Microsoft's quarterly profit drops below Apple's for the first time in 20 years

http://mashable.com/2011/04/29/microsoft-quarterly-profit-apple/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Mashable+%28Mashable%29

by mapk • 15 years ago

116 81 15 years ago

mashable.com

orijing8• 15 years ago

Misleading. Microsoft's quarterly profit grew pretty quickly (above 30%). It's just that Apple's profit grew faster, causing it to take the lead in the race.

fredoliveira• 15 years ago

I don't see what's misleading here. Doesn't your sentence basically mean the same thing the title does? As you said, microsoft's profits grew slower, and they had lower profits than apple did, which means the story title is far from misleading.

benologist2• 15 years ago

MS didn't drop below Apple, Apple grew above MS. It's a pretty important distinction - drop means they declined, Apple is now making more money than Microsoft, and Microsoft is making more money than they used to too.

jammur2• 15 years ago

I don't think it's misleading. Since it says that MS profit "drops below Apple's", it's making reference to a relative difference, in which case it did drop.

watty2• 15 years ago

It can be understood in multiple ways, maybe not intentionally misleading but it could be written better.

"My height grew above Yao Ming's last year". Did I surpass his height last year or grow more during that period of time?

jscore• 15 years ago

Not misleading at all. You just misunderstood. A drop is a drop even when it's relative.

orijing8• 15 years ago

Guys, I didn't mean to start such a discussion over the wording. I said it was misleading, not "cannot be interpreted correctly."

In particular, by saying that X's profit dropped below Y's for the first time (without context of X and Y) suggests TO ME that X's profit dropped when that was not the case.

By "misleading," I meant that had I not known profit figures already, I would have assumed the title meant that Microsoft's profit had fallen. It means that the understanding it leads you to believe initially is incorrect, hence misleading.

glhaynes2• 15 years ago

I downvoted your original post because I read "misleading" as implying that it was intentionally, wilfully misleading - i.e. lying. But you're correct: the wording misled you (and understandably so) to an incorrect conclusion. Apologies.

bstar• 15 years ago

I guess I was most amazed that in 1991 Apple's profits were greater than Microsoft's. I was playing Ultima 6 and King's Quest V back then... I didn't know anything existed but the IBM PC.

protomyth2• 15 years ago

Office came out in 1990 and took a while to take over. MS-DOS wasn't as profitable as Windows would be.

CamperBob• 15 years ago

Their margin was certainly higher. Macs were brutally expensive around that time. It was no trick at all to drop $10,000 on a high-end Mac system.

runjake2• 15 years ago

For me, it's more interesting that Apple did this without a lot of the shady business & licensing practices that Microsoft engages in.

Edit: Before downvoting me, take a look at my comment history. I'm not your typical Apple fan/Microsoft basher.

orijing8• 15 years ago

Do you think Apple's walled approach to iOS apps and content on iOS platforms is more honorable than Microsoft's open development initiative? (i.e. letting anyone write Windows applications).

To me, their decision to prevent iOS apps from getting content outside of its walled garden (and bypass the 30% fee) is much more anti-competitive than whatever Microsoft did.

I don't know if anyone downvoted you (I didn't). I just wanted to hear your opinion. I'd like to hear what you mean by 'shady', and what in particular about Microsoft makes it shadier.

benologist2• 15 years ago

They both make dick moves every day and get soundly rewarded for doing so.

crs3• 15 years ago

How is the "walled garden" anti-competitive. It doesn't stop anyone from writing applications for android, WebOS, etc. Apple is selling a hardware experience. We have a choice, use IOS devices with the walled garden experience, or use an alternative like Android or WebOS devices. Furthermore, "honor" has nothing to do with the ability to write apps for a platform without paying a fee. This is not similar to Microsoft's anti-competitive practices in the past.

muhfuhkuh• 15 years ago

"Do you think Apple's walled approach to iOS apps and content on iOS platforms is more honorable than Microsoft's open development initiative? (i.e. letting anyone write Windows applications)."

I can make an OS X application and market it, distribute it in any way I wish. I can even use Apple's IDE, libraries, and compiler tools.

Why are you comparing that to the device OS (which by the way, Microsoft also implements a similarly restricted approach for in their Windows Phone Marketplace).

alanh• 15 years ago

Please stop trolling. Microsoft did a ton of shady things. For instance: Colluding with SCO to spread Linux IP FUD [1]; suing Lindows around the world, even“ex parte,” and getting a ruling from some a Dutch judge that every day someone could download Lindows from the Netherlands, Lindows owed MSFT an additional 100,000€ for trademark violation [2]; the whole Java Embrace, Extend, Extinguish thing; forcing OEMs to not ship PCs with Linux installed if they wanted standard OEM discounts on Windows; the whole federally-convicted-of-antitrust bit; etc.

And I for one LOVE the walled garden as it provides me with demonstrably higher-quality, malware-free apps that don’t just rip off someone else’s IP/icon haphazardly the way most Android apps seem to do. The walled garden does NOT prevent end users from installing web apps to the home screen, sans Apple approval. It is also NOT anticompetitive, unless you know something no one else does.

[1] http://news.cnet.com/2100-7344_3-5172426.html?tag=nefd_lede

[2] http://www.eweek.com/c/a/Linux-and-Open-Source/Microsoft-Kee... and http://www.wired.com/techbiz/media/news/2004/03/62644 and more generically http://en.wikipedia.org/wiki/index.html?curid=465335

msbarnett• 15 years ago

Microsoft is using the same "walled approach" in Windows Phone 7.

And Apple is using the same "open development initiative" approach in OS X.

I'm curious as to why you feel that "(Apple's walled garden approach) is much more anti-competitive than whatever Microsoft did" when Microsoft is pursuing the same approach in the same space.

cwp• 15 years ago

Um, "whatever Microsoft did" was so shady it's illegal. Apple may be heavy-handed in how they manage their platform, but they don't do anything to prevent consumers from using competing platforms.

prodigal_erik• 15 years ago

Human beings deserve uncrippled tools, so I consider Apple's iOS appliances to be unworthy of us. But their customers are at least willingly buying into that dystopia, unlike Microsoft customers who were usually confronted with vendors who couldn't dare to sell you a box with a competing operating system even when asked.

runjake2• 15 years ago

Definitely what Microsoft participated in has been much shadier. I'm not sure it can be reasonably argued otherwise.

Everything from forcing hardware vendors to bundle their OS to forcing Internet Explorer installs to the infamous Halloween documents to their covert dealings with SCO & everyone else over Linux and patents.

Surprisingly, it still seems pretty hard to get the hardware I want without paying for a Windows OS I:

1.) Won't use, because I'd throw Linux on it. 2.) Don't need, because I already have several valid Windows licenses which are unused.

But yes, certainly some of Apple's walled garden/30% actions are alarming.

http://en.wikipedia.org/wiki/Microsoft_antitrust http://en.wikipedia.org/wiki/Halloween_documents

Niten• 15 years ago

Ha! Suing competitors over dubious patents; pushing for legislation to punish people for using their own hardware how they see fit; trying their hardest to keep people from using iPods and iPhones with anything but iTunes; designing special screws to lock people out of working on their own Macs and iDevices, increasing service revenue; abusing their control over the App Store to keep out competitors; instituting a new App Store policy to force content providers to pay 30% to Apple, and disallowing providers from raising prices in the App Store vs. on other platforms to cover this cost...

None of this sounds the least bit shady to you?

emehrkay• 15 years ago

I keep it simple; Apple contributes to open source projects that could be (and have been) used as direct competitors to their own, while MS sues companies who implement open source software.

bkhl2• 15 years ago

"a lot of the shady business & licensing practices that Microsoft engages in"

Um... you are wrong. These companies are all suing each other, and Apple is known for creating patents for every little thing they do in iOS.

rahoulb• 15 years ago

Apple has never done anything approaching what Microsoft did to Be and Hitachi

pessimist• 15 years ago

Two things - Windows license down 4% year-over-year(!) while macs rose 28%, and $728 million loss this quarter alone competing with Google. Thats a run-rate of $3b loss just to compete with Google - at some point one has to think this assault - plus competition from Apple and facebook - will finally start hurting Google a lot.

orijing8• 15 years ago

While it is significant that Microsoft's falling behind Apple, I'm not particularly surprised that OS sales are slightly lower than it was last year at Microsoft. Last year was the start of the launch of Windows 7.

eddieplan9• 15 years ago

MSFT is down 4.4% now: http://www.marketwatch.com/story/microsoft-offers-more-muted...

smackfu• 15 years ago

Stocks move for odd reasons. Not based on the news directly, but based on the news relative to what the market thought the news would be.

r00fus• 15 years ago

Probably has to do with concurrent reasons why Apple is overtaking them in profitability, notably, the iPad is absorbing the netbook market (MS reported netbook sales down 40%).

cooldeal4• 15 years ago

Microsoft spends a significant amount on basic research, like Bell labs used to and Microsoft research publishes a lot of publications. 15% of the research budget goes to universities for research, that could keep the profits lower than Apple.

orijing8• 15 years ago

In fact, Microsoft spends around $2-2.5b on R&D per quarter [1] while Apple spends $500-600m [2]. That certainly more than makes up for the difference.

[1] http://finance.yahoo.com/q/is?s=MSFT

[2] http://www.google.com/finance?q=NASDAQ:AAPL&fstype=ii

wooster• 15 years ago

I was on a team once at Apple with ~15 people on it. At one point, we found out the equivalent group at Microsoft had ~500 people.

Most people I've talked to who worked elsewhere are shocked at how small the teams at Apple are.

ellyagg• 15 years ago

So I don't understand. Are you saying that research money is essentially a donation so that's why it doesn't "count"? Isn't the point of a company's research team to develop profit centers that not only cover their own costs but then some? Because the way I'm reading this Apple's R&D is doing it better and more efficiently.

ugh2• 15 years ago

And?

ksolanki• 15 years ago

Microsoft can keep this up until profits are growing. Here's hoping this research funding doesn't dry up like Bell labs' did. It is hard to quantify the benefits of spending on basic research. Apple puts a lot of focus on design, wheres Microsoft on technology (or science?).

pohl2• 15 years ago

May 2010: marketCap(AAPL) > marketCap(MSFT)

"Bah, it's revenue that matters"

October 2010: revenue(AAPL) > revenue(MSFT)

"Bah, profit is the real metric"

April 2011: profit(AAPL) > profit(MSFT)

"Bah, basic research is where it's at!"

cooldeal4• 15 years ago

I was just making an observation, not making an excuse for Microsoft. Apple may have "won" long ago vs. MS for all I care, if that is what you want me to say. I don't know how my reply got twisted into something that I didn't say.

contextfree2• 15 years ago

The basic research budget (MSR) is a pretty small part (2%?) of the overall MSFT R&D budget. Though probably still one of the biggest industrial research budgets.

mkramlich2• 15 years ago

> Microsoft spends a significant amount on basic research, like Bell labs used to and Microsoft research publishes a lot of publications.

I've always felt they spent so much on "research", in part, as a way to reduce their reported profits. Because Microsoft was notorious for mostly just copying what others did first (see Apple --- and yes I know about Xerox PARC), or acquiring/rebranding/integrating (Spyglass -> IE, etc.), and only a small percentage of so-called original/in-house stuff. When the original version of C# and .NET came out it was so hilariously obvious what they were ripping off at that time (cough-Java-cough), they didn't quite shave off all the boilerplate for those in the know. But They Capitalized Differently. Oooooh. ;)

On a related note, I once knew someone who officially worked in software R&D. And I noted they mostly spent a lot of time surfing the web and then parroting some sexy sounding thing they read about recently. Ironically (or not?) I think that's a not un-legitimate way, and certainly can be an effective way, to introduce new thinking inside a particular company, or introduce a new technology, like say as a pilot project. But to describe this process as requiring heavy spending (on software R&D mind you, not talking about hardware stuff) sounds ridiculous and an unnecessary money sink. Find a smart creative engineer. Take them off the leash. See where they go, what shiny nuggets they bring back. That's how you do practical software R&D, outside of academia. Doesn't require billions. Just brains, and it can be a side product of what your staff is already doing anyway -- if you have the right staff.

hvass• 15 years ago

Can someone please explain why Apple spends relatively so much less than Microsoft on R&D? I would've thought it's the opposite.

recoiledsnake• 15 years ago

Microsoft does a lot of basic research, not just applied research.

brg• 15 years ago

I would look at it from the perspective of Microsoft spending so much more than everyone else.

Research encompasses a lot of things at MS, from pure research labs in Redmond, Boston, Cambridge to online services and live labs. Microsoft runs perhaps the largest CS research organization in existence, when basic research is considered alongside product research such as Bing and Photosynth.

MSR grew to be so by the promotion of Nathan Myhrvold, and the buy-in he was able to get from Gates and Ballmer. It maintains itself by being able to collect a lot of talent, and keeping them interested. But like Lucent, it probably only survives as long as the company is growing.

kenjackson6• 15 years ago

In many ways Bill Gates seems to view MSResearch and the Gates Foundation as his legacy, more than Microsoft proper. Whereas for Steve, I think Apple is his legacy.

romey• 15 years ago

What I think is most interesting about this is that 1. People continue to compare Microsoft and Apple as if they were directly competing, in spite of the fact the Apple is [primarily] a hardware company and MS is [primarily a software co. and 2. In spite of being primarily a hardware company, Apple is still able to be more profitable than Microsoft. They truly do release their hardware as if it were software, iterating and releasing a new version nearly every year. Even more surprising is that people actually buy this new hardware annually, as if it were a software upgrade

raganwald• 15 years ago

Hardware is not software, but it's trending in that direction. The price of the raw components keeps falling, we are headed towards a future where a tablet is really a hardware dongle for an operating system or an advertising platform.

johncoltrane• 15 years ago

Its not only blog commenters, pundits or people.

You wouldn't believe how much MSFT people are fixated on Apple despite having no direct competition between each other (except Zune Vs. iPod, but I would say it doesn't count). The fruit word and the fruit logo used to come up in almost every external powerpoint presentations/briefings five or four years ago, it was crazy. They are/were fascinated by Apple and lack any ability to even understand how they work and, of course, learn from them.

For some reason, I find it hard to imagine a keynote in Cupertino with a pixelated Windows logo in every slide. But I might be wrong.

I hear now they are fascinated by Google, now.

bkhl2• 15 years ago

What we need to focus here is this...despite the decrease in PC sales, Microsoft managed to grow. They did not just grow a little, but they grew tremendously. 30%? that's a huge number for a company like Microsoft. Nonetheless, Apple has reached another huge milestone in their history.

kevin_morrill• 15 years ago

Right, I think the point is this says more good things about Apple and doesn't really say that MS faces impending doom. Both companies are quite impressive, just more so for Apple. To grow a megacap company in double digits is quite a feat.

fauigerzigerk• 15 years ago

Their revenue grew 13% yoy and earnings include 5 cents one off tax benefit. Without that earnings still grew about 24% coming out of a recession. What caused Microsoft's share price to fall massively yesterday was that Windows revenues actually decreased, which is rather surprising.

cocojumbo123• 15 years ago

herp-derp. Title should had rather been: Apple's profit is higher than Microsoft's for the first time in 20 years.

Microsoft's quarterly profit drops below Apple's for the first time in 20 years

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