Mac Corner: Apple's amazing market valuation

  
By Larry Grinnell, Palm Beach Phoenix Apple Users Group

A recent story in the San Francisco Chronicle reported that, incredible as it may seem, Apple is now worth more than Microsoft! As of the May 25 market close, Apple’s market capitalization was $223 billion. Along with this, Apple has $23 billion of cash and no debt, which means that Apple's enterprise value is $200 billion.

Microsoft had a market capitalization of $228 billion. They have $37 billion of cash and $6 billion of debt (per Yahoo Finance). From this, it can be determined that Microsoft's enterprise value is $197 billion.

So, in your face, Apple haters: Apple is now worth more than Microsoft!

It’s been 13 years since Microsoft invested $150 million to help Apple over a rough spot, and since then, it’s been nothing but success after success. Seems like they have been hitting on all cylinders. Gee, have there been any failures at Apple since their less than memorable 1990s? Remember the Pippin (a set-top box for the Japanese market)? How about Apple’s PDA, the Newton? The perplexing and confusing consumer computer product line, the Performa?

Contrast this with the iMac. Yeah, the all-in-one that worked. How about the iPod? The iconic device that may not have created the MP3 player market, but certainly helped define it.

The AirPort made wireless computing easy, and okay, maybe the jury is still out on the AppleTV, but even Apple has said it’s a hobby (for the moment, this mainly means that the AppleTV isn’t expected to contribute a whole lot to the bottom line). What it does contribute, however, is rental and sales income through the iTunes Store, so maybe it’s just the classic Gillette razor business model all over again: give away the razor, but charge the heck for the disposable blades. Finally, the iPhone and iPad are iconic market leaders that have created new markets and new uses for mobile devices.

How about Microsoft? Well, the 90s were good times for Microsoft. In rapid succession, they had Windows 95, Windows 98, and for the pro market, Windows NT followed by Windows 2000. Microsoft Office has always been a tremendous cash cow. Come the millennium, however, Microsoft somehow got their eyes off the prize.

Windows XP, after the second and third service packs, turned out to be a pretty decent operating system, though somewhat susceptible to virus and malware attacks. That said, can someone explain to me what the heck happened with Windows Vista?

It seems to me that Microsoft tried so hard to be everything to everyone, and in so doing, confused and alienated its customers. Drivers didn’t work anymore. Older versions of software stopped working. Every operation brought up another annoying dialog box asking if it was OK to do whatever it was you were trying to do. I never used it, so I can’t say one way or the other how bad it was. I can say that corporate users stayed away in droves, keeping their Windows XP licenses, and scrambling to obtain additional licenses for new machines.

Microsoft had to extend the cancellation of Windows XP twice, I think. Admittedly, Microsoft finally listened to their customers and came out with the vastly-improved Windows 7, which is probably what Windows Vista was really meant to be, but it was pushed to market too quickly.

Then came Windows Mobile, their smartphone operating system that turned out to be not so smart in the long run. The iPhone has all but eliminated Windows Mobile from the marketplace, but the upcoming Windows Mobile 7 promises to be a major improvement in the user experience. I look forward to finding out for myself.

Finally, the Zune. The first question you have to ask is, “why?” Gee, an MP3 player tied to a proprietary DRM (digital rights management) system so you can’t move your music around to other devices you own — Apple learned that lesson. Also, who in their right mind would introduce a consumer product with that awful brown color? I will say that subsequent Zunes are vastly improved, though the DRM is still there.

So yes, Apple’s market valuation has gone beyond Microsoft, and continues to go from success to more success. I can’t imagine Steve Ballmer at Microsoft is taking this lying down. The next six months could be very interesting.

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About Larry Grinnell: Larry has been working with Macintosh and Windows PCs for over 25 years and worked as a senior technical writer and IT support professional for a major midwest-based consumer electronics and telecommunications equipment manufacturer here in South Florida. His musings on a wide variety of topics from computers to jazz guitar to strange foreign cars from the 1950s can be viewed at the MyMac.com website. Click here to reach him by email.

Writers of this column are members of the Palm Beach Phoenix Apple User Group, a nonprofit organization for Apple Computing Device Users, recognized by Apple Inc., with the purpose of providing educational training and coaching to its members (students, professionals and seniors alike) in a cordial social environment. The club meets the second Saturday (1-4 p.m.) and fourth Wednesday (6-8 p.m.) of each month at the Fire Station #2, 4301 Dixie Highway in West Palm Beach (just two block south of Southern Boulevard). Click here to visit their website. Click here to reach them by email.