Apple beats Microsoft? Not so fast, fanboys
Forget about the numbers. It's the journey that matters
So it's official: last night Apple's market capitalisation - the value of all of its shares - exceeded Microsoft's, making it the second most valuable US corporation on the face of the Earth. It sounds really impressive, but what does it really mean?
The short answer is, not much. In the very few areas where Apple and Microsoft are direct competitors - software sales and digital music players - Microsoft stomps Apple into the ground on the former and Apple stomps Microsoft into the ground on the latter. But in most cases, Apple and Microsoft simply aren't in the same business.
Take phones. Apple makes them. Microsoft doesn't. Apple sells its phones to normal punters, or to mobile phone networks. Microsoft sells phone operating systems to phone manufacturers. There's no doubt that Microsoft's mobile division is hurting, but its enemy here is Android.
Microsoft and Apple aren't rivals in the PC market either. Apple makes hardware. Microsoft makes operating systems that it sells to hardware makers. Once again Apple doesn't licence its OS, so it's not a direct rival; Google Chrome, or Google's vision of cloud computing making operating systems redundant, may turn out to be.
So is comparing market capitalisation meaningless? Not quite. What's interesting isn't the numbers; it's the journey they represent.
Since the return of Steve Jobs, Apple has transformed itself, especially since its invention of the iPod: almost overnight, Apple went from being a computer company to a digital music company. The iPod business has probably peaked, but Apple doesn't mind: it's changed again to a mobile phone company, and if that business starts to wane then it may turn out to be an iPad company, or a something-else company.
Microsoft, on the other hand, hasn't really changed at all. Sure, it's got the Xbox division, and it's had a go at online applications, Zune and so on. But its core business remains pretty much what it was back in 1989: selling Windows and Office to manufacturers and big corporations.
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And that's ultimately what the two firms' market capitalisations show: since Steve Jobs returned to Apple the firm has innovated again and again, and its value has rocketed as a result. Since Bill Gates stepped down Microsoft has played it safe, and its value has collapsed.
Microsoft isn't doomed - far from it; it's still much more profitable than Apple, and it's an enormous company with huge global sales - but what the numbers do show is what happens in the technology industry if you stop innovating.
Newer, sleeker rivals are doing to Microsoft what it once did to IBM. Bet you can't name anyone doing the same to Apple.
That said, we've been here before. Apple was on top of the world back in 1989, the last time its market capitalisation beat Microsoft's.
Eight years later it was a basket case, its share price in the toilet and its future depending at least partly on Microsoft's cash and commitment to keep making Mac software. That's the trouble with being on top. It's really hard to stay there.
Just ask Microsoft.
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Liked this? Then read What if Steve Ballmer ran Apple?
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Contributor
Writer, broadcaster, musician and kitchen gadget obsessive Carrie Marshall has been writing about tech since 1998, contributing sage advice and odd opinions to all kinds of magazines and websites as well as writing more than twenty books. Her latest, a love letter to music titled Small Town Joy, is on sale now. She is the singer in spectacularly obscure Glaswegian rock band Unquiet Mind.