20 ms·

Microsoft Is Worth as Much as Apple. How Did That Happen?

273 points by vthallam 8y ago

lotsofpulp 8y ago
Articles that conflate worth and market cap should be flagged as clickbait.
- iamgopal 8y ago
  How worth and market cap different things ? Isn't market cap reflection of worth ?
  - lotsofpulp 8y ago
    https://www.investopedia.com/terms/m/marketcapitalization.asp https://www.investopedia.com/terms/m/marketcapitalization.as... 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.
    - DanBlake 8y ago
      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.
      - lotsofpulp 8y ago
        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.
      - parrellel 8y ago
        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.
      - EliRivers 8y ago
        Thats literally the definition of the market cap. It literally isn't. Market cap is literally the current share price multiplied by the number of shares outstanding. It's literally a different thing.
      - AviationAtom 8y ago
        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.
      - jerf 8y ago
        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.
  - parrellel 8y ago
    Market cap is guessing and network effects - investor hype - so only a reflection of perceived worth.
  - jacques_chester 8y ago
    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.
  - bunderbunder 8y ago
    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. [1]: https://en.wikipedia.org/wiki/Mr._Market https://en.wikipedia.org/wiki/Mr._Market, http://www.berkshirehathaway.com/letters/1987.html http://www.berkshirehathaway.com/letters/1987.html
    - addicted 8y ago
      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.
      - perl4ever 8y ago
        "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.
  - gowld 8y ago
    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.
cwyers 8y ago
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.
- JacobJans 8y ago
  Their stock price has tripled since 2014. I would say that's a topic worth exploring.
  - egocodedinsol 8y ago
    Thank you. “Obvious” can be a dangerous concept, especially when paired with sarcasm.
  - hbosch 8y ago
    This surely correlates to the rise of Azure?
    - damon_c 8y ago
      Actually it correlates to the exit of Steve Ballmer. I bought shares that day ;)
      - Delmania 8y ago
        Go look at the company's performance under Ballmer. You may not like him, but the man knew how to make money.
        snovv_crash 8y ago
        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.
beginningguava 8y ago
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
- mattferderer 8y ago
  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.
  - vtesucks 8y ago
    Surface is Ballmer 3x revenue is ballmer He quit because gates opposed Nokia deal Cloud is essentially Ballmer too
    - Delmania 8y ago
      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.
- crabl 8y ago
  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. [1] https://www.businessinsider.com/angela-ahrendts-says-a-significant-change-in-mindset-to-launching-apple-watch-online-2015-4 https://www.businessinsider.com/angela-ahrendts-says-a-signi... [2] https://money.cnn.com/2008/11/09/technology/cook_apple.fortune/index.htm https://money.cnn.com/2008/11/09/technology/cook_apple.fortu...
mattferderer 8y ago
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.
- oblio 8y ago
  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.
  - bunderbunder 8y ago
    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.
    - scirocco 8y ago
      "phone manufacturer that respects people's privacy" Small market (outside of HN) :)
    - basch 8y ago
      right now apple is - 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.)
bryanlarsen 8y ago
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...
- oblio 8y ago
  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.
  - dmoy 8y ago
    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.
    - bryanlarsen 8y ago
      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.
mbroncano 8y ago
How did the other way around happen? I still have around that Wired magazine issue ‘Pray’
outside1234 8y ago
Satya Nadella Seriously, this guy is amazing. So glad to have him as our CEO. Runs laps around Larry Page and the others I've experienced.
- setquk 8y ago
  Yes he really delivers for the shareholders. Customers however I’m not so sure. Time will tell.
  - partiallypro 8y ago
    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.
    - AnIdiotOnTheNet 8y ago
      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.
      - setquk 8y ago
taneq 8y ago
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.
logicallee 8y ago
AAPL is a steal right now. (Current mkt cap: 853.41B.) The company has $285.1 billion in cash and is trading at a cap of 3 times that amount (nearly exactly, 3.00something from the figure I found) and bringing magic to market that if anyone here proposed in a comment they would be laughed out of the room. For example waterproof watch that is full mobile phone, you don't need the phone with you. Face ID based on thousands of kinect-like infrared dots. Airpods. Are you kidding me. This stuff is magic. "Hey I'm the only company on the planet bringing whatever magic I want to 300 million people in 2018 out of a target audience of 3 billion people." It should be trading at a P/E of 200. It is trading at a P/E of 15. If you want to double any amount of your wealth in the next 7 years at a minimum but wish you could get even better then the surest, most guaranteed and lowest-risk way you can do so is to invest in AAPL today and hold until 2025. Have a wealth of $600 million and wish you could turn it into $1.2 billion (at least) by 2025? The surest and lowest-risk way of doing so is by parking it in AAPL and holding. It is not going anywhere. It is like a government-backed bond paying 10.4% per year or something. Literally unbelievably low market cap at the moment. It's a steal! And this doesn't even price in anything it hasn't announced. (You know what I'm talking about. Come on you know.) Absolute ridiculous steal. When I checked the market cap for this article I was expecting to see 1.2t (it hit 1t recently) and instead saw 0.8t, down 20% from recently.) For this level of volume and low-risk, you might never see such a low-risk investment in your lifetime. Ridiculously cheap. I swear I was expecting to see 1.2t just now
spinchange 8y ago
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.
- juandazapata 8y ago
  Them being that close probably means insider trading risks
- gregw2 8y ago
  lmddgtfy 2018 version: http://fortune.com/2018/05/05/warren-buffett-berkshire-hathaway-microsoft-stock/ http://fortune.com/2018/05/05/warren-buffett-berkshire-hatha... 1997 version: https://buffett.cnbc.com/video/1997/05/05/why-buffett-doesnt-invest-in-intel-and-microsoft.html https://buffett.cnbc.com/video/1997/05/05/why-buffett-doesnt... TIL: Apparently he bought 1000 shares from Gates pre-IPO? (Source: https://www.quora.com/Why-did-Warren-Buffett-never-invest-in-Microsoft https://www.quora.com/Why-did-Warren-Buffett-never-invest-in... )
  - spinchange 8y ago
    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)
- bduerst 8y ago
  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.
porpoisely 8y ago
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?"
jacknews 8y ago
The articles seems to answer it's own question. Apple if anything has become a consumer electronics company, whereas Microsoft appears to have kept focus on business and infrastructure. With many people fearing a recession approaching, the relative valuation shifts make sense.
manishsharan 8y ago
How? Just Bing it and find out how!
lostgame 8y ago
Does nobody seem to remember 18-20 years ago or so when Microsoft actually had to bail out Apple in order to avoid becoming a monopoly?
- Anechoic 8y ago
  It wasn't a bailout, it was a lawsuit settlement: https://en.wikipedia.org/wiki/San_Francisco_Canyon_Company https://en.wikipedia.org/wiki/San_Francisco_Canyon_Company
  - josefresco 8y ago
    It was both: https://www.wired.com/2009/08/dayintech-0806/ https://www.wired.com/2009/08/dayintech-0806/ "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."
- scarface74 8y ago
  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.
  - triplesec 8y ago
    How can you be so sure about that? Many otherwise very viable companies go bust because of current account issues. $250m is a lot of current account.
    - scarface74 8y ago
      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.
redsummer 8y ago
I remember one Tim Cook keynote where the only new thing was a gay pride related rainbow watchband. Recently he was given an award by the ADL. I’m not sure if pinning progressive medals on your chest is a good use of time for a CEO.
izzydata 8y ago
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.
resters 8y ago
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.
- radley 8y ago
  > 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.
  - resters 8y ago
    > 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.
ry4n413 8y ago
Recurring Revenue
linuxftw 8y ago
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.
- joeax 8y ago
  It's inferior to GCP's UX as well. I love many of their products but Microsoft is overdue for a vast revamp of their UI.
  - askvictor 8y ago
    Didn't they do a massive revamp of their ui only a couple of years ago?
crazy_monkey 8y ago
Mankind, in the last 43 years, produced a ton of trash. That trash heaped up. And, now it's as big as Apple. Clearly.
dekhn 8y ago
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.
throwaway456321 8y ago
What amazes me is apple is that valuable. What do they have that you can't get much better for much cheaper elsewhere?
- lnanek2 8y ago
  Normal, non-developer people prefer their experience, which is all that's needed to command a price premium like they do.
- starbeast 8y ago
  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.
- zjaffee 8y ago
  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.
- remir 8y ago
  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.
- Steko 8y ago
  Show me a phone with much better silicon for much cheaper. I'll wait.
  - e12e 8y ago
    Huawei?
michaelcampbell 8y ago
1. EMBRACEd Linux by buying a board seat on the Linux Foundation 2. provide a Linux-y OS, and EXTENDed it; but require a proprietary lock-in by requiring Windows and VS-Code to code for it 3. Who can guess what happens next?
alkonaut 8y ago
The iPod and iPhone happened. Otherwise it would still not be close.
hockeybias 8y ago
Why the surprise?
bunnycorn 8y ago
A few months from now on... Apple is worth much more than Microsoft, and lots of idiots lost money on this opportunity, how did that happen. Seriously... fake news, like there are every year of "supply cuts, demands and whatever"... oh, and "Chinese chips" on the servers too...
ksec 8y ago
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.
woodandsteel 8y ago
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.

273 points by vthallam 8y ago

lotsofpulp 8y ago

Articles that conflate worth and market cap should be flagged as clickbait.

iamgopal 8y ago
How worth and market cap different things ? Isn't market cap reflection of worth ?
- lotsofpulp 8y ago
  https://www.investopedia.com/terms/m/marketcapitalization.asp https://www.investopedia.com/terms/m/marketcapitalization.as... 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.
  - DanBlake 8y ago
    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.
    - lotsofpulp 8y ago
      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.
    - parrellel 8y ago
      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.
    - EliRivers 8y ago
      Thats literally the definition of the market cap. It literally isn't. Market cap is literally the current share price multiplied by the number of shares outstanding. It's literally a different thing.
    - AviationAtom 8y ago
      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.
    - jerf 8y ago
      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.
- parrellel 8y ago
  Market cap is guessing and network effects - investor hype - so only a reflection of perceived worth.
- jacques_chester 8y ago
  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.
- bunderbunder 8y ago
  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. [1]: https://en.wikipedia.org/wiki/Mr._Market https://en.wikipedia.org/wiki/Mr._Market, http://www.berkshirehathaway.com/letters/1987.html http://www.berkshirehathaway.com/letters/1987.html
  - addicted 8y ago
    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.
    - perl4ever 8y ago
      "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.
- gowld 8y ago
  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.

cwyers 8y ago

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.

JacobJans 8y ago
Their stock price has tripled since 2014. I would say that's a topic worth exploring.
- egocodedinsol 8y ago
  Thank you. “Obvious” can be a dangerous concept, especially when paired with sarcasm.
- hbosch 8y ago
  This surely correlates to the rise of Azure?
  - damon_c 8y ago
    Actually it correlates to the exit of Steve Ballmer. I bought shares that day ;)
    - Delmania 8y ago
      Go look at the company's performance under Ballmer. You may not like him, but the man knew how to make money.
      - snovv_crash 8y ago
        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.

beginningguava 8y ago

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

mattferderer 8y ago
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.
- vtesucks 8y ago
  Surface is Ballmer 3x revenue is ballmer He quit because gates opposed Nokia deal Cloud is essentially Ballmer too
  - Delmania 8y ago
    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.
crabl 8y ago
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. [1] https://www.businessinsider.com/angela-ahrendts-says-a-significant-change-in-mindset-to-launching-apple-watch-online-2015-4 https://www.businessinsider.com/angela-ahrendts-says-a-signi... [2] https://money.cnn.com/2008/11/09/technology/cook_apple.fortune/index.htm https://money.cnn.com/2008/11/09/technology/cook_apple.fortu...

mattferderer 8y ago

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.

oblio 8y ago
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.
- bunderbunder 8y ago
  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.
  - scirocco 8y ago
    "phone manufacturer that respects people's privacy" Small market (outside of HN) :)
  - basch 8y ago
    right now apple is - 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.)

bryanlarsen 8y ago

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...

oblio 8y ago
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.
- dmoy 8y ago
  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.
  - bryanlarsen 8y ago
    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.

mbroncano 8y ago

How did the other way around happen? I still have around that Wired magazine issue ‘Pray’

outside1234 8y ago

Satya Nadella Seriously, this guy is amazing. So glad to have him as our CEO. Runs laps around Larry Page and the others I've experienced.

setquk 8y ago
Yes he really delivers for the shareholders. Customers however I’m not so sure. Time will tell.
- partiallypro 8y ago
  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.
  - AnIdiotOnTheNet 8y ago
    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.
    - setquk 8y ago

taneq 8y ago

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.

logicallee 8y ago

AAPL is a steal right now. (Current mkt cap: 853.41B.) The company has $285.1 billion in cash and is trading at a cap of 3 times that amount (nearly exactly, 3.00something from the figure I found) and bringing magic to market that if anyone here proposed in a comment they would be laughed out of the room. For example waterproof watch that is full mobile phone, you don't need the phone with you. Face ID based on thousands of kinect-like infrared dots. Airpods. Are you kidding me. This stuff is magic. "Hey I'm the only company on the planet bringing whatever magic I want to 300 million people in 2018 out of a target audience of 3 billion people." It should be trading at a P/E of 200. It is trading at a P/E of 15. If you want to double any amount of your wealth in the next 7 years at a minimum but wish you could get even better then the surest, most guaranteed and lowest-risk way you can do so is to invest in AAPL today and hold until 2025. Have a wealth of $600 million and wish you could turn it into $1.2 billion (at least) by 2025? The surest and lowest-risk way of doing so is by parking it in AAPL and holding. It is not going anywhere. It is like a government-backed bond paying 10.4% per year or something. Literally unbelievably low market cap at the moment. It's a steal! And this doesn't even price in anything it hasn't announced. (You know what I'm talking about. Come on you know.) Absolute ridiculous steal. When I checked the market cap for this article I was expecting to see 1.2t (it hit 1t recently) and instead saw 0.8t, down 20% from recently.) For this level of volume and low-risk, you might never see such a low-risk investment in your lifetime. Ridiculously cheap. I swear I was expecting to see 1.2t just now

spinchange 8y ago

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.

juandazapata 8y ago
Them being that close probably means insider trading risks
gregw2 8y ago
lmddgtfy 2018 version: http://fortune.com/2018/05/05/warren-buffett-berkshire-hathaway-microsoft-stock/ http://fortune.com/2018/05/05/warren-buffett-berkshire-hatha... 1997 version: https://buffett.cnbc.com/video/1997/05/05/why-buffett-doesnt-invest-in-intel-and-microsoft.html https://buffett.cnbc.com/video/1997/05/05/why-buffett-doesnt... TIL: Apparently he bought 1000 shares from Gates pre-IPO? (Source: https://www.quora.com/Why-did-Warren-Buffett-never-invest-in-Microsoft https://www.quora.com/Why-did-Warren-Buffett-never-invest-in... )
- spinchange 8y ago
  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)
bduerst 8y ago
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.

porpoisely 8y ago

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?"

jacknews 8y ago

The articles seems to answer it's own question. Apple if anything has become a consumer electronics company, whereas Microsoft appears to have kept focus on business and infrastructure. With many people fearing a recession approaching, the relative valuation shifts make sense.

manishsharan 8y ago

How? Just Bing it and find out how!

lostgame 8y ago

Does nobody seem to remember 18-20 years ago or so when Microsoft actually had to bail out Apple in order to avoid becoming a monopoly?

Anechoic 8y ago
It wasn't a bailout, it was a lawsuit settlement: https://en.wikipedia.org/wiki/San_Francisco_Canyon_Company https://en.wikipedia.org/wiki/San_Francisco_Canyon_Company
- josefresco 8y ago
  It was both: https://www.wired.com/2009/08/dayintech-0806/ https://www.wired.com/2009/08/dayintech-0806/ "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."
scarface74 8y ago
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.
- triplesec 8y ago
  How can you be so sure about that? Many otherwise very viable companies go bust because of current account issues. $250m is a lot of current account.
  - scarface74 8y ago
    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.

redsummer 8y ago

I remember one Tim Cook keynote where the only new thing was a gay pride related rainbow watchband. Recently he was given an award by the ADL. I’m not sure if pinning progressive medals on your chest is a good use of time for a CEO.

izzydata 8y ago

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.

resters 8y ago

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.

radley 8y ago
> 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.
- resters 8y ago
  > 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.

ry4n413 8y ago

Recurring Revenue

linuxftw 8y ago

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.

joeax 8y ago
It's inferior to GCP's UX as well. I love many of their products but Microsoft is overdue for a vast revamp of their UI.
- askvictor 8y ago
  Didn't they do a massive revamp of their ui only a couple of years ago?

crazy_monkey 8y ago

Mankind, in the last 43 years, produced a ton of trash. That trash heaped up. And, now it's as big as Apple. Clearly.

dekhn 8y ago

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.

throwaway456321 8y ago

What amazes me is apple is that valuable. What do they have that you can't get much better for much cheaper elsewhere?

lnanek2 8y ago
Normal, non-developer people prefer their experience, which is all that's needed to command a price premium like they do.
starbeast 8y ago
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.
zjaffee 8y ago
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.
remir 8y ago
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.
Steko 8y ago
Show me a phone with much better silicon for much cheaper. I'll wait.
- e12e 8y ago
  Huawei?

michaelcampbell 8y ago

1. EMBRACEd Linux by buying a board seat on the Linux Foundation 2. provide a Linux-y OS, and EXTENDed it; but require a proprietary lock-in by requiring Windows and VS-Code to code for it 3. Who can guess what happens next?

alkonaut 8y ago

The iPod and iPhone happened. Otherwise it would still not be close.

hockeybias 8y ago

Why the surprise?

bunnycorn 8y ago

A few months from now on... Apple is worth much more than Microsoft, and lots of idiots lost money on this opportunity, how did that happen. Seriously... fake news, like there are every year of "supply cuts, demands and whatever"... oh, and "Chinese chips" on the servers too...

ksec 8y ago

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.

woodandsteel 8y ago

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.