Microsoft Pulling Even with Apple in Ranks of Biggest Companies

https://www.bloomberg.com/news/articles/2018-11-26/microsoft-pulling-even-with-apple-in-ranks-of-biggest-companies

by chollida1 • 8 years ago

70 71 8 years ago

MSFT is more predictable to me as it has a lot more sources of revenue and looks like they are doing very well in cloud.

partiallypro2• 8 years ago

I think this is the crux of why Apple trades at such a low P/E, sure they make tons of money, but their product line is very concentrated and not diverse at all. Microsoft has tons of product lines, and if one is suffering others usually do ok, or excel. Windows has struggled for the past decade or two, and what picked up the slack? Office 365 and Azure. I suspect when those cool off, Windows and devices will pick back up. Microsoft is built better to handle cyclicality. That's not to say Apple isn't a great company, or even a bad investment, but I do understand why Apple has fallen so sharply, and relatively speaking, Microsoft has had a marginal correction relative to its peers.

If you assume we might head into a recession due to the trade war, Apple has never really had to go through that with their current high end product line. The iPhone was introduced in 2007 and was early cycle even during the financial collapse. It will be interesting to see if the business cycle greatly hurts their sales. I think that's what so many are worried about. Especially when we have their vendors cutting forecast (and yes there have been some crying wolf over the years, but eventually the wolf will show) and Apple being less transparent about unit sales. I suspect they will see a fall in sales when we do enter a recession, but I am encouraged that they have such control over their supply line that they won't get stuck with inventory gluts, like...uh Nvidia.

I mean back a few years ago Microsoft had a massive write-off from hardware...and that's not even a fraction of their business, imagine if Apple had to write off a ton of hardware, it would be brutal. That seems unlikely though, as I said, they seem to have a good handle on their inventory.

burtonator• 8 years ago

It's because they've been making some great decisions lately.

I've been using Typescript in an Electron project I've been working on (https://getpolarized.io/) which is a doc manager for PDF and web content.

Typescript is awesome. It's basically Java 8/9 in terms of language design. Supports interfaces, generics, etc.

If you add VS code and their github acquisition they're going to be in front of a lot of developers in the next 2-5 years.

actuator2• 8 years ago

While I agree that Typescript, VSCode and Github might earn a lot of love from open source community. I can't see how they will be able to leverage this with their other products which make them money. These products work with other ecosystems just as well and I can't see Microsoft products benefiting from them. The only big positive is the change of perception this brings.

geodel• 8 years ago

If you add VS code and their github acquisition they're going to be in front of a lot of developers in the next 2-5 years.

Lot of Javascript developers I think. There was a time when every Java application was supposed to be written in NodeJS. Thankfully, better sense prevailed.

chrisco255• 8 years ago

I mean, I love their tooling too, but the financial markets couldn't give a damn about VS Code or TypeScript. The GitHub acquisition is interesting, but as far as I know, GH was losing money on operations. I think Azure's growth, Office and Windows continued strength in the mobile era (despite predictions of the end of the PC), have more to do with MS's stock price than TypeScript.

RandallBrown• 8 years ago

Isn't the better tooling at least part of what fuels the growth of Azure, Office, and Windows by making it more useful to consumers?

LiterallyDoge• 8 years ago

What did you find you liked about Typescript? I considered it and opted for pure ES6/Next because the typing didn't feel like it would actually help sanitize my data. If I get a bad payload from the server, it's still transpiled at that point, and that's when I really need to know what my data type is. Otherwise I just sanitize at use (like all JS) and the overall overhead is less. Maybe you know something that I don't?

nicoburns• 8 years ago

It's pretty useful for libraries, as you don't have to do anything, but still get type safety benefits. It also has really good tooling. If you use anything like ES Lint, then TypeScript does a similar job but is a step up in quality.

dean177• 8 years ago

Maybe you will be interested in a library I wrote:

https://github.com/Dean177/jest-to-match-shape-of

I had the same issue, types don't mean anything if they don't align with the data that your app is consuming. My solution was that matcher combined with some integration tests.

matthewmacleod2• 8 years ago

In my experience, retrieving external data is not the point at which Typescript is useful – it's usually safe to the make the assumption that whatever data you retrieve meets the contract you've already agreed. But it does prevent whole classes of bugs that I found were pretty common in plain JS:

- "This thing was null but you didn't account for this case" - "You should have a number here but something returned a string" - "You have made an invisible typo in a property name" - "You have not handled all possible values in this function" - "You accessed some data internal to a class that wasn't meant to be changed"

Basically my experience is that is substantially cuts down on the number of stupid bugs that end up in my code. The code completion is also fantastic!

yazr• 8 years ago

Very nice product.

Which lib is used for pdf processing ?

Is epub support in the roadmap ?

grezql2• 8 years ago

good, that will teach them not to remove HDMI from macbooks and adding stupid notches, dj touchbars and other crap.

edit: not to mention 30% app store fee for developers.

actuator2• 8 years ago

While I wish that would drive Apple to rethink some of the decisions with MBPs, it is because of iPhone as mentioned in the article.

grezql2• 8 years ago

don't worry. A year ago when people were complaining about iPhone prices all the quarterly reports said "everything is fine, Apple is on the way up". It just takes time before the effects of those horrible new macbook changes shows up on the financial reports.

jamroom• 8 years ago

MSFT charges 30% to developers as well:

https://docs.microsoft.com/en-us/legal/windows/agreements/ap...

binarycrusader• 8 years ago

Actually, what you linked states different amounts depending on application type and/or other conditions:

The Store Fee is:

i. Thirty percent (30%) of Net Receipts for: (a) all Apps and In-App Products made available in the Store and billed to Customers on a non-subscription basis, and (b) all Games (and In-App Products in Games).

ii. Fifteen percent (15%) of Net Receipts for any Apps that are not Games (and any In-App Products in such Apps) that are billed to Customers on a subscription basis.

See also this blog post:

https://blogs.windows.com/buildingapps/2018/05/07/a-new-micr...

thrower123• 8 years ago

The thing is, nobody really uses, or has to use, the Windows Store. Which is decidedly not the case for iOS.

The better comparison on PC is Steam, which takes basically the same cut as Apple takes.

mkirklions2• 8 years ago

The cost of the operating system + ecosystem needed to compile is so enormous, it increases income inequality.

A low income person is excluded from developing for Apple. Established, middle-upper class and corporations are the only people that can afford to develop for Apple. Apple is effectively widening the gap between rich and poor.

jermaustin1• 8 years ago

I kind of agree with this in theory, but with services like Mac in Cloud and Mac Stadium, you can learn/develop for tens of dollars a month, and cancel your mac for extended down time.

sirmike_2• 8 years ago

And touchid. Still sore about that. Maybe I am just too old but the iOS platform died for me as an option the day they yanked touchid out of the iOS ecosystem.

I know this is pure speculation but does anyone think they may bring it back if they can do it under the screen? Also waiting for them to add mouse support to ipad. I am convinced this will happen in a few years (prolly not tho).

fetus8• 8 years ago

Care to elaborate on why removing TouchID killed the iOS platform for you as an option...?

chadash• 8 years ago

As of 1:04 pm EST, looks like MSFT has a market cap of $807B compared to Apple's $812.

If you look at their Q2 filing [1], their business has 3 main components:

Productivity and Business Processes ($9.0B) - includes office, Microsoft Dynamics, LinkedIn

Intelligent cloud ($7.8B) - includes server proudcts and azure

Personal computing ($12.2) - includes Windows OEM revenue, xbox, search advertising, Surface

It seems to me that Microsoft has a much more diversified set of products than Apple [2] with more resiliency in terms of revenue. The business world isn't migrating away from Excel any time soon. Their cloud business is growing strongly. And for the foreseeable future, Windows is the only OS for PCs outside of MacOS which is more of a luxury product (I love linux, but it just hasn't taken off for mainstream consumers).

[1] https://www.microsoft.com/en-us/Investor/earnings/FY-2018-Q2...

[2] about 2/3 of apple's revenue comes from the iPhone. See https://www.apple.com/newsroom/pdfs/Q2_FY18_Data_Summary.pdf.

mkirklions2• 8 years ago

My experience with an iphone had me convinced Apple=AOL.

Less features, more expensive, and anti-consumer practices?

This is the example of short term profits to drive up stock prices. Squeezing current users, spending limited money on improvements, and charging more money will work temporarily.

That said, Nintendo has been doing this for a decade, and they somehow survive. Marketing might be more powerful than competition...

EDIT: Due to HN whales(or apple marketing teams), Anti consumer practices-

Intentionally slowing down old OS
Proprietary connectors
Luxury pricing
Limited to App store and removal of apps
Limited hardware

An argument could be made for 'safe apps', but the rest of that list is a hard 'No, that is bad for the user'.

Redoubts• 8 years ago

Marketing might be more powerful than competition...

Or infinite choice and configuration is actually an anti-feature.

millstone3• 8 years ago

"Less features and more expensive" has been Apple's modus operandi for decades. So there's nothing short-term about that.

I don't agree with "anti-consumer practices."

setquk• 8 years ago

At least Apple didn’t have a funeral for windows phone, switch the platform half way through pissing off every developer, stuff it full of telemetry and unreliable crap then can the whole platform and jump on the cloud all while deprecating specific handsets randomly for the hell of it.

Microsoft are utter and total schizophrenic clowns in comparison.

I spent years betting on windows phone getting mugged over and over again. My iPhone just bloody works. No other vendor has managed that yet.

malshe2• 8 years ago

"Intentionally slowing down old OS"

One of the main reasons why I am not upgrading my iPhone 7 Plus this year is that iOS 12 has made it amazingly smooth. I have an iPhone 5S and even that's fantastically smooth with iOS 12. This is not my experience alone btw. So I think you are just making stuff up here.

heartbreak• 8 years ago

And for the foreseeable future, Windows is the only OS for PCs outside of MacOS which is more of a luxury product

Don't forget ChromeOS. The recent retail discount frenzy in the US (Black Friday and Cyber Monday) has opened my eyes to just how popular and affordable Chromebooks are.

Edit: To clarify, I know several people (including on HN) who are taking advantage of these discounts because they use Chromebooks. Obviously discounts themselves aren't indicative of popularity.

kodablah• 8 years ago

The recent retail discount frenzy in the US (Black Friday and Cyber Monday) has opened my eyes to just how popular [...] Chromebooks are.

Careful judging popularity increases based on advertisements alone, especially in large-scale discount situations, as the sales can sometimes indicate the opposite.

tw04• 8 years ago

Since when do discount frenzies = popularity?

There are currently discount frenzies on the essential phone...

wil421• 8 years ago

Apple is strictly consumer focused. Microsoft is consumer and enterprise focused. I also believe Microsoft will become a software and services company where consumers are targeted via mobile devices and enterprise for traditional server and workstations (non mobile). Especially as normal users keep dropping laptops for mobile devices like phones and tablets.

dingaling• 8 years ago

Especially as normal users keep dropping laptops for mobile devices

That really isn't happening. In fact laptop sales are now rising again whilst phones and tablets are saturated and static in volume.

mandeepj• 8 years ago

Apple is strictly consumer focused.

Not true.

1- https://www.apple.com/business/resources/

2 - https://www.apple.com/support/enterprise/

3 - https://www.apple.com/newsroom/2014/07/15Apple-and-IBM-Forge...

partiallypro2• 8 years ago

Big headlines like this, usually portend to a reversal. Look at the Amazon headlines around $1 Trillion, or the Winklevoss headlines when Bitcoin was at $25000. I suspect Apple will be bouncing in the coming days/weeks. That's why traders make fun of Barron's front pages, etc. If you don't believe me, you haven't traded often.

Both companies are going to keep doing great, but as I said in a prior post, I do wonder how resilient Apple's revenues will be if we have a downturn in the business cycle.

ohthehugemanate• 8 years ago

Agree, except that windows is a clearly de-emphasized product. License revenues are contracting faster than the PC market - almost 1.5x as fast. They're not releasing new paid versions anymore, and exploring things like paid support options a la redhat. It doesn't even have a dedicated department anymore.

Xbox and surface have been surging though, which is the real strength in that profit center.

zeusk• 8 years ago

Agree, except that windows is a clearly de-emphasized product.

huh? Windows licensing revenue is up 15% YoY

Agree, it no longer is the marquee product brand for Microsoft but every shipping product at the heart is still based around Windows (Xbox, Surface, HoloLens, Azure).

basch• 8 years ago

Apple has cash and COULD move on Microsoft.

Buy Adobe to compete with Office.

Buy Salesforce to compete with Dynamics CRM.

Buy SAP to compete with Dynamics ERP.

clubm82• 8 years ago

for the foreseeable future, Windows is the only OS for PCs outside of MacOS which is more of a luxury product

Counterpoint: many people are moving to a future where they don't have a home PC - they have a smartphone, a tablet, and maybe a console or entertainment system.

millstone3• 8 years ago

Note that Microsoft's P/E of 43.6 is higher than Alphabet (40.7), Facebook (20.4), Apple (14.49) though of course lower than Amazon (87.3). This is presumably due to their incredible growth in Azure / cloud.

btilly2• 8 years ago

I am a little shocked that the market hasn't woken up to the problems that Apple has.

Consider all the people you know well. How many have switched from Android to OS X in the last 5 years? How many have switched from OS X to Android in the last 5 years? In my household, 2 switched to Android, 0 switched the other way. In my broader network I'm aware of several more switching to Android, none switching back.

There is a good reason for that. An iPhone with equivalent specs to an Android costs 2x as much. The user experience isn't that much better. (Many people who switch say that the Apple experience was actually worse.)

The cheapest phone that Apple wants to sell you is an XS for about $1000. You can get a top of the line Android for less than that - with specs that beat the best model that Apple has.

So Apple is fighting a rearguard action - squeeze the most profit that it can out of a clientele that is slowly disappearing on them. In this world, they can't afford defects.

So what happens? I personally have an iPhone X because my sister gave it to me as a present. This month the display became non-responsive (that's the bug that has Apple's stock falling). They fixed that after most of a week without a phone. I've now got it randomly deciding that Face ID no longer works, the volume randomly going between off and on, and it recharges when it feels like it wants to. I've got to wait most of a week for them to fix THAT as well. (Have you ever had your phone decide to dial its volume to 0 in the middle of a phone call or listening to a book on your commute? Yeah, it sucks just as much as you would guess.) In the meantime I'm looking at my wife's phone with a growing amount of envy.

When Apple stops being willing to fix their phone under warranty, what do you think I'll replace it with?

diogenescynic• 8 years ago

Consider all the people you know well. How many have switched from Android to OS X in the last 5 years? How many have switched from OS X to Android in the last 5 years? In my household, 2 switched to Android, 0 switched the other way. In my broader network I'm aware of several more switching to Android, none switching back.

Anecdotes are worthless because one anecdote counters another. I don't know anyone who has converted from Apple to Android, but I know several who've left Android for Apple. However, since we're both only throwing out our anecdotal experience and not data, there's not much of a conclusion we can draw from it.

stouset• 8 years ago

I don’t understand how yours is the top comment. The cheapest iPhone currently available is the iPhone 7, which you can purchase right from their store. It’s $449. Their cheapest current-gen phone is the iPhone XR, which retails for $749, 75% of your claimed $1,000 price.

On top of this, iPhones handily trounce equivalent-generation Android phones in hardware performance, so it’s difficult to see how you can so confidently assert that Android phones are cheaper for the performance you get. The Pixel 2 XL and Galaxy Note 8 are still absolutely shamed performance-wise by the iPhone 8.

penagwin• 8 years ago

I'd disagree, I work in phone repair and have an iPhone 7+. Apples cheapest phone isn't 1000$ it's 450$ for an iPhone 7. Which IMO is fast enough given the tiny incremental improvements of the 8, etc.

I'd say iPhones last far longer then most (not all!) android devices. My mom still uses a 5S. It still gets security updates (and feature updates and optimizations!) how many android devices can say that? Even Google's nexus series can't say that anymore.

That said the 6 and 6p have been dying a lot recently from cellular/wifi issues or some other weird things - things we can't replace or fix (sadly our store is unequiped to do motherboard level repairs, but IMO only 2 employees would even have a chance at attempting something like that). I think this comes back to the bending issue they had. iPhone 6 phones are still aplenty in the wild though.

btilly2• 8 years ago

I said "that they want you to buy".

The ones that they want you to buy are listed at https://www.apple.com/iphone/compare/. Go there and look at the phones that they list.

Can you find the cheaper phone? Yes. Its specs don't compare to the https://www.samsung.com/us/mobile/phones/galaxy-s/galaxy-s8-... for the same price.

As for iPhones lasting longer, it certainly used to be true. I went out of my way to buy Apple products for close to 20 years, in large part because of the reliability that they gave. However reliability of Apple devices seems like it has gone downhill in the last few years. Look at https://ifixit.org/blog/10229/macbook-pro-keyboard/ for example.

My anecdotal experience fits. In the last 5 years I personally bought 3 new phones. One died 3 days out of warranty, one is the phone I described above, and the other is still being used by my son. My wife switched after her phone had reliability problems, and my step-son's switch came after his phone just died.

pgoggijr• 8 years ago

This is purely anecdotal - I have noticed the opposite trend in my circle of friends and family

The cheapest iphone that apple sells is certainly not an XS for $1000, the cheapest phone on their website is a cool $449:

https://www.apple.com/shop/buy-iphone/iphone-7

The problems I faced with my many android phones dwarf the amount of problems I've had with the two iPhones that I've owned (7 Plus + XS)

It's important to understand that these kind of experiences are anecdotal and have a history of being over-reported by tech news media (think "bendgate" and "squeezegate")

Humdeee• 8 years ago

This month the display became non-responsive (that's the bug that has Apple's stock falling).

This is not why Apple's stock is falling at all... it was forecasted that future production rates were expected to be lower than expected. Manufacturing suppliers were also affected by this. Not from some bug.

Animats2• 8 years ago

This is Peak Phone. Everybody already has a mobile, and IPhone N+1 is only marginally better than IPhone N. It's like GM in the 1950s trying to get people to buy a new car every year. Then GM tried "more car per car", trying to get people to pay more per unit.

There's no Next Big Thing in the near future, no "must-have" consumer product. 3D TV was a flop. VR goggles were a niche product. Cloud-connected surveillance ("speakers") and computer-controlled woks (big in Asia) are just not that big. Foxconn sees this and is cutting back.

jimmaswell• 8 years ago

There's no Next Big Thing in the near future

How can you know this? Is there a precedent of knowing beforehand right before the "next big thing" is about to happen?

Animats2• 8 years ago

The Next Big Thing for volume production 3-5 years out has to be working now in some form. What's almost here? AR goggles?

10 years out, there could be something completely new. But there is lead time.

sitkack• 8 years ago

The next big thing is quality. We have everything we need. What we need is quality air, food, water, time. Basically everything that capitalism has taken away in the last 50 years.

danielor2• 8 years ago

I think this is mainly a question of momentum. Microsoft is benefiting from some good strategic decisions in recent past, and has a large number of legacy businesses that are quite profitable. Apple in the short term is too dependent on the iPhone, and it will take a few quarters to build a more robust product pipeline.

nkkollaw5• 8 years ago

I think the more they build, the more they'll screw up. I've yet to see anything good coming out of Apple in the last few years.

- force-touch touchpads are so useless than not even them use the technology to any meaningful extent

- the Touchbar is completely useless, and anecdotally people stop using it after a few days

- their new butterfly keyboards are a nightmare to type on (albeit that's definitely subjective), and stop functioning with dust particles, and they haven't even acknowledged the problem before being hit with 2 class actions

- they've removed all useful ports from their laptops, and headphone jacks from their phones.

What a shit show.

konschubert• 8 years ago

It's weird. It really looks like Steve Jobs kept the vision clear and what we're seeing now are his people cargo-culting what they saw him do.

I don't know much about Steve Jobs, but I imagine he cared more about making a great product than optimizing earnings. I also think he cared more about making a great product than about forced innovation

And I think that's different now, and ironically that's one of the things holding the share price back.

danielor2• 8 years ago

Apple will continue on the trajectory that it is on, until people stop buying things on their platform. The share price will reflect this as net income is the name of the game. If and when they miss, I would expect significant changes in leadership and the direction of the company. Until then, they will keep hammering these incremental i* "improvements". The mediocre features you highlighted will not necessarily impact them if they can convince people that they are worth it.

matthewmacleod2• 8 years ago

I'm sure you appreciate that this is all a little subjective though.

force-touch touchpads are so useless than not even them use the technology to any meaningful extent

I love this technology. Use it literally every day!

the Touchbar is completely useless, and anecdotally people stop using it after a few days

See above :) I quite enjoy the UX of this, especially for things like trimming video, brushed in Photoshop, stuff like that… basically gauges and pallets work quite well!

First point is subjective as you say (and personally I now find the old keyboards weird and mushy!) Breakdown does appear to be an issue, though.

they've removed all useful ports from their laptops

Could have retained the HDMI I guess, but I reckon most people probably didn't use much other than that! Bit of a downgrade though, agreed.

Basically, I think the "shitshow" of recent Apple devices has been a tad overstated by some people. I get that not everybody's going to be happy with those design decisions… but I don't think it's quite as "sky is falling" as we often hear.

nkkollaw5• 8 years ago

Microsoft is doing a much, much better job with hardware compared to Apple. Microsoft's Surface Book is absolutely stunning--although a little pricey for me--and unlike Apple's stuff it doesn't break after a month of normal use with people having to do class actions for them to acknowledge that there's even something wrong.

On the other end, macOS is definitely better than Microsoft in pretty much every aspect (although that might be subjective).

Me, I'm currently on a Surface Book "clone"--meaning a laptop that has the exact same Chinese, awesome 3000:2000 touch screen, running an hybrid of Xfce with Kwin and other components to make Linux look a little prettier.

Joeri• 8 years ago

Microsoft's Surface Book is absolutely stunning--although a little pricey for me--and unlike Apple's stuff it doesn't break after a month of normal use with people having to do class actions for them to acknowledge that there's even something wrong.

The surface book is actually known to have thermal problems, and the surface pro 4 almost went to class action before microsoft organized a replacement program.

http://www.classlawdc.com/2018/02/06/microsoft-surface-pro-4...

On the other end, macOS is definitely better than Microsoft in pretty much every aspect (although that might be subjective).

As someone who hops between macOS and windows I'd have to disagree with that. Window management on laptops is way better on windows. There's no good way to cope with the dock on a small screen. It's difficult to resize windows (very small targets and no "dock to resize" feature) and the window behavior when maximized (fullscreen) is very clumsy. Also, macOS has no equivalent to the windows timeline.

dkrich• 8 years ago

Share prices expand when revenues look to be expanding. What the price action in MSFT and AAPL tells me is that the market sees MSFT as growing over the next few years (at least) and AAPL not growing much from where it is now.

This story starts to make sense as you look at Apple's product portfolio. AAPL's cash cow is the iPhone. Yes they make tons of money on other products like laptops, tablets, and watches, but the lion's share of the revenue comes from iPhones. This has been the case for a long time, so why now has the stock pulled back? It's because now the ASP on the iPhone is likely topped out for a while, especially as the economy starts to slow down. So ASP is topped out, what about unit growth? If prices remain constant but units sold continues to go up, wouldn't that mean increased revenue? Yes, but that too seems to be stagnating according to the most recent earnings reports. And that's the story, IMO. Revenues on the most important products have seemingly topped out and probably won't increase significantly from here. That could of course change if for example lots of Android users unexpectedly flock to iPhones. There's no reason to believe this will happen, though.

What about other lines of revenue? Services, for instance? Apple Music and video content are commodity businesses so likely won't see much revenue expansion from here. Wearables are probably the main bright spot.

Let's not forget that the entire market for tech stocks is in the midst of a huge sell-off which is probably most to blame for Apple's decline. There is probably two-way influence here.

Apple was basically rerated over the past year or two from a stable dividend generator to a growthier stock and is now being rerated back to stable dividend generator. I don't think Apple has any near-term competitive threats to its business so should bottom out sometime soon, but if the stock is to resume its uptrend it has to show significant growth in new areas.

Microsoft Pulling Even with Apple in Ranks of Biggest Companies

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