iPhone XR, or the supposedly affordable iPhone. Now it doesn't look like it.
The thing is, I don't have hard numbers for this, but from what I know (and it makes sense, given my personal experience with people and desktop OSs, car brands, clothing brands, etc.), regular people don't switch that much between mobile platforms.
I'm pretty sure Android is growing faster than iOS, worldwide. And most of the users that get entry level or mid range level Android phones won't "upgrade" to iOS, they will just get better Android phones, since they already know the system.
Barring some super successful entry level iOS device [1] being introduced by Apple, which is unlikely, Android's market share will only go up. Apple will still be super profitable, though.
[1] And that won't happen, as Linus from Linus Tech Tips put it: Apple is jewelry and people don't buy cheap jewelry :)
>I'm pretty sure Android is growing faster than iOS, worldwide. And most of the users that get entry level or mid range level Android phones won't "upgrade" to iOS, they will just get better Android phones, since they already know the system.
First one is true. Mostly because Smartphone Saturation. The growth are in Low Pricing phones, 80% of the Smartphone in India are below $250. And Apple doesn't have phone below $400.
The Not Switching to iOS is false. While everyone has expected that, in reality Apple is still growing its user base, at a rate of roughly 100M in 18 months. That means roughly 25% to 30% of all iPhone purchase were coming from Android.
Global market share. In most western countries it's around 50/50 or 60/40 one way or the other. End of the day, that's still where most of the purchasing power is.
Yeah, but in the wealthier countries, apart from Germany and France, it seems iOS is either almost tied or in the majority (I just looked at US, UK, Canada, Netherlands, Sweden)
Indeed, and Apple's services revenue is also growing quite a bit. So, they'll want chunks of the market where it is also likely that people will be purchasing paid apps, iCloud storage, Apple Music, movies, etc.
A lot of developers want portability and retaining all revenue from their programs. Could Apple do even better by providing more for developers on these fronts?
With portability you also get Qt apps, which generally blend in reasonably well on their respective platforms. Developers can go the extra mile to make apps really blend in on each platform, but the defaults are fine.
"For calendar 2017 the App sztores approximate $11.4 billion in revenue was almost 5% of the company’s projected $237 billion in total revenue and over a third of the $31 billion in forecasted services revenue." - https://www.forbes.com/sites/chuckjones/2018/01/06/apples-ap...
I'm a NBA fan, it's been funny to see Steve Ballmer portrayed as a business titan using his know-how to turn around the Clippers rather than as a college buddy of Bill Gates who might have been the worst tech CEO of the late 1990's.
The stock price remained stagnant, but under Ballmer, both revenue and net income doubled. He may have sucked at the PR game, but he was far from the worst CEO of the 90s.
Did he really do that bad or was he stymied by anti-trust concerns. Major miss in terms of executing on Windows Phone a few years too late but in other ways he really could not use the strength of Windows too much for fear of the government.
Ballmer was a great CEO. The company made record profits, completely dominated the enterprise market, started getting into cloud services before anyone else, and managed to break into the living room and the giant gaming market with the Xbox. He even invested in Facebook. He fumbled the mobile phone fight with Nokia against Apple and got pushed out for it, but overall the company did incredibly well through his tenure.
Well, as a Clippers fan, Ballmer is such a step up (albeit such a low bar from Sterling). Being an NBA owner is a lot easier than running one of the world's largest companies: Be willing to pay for a few smart/modern execs, splurge on a few players, and the rest kind of runs itself.
Oh, and be in the second largest media market in the country.
As a developer and architect, the move to embrace cross-platform has been truly wonderful - I no longer feel like a 2nd class citizen!
I think this change has been driven by 3 things:
1. The cloud: Azure isn't going to make money with Windows alone
2. "Developers, Developers, Developers": the focus on the needs of developers means a cross-platform story - .NET Core, VSCode, Visual Studio for MacOS...
3. Satya's good sense of timing that the time was right for 1 & 2
I'm a very happy Microsoft customer, both personally and in business. I have issues with some of their stuff, but I've had issues with my Apple and Google devices/services...so it's just part of it.
I think the big issue has been since he shifted focus off Windows the QA has fallen off. Thinking "Windows insiders" would uncover bugs that their former internal teams would have normally done...I think, just doesn't work as they planned. Supposedly this is being addressed. And despite Microsoft canning some projects their support for those things are well beyond what Apple or Google would do. But things like Azure Sphere, Hololens etc are very exciting. Their demos for industrial usage at Build/Ignite always amaze me. AWS/GCS seem to be media/consumption driven, while Azure is driven by makers/producers.
As a customer, I'm very much not happy with Microsoft, specifically concerning Windows. Their QA is in the toilet, they've become increasingly hostile to the concept of users being in control of their own systems, and have just generally made a giant mess of everything above the new driver model.
For the business, we're sadly stuck with Windows for the foreseeable future regardless (assuredly Microsoft realizes this and that's why they don't give a damn about complaints), but for me personally moving to Linux Desktop, as much as I loathe it, is increasingly looking like the lesser hell.
I'm a long-term Windows user and if it wasn't for the negative responses about the current MacBook Pro keyboards I'd have quit Windows about a month ago. The update data loss problems, insane updates (let's change the Start Menu again, 3D Printing?!?) and Stasi-like Telemetry just feel like a company that doesn't respect their home customers.
If someone would write a fantastic file manager like XYPlorer or Directory Opus for Linux then I'd probably never look back and just buy Crossover.
MS is really starting to get my attention back as a developer. ~6-10 years ago, Apple took over a large share of the dev community because of combination of iOS plus Unix but as of late they have not been delivering reasons to stay around. MS on the other hand has been working to get developers back. They have been getting out of the way and making it easier to get stuff done.
Apple’s lead is largely due to key decisions that competitors failed to emulate — leveraging bsd open source tooling, removing legacy io ports, largely perpetual OS licensing model.
But now that Microsoft is emulating those decisions it will no longer be as crippled by its own past bad decisions.
And in the meantime it has sunk tons of money into cloud and xbox which are massively profitable.
And Apple’s refusal to cater to budget conscious consumers is starting to really hurt market share, while allowing competitors to extract a lot of undeserved profit simply by offering their goods at a relative discount compared to Apple.
Apple’s most consequential f-up in my opinion has been the way it has priced solid state storage across its product line. This has left the door wide open for competitors to win on the basis of consumer ignorance about subtle performance differences, while forcing marginal apple buyers to settle for a highly inferior user experience bc of not enough (and not expandable) storage.
Apple does a lot of things well but its weakness is that it doesn’t understand that not all of its customers work at apple.
Even today Amazon is setting itself up to eat Apple’s lunch in educational tablets and parental controls, a major driver of consumer purchase decisions, but hard to understand if you are a recent grad from a top school seeking status who took a job in product at apple.
Microsoft does a lot of things badly but seems to be willing to revert bad decisions and try hard for market share.
Ultimately market share is what makes developers create high quality experiences for the platform. Microsoft had this and lost it, and doesn’t plan to lose it again.
Apple is riding on their earlier successes, and failing to look to the future.
Take that "BSD open source tooling". It's a decade old. I depend on that stuff, and Apple used to market its UNIX roots heavily to people like me. I now see scripts breaking which work fine on Linux and real FreeBSD, because it doesn't support new options added to commands over the course of an entire decade. Or there are behaviour differences, or missing functionality. It's becoming significantly less useful. Enough that I hit these problems frequently and have to find workarounds. I want some commitment from them to actually maintain the system I pay for.
The perpetual licensing did solve one of their problems, customers who didn't upgrade, and reduce their support burden. But this coincides very closely with the end of any real maintenance of the core operating system underneath the GUI. Since 10.6 it's been sorely lacking, and the quality drop is noticeable.
You're right about the storage pricing. When you spec out a fully loaded Mac Mini, the pricing is obscene. I do need a new Mac to support Mac development for my customers. I need a system as a CI server, and for interactive testing. A Mac mini would be ideal for a small office. The old ones were woeful. The new ones are better on some fronts but terrible on other counts like graphics. And the pricing is insane for what you're getting. I don't need laptop parts in a tiny case. I do need an affordable system which will last a while, rather than an expensive fashion statement. If it was twice or even four times the size, I wouldn't care. I do however care that the storage is expensive and soldered. What if I wear it out in a few months after thrashing it soundly with CI builds and testing. The whole system will be an expensive brick. A single NVMe slot would have solved that.
This does drive away developers, particularly ones who develop applications which require higher-end systems, such as scientific computing. Apple doesn't have a high-end system to offer. But I can get or build a PC with a fantastic spec for less than the cost of the Mac mini and run Linux or Windows on it. Microsoft have even started tools like vcpkg which significantly lower the entry barrier and maintenance cost for developing on Windows. It still has a number of disadvantages over Linux or MacOS, but they are actually catering to a real need while Apple stands aloof, ignoring the needs of people who would drive the use of their hardware and software.
When it comes to CI, a Mac Mini is acceptable only because it's the cheapest bit of Mac hardware for the task. Not because it's the most appropriate. What I'd really like is to be able to run it on VMware on the hardware all my other CI systems are hosted on. Because paying for an overpriced bit of anæmic hardware for it to sit on a shelf in a machine room is a complete waste of money and space, as well as being a complete pain to administer.
Better still would be some support for native containers in MacOS, do I can use docker or an equivalent directly, and run every build in a properly clean virtual environment. But I doubt the current Apple care about such things.
I'm perfectly happy to pay for real Mac hardware for development, testing and end-user deployment. But for the back-end stuff, it's awful, just plain awful. If I could purchase a MacOS licence specifically for VMware usage, I'd do so immediately.
> Even today Amazon is setting itself up to eat Apple’s lunch in educational tablets...
I thought ed tablet demand was shifting to Chrome OS laptops. Further, I don't think I've ever heard of Amazon (Fire?) being a relevant part the ed market.
> I thought ed tablet demand was shifting to Chrome OS laptops.
This is due to a massive sales/discounting effort and naive people doing the purchasing.
> Further, I don't think I've ever heard of Amazon (Fire?) being a relevant part the ed market.
It's under the radar at this point. For the price of one Chromebook you can get a half dozen 10" fire tablets. Amazon has a far more thoughtful kid-oriented experience compared to anything Apple, Google or Microsoft offers.
Apple caters to big budget studios who make glossy but underwhelming kids content, Google just wants to show kids ads and monetize based on kid eyeballs, and Microsoft ignores kids until they are old enough to want an XBox.
MSFT is in this position because they executed better than Google in cloud (also cleverly placing their fat profitable office revenues in cloud) and the market rewards growth in rapidly expanding markets because it's a signal that of future revenue and market share.
It happened because all of their asshole stuff about pushing everyone onto a single platform, deprecating all their previous platforms, forcing telemetry into everything, and a merciless focus on 'as a platform' and 'store'... is working.
I mean, I hate it, but I gotta call it how I see it. It's an evil play but not a dumb one.
People aren't as hyped for iPhone 13ABC and aren't upgrading as soon as possible. I haven't seen the news covering the multi-day long wait lines at Apple stores for years.
Microsoft also got it together after dropping Balmer
A big reason for the lack of long wait lines is because Apple's retail org under Angela Ahrendts has been trying since 2015 to actively discourage that behavior [1], and they have SUBSTANTIALLY better control over their supply chain now than they did 10 years ago. Tim Cook has been quoted as saying inventory is "fundamentally evil" [2], which is the main driver behind that change.
I would really like insider insight on the last years of Steve Ballmer. A lot of the good things Microsoft is doing started under his last few years. Whether he deserves credit or not, is another story. I know Scott Guthrie gets a ton of credit from a lot of people for turning the company around, especially with Azure & Open Source.
I'm also curious what really happened with the Nokia debacle. Microsoft had some die hard phone fans & many people wish they could have one that ran Android apps but with the MS Phone UI so they could have the best of all worlds.
These are the key points that people should read. Ballmer is constantly criticized, yet under his watch, revenue and net income doubled. The release of the Surface, Azure, and o365 also started under his watch. Natya was a great choice to take the reins, but the people who think Ballmer was terrible only paid attention to his poor PR and stock prices. The man knew how to make money.
"In a remarkable feat of negotiating legerdemain, Apple co-founder Steve Jobs got needed cash — in return for non-voting shares — and an assurance that Microsoft would support Office for the Mac for five years. Apple agreed to drop a long-running lawsuit in which they alleged Microsoft copied the look and feel of the Mac OS for Windows and to make Internet Explorer the default browser on its computers — but not the only choice."
It wasn’t a bailout. The monetary amount was only $250 milllion. Apple turned around and spent $100 million the same quarter to buy out Power Computing’s Mac license.
A net $150 million wouldn’t make or break Apple even then.
Microsoft paid $150 million, not $250 million. And Apple had $1.2 billion in cash at the time, so they weren't on the brink of bankruptcy, just headed that way. It looks as if Apple would have won its patent infringement case against Microsoft, since there were thousands of lines of quicktime code found in Windows media player (probably added by mistake, but even so...). That was a smart deal by Apple, dropping the infringement suit, because Microsoft pledged to develop Office for Macs. No Office, no Mac sales to businesses. There was a time when Macs couldn't open Word .doc files, not with formatting intact, so it was an incredible barrier to communication.
Well, you can be sure about that because Apple kept losing money for the next three years. The net $140 million wouldn’t have covered half of thier losses for a quarter.
It's always seemed curious to me that Berkshire Hathaway had major positions in IBM and now with Apple and Buffett and Gates are like BFFs, but BRK has no position in MSFT and seemingly never will. MSFT has always seemed like the more BRK-style investment to me than any of them, besides.
I'm familiar with his position on tech companies generally, as was kind of the premise of the comment (he doesn't "do" tech but does IBM and Apple and he's BFF's with Gates).
What I didn't understand was there are several CEOs and executives of BRK portfolio companies on the BOD and why is there a not conflict there, but would be with MSFT...the reason, it seems to me is none of those portfolio company execs on the BOD report earnings separately from BRK. (wholly owned)
Buffet basically admitted he wanted to invest in tech, but didn't research very well which company in tech to invest in. IBM was more a dart throw amongst tech companies than any real research.
It's my impression that Microsoft is invested in a ton of different segments and Apple is only in a few. If the mobile phone market is Apples huge majority and it starts to decline it becomes a putting all your eggs in one basket problem.
Microsoft knows how to ink large deals with enterprises to move them onto their Azure platform and sell them additional products and services. Their cloud, while IMO the UX is inferior to AWS, is an easy sell to large corporations with a large MS footprint already. I expect their revenue to keep growing, but their P/E multiple is a little high IMO.
Apple has been extremely influential in consumer tech by refining technology to make it approachable by the common man, starting with the introduction of the Macintosh, and then the iPod, the iPhone, the iPad, Macbook Air, etc.
All of these products have been very successful, I'd say even game changer. Add to that strong marketing campaign, hype and huge margins and this is what you get.
When they get it right, their design, finish and overall build quality are very very good. I think they could do a lot better, but nobody else really is, at least not at scale.
Looks like the huawei p20 pro retails for about 0.6 the price of an iPhone x - and I'm not sure I'd describe it as much worse? Maybe the cpu? [ed: but I don't think the p20 qualifiés as "much better and much cheaper" either]
Apple makes their money by being the most successful fashion/luxury goods brand on all time, and in turn, makes nearly all of the profits in their core businesses while controlling a minorty of the market share.
Computer hardware is normally a race to the bottom that only Apple has been able to get around.
People misunderstand Microsoft. They look at how it dominates both home and business computing, and so naturally they assume that it must be equally competent at both. Now it is true that, from the beginning MS has been brilliant at figuring out how to make software useful to businesses.
However, when it comes to home users, that is not at all the case. What happened was when home computers started to take off, they were new and so potential users had no idea which of the many brands that were available were really good.
But then IBM came along and got into home computing and it had this reputation of being the king of computing, so everyone just assumed its home computer was best. and in addition people who had learned to use a PC at work decided to buy a similar computer for home use.
And so the PC became the overwhelming choice and dragged MS along with it, even though DOS and the PC architecture were quite inferior to some of the other choices. And then the GUI was invented by Apple, which is truly expert at making computing easy for ordinary people.
But then the smart phone came along, and MS stumbled there, so now MS has intelligently decided to focus on its real strength, business computing.
The market is basically valuing Apple using the old Hardware Company matrix. Unit Sold, Profit Earn Per Year. An equation used for when you are selling commodity like Fridge, TV etc. And because consumer can always switch into another brand in their next purchase, it has a Low P/E.
But in reality the Apple has a software ecosystem lock in, most consumers don't want to leave the iOS. And most are willing to pay for not having them worry about their next upgrade move. Now by this point someone would say Google Photo, Dropbox etc and your data is etc etc. Most consumers, 95%+ of them aren't geeks. They don't know what is Google Photo, they never heard of Dropbox.
Apple stock Price doesn't even account for the Asset Apple has, its brand value, its Cash. And I have been saying for years, if it wasn't a ridicously large amount of money, Apple would have been an instant take over target.
I really wish / think Apple should start their iPhone Subscription Services Worldwide. Allow contract with 24, 36 , 48 months of payments with AppleCare+ and iCloud within the period. Your iPhone repair will at least be affordable by default, along with free Battery Swap during your Subscription period. iCloud will protect you from Data loss, along with options such as Apple Music, Apple TV etc. You are allowed one free upgrade during your subscription period which will reset your cycle again. This way, most users are simply paying a monthly price and stick to an Apple devices for effectively forever.
The great thing about this is it would be very hard for its Android competitor to copy. Most smaller players need the immediate cash flow, Android users also enjoy being able to switch between manufacturer. And if they do, the monthly difference between an Apple and theirs will be small in numbers in monthly cost they might actually decide to go with Apple.
Benjamin Graham's "Mr. Market" allegory [1] is a decent illustration of how seriously we should take fluctuations in market prices.
To take another angle on it: Market cap is simply the number of shares outstanding, multiplied by the last price anyone paid for a share. This means that market cap is determined by the tiny minority of people who are actively trading shares in a company. That group may or may not be deciding what the company is worth according to the same criteria that you or I or the vast majority of people who are simply quietly holding on to their shares might want to use.
Another way of phrasing that is the market cap is determined by the people who have the information, and resulting conviction, to put their own money on the idea that the company may be worth that much.
Further, the reason why the market cap works is because every transaction has a buyer and a seller. The seller believes the price they are getting is above what it should be, while the buyer believes it’s below what it should be. As a result, the actual price is a consensus between people who have very different outlooks on the company, and as such almost necessarily incorporates a lot of different, and likely non overlapping, information.
"As a result, the actual price is a consensus between people who have very different outlooks on the company"
A better word would be "compromise", since there is no consensus by definition.
But another point is that I always think of the price of a stock as deceptively precise. If you measure anything in a scientific sense, there is an associated +/- uncertainty. The value of a company always has an uncertainty and it might be quite large as a percentage of the total size. So when you look at the price going up and down, maybe it's only fluctuating within the zone of uncertainty.
Below is copy pasted from above website. In any case, share prices fluctuate a lot, due to many factors. And every time, someone writes an article about it, but it never means anything.
Misconceptions About Market Caps
Although it is used often to describe a company, market cap does not measure the equity value of a company. Only a thorough analysis of a company's fundamentals can do that. It is inadequate to value a company because the market price on which it is based does not necessarily reflect how much a piece of the business is worth. Shares are often over- or undervalued by the market, meaning the market price determines only how much the market is willing to pay for its shares.
Although it measures the cost of buying all of a company's shares, the market cap does not determine the amount the company would cost to acquire in a merger transaction. A better method of calculating the price of acquiring a business outright is the enterprise value.
Hogwash. The worth of a company is what someone will pay for it. Thats literally the definition of the market cap. Trying to say "But these shares are overvalued right now!" means nothing. The value of anything is what someone will pay for it- Just ask the guy walking in the desert what he will pay for a bottle of water.
The worth of the company is what someone will pay for it, although that gets fuzzy when "what someone will pay for it" is rather more than one person or non-governmental entity could raise, but there's no particular reason the market cap is that number. If someone makes a serious offer on a company, i.e., tries to buy all the stock, the stock price usually significantly rises. It has to; to pry the stock out of other people's hands you can't simply offer the market price, or they'd already have sold, so you can't just buy stock at the "market price" (as unaffected by your attempt to buy the company) and end up with all of it. Contrariwise, if someone owns a lot of stock and decides to just dump it all for cash, they won't get the market cap either, because the very act of dumping the stock will cause the price to go down, possibly even crash. So, the "market capitalization" is a "price" that you can neither buy, nor sell, the company for or at... so... it also can't be what "someone will pay for it", or, it isn't a "price" at all.
If you read the investopedia link, you would see that what you write is not true. Just because some shares are being sold at a certain price does not mean all shares will be sold at that price.
>Although it measures the cost of buying all of a company's shares, the market cap does not determine the amount the company would cost to acquire in a merger transaction. A better method of calculating the price of acquiring a business outright is the enterprise value.
Did you guys read the part of the article taking about their revenue increases? It isn't just stock price going up. As mentioned too, paying out a dividend means the company has a good revenue stream.
Apple's failure to innovate was Microsoft's opportunity to surge ahead.
That's the value of the stocks, what does it have to do with the objective value of the company, its assets, its IP, its facilities. Entirely different critter.
Dividends (MSFT paid much more than AAPL) is one major difference. Is MSFT worth less than AAPL just because MSFT handed out cash to investors instead of keeping that cash in a bank account wrapped in AAPL shares?
Would you say AAPL is worth more if it issued a new pile of stock and just sat on the cash? The market cap would grow, but it's pointless to say it's worth grew just because it's a computer business with a bank account bolted onto the side.
I think the argument here is about the distinction between book value -- ie owner equity in the accounting sense -- and market value.
They are both "true" values in different senses. If anything market value is "supposed" to be an integral of the total lifetime book value. Book value in turn is the integral of transactions up to the current time.
Microsoft has maintained a decades long monopolistic position in OS and Office Suite software. It also has a significant presence in corporate software development ( NT server, Visual Studio, SQL Server, etc). It has been one of the most valuable and profitable tech companies in the world for a very long time.
Is this really a nytimes article? Why are we getting these types of articles from the nytimes of all places? What's next? "Bill Gates is one of the wealthiest men in the world. How did that happen?"
