Apple is Officially Worth More than Microsoft | Hacker News Reader

Apple is Officially Worth More than Microsoft

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215 pointsfusionman129 comments

Consider that Apple's P/E is 24.5 and Microsoft's P/E is 13.4. Basically, while Apple may be in demand right now, Microsoft is earning almost twice as much.

Also, Microsoft pays a (albeit small) dividend, whereas Apple does not.

Goldman Sachs has a P/E ratio of 5.94.

Microsoft's P/E is heavily "discounted" because it's considered a sort of swan song of easy money (the Windows and Office empire that they've coasted on). Apple's is considered the beginning of things. Stock value today isn't based on today, it's based on "tomorrow".

> Apple's is considered the beginning of things.

Who says that? They could be at the top of their game right now and not see more growth and stabilizing and/or decreasing in the future. There is no way to tell, otherwise you'd be very rich already ;)

> Stock value today isn't based on today, it's based on "tomorrow".

Who says that? Many believe that Apple stocks are overvalued today, that's for sure. Oh, and again, there is no way to tell the future.

> "They could be at the top of their game right now and not see more growth and stabilizing and/or decreasing in the future."

In the future, anything's possible. But the future is almost always a function of the past, and current trends indicate anything but a decline in Apple's growth.

Trends reverse, and "this thing is going up forever" trends usually reverse with a huge drops and without a warning.

Check this http://www.davemanuel.com/investor-dictionary/momentum-play-...

Stock price isn't meant to predict the future, it represent trust in the future turning out well for investors.

. There is no way to tell, otherwise you'd be very rich already ;)

Conversely, the aggregate opinion of investors does has some value. Otherwise you could make a fortune betting against any stocks with high P/E ratios.

Many believe that Apple stocks are overvalued today, that's for sure.

Sure. And just as many believe it's undervalued, otherwise the current price would be lower than it is. This is true for any stock.

Just so you know, Goldman Sachs' P/E has nothing to do with this discussion. GS is a player in an entirely different industry and it is useless to compare this one statistic between two tech companies.

>Goldman Sachs' P/E has nothing to do with this discussion

Nothing? Don't you think that's a little strong?

P/E reflects growth prospects, and a large, established financial company has limited growth prospects. Just as a large, established, coasting tech company tends to have lower P/E ratios. GS lives in an industry with lower P/E ratios, but saying that it has "nothing" to do with it is terribly wrong.

You are missing the point, GS is a horrible example to compare to anything but other financials right now. We have upheaval in the financial market around the world along with new regulations coming down a year after they were basically bankrupt and had to be bailed out by the government. What about that is established, limited growth prospects etc.

There are plenty of other large cap companies to compare MS to that are far more applicable, look at Proctor and Gamble's P/E is 16.06. Colgate Palmolive's is 19, IBM's is 12. Those are more comparable/normal.

>You are missing the point

So you're going to provide another poster's "point"? Their point was that they were two different industries, which is entirely fair. Your point is something entirely different altogether, yet you're speaking on their behalf.

P/E is often a farcical metric, yet you know I'm not the one who brought P/E into the discussion, yet here we are.

I am in the midst of studying for a hefty financial certification exam right, so your comment reminded of something that is frowned upon in the financial industry.

Its not that what you're saying is completely wrong, just unnecessary.

A P/E ratio is useful, but it requires lots of context. You provided no context and mentioned a stock that shows little to no correlation to the tech industry and plus the financial industry is somewhat "messy" right now.

I suggest you look up some other large established banks and their P/E ratios right now. For example, Morgan Stanley (MS) has a P/E of 98. Does that mean they have that much more growth potential? Maybe it means that GS is currently undervalued with all the negative press they are getting recently? A low P/E could also be a sign of being undervalued, just as a high P/E can a sign of being overvalued. On the other hand, the tech industry is proving to be quite lucrative lately. Apple has released the iPad and is coming up on their WWDC and there is plenty of speculation concerning iPhone 4G and mobile advertising opportunities. With all the media attention Apple gets, their "friendly" design, and their phenomenal advertising campaigns, isn't it quite possible that they are overvalued? As soon as a viable Windows 7 based tablet comes out that lets you torrent, play divx via divxplayer and flash, don't you think the iPad might be a little more than fucked in its current incarnation/closed environment? And who knows, maybe Microsoft is undervalued right now seeing as two execs have left? Its at a fairly low share price (historically speaking) right now.

tl;dr Fundamental analysis is complicated enough as it is, don't throw in unrelated numbers.

the difference implies that the market is assigning a higher multiple to AAPL presumably on the basis of growth. Whether that is warranted or not, I do not know.

I actually think it is more useful to look at these companies from a yield perspective. So if you take the free cash flow / enterprise value of each company you get:

10.8% for MSFT and 6% for AAPL. This is in line with what you said (MSFT producing greater earnings) but presents the data in a more readable manner I think.

PEG would be a more appropriate way to compare the two...don't you think?

Also, earnings for MSFT are about $17B and AAPL is about $11B

Simply put, the market sees more growth in Apple than they do in Microsoft. Microsoft has been trying to grow for a while now, which since they own such as large share of the OS/Office market, means expanding into new markets.

They have had some success with xbox, but overall they are yet to be in the black there. There is still a chance to grow with the online services. If they can get the xbox positioned as a general entertainment devices in enough peoples homes, but it may be too expensive for that. You have google coming into this space now, and they are going to do things very cheap.

Zune hasn't worked out for them.

They lost there way with Windows Mobile, it seems they just forgot about it, just as they did with IE.

IIS has started to falter, and .Net has seen some great growth, but looks like stagnating now as well.

Whereas Apple have some exciting products coming out, that seem to do very well.

On the other hand Microsoft is in a position where they can deliver the best integration of your web, desktop, mobile and living-room devices and has the resources and skill to do so.

They probably don't do it because they are such conservative douche-bags and don't want to threaten their cash-cows, but I wouldn't bet against them in case the money from Windows / Office stop flowing and they end up in a position where they either compete or die.

Is it just me that thinks it's insane that companies can permanently plan to not pay (or pay small) dividends?

If market trading is solely based on the ability to resell stock at a higher price how is the market expected to select companies that deliver real value to the economy?

Surely the ability of a company to consistently and stably deliver dividends to the stock holders would be the best measure of success, re-investment cases aside.

Unless I misunderstand the only shareholder value in this context is the ability to flip the stock or get a piece of the action if the company is sold.

The theory is that Apple can spend the money better than the investor, by using it to do more R&D, make new products, and make the portion of the company represented by the share more valuable. In growth mode, that's not unusual.

In companies that can't do much R&D, you see much more dividend action, for example, natural resource stocks are high dividend, since there's near nothing they can do to reinvest, at least not with everything they pull in.

You don't need to pay dividends to increase shareholder value. It just depends on how good management is with allocating capital.

Buybacks can work just as well if you are buying back at the right price. A lot of management teams are bad at capital allocation and buyback stock at 52 week highs - that is almost always incredibly stupid.

But sometimes the business is trading at irrationally low levels and it makes a lot of sense to just buyback stock, especially if the fundamentals are in tact. I saw a company doing this and it is a great decision, their business earns a 50% return on invested capital and they have an earnings yield around 20%. It is a slam dunk strategy. When it is overvalued, you can issue stock and use it for acquisitions.

Look at Henry Singleton who ran Teledyne and used that strategy. Teledyne went from $100,000 in profits in 1960 to $238 million in 1986. Shareholders’ equity grew from $2.5 million to over $1.6 billion. Teledyne trounced the market by 4x over that period.

Using excess capital to fund accretive acquisitions, internal growth, or to invest outside of the company can work if you are disciplined in the process (most aren't). Warren Buffett became one of the richest people in the world, simply by doing this (it sure wasn't his $100K salary).

> Buybacks can work just as well if you are buying back at the right price. A lot of management teams are bad at capital allocation and buyback stock at 52 week highs - that is almost always incredibly stupid.

The stock price for buybacks doesn't matter, if you only care about getting money back into investors' hands.

Incorrect. If your stock is overvalued, a buyback is an inefficient and destructive method for getting money back into shareholders hands. You would be better off giving a special dividend instead.

Debatable in the US, once the Bush dividend tax cuts expire next yr.

Please explain.

If you spend $100M buying back stock at the top of the market and then the next year, the bubble pops and your stock is down 50% was that really good capital allocation?

For every dollar you spent, you have effectively lost 50 cents. Sears admitted as much back in 2007 when they were buying back stock at $180 only to watch it drop to $90 a few months later. Remember, the idea with buybacks is to reduce overall share count so that you boost EPS and in turn your share price.

The amount you can retire might double if you simply wait out a bubble period. That's why dividends and buybacks need to be looked at relative to where the stock valuation is. When your stock is trading at a peak valuation, if you want to release value to shareholders, you are much better off using a dividend than a buyback.

You can play the stock market, and you can put money back into investors pockets.

If you want managers to play the stock market, your comments are spot on--but you shouldn't restrict them to buying only shares of their own company. If they are good at predicting when valuations are high and going lower, or the other way round, you should open an investment fund and profit from their expertise.

Most companies aren't in the business of playing the stock market.

If you just want to transfer money from the company to the stock holders, you can either issue dividends or buy back shares at any time there's excess cash. Apart from taxation issues, there's no difference between share buy-backs and dividends in terms of getting money back to the investors.

I think the more interesting news here is that Apple is now the second largest company in America (about $50 billion behind Exxon).

This is kind of pedantic, but I think the word valuable might be better here than largest.

Apple is relatively small when compared to companies like Walmart, which has 2.1 million employees and almost 8x revenue.

Where is the value in Apple? Its ability to trick Americans into buying very expensive, yet very restrictive, products that most of the time they really don't need? That's actually a very harmful thing, from an economic perspective.

iPods and iPhones are competitively priced.

Sure, the Macs are expensive, but the hardware is very high quality, and when you compare them to Thinkpads and Vaios--other high-end computers--it's pretty reasonable.

I'm no Apple fanboy (as of now, the only money I've ever given Apple is 30% of app purchases I've made for my hand-me-down iPhone 2G), but in a couple of days, I'm buying a MacBook Pro because it's a high quality unix system that Just Works. Given that I'm a programmer who will use it constantly, the time it will save me should cover the extra few hundred dollars by the end of summer.

This is so true. I like me some Linux, but OS X has won me over. I thought the iPod was a fad for people with money to waste, until I got a Mac and discovered how much thought Apple puts into their products. Sure I had a HDD based MP3 player (Creative Nomad Jukebox), but it took 2-3 minutes to boot if you put 2GB of music on it and it was the same size as a discman. The UI was atrocious. I went back to an MP3 discman because the Jukebox sucked.

Most people don't compare Macs to equivalent systems, often because there is no comparable alternative. Even if you spec out a similar machine from other manufacturers you are almost guaranteed to be giving up something, whether that be battery life, a good case, or just the little touches that make you happy day to day like the battery life indicator or addictive multi-touch gestures.

Even the Vaio-Z, which is pretty slick and only 13", isn't on par with a MacBook Pro when it comes to the little touches. Yet it costs as much as a 15" MBP.

People who like to compare specs think they're getting a better deal but they rarely take into account actually using the thing for 8+ hours a day. The little things make a big difference when you use your computer that much.

My experience with my first Mac has not been one of it "Just Working." I get periodic whole-screen graphics corruption (I took a photo of the screen with my digital camera I was so surprised), infinite loops when connecting to shared folders if I type the URI wrong, and other issues. Plus, its UI is a lot slower than the custom PC I paid the same price for. It mostly sits unused now.

Then you should have taken advantage of the other thing Mac does extremely well: support. There is obviously something wrong with your machine. Or did you think we're all just suffering through this, embarrased that we paid so much for a machine that doesn't run?

value is also an almost meaningless term. How many times have we all seen the infomercials that sell some gadget at a $50 "value" but they'll sell it to you for only $19.95?

I think they refer to market value or in this case market capitalisation, which is well defined as share price * # of shares. Both prices you listed are just the asking prices, the true market value will be somewhere between the bid and ask prices. The bid ask spread in a liquid market is small under 'normal' circumstances, eg Apple shares bid/ask is currently 243.50 x 400/244.00 x 2600, people willing to buy 400 shares at $243.50 and sell 2600 shares at $244.

I'm not sure how the asking price for a share is substantially different than the concept of "value" I mentioned before. Both are fictitious concepts that have very little to do with the actual price something should have (I'll use the term "worth" here to describe that more precise measure, but feel free to substitute average cost or some other term that means "the objectively calculable price for something").

A share price can be both under and over valued right? Under or over what? Worth.

One way to measure is revenue/outstanding shares (though secondary factors like P/E, private investments, etc. figure into this to define more precise measures) another way is based on a softer metric like "valuation" which is typically some multiplier of revenue/yr (notice the root word of valuation is "value" which is precisely what I'm talking about -- and we both know that valuations can have very little to do with reality (see Facebook for a case study in how valuations can be broken).

Share prices are merely a representation of the subjective "value" of a share vs. the actual price for some % of a company. If the market thinks something is hot, it doesn't matter if a share is actually worth only $2 or $3 from a pure revenue/yr perspective, demand for those shares can drive shares up to ridiculous levels -- hundreds of percent above what they should be. If a company is not "hot" (based on the very subjective moods of the market) those shares might even sell for less than they are worth because people see the value as less.

The market does a very efficient job of obscuring the worth of a share in some company by only feeding investors value signals.

There is nothing different from this concept than the concept of value at the microeconomic level. If I see an item for sale. I have a pretty good idea what it's worth is based on materials, construction techniques and various other factors that contribute to the manufacturing cost of a product. But again, just like in the market, all of the signals I receive about a product are value signals not worth signals. So I compare that mental model to the asking price to determine if I'm getting a good value for my purchase. Value here being how close to the average per unit cost I'm able to estimate. A pair of shoes might be priced to sell at $150. The next week it goes on sale for $100. That increases the perceived value I get from the purchase. But I might still skip it if I have a good idea that the average cost per unit-pair of shoes is only $10. But companies seek to increase the value of their products at higher prices by various means like brand building.

This is the logic that good investors use when deciding to buy and hold or sell shares. If a stock's value is perceived to be too high compared to the average worth of a share, investors expect that the share price will more likely go down than up. Companies seek to influence this by keeping investors interested with positive statements about the company. "new product!", "big contract!", "how new business concept!", "change in leadership!", "increase in business efficiency!" so that a share of XYZ company, that may only be worth $10 on a revenue/shares matter is valued at $150 by the market.

Of course what you say is true, value or worth is subjective - something that you think is worth only the cost of production may be worth a lot more to someone else. Everybody has their own value metric, but funnily if you want to buy or sell at a particularly instance in time you have to pay the market price.

You're right -- I should have either said "most valuable" or "largest by market cap".

Some would argue that they were always worth more. :-)

It's interesting that this happened without breaking Microsoft's 90% desktop monopoly. Apple got bigger but it wasn't to the detriment of Microsoft. They just grew into new markets.

I suspect that this was just a sound bite in 1997, but Jobs himself said it: "We have to let go of a few things here. We have to let go of the notion that for Apple to win, Microsoft has to lose."

Here's a video of that keynote: http://www.youtube.com/watch?v=PEHNrqPkefI

I was amazed when he said "we lost, they won" with no sense of rancor, nor of defeat of self. Very growthful and in-reality. Say what you will about Jobs, he's not dogmatic; he's far from an apple fanboy.

He's doing what a recent article on disruption (http://news.ycombinator.com/item?id=1375141) reminded me of: don't confront entrenched competition, it will "invoke a competitive response" and they'll win (or "never attack a fortified hill", from crossing the chasm). Instead, do something else.

> he's far from an apple fanboy.

I agree.

In order to make great things, and then to sustain that, I really truly believe you have to grow to dislike what you made before. It's the only way to take a critical eye one what you have done and learn from it.

Lots of people think Jobs is a tyrant inside of Apple (and I agree with that sentiment), but I think the motivation for that is that he simply wants to create something he doesn't hate right now. It might be bootup time, or interface delays, or screen pixel density etc. That kind of thinking, a critical review of your own likes/dislikes is healthy I think in order to grow.

Fanboyism, by definition, is not a process of critical thought.

Exactly! One of the best essay in PG's H&Ps book in my opinion was the one that explains how winning doesn't have to be a zero-sum game, you can generate wealth. This seems a no brainer but a lot of people don't get it.

Many predict that a similar thing will happen in the battle between Google and Apple.

It interesting view this google vs apple in: http://www.google.com/finance?q=NASDAQ:AAPL+goog

put the graph to 1y or 5y.

Interesting in the similarities? Compare it with Microsoft (MSFT), the ups and downs appear to be more due to economic shifts than any connection between the two. AAPL/GOOG is definitely closer than AAPL/MSFT, but part of that could simply be due to that both are growing and changing quickly, and are less immune to economic forces than entrenched-MSFT.

GOOG is now selling at about its mid 2005 price while APPL is about 350% above its mid 2005 price.

Add MSFT and put the graph in Max, gives another interesting perspective

Forgot to put a link to the essay, here it is: http://www.paulgraham.com/wealth.html

Markets change. If you are unable to adapt well, you will likely perish or grow obsolete.

If you consider the PEG ratio of both, you'll actually see that when taking growth rate into consideration, Apple is still cheaper than Microsoft...barely. So, if you put faith in PEG ratios, Apple is still a better buy. If you don't know what a PEG ratio is, check it out here http://en.wikipedia.org/wiki/PEG_ratio

If APPL, MSFT or GOOG disappeared tomorrow. Which one would cause the least damage? Which one could we live without?

Would everything they ever made disappear too? If so, the loss of Windows and Office would create much more chaos than the loss of Google. The disappearance of all Apple products would not cause that much damage in comparison.

Not to mention Windows Server / MS-SQL.

The thing that's most interesting about all this is the predicament that Microsoft now finds itself in. They just lost two top guys - J. Allard & Robbie Bach - and you have to wonder just how rudderless Microsoft is at the moment. They've invested heavily in their core tech - mostly a good idea - but then they have really nothing to compete with Apple or Google in the mobile space, at least until their new phone os hits (and even then it faces a serious uphill battle). Balmer is probably wishing he had bought Palm at this point.

I wonder if Bach and/or Allard end up at Google... a GBox has a nice ring to it actually.

> a GBox has a nice ring to it actually.

Let's not go there ok ?

The reality is we are going there because Google (along with Apple) are both developing 'connected tv's (aka, wifi enabled, OS running tv's). Not exactly an attempt to go right at Sony, Nintendo, etc, but Apple has shown how disruptive a sideways entry into a new market can be (or was that more of a happy accident stumble sideways?). Plus, I think the 'game companies' fail to recognize what a huge market casual games are and for most people, that's plenty enough to keep them happy.

Maybe I should have added that ';)' after all...

That seems like the sort of market that google is going to win. Apple is going to want to sell you an Apple-branded piece of hardware (either a TV or a box) that lets your TV do new things. Google will simply license their technology to Samsung, LG, Panasonic and all the other existing TV manufacturers and have it built in to every TV that gets shipped.

(Except maybe Sony, who will probably attempt to build their own system. It won't work very well outside Japan.)

Bach may have been fired precisely because HP bought Palm rather than continuing as a Windows Mobile customer: http://blog.asymco.com/2010/05/25/the-reason-robbie-bach-was...

J Allard has apparently ruled out working for Google or Apple, and wants to focus on extreme sports instead: http://www.techflash.com/seattle/2010/05/bach_allard_leaving...

Man, what's really scary is that I thought this article was going to be about how MS lost out to HP in the Palm deal, and that's why they fired him. But it sounds like they never even considered this, and it was more about 'losing a key client'.

Wow, I really thought they had a better grasp of the market trends and were at least aware of the major problems they face.

This surprises me given that it seems pretty clear they are about to lose their projected dominance in the smartphone game to Android. I can't see how you can justify that sort of valuation without projecting them to be the dominant smartphone platform. The iPad seems to be doing well but it all hinges on the same OS as the iPhone. Is it possible that Jobs "reality distortion" field is now working on the market?

Why is it clear that they'll lose the #2 spot to Android? It certainly may happen, but it doesn't appear to be anywhere near certain. Notice that at Google I/O, they said that Android was #2 in the US. Why didn't they say in the world, or in the US and Canada, or in the US and Europe, or even in the US and Australia? Obviously it's because the US is the only major market where they've been able to beat Apple. If Apple announces a multiple carrier version of the iPhone at WWDC, I would say it's likely that Google would lose the #2 spot in the US.

Android is growing much faster than the iPhone. The rest of the world (where I come from) is a lot more varied. RIM doesn't do so well and Nokia dominates heavily in a lot of markets. The iPhone doesn't do so well outside of the US either.

Android might be growing faster than iPhone, but how does that directly benefit Google? Apple makes money for every iPhone sold, but Android phones are manufactured and sold by other companies than Google. I thought Google gave away the OS for free (unlike Microsoft's strategy of licensing their mobile OS at a cost). Can someone explain to me how Google makes money on Android phone sales?

Please don't say "future search ad revenue from having more internet connected devices in the hands of consumers."

Edit: In answer to my own question, if the only profit Google makes from Android sales is search ad revenue, then according to this article (http://aseidman.com/2010/05/65000-new-android-devices-ship-e...), Google makes only $8.63 per Android device sold over the entire lifetime of that device. Article was found via HN, but no one has commented on it yet.

So apart from this meager search ad revenue, how does Google benefit financially from Android sales? I just can't figure this one out.

I never said it helps Google only that it hurts Apple. The fact that google can hurt Apple so much without a large direct profit motive is pretty telling about Apple's weakness IMHO.

Interesting tidbit, when you scroll down the page to the end where the logos are displayed, the apple logo looks new, shiny and modern, the microsoft logo looks old and boring.

Their corporate images reflect the logos quite well.

edit: funny moderation here, would you mind telling me why ? Apple logo on the page not shiny ? Microsoft logo not old and boring ? Or do you - mistakenly - take me for an apple fanboy or something ?

So irrelevant. Apple logo is indeed shiny, but it's 90ies-shiny. I much prefer Microsoft logo.

Not so irrelevant. I have no dog in this fight, I prefer linux over either, but the image that those companies project is very important in their contact with their target audience.

When given a choice between an ipod and a zune with twice the storage capacity the majority of teen-agers would probably pick the ipod.

When you sell consumer stuff 'cool' matters.

Microsoft always has to balance their business image with their 'cool' image and in most (hardware) consumer products (other than the Xbox) they seem to fail at that. Phones that run windows CE are (rightfully) seen as old fashioned, the zune was dead on arrival and so on.

Cool & shiny really matter.

I don't know about the moderation, but what you said is entirely subjective - and quite possibly simply your perceptions of the two companies projected onto their logo's. You could equally well say that the MS logo on that page is elegant, simple and understated, while the Apple logo looks cheap, plasticy and tacky. Either personal opinion would be equally valid, just looking at the two logo's on that page.

Apple has adapted their logo over the years - and their website - to reflect the changing times, microsoft has kept their logo the same for a very long time.

Now there is something to be said for keeping your logo the same, possibly forever. But the crowd that apple appeals to and that they intend to sell their gadgets and computers to loves shiny stuff, and apple is very good at making shiny stuff. It stands to reason they'd adapt their logo to that.

Microsoft has a much stronger presence in the corporate world and I think that is why their logo looks the way it does and why they don't want to change it too much. They try not to be a fashion statement, apple tries very hard to be one.

Microsoft keeps a steady logo for the company, and updates the logo for their products. See Windows vs. Vista vs. Windows 7.

Apple doesn't have logos for their products, so they update their company logo instead.

Just different approaches.

I'd beg to differ that Apple doesn't have logos for some of their products. For example:

iTunes - http://www.google.com/images?q=itunes+logo Garageband - http://www.google.com/images?q=garageband+logo

But not all certainly - http://www.google.com/images?q=iPad

Here's another one, didn't last long: http://i.zdnet.com/blogs/ilife05-box-200.gif

According to the ancient, unspoken rules of the Silicon Valley elders, this means that Bill will have to pass the Sacred Dagger of Evil to Steve in a secret ceremony with the sacrifice of a virgin. Apple fans are already lining up by the hundreds, hoping to be the "chosen one". Said one "well, yeah, stabbed to death, but...hey, it's Apple! The iDagger is so cool!"

The real question is whether Apple's growth is defensible?

Talking about smart phones, Apple is a latecomer to the industry, and does not have a sufficiently strong patent pool to prevent competitors like Oracle, HP and MS from encroaching.

Apple is the first to deliver to the mass market affordable tablet computing and touch computing devices. This will remain growth areas, and hence Apple's willingness to accept lower margins in return for a beachhead and a sufficiently large user-base to establish itself as a platform-play.

However, further on, Apple is going to have to finely balance the tension of being the most widely used vs being "exclusive", "cool", or "different". Give a few years when competitors reach feature parity, Apple will be at crossroads whether to go mass market or boutique.

I wouldn't necessarily say that Apple doesn't have the patent pool for mobile devices (yes, the smart phone sector included) with Apple doing a lot of innovation in the form of multitouch, OS UI design, usability and a whole other range of other things.

Dismissing Apple outright is definitely the wrong thing to do.

I'm sorry, I should have said "patent barriers" instead. Apple is faced with the necessity of cross licensing their patents with their competitors in order to continue developing smartphones. I don't think Apple will be able to aggressively use their patents to prevent MS, HP, etc from copying.

Will the competitors really reach feature parity? Really? I mean, to have feature parity with iPod, you need a top notch player, you need a very good music manager and then you need a one click store that has nearly everything. It's not the touch screen, it's not the iTunes app, it's not the store: it's all that stuff.

Does the competition take away or does it help them stand out more?

Smells like an Apple bubble?

Actually, their P/E ratio has been steadily declining over the past five years, even as their stock price has risen dramatically. Usually a stock is considered overvalued if the P/E ratio is really high. But this chart (stock price on top, P/E ratio on bottom) seems to indicate that AAPL is not being overvalued by the market as the stock price goes up: http://bigcharts.marketwatch.com/advchart/frames/main.asp?ti...

But investors are putting their money in to sell high since APPL doesn't pay dividends. The price is high atm, and there are many who are waiting exit, so any kind of trigger could set off a landslide.

Yeah, they are well over their real worth. I'm looking forward to the pop.

There's too many people chasing the bus.

AMZN PE 53.69

So, when did Microsoft surpass Apple in market cap? 1992? 1988?

Good question. I couldn't find out since I can't get either google finance or yahoo finance to plot market cap, but I did get this:

http://ycharts.com/search?q=MSFT%20vs%20AAPL&c=market_ca...

It only goes back ten years but it at least shows that MSFT was vastly bigger than AAPL back in 1999.

Wow, YCharts is pretty great, thanks!

Wow, '99-'00 was a rough year for MSFT.

I remember picking up an iPod in what was probably '02 and thinking "I should buy some Apple stock".

Damn.

Apple, unlike Microsoft, is well-positioned to take advantage of demise of high-tech industry as we know it. This demise has already happened once, with an industry that was "hi-tech" for centuries: clocks and watches.

http://abandontheweb.blogspot.com/2005/11/is-hi-tech-timeles...

Ballmer MUST go!

And be replaced by who?

Anyone with vision, courage and the ability to inspire.

Balmer could always execute, but that's not what Microsoft needs right now. It doesn't know where it's going, so it's meaningless how well it gets there.

Microsoft, for better or worse, is still in the driver seat. In terms of market share, Apple is a rounding error. But they inspire. They are exciting people about the future. When was the last time Microsoft did that? This isn't just about share price; it's about perceptions by investors, customers, employees -- everyone. They need to inspire again.

Also: More controlling than Microsoft.

controlling, maybe. MSFT is not the most "controlling" tech company out there (take a look at electronics and automation companies for real tight arsed behaviour)

The problem people had with MSFT is their use of market dominance to kill off competition.

Apple is treading the same path to the same type of market dominance. Apple isn't the underdog any more. Time to take a second look.

"The problem people had with MSFT is their use of market dominance to kill off competition."

Isn't that just doing business?

I hate the fact that Apple is soo good at what they do. They go after the dumber people trying to be in style. They are such a closed company. If they were a government, they would be totalitarian country. I for one will never support them because of their closed mindedness.

Wow, that happened a lot faster than I thought it would. Well, to be honest, I think I wanted Apple to overtake Microsoft more than I ever thought I'd see it happen.

I wonder if in a few years from now Facebook'll overtake MS and Apple? ;)

The problem with facebook is it does not produce any value unlike Microsoft and Apple.

Both Apple and Microsoft's product help people create stuff, get things done, entertain themselves. Facebook does a tiny bit of entertaining and socializing, it is no where near MSFT or AAPL in terms of having a tangible impact on people's lives.

We are social creatures, so products which aid that do have value.

I'll bet facebook has more impact than Apple. Apple makes your iPod, that let's me listen to music. Facebook creates your social life (for a lot of people it does).

I disagree. For me, the only way Facebook helps me socially is as a sort of phone book and with events. Catching up over Facebook seems a useless event compared to conversing IRL. Besides, an inordinate amount of people use it as a game system with a leaderboard. Facebook's value isn't really social at all. It's pseudosocial.

It's the same to me, catching up over FB is crap. But there are a lot of RL social stuff that if FB wasn't there a lot of people would be missing.

You don't personally use it to socialize so you say they don't provide value for the tens of millions who do and apparently get enjoyment from it. ... OK.

Facebook will get you laid.

Having an iPod.... nope.

An iphone might have done it about 2 years ago.

> Facebook will get you laid.

How does Facebook accomplish that? I'd rather count sitting behind your computer as a counterproductive.

Even if that were true, I give money to Apple and I don't give any money to facebook. Apple extracts thousands of dollars directly from my wallet, while facebook just sells my wandering eyeballs.

This thought occured to me the other day as I wondered in the Apple store to just look and walked out with my wallet $1500 lighter. In less than 45 minutes Apple extracted more money from me than Facebook ever did during the five years I used that site. Despite eyeballs, large numbers of users, and other assorted impressive metrics, there's still something to be said for functional (physical) products that solve problems and a solid product line.

> Facebook does a tiny bit of entertaining and socializing,

Many people have had countless friendships reconnected and met other new people as a direct result of Facebook being as linked up as it is. Whether "tangible" or not, this is at least as valuable as an iPod to many.

Did MG Siegler just violate SEC laws by not disclosing if he owns Apple stock and telling thousands of his readers that Apple stock will continue to increase?

Are SEC laws that easy to violate?

Hey everybody, I think Apple stock is going to continue to increase! I may or may not own Apple stock.

Yes, I think so. People have been forced to settle with the SEC for comments made on forums for example.

http://news.cnet.com/SEC,-teen-settle-Net-stock-scheme-case/...

Crud. Well in that case... hey everybody, I don't own any Apple stock!

I own a fund that owns shares of every public company on the market (VTI). Does that mean I have to say "I own this" any time I talk about stock?

The diference between a managed fund, where you're just investing in a basket that someone else controls, and a self-direct investment defines went to disclose or not.

It makes sense. Without a law like that, people with circulation/influence could manipulate the markets by buying, boosting and selling.

That's a pretty crappy design.

Just buy some of everything (index fund), and always put the disclaimer in, and it will become meaningless.

(Or do you have to reveal your net position, with shorts netted against longs?)

Perhaps he doesn't own the stock. Surely you can't be forced to disclose if you have no financial interest, right? If so, HN is a treasure trove of SEC violations :)

Now it's time to see if money corrupts absolutely..

wow.. 25$ a share for MS vs. 250$ for Apple? As much as i like that Apple innovates and does produce good products, you'll have to be blind to not see the share crash in the future.. it strongly reminds me of the old startup days..

I mean (not offending) MS products are deployed in what.. 95% of all computers? office in every companies PC? Windows?

Ok, Apple does have music selling through itunes, hardware (very low market share here!) and the mobile app sales.

I don't know, i'd rather want to see the income of both companies per division, that'd be more meaningful to me, at least. A lot of shareholders betting insane amounts of money into a company seems to be too familiar.

(Also i'm usualy not interested in shares and such, so i've probably missed something)

you can't compare stock prices directly, they have no relative meaning

Mh, yes, now that i think of it... my first thought was "woah, i'll have to pay 10 times as much for one apple share", but in reality i'd just say "in invest 1000$ in whatever company, regardless of how many shares".. if the share goes up 10% it doesn't matter how many shares.. well.. my bad, as i said, i've no real interest in that stuff :P

So, all in all, this means that Apple is seen as much worth as MS (and not 10 times more). That's a point of view i didn't consider..

Still, i would really like to see the income sources of both and how much income is generated where, that'd be interesting.

> Still, i would really like to see the income sources of both and how much income is generated where, that'd be interesting.

Here you go:

http://finance.yahoo.com/q/sec?s=MSFT+SEC+Filings http://finance.yahoo.com/q/sec?s=AAPL+SEC+Filings

  Ok, Apple does have music selling through itunes,
  hardware (very low market share here!) and the mobile
  app sales.

You should research what share of profits they have with that very low market share in both computers and smartphones markets.

Computers? As in Desktop computers and laptops worldwide? I can't find current numbers but i wouldn't think that Apple has reached a global market share for desktops over 10%. Take a look at http://en.wikipedia.org/wiki/Usage_share_of_operating_system... Thats what i meant. Now tell me that in _this_ area Apple is exactly worth as much as MS. MS doesn't produce computers, so the comparison is not fair. But that's why i said i would want to see the numbers for all the departments of MS and Apple.

Also, the global market share for smart phones: http://en.wikipedia.org/wiki/Smartphone

You surely don't want to know the numbers for mobile phones in general.

Wow, you are quick. He said profit, not market share. For example, Apple maybe only sell 2-3% of the entire mobile handset market, but make more profit out of any Mobile company. They make more money than Nokia, who sell 100x as many phones.

Good point....like how MS's profit/revenue ration (in 2009 anyway) was ~28% vs. ~18% for Apple http://royal.pingdom.com/2010/04/09/the-money-made-by-micros...

for the hundreds time now. That's why i want to see the numbers. I am writing since the first comments now, that the most interesting information would be numbers. But we don't know them...

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