In summary, when you count up all stock for Microsoft and for Apple, then multiply it by the value of said stock, Apple is now worth more (higher market capitalization) than Microsoft. MS's CEO said, basically, "who cares". When you look at gross profits, Microsoft wins, but not by that much -- roughly $56Billion/year to Apple's $52Billion.
Problem is that only a few years ago, Microsoft had to bail Apple out of insolvency in order that MS wouldn't become a monopoly (although some argued that, since it controlled 98% of the market, it was anyway ). So the trend is clear. While Microsoft has been basically stagnant, Apple has been going from a tiny, near-bankrupt player, to an industry leader. So it's pretty clear who has momentum.
I've blogged about this before, but I see PC's lasting about another 5-10 years and then disappearing from the mainstream. Software developers will use them. People who do a lot of photo manipulation will use them. People who edit home video will too. And there will be people who have specialty applications (accountants who use Quickbooks or something).
But most will use ipads and netbooks. For games, it will be the xBox, the PS3, and the Wii. They'll watch video on game consoles too.
Note that none of those devices run Windows. In addition, Microsoft has a smart phone which sucks and can't compete with Google or Apple.
Microsoft is making great strides in the server market. But, I think they're starting to look more and more like IBM about 10 years ago. With Oracle's purchase of Sun, and IBM re-inventing itself, I'm not sure that the future is really on the servers. Servers do ... what they do. Sure, there will be tweeks her and there, but, besides security and compliance, servers do about what they did 15 years ago. The improvements are mostly due to better hardware, not better OS's. And, frankly, I'm not seeing much growth in the U.S. server market (China is a different story). Sure, companies upgrade from time to time, but frankly, most everyone that needs a server has one by now. It's easy to think that servers are their future, but IBM thought the same thing. Now, IBM has become very, very profitable making software and selling consultants. Their servers are still crankin' but the sales of them have been pretty flat.
So, here's my prediction.
--Based on what Balmer is saying, I don't see MS changing direction any time soon.
-- MS' console sales are going to stay basically flat. They had a great competitive advantage
when you could watch Netflicks on Xboxes. But now you can do it on PS3/s and Wii's too.
-- MS' desktop OS sales are going to drop dramatically in the next 5-10 years. I'd say they're looking at a 20% loss or more. In fact, if Apple keeps stealing market share, they could be worse. Last I saw MS was down from 98% marketshare on PCs to 92%. And when you focus on Windows 7, they haven't even caught Mac yet.
-- MS won't ever be a major player in cell phones or hand-held devices. The problem is that MS keeps trying to use Windows for everything. When you look at what Google did, they basically took a browser and made it into a small OS. It's light, small, and runs great on underpowered devices. That's *tons* easier than taking a bloated OS that's intended to run on every computer (PC and Server) ever made and trying to squeeze it down to a phone. I have a Windows phone. I'd give it a C- . It uses Windows' interface which is impossible to navigate on a cell, it crashes regularly, runs slow and requires regular reboots.
-- MS will stay strong on servers. But I wouldn't expect a lot of revenue growth.
I guess I'm wondering if they aren't going the way of Sun and IBM. A few years ago, some developers walked around with and attitude because *they* were *serious* developers (meaning they worked on mainframes, not those silly PCs). I wouldnt be shocked if 10 years from now, it's the Microsoft developers that do that. While the Android developers are slowly taking over.
If I'm right it will mean that the software development industry will move back to the wild west. Since there will be less standardization in non-servers (PCs, game consoles, phones, ipads, netbooks, etc) and each will use its own OS, there will be fewer tools available to do development and fewer standards on how to do it.
This could be good for IT and it could be bad. On the one hand, I think it will get harder to do client development. Even now, if you think about a bank app to check your balance, it has to run on a PC, a Mac, an iPad/pod/phone, a handfull of other phones (Palm Pre, for ex), and Chrome OS. That *has* to be a pain.
On the bright side, it will keep us developers busy. I'd expect whole new investment opportunities and I'd expect to see developers make more money because of the additional challenges.
We'll see what the future holds.
