Microsoft’s revenues down, Apple’s revenues up – blip or trend?
This has been a tough year for most companies - including Microsoft. But Apple, so far, seems to be bucking the trend.
06 August 2009
The bad news - especially for Microsoft - was that revenues were down 6% compared to the previous year, and for the last trading period were down by 29%. In fact, Microsoft's numbers have been on the slide for the last 3 years.
The computer press loves to compare Microsoft with Apple - perhaps because Microsoft has no near competitors. In fact, the comparison is a touch unfair, as Apple is in many ways more 'like' Sony than it is Microsoft, and a better comparison company could be Adobe. Old feuds never go away, so the comparisons are drawn - especially as Apple is doing rather well right now.
During the same trading period, Apple had its best (non-Christmas/holiday) sales - with Mac sales up 4% and iPhone sales up by over 600%. iPod sales did drop, though, by 7%, confirming the views of some analysts that the market is now almost saturated.
Microsoft blaming the economy didn't really wash, since Apple is operating in the same economy.
However, the picture is much more complex than that. Steve Ballmer isn't far off wrong when he dismissed Apple's competition to Microsoft representing little more than a 'rounding error'. Apple might be growing its market share, but that market share remains tiny. Microsoft remains massive.
That's despite Apple's inroads into the market. According to Forrester Research, Windows Vista is on 11.9% of corporate desktops and Mac OS X is on 3.6%. Gosh, that sounds like a lot. Well, we know that Vista hasn't been embraced by corporates. But Windows XP holds 86% of the corporate desktop - a figure that puts things properly into perspective - although we're a bit worried that Forrester's figures don't add up to 100% or include Linux. Overall, Windows accounts for 96.2% of corporate desktops. No wonder Steve Ballmer's a long way from quaking in his boots.
And remember, this is a bad trading period - with Windows 7 on the horizon, even if times weren't tough, people would be holding off buying Vista or a new PC. You may as well wait. The last version of Office isn't exactly 'just launched' so the sales surge from that has gone. Yes, Vista has hurt Microsoft, but it still shipped some respectable figures - and many, many more than OS X. The tables aren't turning - nor are they even wobbling, other than very, very slightly.
But that's not to say that the situation couldn't change or isn't without risk. The biggest risk - to both Apple and Microsoft - is the economy. Times are tough and money is tight, so will people fork out for Windows 7 if they can put it off? Sure, Windows XP's long in the tooth - but it works well. It can last another year or so. While Apple has continued to sell premium-priced products in a difficult market, that could fall away at any time. Without getting into discussions about which is best, the fact is you can get a pretty decent Windows Vista laptop with 3GB RAM for around half (well, perhaps a touch more) of what you'd pay for an Apple. True, it wouldn't be a unibody leading-edge aluminium chassis with an LED screen, and the plastic case may flex around a bit, but what the heck, two for the price for one - almost.
Microsoft's current weakness is that it's spread too thin. It's trying to enter every market - software, server, desktop, games, search, advertising and so on. That's a lot of plates to keep spinning, however good you are. By contrast, Apple remains tightly focused on a rationalised product line - making more profit by doing fewer things, and making sure that those things are done well.
But none of these are really affecting the big numbers. Microsoft remains dominant by a long way, and Apple remains niche. In answer to our contentious headline, the numbers are a trend not a blip - and have been for a few years. But in reality, there's not enough of a trend to make a difference in terms of real market share - just to make a few attention-grabbing headlines.
