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Bigger Than Microsoft

Entry 877, on 2008-10-28 at 21:45:58 (Rating 3, Computers)

How could any computer company ever be bigger than mighty Microsoft? Especially how could an insignificant company like Apple ever do that? I mean, all Apple do is make a computer that is used by a tiny fraction of people in a niche market, an over-priced music player, and an even more over-priced phone. They aren't the provider of important services to big corporations and the creator of the most successful operating system and productivity programs ever, are they? The idea of Apple ever overtaking Microsoft is ridiculous. Or is it?

I ask this question because it was asked in a ZDNet poll I recently visited. In that poll twice as many people thought Apple could get bigger than Microsoft as those who didn't. And most people though it would take less than 5 years to happen. The poll wasn't necessarily very well designed. The word "could" was significant, for example. Of course Apple could get bigger than Microsoft. Maybe they should have asked will they get bigger or is it likely. Also 64% of 2874 votes said it could happen but 2364 went on to give an estimate of when. That doesn't make sense.

Whatever the poll said, the numbers are interesting. Most people assume Microsoft is much bigger than Apple, but it isn't. Microsoft had more revenue at $15 billion against Apple's $12 billion, but that was close. Microsoft had $4.3 billion in net profit against Apple's $2.4 billion (that was interesting). And Apple actually had more cash in the bank at $26 billion against Microsoft's $21 billion. So Microsoft is bigger, but not by that much.

The profit figures were interesting. Apple are often accused of having high profit margins on their products but based on those numbers it seems that Microsoft might have even higher margins.

Its true that Apple do make a significant part of their money through devices which aren't traditional computer hardware or software (although, of course, both the iPod and iPhone really are computers) but Microsoft also has interests outside its main activities in areas such as their Xbox game console and network services.

Maybe the most important number was the percentage increase. Microsoft grew their quarterly revenue by 9% but Apple grew it by 75%. According to my calculations, at that rate, Apple will be bigger within a year. I don't think we can make that assumption but its an interesting point to ponder.

As well as the numbers we can look at the current state of the computing industry. Microsoft Vista is a failure. Even Microsoft have more or less admitted that by dropping the name of the new OS from their advertising. Sure, many people are waiting for Windows 7 but I think they will soon realise that's just Vista with a few hacks and a new name. When that happens Microsoft will lose even more credibility.

And Apple is considered as a serious option now far more than in the past. Part of this is due to the Vista debacle. Some of it is due to the "halo" effect of the iPod and iPhone. People use these devices, see how much nicer they are to use than the competition (including the Zune and those abysmal Windows Mobile devices) and extrapolate this to the Mac operating system and overall user experience. And a lot of it is due to the fact that Macs are just better. The computers are better and the operating system is better. A lot of the programs are, as well.

So I'm sorry to continue to rave on about the obvious, but the Microsoft facade of invincibility is really starting to crack. Microsoft are technically inferior and even their business tactics are beginning to fail - was anyone convinced by the latest series of pathetic ads? No? Me neither.

As I said, the poll might not be realistic. Even though ZDNet is PC oriented and the person who created the poll claims to not be an Apple fan boy, we still can't take it as good evidence in itself. But combined with all the rest I think it shows the inevitable decline of Microsoft's dominance. And that can't happen quickly enough!

Comment 1 (1793) by SB on 2008-11-01 at 20:16:20:

I like my Mac but my friend likes his PC with Vista. So why do you say Vista is a failure?

Comment 2 (1795) by OJB on 2008-11-01 at 22:07:32:

There will always be some people who like something, even if its really awful. People tend to be susceptible to "cognitive dissonance" where they change their perception of something when they have committed to it in some way. For example, if someone has just spent heaps on a new Vista PC then they tend to convince themselves its a good thing. The overall view of the IT industry is that Vista is a disaster! Anyway, just keep enjoying your Mac!

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