Apple’s sales to eclipse Microsoft’s by 2010?

“Not that long ago, anyone suggesting that Apple might some day be as large as — or even larger than — Microsoft would have been laughed out of the room,” Mathew Ingram reports for The Globe and Mail.

Ingram reports, “In 2004, Apple had somewhere around 2 percent of the computer market, and annual revenue of slightly more than $8-billion (U.S.). Its stock market value was roughly equal to its sales, at about $9-billion or so. Microsoft, by comparison, had revenue of $37-billion, almost five times larger than Apple’s, and a market value 30 times higher, at about $275-billion.”

“The past few years have shown, however, that the best company — and by far the best investment — has been Apple. Its shares have climbed more than 700 per cent to the $83 level, and its sales have soared 150 per cent to about $21-billion. Microsoft’s sales are now only twice as large (although its stock market value is still substantially larger),” Ingram reports. “A financial blog called 10Layers.com caused a stir recently by suggesting that if current trends continue, Apple could actually surpass Microsoft in terms of sales within the next five years, hitting the $65-billion revenue mark (according to one forecast) in 2010 or 2011.”

Ingram reports, “So is it possible that Apple’s sales will eclipse Microsoft’s by 2010? It’s not as outlandish as it sounds. In order to do so, Apple would have to grow by 25 to 30 per cent a year, which is not unheard of (of course, it’s also possible that Microsoft’s revenue could decline over that period). However, the list of $20-billion companies that can grow at 30 per cent or more — and do so every year for five years — is so short as to be almost non-existent.”

MacDailyNews Take: The reason the list is so short is because other companies don’t have iPhones due to launch, multi-touch widescreen iPods (rumor, for now, wink, wink), a personal computer business growing at three times the industry rate and taking share from Microsoft Windows, Mac OS X – the world’s most advanced operating system with an even more advanced version (Leopard) coming very soon, an online media store that dominates the market, a CEO like Steve Jobs, a growing and very profitable network of higly-trafficked retail stores, etc. Many seem to vastly underestimate the Mac. Those who do are in for a huge surprise.

Ingram continues, “Microsoft’s sales may only be twice Apple’s now, but its market value is about four times as high — close to $300-billion versus $72-billion. The main reason for that is that Microsoft’s profit is much higher. In 2006, it was more than six times that of Apple’s.”

MacDailyNews Note: Actual current market values: Microsoft – $288.7 billion, Apple – $73.5 billion.

“A great example of the disparity between sales and market value is to compare Wal-Mart and Microsoft: At about $380-billion, the retailer’s sales are 10 times higher than the software company’s, and yet Wal-Mart’s market value is substantially lower than Microsoft’s, at only $200-billion,” Ingram reports. “Market value aside, however, there is no doubt that Apple currently seems to have all the momentum — in a corporate sense, at least — while Microsoft has increasingly little.”

Full article here.

Related articles:
Apple larger than Microsoft by 2010? – January 29, 2007

Apple passes Dell in market value – May 02, 2006

Net Applications: Apple’s Mac market share continues rise, hits 6.22% in January 2007 – February 01, 2007
Gartner: Apple’s U.S. Mac shipments up 30.6% year over year – January 18, 2007
Net Applications: Apple’s Mac market share continues rise, now at 5.39%, up 31% year-over-year – December 01, 2006
Apple’s Mac market share surges, up 35-percent year-over-year as growth accelerates – November 01, 2006
Analyst: Apple has ‘real shot at dramatically expanding Macintosh market share’ – October 31, 2006
Analyst: Apple Mac gains market share, the reason why is significant – October 26, 2006
IDC: Apple Mac attained 5.8% of U.S. market share in Q3 06 – October 18, 2006
Gartner: Apple Mac grabbed 6.1% of U.S. market share in Q3 06 – October 18, 2006

30 Comments

  1. I have to admit. I’m pretty skeptical myself. I remember in 2001, I thought Apple had it all, and that people were going to switch over in droves. A lot of people have switched, but it’s taken a lot longer than I thought it would, and not as many people as I thought would have.

    But, I live in hope. The next few years prove to be exciting times.

  2. Vista will be the last major revision of Windows.
    Windows applications will run natively in OS X.
    Microsoft will be out of the consumer OS business by 2010.
    The remaining litter-box makers (Dell, HP, Lenovo, etc) will consolidate.
    The sun will shine, the angels will sing, the clouds will part, and the long, dark age of consumer computing will finally come to an end.

    -c

    MW: ‘entire’ (industries will turn on the fulcrum called Apple)

  3. The reality:

    Microsoft
Vista – poor user experience and continuing security issues means there will be resistance to its adoption
Office – new version’s benefits are nebulous
Zune – bombed for its hardware, its software, its DRM and its style, or rather lack of it
X-Box – being outshone and outsold by Nintendo Wii and PSP2 and PSP3
Search – a disaster area
Plays4Sure – partners were shafted
Win CE/Mobile – hardly making any inroad into Symbians domination and now facing the challenge of iPhone
Customer satisfaction – viruses, Windows botnets creating spam all are making customers ask, why?
Credibility – low, performances by Gates and Ballmer attract much criticism, and emails shown in evidence demonstrate their envy of achievements by Apple (and that was back in 2004).

    Apple
OS X – Unix based, secure and attracting huge acclaim as the best user interface, new version Leopard this spring will take it further ahead of Vista
Macs – hardware designs that leave the competition looking dull, even when big increases in manufacturing capacity has allowed some more hardware failures to creep in, but..
Customer satisfaction – is the highest in the computer industry with problems sorted to customers’ satisfaction
iTunes – the only successful online sales of digital media to date
iPod – many times copied, but they never come close
iPhone – will certainly be the most easy to use phone and the one to beat. Market share 1 or 2 or even 3% has to be possible.
Aperture/Final Cut Pro/Filemaker – ground breaking professional applications for photographers, film makers and databases creators
AppleTV – Selling better than expected and could be the first to bring computer sourced digital content to the big TV screen
Credibility – sky high, despite the many attacks on it and its suporters from various “experts” (examples: Enderle/Dvorak/ ) wanting to see established players keep position and control (particularly Microsoft)
    Microsoft will continue to levy its extortionate tax levy on the world for Windows and Office, which will fund much lossmaking activity. But its growth will not be good, and if the tipping point is reached when it becomes seen as a pariah rather than a customer friendly innovator, it could slide towards flatlining.
    Apple has so many positives that it is impoosible to think it will do anything but ramp up its already astonishing growth rate.

  4. One thing that may change is the insane profit margins that Microsoft achieves, that’s why they have such a high market value. They only spend 5% of sales of Windows and Office on actually making the products, their other major expenses are lawyers and marketing (like theannounced $500M for Vista Launch) and subsidizing loss making products like XBox and MSN.

    Oh and most copies of Windows sell for ~$60 to OEMs, charging $399 for retail boxes is really taking the piss for a product that costs around $4 to make.

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