Apple vs. Microsoft: Who Owns the Future?

There was an announcement last week that should have caused tech investors to do a double take: Apple (Nasdaq: AAPL  ) passed Microsoft's (Nasdaq: MSFT  ) value to become the new king of tech. That's right: Apple's market cap is now $240 billion, while Microsoft, yesterday's standard-bearer, is sitting at $235 billion. If you're not immediately shocked, you may want to look back at the start of this millennium. Back in 2000, Microsoft was worth around $500 billion and Apple was picking at the edges with $16 billion, even sinking as low as $4 billion at its post-dot-com-bubble lows.

Over the past decade, Apple's stock kept rising, and Microsoft's kept doing what it has gotten so good at of late -- kind of limping along. Now that the two companies are about equal in price, Fool.com analyst Eric Bleeker wants to know which one is the stronger buy.

Despite some very real concerns for Microsoft -- in particular, that consumers will shift their spending dollars to mobile devices, where the company doesn't derive much revenue -- it's a pretty good bet that most large companies will still be Windows-based in 10 years. For that reason, Microsoft is still a pretty safe -- albeit unsexy -- investment.

Meanwhile, Apple boasts more upside potential, thanks in large degree to its iPhone. The company should see some 40 million iPhones fly off the shelves this year. And every one of them plays into support for the company's other products, such as Macbooks and iPads. It's a pricy stock, but if you believe in the iPhone's future, Apple looks like a solid investment, too.

At the end of the day, though, Eric may not be putting his money down on either Apple or Microsoft. Find out why in this video.

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Eric Bleeker owns shares of no companies listed above. Microsoft is a Motley Fool Inside Value selection. Apple is a Motley Fool Stock Advisor recommendation. Motley Fool Options has recommended a diagonal call position on Microsoft. The Motley Fool has a disclosure policy.


Read/Post Comments (10) | Recommend This Article (19)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 04, 2010, at 2:09 PM, ConstableOdo wrote:

    I wonder if it's even possible for Apple to grow like Microsoft did because Microsoft was able to grow with little opposition. Apple has so many haters that will try to stop Apple by all means possible. All the Windows fanboys who refuse to let go of the Windows way of life on the desktop. Now Apple has to deal with the Android fanboy iHaters on the mobile front. Apple will be constantly set upon by the Feds to stop Apple gaining any type of control even with such a small market share. Apple has a tough road ahead. The world let Microsoft grow to nearly 100% desktop market share and hardly anyone protested.

  • Report this Comment On June 04, 2010, at 5:05 PM, Turfscape wrote:

    If you review video of the appearances by Steve Jobs and Steve Ballmer at the recent D8: All Things Digital conference, you'll see immediately why Apple has grown so prominently and Microsoft waffled so embarrassingly.

    Jobs is open to the idea that Apple faces stiff competition. Jobs recognizes that the consumer world of computing is changing rapidly and will look entirely different in 2 years than it does today. Jobs recognizes that the consumer's needs and desires will drive their product development.

    Ballmer, on the other hand, is dismissive of competition, stating that Windows-based PC usage will grow, and that Windows addresses all needs. Ballmer states that people want full computing devices that do everything for everyone...not nimble, portable devices that meet a person's immediate needs. Ballmer scoffs at the idea of Google developing operating systems.

    And in the meantime, Microsoft flounders and Google and Apple dominate and define the future of technology.

    Ballmer is far from a trans-formative leader. Ballmer is a salesman...a very good salesman, but not an innovator or leader. And Microsoft will continue to hurt until he's gone.

  • Report this Comment On June 05, 2010, at 6:19 PM, plange01 wrote:

    both of these companys are finished microsoft for the last 10 years and apple just now starting its decline..

  • Report this Comment On June 06, 2010, at 2:04 AM, UrbanBard wrote:

    There is a good reason that Microsoft grew so rapidly, ConstableOdo: it cheated. Look into Microsoft's involvement in OS/2 and how MS sold IBM down the river. Roughlydrafted.com has a good explanation of how Microsoft got its dominance. OS/2 was a more secure OS than Windows 3.1, but OS/2 had to be sabotaged to give MS a monopoly.

    The point is that Windows 3.1 would work on a DOS computer (which were the bulk of the PC's) while the classic Mac OS required more expensive hardware. Windows 3.1 on a DOS PC was a sorry substitute, but it only cost a third of a Mac.

    All those advantages, which Microsoft had, have run their course. Let the Apple haters be; Microsoft is doing an excellent job of sabotaging themselves. Windows Seven is more secure than Vista, but it isn't even close to a UNIX based OS. It is bloated, insecure and buggy. It can't be fixed without a complete rewrite or a hypervisor and there are very good reasons for Microsoft to dislike either.

    Apple is busy expanding the computer market with the iPad, rather than fighting over Microsoft's turf. The OS wars are over: Apple won.

    Many changes lie ahead when Apple converts to the 64 bit kernel and when the Mac gives up the last vestige of the Classic Mac OS: the Carbon API's.

    It is no disadvantage that the losers haven't caught on yet. This partially true because Apple is not attacking Microsoft head on. Apple has more business than it can handle, so why should it begrudge Microsoft its niches?

  • Report this Comment On June 06, 2010, at 11:57 AM, netskater wrote:

    Apple is going great guns and Steve Jobs has indeed had the proverbial golden touch in the past 5 years. The iPod, iPhone and now the iPad have been iconic milestones in personal communications and computing. However I cannot help but feel that the next coin-toss may not land in Apple's favor. Apple has made rapid strides in the 1st world (read rich countries), but they barely have any products in the low to mid-end of the market. Job's arrogance and disdain for these markets is going to cost him dearly. The future growth is in countries like China, India and Brazil where the purchasing power parity is a lot lower. Apple does not have any products in this space. Case in point - the iPhone which barely has a presence in India even though it was introduced 2 years ago. The high prices are also sustaining a profitable market for knock-off imitations from China and Taiwan.

    I feel that companies like Google and Microsoft are better positioned in these emerging markets. The Android OS is wide spread and can be ported to a host of devices in all price categories. Secondly Microsoft is coming back in a strong way with its Windows7 mobile OS as also making key improvements in its Office and Server offerings. Windows 7 for the desktop has been a legitimate success and will serve as a good defence for preventing any more market attrition. All in all I think the tide is slowly turning for Apple. They are going to find it a challenge to stay ahead of the curve and penetrate new markets, with their current strategy.

  • Report this Comment On June 06, 2010, at 2:13 PM, DesertDad wrote:

    Finally, the world is as it should be. Apple has always been the technology leader while Microsoft successfully stole the show and treated us to sub-par products. The movie "Pirates of Silicon Valley" available on YouTube does an excellent job of telling the inside story. In the movie when Steve Jobs learns that Bill Gates decieved him and developed Windows, Jobs tells Gates "We're still better." and Bill Gates replies, "It doesn't matter." It's good to see Apple finally get its overdue rewards.

  • Report this Comment On June 06, 2010, at 9:33 PM, greenwave3 wrote:

    AAPL vs MSFT? My answer: GOOG.

  • Report this Comment On June 07, 2010, at 11:46 AM, gman5556 wrote:

    Neither.

    I agree with greenwave3. Google!

    Both of the mentioned companies' success is based on the the direct actions of their respective leaders, Steve Jobs and formerly Bill Gates. We have seen poor performance from both when these 2 are not in the picture because they developed a very authoritative approach to development. The leaders at Google are more about creating an atmosphere to stimulate development. They don't personally contribute. They encourage. And we can be reasonably assured they will not deviate from this management style as they made a pact to work together for the next 20 years.

  • Report this Comment On April 28, 2011, at 1:26 PM, raywj wrote:
  • Report this Comment On June 23, 2011, at 11:46 PM, pravinganore wrote:

    Apple vs. Microsoft: The First Versions Of Windows and MacOS ---> http://www.esds.co.in/blog/apple-vs-microsoft-the-first-vers...

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