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How, and Why, Apple Overtook Microsoft

nytimes.com

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Re: How, and Why, Apple Overtook Microsoft

#11

Post by capkutay »

thewarrior wrote: post #5

>> But he noted that by many measures, Apple shares appeared to be a bargain. “The valuation is still inexpensive,” he said. “It’s less than 13 times next year’s earnings and less than 10 times cash flow,” both below the market average. “Those are very low multiples. They have $140 billion in cash on the balance sheet and they’re generating $60 billion in cash a year. All the numbers are just enormous, which is hard…

I don't know...I'm a relatively young investor. I started investing in 2009, bought a bunch of apple and google stock. Now I feel like the market is inflated like crazy and I'm afraid to touch anything. Am I being irrational or is it normal to see these types of cycles?

Anyways, if you want my unsolicited stock advice, I think Tesla still has a lot of upside. The way I see it, it has a $25b market cap where as a lot of big name car companies are above $60b in market cap (BMW at $60b, Mercedes around $100b, Toyota around $220b). I think Tesla could easily catch up to them because of their potential for growth. So that's a somewhat likely 2x return on tesla stock if you want to look at it that way.

Re: How, and Why, Apple Overtook Microsoft

#12

Post by DigitalSea »

The easiest explanation of what happened was Microsoft were a software company who had all of their eggs in one basket relying upon third parties to use their operating system and consumers/enterprise to use their products like Microsoft Office. Whereas Apple started out as both a hardware and software company, first computers and then portable music players (iPod), watches (iWatch) and phones (iPhone).

This is where Microsoft went wrong. They focused on providing the software and let vendors like HP, etc use it on their machines. Apple was smart in seeing that there are advantages to controlling both the software and hardware (the iPhone is a perfect example of this). By the time Microsoft realised they should have been producing hardware that used their software, Apple had already overtaken it in the great tech race. Apple had the hardware and were providing the software thus locking out any competitors from their platform. Not to mention, they were focusing on the design aspect of the devices themselves which others were not.

I think Microsoft have started clawing back. HoloLens looks like a seriously great product, I think the amount of time and effort they have been putting into hardware and infrastructure will undoubtedly catapult them back to the top. Not to mention Microsoft have cleverly changed their strategy to favour open source (something nobody would have predicted 7 years ago). The Xbox division also does pretty damn well too.

The question is: can Apple sustain their current success? It seems the iPhone is their meal ticket, if the iPhone eventually fizzles out, where will that leave Apple?

Re: How, and Why, Apple Overtook Microsoft

#14

Post by avelis »

I think in some ways Microsoft lost its dominance by focusing on the wrong competition. Microsoft Bing is a great example of Microsoft trying to become a company it wasn't. (i.e. Google)

In my perspective, Apple dialed in it's focus, avoided the same pitfalls, and came out a dominant player in a market not many were focused to innovate on. (i.e. smartphones).

Re: How, and Why, Apple Overtook Microsoft

#15

Post by sliverstorm »

DigitalSea wrote: post #12

The easiest explanation of what happened was Microsoft were a software company who had all of their eggs in one basket relying upon third parties to use their operating system and consumers/enterprise to use their products like Microsoft Office. Whereas Apple started out as both a hardware and software company, first computers and then portable music players (iPod), watches (iWatch) and phones (iPhone). This is where…

Do remember that Microsoft became a breakout success thanks to IBM losing control of the IBM PC, upon which DOS ran.

The origin of Microsoft (rampant clones, many hardware vendors) is literally the opposite of the origin of Apple's recent successes (vertically integrated, does their own hardware).

Microsoft's original strength was its weakness this time around.

Re: How, and Why, Apple Overtook Microsoft

#16

Post by Steko »

The problem for Microsoft isn't that they didn't see mobile coming and Apple did like as article suggests. The problem for Microsoft is that their previous strategy of ruthlessly copying Apple's innovations and taking the market for themselves with a highly profitable licensing model was coopted by Google doing the same thing except Google gave it away. If you're looking for the old MS it's alive and well at Google, Samsung and Xiaomi.

Re: How, and Why, Apple Overtook Microsoft

#17

Post by Dwolb »

DigitalSea wrote: post #12

The easiest explanation of what happened was Microsoft were a software company who had all of their eggs in one basket relying upon third parties to use their operating system and consumers/enterprise to use their products like Microsoft Office. Whereas Apple started out as both a hardware and software company, first computers and then portable music players (iPod), watches (iWatch) and phones (iPhone). This is where…

I think you're not giving MS enough credit. The pieces of the story that are missing are IBM and Intel. IBM was the only firm in the world at the time that were able to integrate a working computer. To do so at a price that was appropriate for the home, IBM had to outsource large pieces of the project, both the CPU and OS.

MS and Intel were brilliant to allow substitutes for the early IBM computers to rise to market by working with multiple customers. The first firm to fully copy IBMs system (allowing software purposed for the IBM computers to run on other machines) was Compaq. Henceforth, MS and Intel were able to commoditize the PC and extract tons of value from their portions of the value chain.

MS, Intel, and Compaq were key in effectively capturing about 1/3rd of IBMs value in a short time span. The factors that led to their success can probably then be assessed in the context of Apple et al.

Re: How, and Why, Apple Overtook Microsoft

#18

Post by SG- »

Steko wrote: post #16

The problem for Microsoft isn't that they didn't see mobile coming and Apple did like as article suggests. The problem for Microsoft is that their previous strategy of ruthlessly copying Apple's innovations and taking the market for themselves with a highly profitable licensing model was coopted by Google doing the same thing except Google gave it away. If you're looking for the old MS it's alive and well at Google,…

Well MS lost mobile because quite frankly they didn't control the hardware, and for a time it seemed OK to simply provide software for them, but they couldn't push a specific idea out the door until it was too late. They were happy to provide an OS that did phone calls, text messages, emails and a few other small things.

They didn't quite see the big picture, it's not that they didn't see it coming (they were already in it), they just didn't think you could do so many things so well and that people would want to do it.

Re: How, and Why, Apple Overtook Microsoft

#19

Post by Steko »

SG- wrote: post #18
Steko wrote: post #16

The problem for Microsoft isn't that they didn't see mobile coming and Apple did like as article suggests. The problem for Microsoft is that their previous strategy of ruthlessly copying Apple's innovations and taking the market for themselves with a highly profitable licensing model was coopted by Google doing the same thing except Google gave it away. If you're looking for the old MS it's alive and well at Google,…

Well MS lost mobile because quite frankly they didn't control the hardware, and for a time it seemed OK to simply provide software for them, but they couldn't push a specific idea out the door until it was too late. They were happy to provide an OS that did phone calls, text messages, emails and a few other small things. They didn't quite see the big picture, it's not that they didn't see it coming (they were already…

Google didn't control the hardware either though so I think that's selling it short.

MS lost because they weren't ruthless is copying iOS. Google won the licensed market because basically they dropped everything else they were doing in mobile (copying blackberry) and put it all behind copying iphone. Samsung did the same thing with their Galaxy line. These are the kind of moves 80's and 90's MS would do without blinking, they understood that "second place is a set of steak knives". But late 00's MS -- spoiled on decades of success and perhaps a bit cowed by EU antitrust -- couldn't pull the trigger.

Re: How, and Why, Apple Overtook Microsoft

#20

Post by SG- »

Steko wrote: post #19
SG- wrote: post #18

Earlier quoted context omitted.

Well MS lost mobile because quite frankly they didn't control the hardware, and for a time it seemed OK to simply provide software for them, but they couldn't push a specific idea out the door until it was too late. They were happy to provide an OS that did phone calls, text messages, emails and a few other small things. They didn't quite see the big picture, it's not that they didn't see it coming (they were already…

Google didn't control the hardware either though so I think that's selling it short. MS lost because they weren't ruthless is copying iOS. Google won the licensed market because basically they dropped everything else they were doing in mobile (copying blackberry) and put it all behind copying iphone. Samsung did the same thing with their Galaxy line. These are the kind of moves 80's and 90's MS would do without blink…

True, but they also didn't need to control the hardware because Apple created a template and Google created partnerships with specific requirements.
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