How Apple topped Microsoft

By , Network World |  Hardware, Apple, Microsoft

In the past decade, Microsoft has acquired nearly 10 times as many companies as Apple, and spent nearly nine times as many dollars on research and development.

Yet Microsoft's stock price performance has stagnated these last 10 years, while Apple has soared to its current status as the world's most valuable tech firm, a title wrenched away from Microsoft just last week.

Apple tops Microsoft as world's most valuable tech firm

Dow Jones investment banker Sameer Bhatia says Apple has succeeded where Microsoft has not by focusing obsessively on user-friendliness. While Microsoft trots out new versions of Windows, Apple has found new tech markets to dominate by creating the iPod, iPhone and iPad, he notes.

Based on willingness to spend money, it would seem that Microsoft should be the more innovative company of the two. Microsoft made 104 acquisitions compared with Apple's 11 in the past decade, while spending $71 billion on research and development, compared with Apple's $8 billion. Dow Jones compiled these numbers from the Capital IQ database.

But buying new companies and pouring money into R&D is not the same thing as innovating, Bhatia said in an interview with Network World, and in a blog post for the Wall Street Journal.

"If a company focuses on the user needs and user interaction, that's more important than having loads of cash and capital, and doing mergers and acquisitions," Bhatia said in the interview.

Apple's secret is not making huge investments to keep up with competitors, but in "identifying and satisfying unmet customer needs," Bhatia wrote in his blog. As a result, Apple's stock price has risen 10-fold in the last decade even as the Nasdaq lost 56% of its value, he writes.

It was May 26 when Apple topped Microsoft with a market cap of $223 billion, higher than Microsoft's market cap of $219.3 billion.

Few tech companies are even close to these titans when it comes to market cap. According to the Financial Times' most recent Global 500 report, released March 31, IBM's market value was $167 billion, AT&T was $153 billion, Cisco checked in at $149 billion and Google at $139 billion.


Originally published on Network World |  Click here to read the original story.
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