Microsoft passed by IBM in terms of market value

Microsoft's place in the business world is a little smaller today than it was earlier this week. Bloomberg reports that in terms of its market value, Microsoft has moved down from the second spot to the third position. In stock trading on Thursday, Microsoft's old partner IBM saw its market value go up to $214 billion while Microsoft's went down to $213.2 billion. It's the first time that IBM has been higher than Microsoft in terms of its market value since 1996.

IBM has been trying to redefine itself for the past several years. It decided to sell off its personal computer division to Lenovo back in 2005 and is now concentrating on creating software and services for business clients rather than the consumer. IBM generated $99.9 billion in revenue in 2010 and half of that revenue came from its computer services division. Microsoft has actually expanded its reach into the consumer market with efforts such as the Xbox 360 console, the Zune media player and more recently the Windows Phone 7 operating system. However it still gets 60 percent of its revenue from its Windows and Office divisions. So far in 2011, IBM's stock price has gone up 22 percent while Microsoft' price has gone down by 8.8 percent.

Of course, both Microsoft and IBM are well behind Apple, which is not only the biggest tech company in terms of market share but the single biggest company in the world, period. Apple now has a market cap of $362.1 billion.

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Shrug. Push the price of MSFT up to 150 and suddenly they'd be "bigger" again by a huge margin. But no, can't have that.

Apple oriented to consumers and ibm oriented to businesses, and microsoft oriented to both is in the middle. Interesting pattern.

Gaurav Agrawal said,
Apple is way head with $370.15B....which indicates that Market Caps are not reliable...

Well, right now, iOS devices alone are creating more revenue than all of Microsoft's products combined, so it might not be as unreliable as you make it sound.

How exactly is an exact number not reliable? Market cap is how much money they are worth. There's no room for argument there. It's 100% reliable.

Edited by AJerman, Sep 30 2011, 2:07pm :

Elliott said,

Well, right now, iOS devices alone are creating more revenue than all of Microsoft's products combined, so it might not be as unreliable as you make it sound.

The point is Market Cap is always changing, minute to minute, hour to hour...However catching Apple with a whopping $150B+ lead is quite a challenge.

AJerman said,
How exactly is an exact number not reliable? Market cap is how much money they are worth. There's no room for argument there. It's 100% reliable.

How could it be so reliable?

1) Apple - over valued.
2) IBM - Steady and True Blue.
3) Microsoft - Not willing to toot their own horn, and still digging out of a lot of image issues.


Apple
People see a lot of Apple ads, and they see the iPhone/iPad as 'new technologies' and assume that Apple will continue to maintain what they have done in the past three years.
Even if Apple continues to keep the levels they have with consumer products, they are not the backbone of the world's technology.

If people want to see technology advanced, they won't continue to dump their eggs in Apple's basket. Apple has never been an innovation company. They are good at repackaging technology, and brilliant at Marketing. However, as effective as both can be, they hit ceiling rather fast.

Right now Apple is locked into an ecosystem they adopted, and iOS and OS X are not capable of moving into the next generation of technology easily. OS X already is showing age, and is not an adaptable OS model, meaning that Apple will have to 'start again' with a new OS or continue to put duct tape on OS X. (Example: Hybrid Video - it was a new technology that due to the OS X driver/kernel model and the GUI layer could not easily handle. Windows Vista/7 on the other hand could flip GPUs on the fly without users realizing it, as the NT model was extensible and the constructs XP used were easily replaced.)


IBM
Even as Microsoft shoved IBM out of the position of being the technology company that the world ran on, it took a long time, and some IBM products won't die even if they cut their heads off and drive a stake through their heart. (*cough AS/400*)

The AS/400 (System i) does demonstrate how flexible an object based operating system model can adapt to new technologies can extend even outliving its intended market.

(Windows NT is the only other widely used OS that is also object based, which is one things most Windows/IT gurus don't know/understand nor could explain why this is important. Hint at one example: WDDM/WDM and keeping the XPDM.)


Microsoft
Microsoft has put a ton into investments that are still trickling out, so this isn't surprising, which has not only hurt their net income, but also reduced their gross income levels by slowing the production of product releases and new products.

Windows 8 and WP7 are something the world doesn't yet fully get, and that is ok, as they don't have to understand now, but will see the effects as more and more OEMs and hardware companies are able to produce devices that make the iPad look like dated.

(Which again is a problem for Apple and iOS, as they don't have a 'next' beyond hardware modifications and basic updates. Apple won't be able to copy features of the Windows 8 tablets and Windows Phone 8 technologies, as they can with WP7.)

Microsoft is the backbone of the technology world. Not only does the world run on Microsoft technology and is defined by Microsoft technology, but is also built on top of a lot of Microsoft technology that is freely given to the world, and most people have no idea that it came from Microsoft.

The last statement is where most people get a bit surprised, because in terms of progressing technology and 'freely' sharing technology, Microsoft does more for the world than the OSS movement. Microsoft has given the world a list that would take a book to document just the past 10 years.

Sure Microsoft is 'closed' in they don't let you take NT and modify the code, but the programming techniques and OS technologies they use in NT, they freely give out and explain and let anyone use and implement.

This is where the world currently has an intellectual disconnect, because 'ideas' are often the important things that move technology forward, not chunks of open source code that is very specific to achieving a goal.

Microsoft gives away the ideas, even if they don't show how they implemented the idea. And often they do show, but in example form, instead of giving people access to the NT source code that would be complex to get the 'idea' by seeing the code.

Many of the ideas are so freely given that 99.9% of the IT industry doesn't even realize they come from Microsoft. There are compiler technologies used by companies like Intel as well as Linux developers, that Microsoft designed.

The most concrete idea gave to to the world can be found in virtually every computer and every computing device, even Macs, and iPads. This is Microsoft's GPU engineering work.

It gave us the user defined shader languages, as well as the architecture of VS/PS GPU designs of the early 00s. In 2005 they again gave the world new a new set of GPU technologies from the Unified Shader to a new onboard DMA handler for fast bus system/vram sharing, and advances in stream processing.

There isn't a production GPU today that doesn't have Microsoft technology (ideas) in it.


One reason people should reconsider Microsoft 'investments' because if they do fall, there will not be another massive technology company that freely gives away and shares 'ideas' like Microsoft does. (They still have Gate's vision at their core - empowering people, even if they don't make a dime off of it.)

Another good reason to reconsider Microsoft is the new technologies coming online that they will make direct money from in the next two years. From WP7/WP8 to Azure to Live to Windows 8 to Kinect/XBox and even new robotics technologies, it is an interesting time, and funny that most of the technology world doesn't even see what Microsoft is doing, and again even their R&D site shares most of its 'ideas' with the world.

PS Using a standard model to value a company and stocks, Apple would have to be pulling in three to four times as much revenue as they do today to support their stock prices. Which makes me thing the 'buzz' and genius in marketing that Apple uses for their products easily crosses over to their stock value as well. There isn't another company with their revenue or profit levels that have this inflated of a value. Which is a bubble, and they tend to burst.

Apple was over valued in the 80s as well, as IBM was the king and moving the world, but people saw Apple computers in schools and the popularity of Macs in the 'trendy' groups. Which is analogous because, Apple is making many of the same mistakes they did then. Hoarding, lack of R&D and shoving the same for as long as they can get away with it. Which popped, and in 1997 they were soliciting money from Microsoft.

Impressive! Couldn't agree more.

BTW, on this "One reason people should reconsider Microsoft 'investments' because if they do fall, there will not be another massive technology company that freely gives away and shares 'ideas' like Microsoft does.", I also wonder what massive impact could happen when Microsoft do fall. It must bring the whole ecosystem down, including me

Nice text, but I think you are seeing things a little biased towards Microsoft. Eventough they are a great technology company and produce great products and technologies, there are plenty of other companies around developing essential technologies to our way of living, and IBM is onethe biggest technology creator in the world. Thee are plenty of huge corporations that create technology that modern society relies on: Nokia, Cisco, Ericsson, Honda, Toyota, BMW, Samsung, LG, Toshiba, TI, Intel, AMD, HP, OSRAM, Philips, Bosch, Thissenkrupp and GE are some examples. All of them develop technologies in some field that are important to our society, be medical equipment, tools, robotics, communications, semiconductors and many more.

As for Apple, while they usually do not invent technology and mostly use others technology to create their products, they usually are able to transform the market and the way we use technology. The apple computer, ipod, iphone and ipad are examples of this, where their innovative way to creating their products opened a new era of technology (making these products accessible allowed for a lot of technology investment from other companies and led to the world we have today).

My understanding of this means that Apple is the largest "valued" Tech business on the planet currently. Basically if somebody was looking to invest, they believe the most robust and safest business to invest in would be Apple. That's probably the best way of looking at it.

It's not necessarily a Revenue vs Turnover view, it's more an assets valuation view I believe.

I don't understand does that mean Apple is the biggest IT company now? Or is it just market value aka hype. I'm not trying to troll I just am curious about what this means.

Ently said,
I don't understand does that mean Apple is the biggest IT company now?

It means that - from a stocks (price) perspective - Apple is the most valuable IT company.

MFH said,

It means that - from a stocks (price) perspective - Apple is the most valuable IT company.

The article also says that Apple is "...the biggest tech company in terms of market share...", which would not be accurate. So, I am confused by that last paragraph as well...

M_Lyons10 said,

The article also says that Apple is "...the biggest tech company in terms of market share...", which would not be accurate. So, I am confused by that last paragraph as well...

Author is John Callaham, do I need to say more?

MFH said,

It means that - from a stocks (price) perspective - Apple is the most valuable IT company.

Apple is the most valuable company in the world period, not just IT.

oufc_gav said,

No its not, Exxon Mobil is.

You're right, Exxon took the lead again. Regardless, Exxon and Apple have been going back and forth for about a year. They're pretty much a tie.

M_Lyons10 said,

The article also says that Apple is "...the biggest tech company in terms of market share...", which would not be accurate. So, I am confused by that last paragraph as well...

Yes, author confuses market cap with market share, two entirely different things.