Tech Giant Showdown: Microsoft vs. Apple
Microsoft and Apple are by and large the two biggest producers in cutting edge consumer and business products. Between the two companies, they continue to push the envelope when it comes to developing software and hardware. Let’s take a look at what makes Microsoft the company that it is, and also what makes Apple the most valuable tech firm in the world.
To begin with, Apple and Microsoft continue to coexist, partly because they revolve around entirely different markets. Microsoft aims to corner the business-to-business market. In other words, the majority of Microsoft’s profits come from selling their products to businesses. More specifically, much of Microsoft’s profits come from selling licenses to its operating system to computer manufacturers. Anybody who has paid a licensing fee for Microsoft Windows understands what this is about.
Apple, on the other hand, aims to corner quite a different market than Microsoft. Apple tends to focus on the business-to-customer market. In other words, instead of selling software, like Microsoft, Apple makes most of its profits by selling hardware. This should be apparent when you think about all of the Macs and MacBooks out there with Windows installed on them.
It is interesting to compare the market values of Microsoft and Apple shares, as this says a lot about the two companies. On May 26th 2010, Microsoft shares closed at $25.01, which was down $1.06. This gave Microsoft a market cap of just over $220 billion. Also on May 26th, 2010, Apple shares ended the day of trading at $244.11, which was down $1.11. This gave Apple a total market cap of just over $222 billion. Keep in mind that despite these large numbers, Apple only controls about 10 percent of the computer market worldwide. Much of this ownership can be attributed to the vast success of the iPod, the iPhone and, more recently, the iPad.
It may put things in perspective to look at the three largest publicly traded U.S. companies:
- Exxon Mobil is the largest publicly traded U.S. company, and it is worth $278.6 billion.
- Apple comes in second, at $222.4 billion.
- Microsoft comes in third, at $220.4 billion.
The two super-companies have not always been altogether amicable. For instance, litigation between the two companies spanned from 1988 – 1994, in the lawsuit of Apple Corporation, Inc. vs. Microsoft Corporation. In this copyright infringement suit, Apple tried to get an injunction against Microsoft Corporation and Hewlett-Packard, to prevent the companies from using visual graphical interface elements similar to those designed and implemented by Apple.
In the lawsuit, the court held that “Apple cannot get patent-like protection for the idea of a graphical user interface, or the idea of a desktop metaphor [under copyright law]…” Amidst the lawsuit, Xerox sued Apple on similar grounds, but the case was dismissed because Xerox did not file the action in a timely manner. When it was all said and done, Apple lost on all of its serious claims, and only received favorable rulings on minor aspects of the case.
The rivalry between Microsoft and Apple, however, has another side to it. In August of 1997, Microsoft purchased $150 million of Apple stock. This was reportedly intended to inject new capital into Apple in an effort to help the struggling company get back on to its feet. As it turned out, the boost helped Apple indeed, as it has since that time surpassed Microsoft in many ways.
Finally, it is interesting to look at the products offered by Apple and Microsoft, side by side.
The following products are available from both companies:
- Mobile hardware, Mobile OS, Mobile App Store, Mobil Applications, Music Hardware, Video/Voice/IM Chat, Office Suite, Video Content, Web Browser, Desktop OS, Photo Storage, Calendar, RSS Reader, Email, Online Rental, Music Store, Online Video Rental, Business Software, Gaming Software
The following Products are available only from Microsoft:
Online Search, News, Maps, Gaming Hardware
