Not so long ago Apple was a fragile boutique operation dwarfed by Microsoft
. Now things are different, says the NYTimes
When Microsoft stock was at a record high in 1999, and its market capitalization was nearly $620 billion, the notion that Apple Computer would ever be bigger — let alone twice as big — was laughable. Apple was teetering on bankruptcy. And Microsoft’s operating system was so dominant in personal computers, then the center of the technology universe, that the government deemed the company an unlawful monopoly.
This week, both Microsoft and Apple unveiled their latest earnings, and the once unthinkable became reality: Apple’s market capitalization hit $683 billion, more than double Microsoft’s current value of $338 billion….
Apple earned $18 billion in the quarter — more than any company ever in a single quarter — on revenue of $75 billion. Its free cash flow of $30 billion in one quarter was more than double what IBM, another once-dominant tech company, generates in a full year, noted a senior Bernstein analyst, Toni Sacconaghi. The stock jumped more than 5 percent, even as the broader market was down.
The flip-flop took a decade and a half, perhaps less. But no one really knows how to plan beyond three to five years, not in any detail. But it's dependent on one product, the iPhone. What now?
Mr. Cihra noted that Microsoft already dominates its core businesses, leaving little room for growth. But, he said, “Apple still doesn’t have massive market share in any of its core markets. Even in smartphones, its share is only in the midteens. Apple’s strategy has been to carve out a small share of a massive market. It’s pretty much a unique model that leaves plenty of room for growth.”
Can Apple continue to live by Mr. Jobs’s disruptive creed now that the company is as successful as Microsoft once was? Mr. Cihra noted that it was one thing for Apple to cannibalize its iPod or Mac businesses, but quite another to risk its iPhone juggernaut.
“It’s getting tougher for Apple,” Mr. Cihra said. “The question investors have is, what’s the next iPhone? There’s no obvious answer. It’s almost impossible to think of anything that will create a $140 billion business out of nothing.”