Apple is better managed than Microsoft (and water is wet)

“Most folks know that Apple is now worth more than Microsoft,” Adam Hartung blogs for Forbes. “Although few realize the huge difference.”

MacDailyNews Take: Before you ask, yes, we know the spread down to the nearest 10th of a cent at any given time: $310,074,536,460.872 vs. $ 219,470,217,840.276 or $90,604,318,620.596 difference, mark!

Hartung continues, “After years of dominating as the premier “PC” company, Microsoft is now worth only about 2/3 the value of Apple – $224B versus $310B (or, said differently, Apple is worth about 50% more than Microsoft.) …What few realize is how much Microsoft spent trying to grow, but failed. A look at 2009 R&D expenditures showed Microsoft outspent all tech competitors in its class – spending 8 times what Apple spent!”

MacDailyNews Take: Before you ask again, here.

Hartung continues, “We’d like to know if Apple will keep growing like crazy, and if Microsoft will do what’s necessary to grow as well. And that’s where some recent announcements point out that Apple, quite simply, is better managed than Microsoft. Apple management is making decisions helping the company to grow, and Microsoft isn’t.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Tayster” for the heads up.]

26 Comments

  1. What a shocking revelation. It about time some of these analyst get their head out of Ballmer back side and start see the daylight the rest of us see.

  2. Beyond stating the obvious, a more interesting question would be why AAPL stock is priced so low at around P/E 18+ (trailing), while MSFT stock is priced over P/E 11. MSFT has actually LOST value over the last twelve years. AAPL has grown by a factor of ≈60 over the same period, and is poised to drive far higher.

  3. One of the things that wasn’t mentioned in the article is that every time Microsoft acquires (and inevitably destroys) a business, it has to carry part of its value on its balance sheet as Goodwill. Microsoft’s Goodwill is now *15%* of its book value. Compare this with Apple’s Goodwill of less than 2%.

  4. msft spent $500 million in ads to launch the WP7 to sell 2 million phones (on 60 carriers). $500 m is equal to Apple’s ENTIRE 2009 ad budget!

    estimating from previous winMo license fees of $8 to 15 each they’ve made about $30 million in gross profits (before expenses like R&D)

    what more to say? except that Windoze lovers gleefully subsidizing Msft with expensive Windows desktop upgrades (hey Snow Leopard is $29) so that Msft can waste money

    1. msft spent $500 million in ads to launch the WP7 to sell 2 million phones

      If that is true, then it’s $125/phone in ads.

      That’s more than the phones are worth!

      1. Friday brain fart – that should be $250/phone in ads.

        Definitely more than the phones are worth!!!!!!!

        (And getting towards new car advertising – I have been told by a former care salesman that there is at least $1000 for advertising built in to the price of every new car.)

        1. the 500 m figure has been reported by various sources eg:

          Techcrunch: ” Another source familiar with Microsoft’s manufacturer and carrier agreements says the company will spend $1 billion on the launch, half on marketing and half on other development costs.”

          computerworld “The success or failure of Windows Phone 7 ultimately won’t be laid to Microsoft’s reputed $500 million ad campaign ”

          some years ago Ballmer made fun of iPad numbers saying something to the effect that Microsoft’s aim in phones wasn’t ‘small’ ‘niche’ numbers like the iPhone but high tens of millions of phone sales (like Win desktop). Now Msft managers (and Windows bloggers) trying to spin that they are ‘happy’ with the 2 million sold in 2010 (launch months) on 60 carriers in 30 countries is pathetic.

          Apple’s 500 m ad budget for 2009 was for everything: iPod, iPhone, Macs, software, apple stores etc.

          Fortune Oct 2009
          “Apple (AAPL) shells out a ton of money for advertising. In fiscal 2009 it spent $501 million”

  5. I particularly like the last sentence:
    “Good thing Steve Ballmer is already rich. Too bad all the Microsoft employees aren’t.”

    You can hear the collective sigh coming from MSFT-campus….

  6. What’s overlooked is that there’s a big difference between input and output, between what’s invested and R&D and what emerges from it. Microsoft just doesn’t get much return on those investments. Think about the kid who’s failing his class but insists, “I really tried!”. Or think of the return from almost a trillion in “stimulus” money. Not much return from that either.

  7. Microsoft’s management makes decisions that waste money. They do it, because they can (thanks to Windows and Office). For example, Microsoft MUST have retail stores that try so obviously to copy Apple’s retail stores. What a waste of money and effort… Zune was continued much longer than any other tech company could have “afforded.” And the Danger (T-Mobile Sidekick) acquisition was a complete waste of money because the eventual Kin phone was marketed to “fail by design” (to not compete with the Windows Phone 7 launch).

    And why does Microsoft spend 8x Apple on R&D, when they mostly copy Apple? Common sense says that Apple should be the one outspending everyone, because Apple is the one doing most of the innovating in the industry. It’s because Apple’s product development is usually a steady un-rushed process over a multi-year cycle. Microsoft is constantly rushing to copy and catch up to Apple (whether it’s for Mac OS X, iPod, iPhone, or iPad), which means a larger less-efficient workforce is working on a more compressed schedule.

    Once Apple has something great and successful, they can gradually enhance it over the next few years without overhauling the product every year. Microsoft and the other copycats have to constantly scrap their current product and “redo” the design. For example, the original iPhone design was used for three generations; the outer case changed and 2G (EDGE) was swapped for 3G, but the same overall design was maintained (with gradual improvement of components each year); then, there was a major design overhaul for iPhone 4. iPad is following the same path. Very efficient…

  8. If you bought msft 12 years ago, your holdings would still be under water. If you had bought AAPL instead you would have over $40 for every dollar you paid. And yet, Apple’s P/E is 18+ while msft is over 11.

    AAPL is recognized as having serious further upside potential, and msft not. Apparently investors can’t believe what they are seeing, because these relative valuations are way out of whack.

    1. To be fair, you’re not being fair picking a start date during the internet bubble days! Instead of picking 12 years ago, what if you picked 10 years ago, MSFT was $28.09, where it’s today at $26.07. Most would think it’s underwater, but they have given back $6.19 in dividends, so investors have indeed gotten a positive return over the last 10 years.

  9. “Steve Jobs can’t run companies, but he has proven that he is a genius at motivating teams of people to produce extraordinary products. In fact, he may be the greatest project team leader in the history of high tech. That is no small achievement. But it does not translate to being the CEO of a giant corporation. Jobs failed the first time running Apple, failed at Next and only succeeded at Pixar because the company worked around him. He succeeded in the short term during this, his second, Apple tenure because he ran the whole company as a product team. That only works so long. Why is he a poor CEO? Because he’s mercurial, insufficiently engaged by the more boring (but crucial) operations like distribution and, ultimately, because he’s a pretty nasty piece of work. In the best of all scenarios, Jobs would hire a competent CEO and focus on product development, but his ego would soon lead him to undermine his replacement. Steve Jobs is Apple’s Alcibiades: the company can’t live without him, or with him.”

    http://www.forbes.com/2000/10/09/1005malone.html

    1. Get your head out of your ass and tell us how long you worked at Apple.

      Steve was not running Apple by himself the entire first time. He hired some people to do most of the grunt work. He hired his own replacement and he learned from his mistakes on the first go round.

      He ran NeXt and Pixar the right way. He turned NeXt into a very successful Apple and he turned Pixar into a good sized chunk of Disney.

      The first thing he did at Apple, the second time around, was to hire someone to take care of the daily bullshit.

      Then he hired the best team a company has ever seen.

      He can’t manage worth shit. Ya, right.

  10. Marketing-As-Managment = DEATH.

    Microsoft’s decline was made inevitable as soon as a marketing guy was stuck in the leadership position. This disease is consistent in all companies, apart from those that only market.

    Why Microsoft’s R&D FAILs: I am betting that one aspect of Marketing-As-Management is the prime reason, the fact that marketing people DESPISE productivity people, specifically those in R&D. I am betting that the morale at Microsoft’s R&D is poor specifically due to abuse from marketing people in leadership. It is a very old story.

    Then toss in the fact that Microsoft made most of their money by exploiting the truly innovative work of OTHERS. Very little of Microsoft’s catalogue of products was actually invented at Microsoft. The company is all about exploitation, NOT invention or innovation. Therefore, it is again no wonder that Microsoft R&D FAILs. Throw money at monkey and he’ll only throw it around in the air and defecate on it.

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