This is a big deal folks. In terms of market capitalization, Apple has just shot past Microsoft. For many, many years Microsoft was untouchable, but unfortunately their growth in terms of share price has been dwindling recently. Apple on the other hand, has had a impressive growth spurt in the last few years, starting with the iPod, and now their big money maker, the iPhone.
What makes this even more impressive is that in the mid nineties, Apple were just about ready to close up shop. With a bunch of corporate shake ups and poor leadership on the board, many expected the company to just give up. Luckily Apple somehow go hold of its ousted leader, Steve Jobs, and put him back in charge as interim CEO, or in Apple speak, the iCEO. Before this, Dell CEO, Michael Dell famously pronounced that the right thing to do for Apple is to close shop, and give back the money to the shareholders. Imagine you were one of the shareholders then – things are definitely looking up today. This because Steve Jobs shaked up Apple’s structure and brought back its culture, something that was always Apple’s biggest asset.
What he did is basically scrap unnecessary product lines and refine existing products to just a few choices. It is still very much evident today with the Apple range of products. Despite thinking that people want infinite choice, Apple proves that people do not want to be bombarded with different products.
Oh and one small thing also helped: Microsoft actually invested $150 million into Apple in those bad years to bail them out. Who would have thunk?
Now one should not dismiss Microsoft in this – this is after all percepted value of a company based on shares. Apple only has around 10 percent of the US market, while Microsoft is still very profitable, despite these profits primarily coming from its operating systems and productivity software, but then again they sink a lot of money in to other divisions like Xbox and Windows phone, which is yet to turn signaificant profits, if any at all.
What it comes down to is that investors are not always the best (or most accurate) people to value a company – Microsoft is still the dominant player in the corporate market, where scale, not pure profit per sale is what is more important (just go look at the profits in building an iPad). Whatever you might read into this, we still live in a Windows world.
I dont believe Microsoft to take back their place in the next few weeks – Apple has an exciting month lined up. On June 7th they are releasing their next generation iPhone (which has been leaked it seems, and it looks great) and also roll out the next release of it iPhone operating system, which will roll out to eager iPhone 3G and 3GS users. This software update also addresses one of the last major criticisms of the iPhone platform with multitasking, although only for the 3GS model (and of course the upcoming one).
I think the battle is still coming.
PS: If you want some history on Apple, go read iCon: Steve Jobs, The Greatest Second Act in the History of Business, a great book by Jefferey S. Young. Another great book is Inside Steve’s Brain, by Leander Kahney (he is the guy behind the Cult of Mac website).