Apple uses cash wisely; Microsoft, not so much

Apple Online Store“Apple’s stock has risen ten-fold over the last decade, a period during which Nasdaq lost 56%. At one level, this run is the natural outcome of a string of great product releases,” Sameer Bhatia reports for Dow Jones Investment Banker via The Wall Street Journal. “But it’s also a lesson in how consumer tech companies should allocate capital.”

“All companies must invest to stay relevant, but investments are too often made in the hope of keeping a technological edge on competitors or entering new business segments,” Bhatia reports. “Such considerations are always secondary for Apple; the primary consideration is always identifying and satisfying unmet customer needs. The distinction sounds fluffy and abstract, but the resulting difference in returns is concrete.”

Bhatia reports, “Consider, by way of example, that in the last decade Microsoft has bought 104 companies versus Apple’s 11. What’s more, over the same period, Apple has spent $8 billion, or one ninth of Microsoft, on R&D — and yet came out with three radical new products that now dominate their categories.”

Full article here.

21 Comments

  1. $$$$$ Can NOT!!!! Attain what Apple has in it’s arsenal. Microsoft can not buy it’s way out of the pickle they find themselves in this time around….. And it’s not just AAPL kicking their lame products in the teeth.

  2. I’d just love to know how M$ has been spending billions $$$ on R&D;.

    Oh, I get it….

    How to use illigal mafia tactics to drive out innovation and competions on any market possible… and get away with it.

    That is all, since there is no evidence of any sort of innovation coming from M$ over the last 2 decades.

  3. Leadership, focus, accountability. And the lack thereof.

    Microsoft, the company with almost unlimited resources and no leadership. Unless they find some soon they are doomed.

  4. I absolutely LOVE the idea that a dropout has just beaten a Harvard magna cum laude graduate of Mathematics and Economics into the dust in his own field. Just goes to show you that you can’t buy vision. Take that you yuppie douchebag !!!

  5. Microsoft is dumbing down American corporations to lose to Asian competitors. Google is the next catalyst of the dumbing-down effect of America’s loss of competitiveness. Apple innovates and is leading. Those who jumped on the Windows or Android bandwagons will never learn how to compete but love to suck on the teats of Microsoft and Google. These are losers that will fall before Asian competitors.

  6. Microsoft spent how much on R&D;?

    You’ve got to be shitting me. Where are the tangible benefits of it? Office? Windows? Zune? The Big Ass Table?

    I just don’t see how it’s possible.

    I think Microsoft is obviously a rudderless company run by committee that sucks the life out of any good ideas via compromise and a lack of focus. There is no other explanation. It’s a pretty clear example of a company becoming so big that it is a business no more efficient than big government. Both can fail in some profound ways even with hordes of money, and for pretty similar reasons if you ponder it.

    BTW, not meant to send this into a political tangent. Please.

  7. @kneugent – Who is the dropout and who it the Math and Physics Magna? Gates dropped out of Harvard in1975.

    Perhaps you’re thinking of Keith Richards, although his alma mater is the London School of Economics.

  8. A not-so-nice shot at American drinking products, Big Al. Not sure where you’re from, but let’s say, for fun, England, OK?

    Then here’s the math of that equation:

    American beer = piss (in your opinion)
    English food of any sort = fecal matter (in my opinion)

    And, by the by, has anyone tried to flush an English toilet on the Sceptered Isle? Yeah, right. “Get the manual out, Honey, dinner’s still here!”

  9. Nobody spends defensively like microsoft. Apple invests to move forward.

    To reiterate one of Gen Patton’s quotes I posted for Memorial Day:

    “Nobody ever defended anything successfully, there is only attack and attack and attack some more.”

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.