A week and a half ago, after Apple announced their blowout earnings for the holiday quarter, I wondered if the third and final pillar of Microsoft’s financial strength over Apple was about to fall: profit. In 2010, Apple surpassed their longtime rival in market cap and revenue, but profit has remained elusive (mostly because Microsoft mainly sells high-margin software while Apple mainly sells relatively lower margin hardware). Well it’s still elusive — for at least one more quarter.
As I suspected, Microsoft was barely able to eek out a profit win over Apple. For the quarter, Microsoft earned $6.63 billion in profit compared to Apple’s $6 billion. Assuming the trends hold, Apple should indeed take the profit crown next quarter.
Let’s look at the numbers. Apple’s $6 billion profit quarter was easily their best ever — a full $1.7 billion above their previous record (set only the quarter before). Microsoft, meanwhile, saw their profit dip a bit year-over-year, by around $30 million. Microsoft’s profit did rise quarter-to-quarter, but not as high as Apple’s did. Instead, Microsoft’s profits were up about $1.2 billion quarter-to-quarter.
The holiday quarter is typically the best for both companies. So next quarter should produce a dip for both. But again, following the trends, Microsoft’s should dip further than Apple’s.
When Apple passed Microsoft is revenue for the first time October, they beat them about about $4 billion. This most recent quarter, they pushed the revenue gap to almost $7 billion. Apple now holds about a $70 billion edge over Microsoft in terms of market cap.
As Reuters noted yesterday (while incorrectly guessing Apple would pass Microsoft in profit today), the last time Apple’s profits were ahead of Microsoft’s was 1990. Times were much different than. Microsoft was just releasing Windows 3.0. Apple was gearing up to release System 7. Microsoft was rising, Apple was falling.
Times have changed. And we should see that fully next quarter.
Microsoft, founded in 1975 by Bill Gates and Paul Allen, is a veteran software company, best known for its Microsoft Windows operating system and the Microsoft Office suite of productivity software. Starting in 1980 Microsoft formed a partnership with IBM allowing Microsoft to sell its software package with the computers IBM manufactured. Microsoft is widely used by professionals worldwide and largely dominates the American corporate market. Additionally, the company has ventured into hardware with consumer products such as the Zune and...
Started by Steve Jobs, Steve Wozniak, and Ronald Wayne, Apple has expanded from computers to consumer electronics over the last 30 years, officially changing their name from Apple Computer, Inc. to Apple, Inc. in January 2007. Among the key offerings from Apple’s product line are: Pro line laptops (MacBook Pro) and desktops (Mac Pro), consumer line laptops (MacBook) and desktops (iMac), servers (Xserve), Apple TV, the Mac OS X and Mac OS X Server operating systems, the iPod (offered with...
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