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Microsoft Still More Profitable Than Apple — Barely

8 points by ericmsimons 16y ago

brudgers 16y ago
Typical Siegler - Microsoft has higher profits on lower revenue than Apple = Apple wins again.
- ericmsimons 16y ago
  Yeah...when your company makes almost all of its money selling software your profit margins are clearly going to be higher than a company that does both hardware and software. Hardware is expensive and the profit margins suck. MSFT is still winning though, probably not for long ;)
  - daemin 16y ago
    In general hardware margins compared to software margins suck, in that once the sunk cost of software development has taken place you can sell the software with a near zero manufacturing cost. (I think everyone knows this.) However Apple's hardware margins compared to other manufacturers hardware margins are quite huge. I've heard figures from those tear downs say that Apple have a margin close to 50% or more (or at least in the double digits). Compare that to a more competitive field (by this I mean more direct oranges to oranges competitors) like TV's (or Cars) where margins are squeezed tight in order to sell. Also don't forget now that Apple have this whole *Store thing going where they make pure profit from the sale of software that someone else has made (and taken the sunk cost hit for). That means the ratio of profit to software development cost is near infinite, so how's that for a profit margin.
    - ugh 16y ago
      Apple has had about the same gross margin for the longest time. It was 38.5 percent in the last quarter compared to 40.5 percent a year ago. Microsoft’s gross margin in the last quarter was 75.8 percent compared to 80.9 percent in the year-ago quarter. No need to speculate about that, it’s all publicly available data.
- ugh 16y ago
  Where does the author say that “Apple wins again”?! I’m a bit befuddled by your interpretation of the article which seems to be mostly based on your prejudices about the author. Apple is actually growing faster than Microsoft and it is not in any way strange that Apple, as a hardware and software company, has worse margins than Microsoft, that has always been the case. Here is an illustrative chart, showing all that: http://www.businessinsider.com/chart-of-the-day-microsoft-apple-revenue-income-2010-10 http://www.businessinsider.com/chart-of-the-day-microsoft-ap... The article just reports those facts and includes the author’s prediction that Apple’s earnings will overtake Microsoft’s soon, probably in the next quarter. That’s not at all unreasonable or unrealistic.
  - ericmsimons 16y ago
    Nice chart - it makes me sad to see Microsoft getting rocked by Apple though :( Hopefully Kinect, Win7 & phone will keep them neck in neck with Apple.
  - kenjackson 16y ago
    But it is typical Siegler. He had a post comparing MS revenue against Apple revenue talking about how Apple had surpassed MS revenue -- completely ignoring the fact that you generally don't compare revenue across industries, for example, Ford makes nearly double the revenue of Apple. But I do think Apple does stand a good chance to surpass MS. But I do think the consumer space is also a fickle one, especially the phone market. If they do one release of a "meh" phone or tablet, and Android progresses, they could see their profits literally cut in half in a year (see Sony for how you go from +$2B to -$2B in one year).
    - ugh 16y ago
      People compare Microsoft and Apple. They just do. (See: Chart I linked to.) That’s not in any way typical of Siegler. And his prediction is also nothing special at all. It’s just wrong to attack this particular author about this particular question. It’s not typical Siegler. It’s typical many people. Siegler holds a common position on this particular issue. The popular trope that Siegler is defending Apple despite obvious evidence to the contrary which the first commenter seems to be alluding to is certainly not true when it comes to this particular issue. (It is true on other occasions but not this time.)
robryan 16y ago
It's amazing how many blog posts tech crunch come out with that just take a bunch of statistics, comment on how they compare and speculate on a future trend. Seems to be a good backup for bloggers when there is nothing to write about.
- ericmsimons 16y ago
  I noticed that too. Everyone likes hearing speculation...and then disagreeing with it ;P
edge17 16y ago
i'm confused. are Apple and Microsoft competitors like Coke and Pepsi? as in, is this even a worthy comparison?

8 points by ericmsimons 16y ago

brudgers 16y ago

Typical Siegler - Microsoft has higher profits on lower revenue than Apple = Apple wins again.

ericmsimons 16y ago
Yeah...when your company makes almost all of its money selling software your profit margins are clearly going to be higher than a company that does both hardware and software. Hardware is expensive and the profit margins suck. MSFT is still winning though, probably not for long ;)
- daemin 16y ago
  In general hardware margins compared to software margins suck, in that once the sunk cost of software development has taken place you can sell the software with a near zero manufacturing cost. (I think everyone knows this.) However Apple's hardware margins compared to other manufacturers hardware margins are quite huge. I've heard figures from those tear downs say that Apple have a margin close to 50% or more (or at least in the double digits). Compare that to a more competitive field (by this I mean more direct oranges to oranges competitors) like TV's (or Cars) where margins are squeezed tight in order to sell. Also don't forget now that Apple have this whole *Store thing going where they make pure profit from the sale of software that someone else has made (and taken the sunk cost hit for). That means the ratio of profit to software development cost is near infinite, so how's that for a profit margin.
  - ugh 16y ago
    Apple has had about the same gross margin for the longest time. It was 38.5 percent in the last quarter compared to 40.5 percent a year ago. Microsoft’s gross margin in the last quarter was 75.8 percent compared to 80.9 percent in the year-ago quarter. No need to speculate about that, it’s all publicly available data.
ugh 16y ago
Where does the author say that “Apple wins again”?! I’m a bit befuddled by your interpretation of the article which seems to be mostly based on your prejudices about the author. Apple is actually growing faster than Microsoft and it is not in any way strange that Apple, as a hardware and software company, has worse margins than Microsoft, that has always been the case. Here is an illustrative chart, showing all that: http://www.businessinsider.com/chart-of-the-day-microsoft-apple-revenue-income-2010-10 http://www.businessinsider.com/chart-of-the-day-microsoft-ap... The article just reports those facts and includes the author’s prediction that Apple’s earnings will overtake Microsoft’s soon, probably in the next quarter. That’s not at all unreasonable or unrealistic.
- ericmsimons 16y ago
  Nice chart - it makes me sad to see Microsoft getting rocked by Apple though :( Hopefully Kinect, Win7 & phone will keep them neck in neck with Apple.
- kenjackson 16y ago
  But it is typical Siegler. He had a post comparing MS revenue against Apple revenue talking about how Apple had surpassed MS revenue -- completely ignoring the fact that you generally don't compare revenue across industries, for example, Ford makes nearly double the revenue of Apple. But I do think Apple does stand a good chance to surpass MS. But I do think the consumer space is also a fickle one, especially the phone market. If they do one release of a "meh" phone or tablet, and Android progresses, they could see their profits literally cut in half in a year (see Sony for how you go from +$2B to -$2B in one year).
  - ugh 16y ago
    People compare Microsoft and Apple. They just do. (See: Chart I linked to.) That’s not in any way typical of Siegler. And his prediction is also nothing special at all. It’s just wrong to attack this particular author about this particular question. It’s not typical Siegler. It’s typical many people. Siegler holds a common position on this particular issue. The popular trope that Siegler is defending Apple despite obvious evidence to the contrary which the first commenter seems to be alluding to is certainly not true when it comes to this particular issue. (It is true on other occasions but not this time.)

robryan 16y ago

It's amazing how many blog posts tech crunch come out with that just take a bunch of statistics, comment on how they compare and speculate on a future trend. Seems to be a good backup for bloggers when there is nothing to write about.

ericmsimons 16y ago
I noticed that too. Everyone likes hearing speculation...and then disagreeing with it ;P

edge17 16y ago

i'm confused. are Apple and Microsoft competitors like Coke and Pepsi? as in, is this even a worthy comparison?