Apple Beats Microsoft in First Quarter Profit

[alent1234]

Yes, we'll just wait patiently while they catch up. No rush.

Oh, and Apple and Google just called and said they'll stop innovating and stand still as a friendly gesture.

This isn't 1995.

MS is unprepared for the current competitive situation. Google has shown just how flat-footed and out of touch MS really is. We have a mass-market commodity-ware vendor that apparently has the power to give things away for free that are "good enough." Before, MS used to be the "just good enough" vendor. Then you've got Apple on the Premium end showing the way forward.

This "You just watch, MS will catch up eventually" tactic is currently and will in the future continue to produce diminishing returns.

MS is Zuning it in the current tech climate. Bad management, false starts, a string of failures, continual embarrassment . . . all of this would be no problem at all, if only investors, shareholders, directors - whoever has the power - would call for the entire top-level management at MS to be terminated. THAT is positive change. But same old same old . . .

other than android and the few apps that google sells with it they can't seem to make anything outside their core advertising business. every product they make is a failure or is forgotten by them.

Google Reader is a cool product that has been forgotten. now Pulse and Zite are making much better RSS readers and i'll probably switch. little things like this will make people leave google services. i've read that a lot of talented people like google has are ADHD or only care about making something cool and not building up on it. it took microsoft years to make windows usable and then they took market share from the competition just like it took years for apple to make iOS usable and take the mobile market

 

[ericinboston]

There are two groups of Apple consumers:

Group 1: The people who jumped on the Apple bandwagon in or after Y2K

Group 2: The people who have been loyal Apple consumers prior to Y2K. I belong to this group.


Prior to jumping on the bandwagon, many of the folks in Group 1 and the rest of the world made fun of the folks in Group 2. Group 2 people were often considered crazy cultists with a "sad fetish" for Apple (it took a certain type of individual to recognize the insane greatness of Apple products). Group 2 people were also considered stupid/misguided for sticking with Apple. Many of the people in Group 1 and the rest of the world most likely agreed with Michael Dell when he said Apple should close down.

Fast forward to today. Apple now generates more revenues AND profits than Microsoft. This is an important milestone for the Group 2 folks for the simple reason that Apple has finally won the technology war. It may have lost the PC battle but Apple is now indisputably the technology innovation champion. And it became the champion WITHOUT any benefit of a monopolistic position that Microsoft had over the PC operating system for decades.

When I hear comments from people dismissing the significance of Apple surpassing MSFT in profits, I know that these people belong to either Group 1 or are MSFT fanboys. They will never understand the blood, sweat, and tears that Apple and its cult members had to go through to reach this point.

Congratulations, Apple, for reaching the pinnacle. Thanks for doing what you do best: making insanely great consumer technology.

There is just so much wrong with 100% of your post. I can't even begin, nor will I spend time, contradicting every sentence.

In short, there is no war between Apple and Microsoft...nor has been for decades. Also, you think Apple is not a monopoly? Apple makes the hardware, the OS, the apps, and Appstore, and APPROVES what apps consumers can purchase. No...that's not a monopoly. No, sir.

 

[Vulkan]

If Microsoft ever wants to get back at the top of their game they need to fire Ballmer and bring some new blood to the helm. They are as stagnant as IBM was when Microsoft rose to power.

 

[Vulkan]

Apple makes the hardware, the OS, the apps, and Appstore, and APPROVES what apps consumers can purchase. No...that's not a monopoly. No, sir.

But its a monopoly that works, and that is why people buy it. People buy the experience, and while its wrapped in a monopoly paper, people love that. Computer has become more of a social experience than a nerd experience.

 

[linux2mac]

I still don't understand why nobody has managed to make a viable alternative to Microsoft Office, esp. Microsoft Excel. Apple's iWork is fine, but clearly not enough and of course there is no Windows version. Google is too obsessed with the cloud and ad thing and didn't make Google Docs a local app for Windows / Mac / Smartphones with Dropbox like cloud capabilities.

So Microsoft can continue to be fed with its Windows / Office monopolies for the foreseeable future.

I have clients that I have saved thousands of dollars by ridding their office of MS Office and replaced with OpenOffice and NeoOffice. And because some of my clients run Linux and OSX, they have also saved even more by not needing Anti Virus software for each of their computers.

I also have clients that still wish to remain on Windows. I don't mind because that is easy money as I can always count on Windows to screw up and give me more billable time.

 

[alent1234]

But its a monopoly that works, and that is why people buy it. People buy the experience, and while its wrapped in a monopoly paper, people love that. Computer has become more of a social experience than a nerd experience.

how is it a monopoly when most of apple's customers are windows users and will never buy a mac no matter how much nonsense about the halo effect we hear

 

[JAT]

And they still managed to sell 350 million licenses of Windows 7 in 18 months. That's insane! I am telling you... I would like to sit in that room in either Redmond or Cupertino where you see the profit tote board being updated every second, or every minute or whatever. It must just make someone dizzy. It's like 45,000$ a minute. Of profit! Ridicurous.

IT weenies in the early 90s created the Windows dominatino. M$ simply took advantage of those people's selfish ways and cheapness. M$ did that really well.

x-box and gaming are a huge money maker. millions of people pay $50 a year for x-box live

Xbox took years to come to even a little profit. Most of the profits went to 3rd party developers, not helping M$'s bottom line. So did the PS3. Nintendo, OTOH, had profits immediately. From a business standpoint, they all worked, but Nintendo's method would be my first choice.

 

[KingCrimson]

Haha, you're funny. I'm no fan of the Xbox, but you've got to be kidding if you think Nintendo is ever really going to kill Sony/MS. Nintendo may have sold the most consoles, but most main virtually unused, cos the Wii is woefully under-powered, propped up by the same old kiddy franchises and once you get past the new gimmicks gets boring fast.

I hardly know anyone with a Wii, that still uses it. The same will happen to the 3DS.

Nothing beats the XBox-Live ecosystem from what I read. Kudos for MSFT investing in it for a decade until it became profitable.

 

[alent1234]

x-box wasn't a money loser for that long. on the financial statements i think they had bing/live whatever in the same category making it seem as though they were losing money. recently they took it out.

microsoft had a gaming division that made money since the mid to late 1990's with some of the best games on the market.

the first x-box wasnt that big a seller as the PS and gamecube but it had a higher rate of people buying games and x-box live was a hit from the start.

same with the 360, it wasn't a top seller but people bought more games for it than for the PS or Wii. a lot of people like myself have a PS3 with no games because it's a killer media box and blu ray player. when it first came out at $499 it was the same price as a blu ray player. at $299 it's the same price as a high end internet enabled player but with better support and a hard drive to store data

i had the wii as well and only used it for the balance board. just like a lot of people that bought it. compared to a health club membership it was a killer deal

and with gamestop in the used business, it's even more profits for MS due to all the DLC that is sold now

 

[kharvel]

There is just so much wrong with 100% of your post. I can't even begin, nor will I spend time, contradicting every sentence.

There is so much wrong with 100% of your comment above. I can't even begin, nor will I spend time, trying to explain why you're 100% wrong about me being 100% wrong.

In short, there is no war between Apple and Microsoft...nor has been for decades.

You either jumped on the Apple bandwagon after Y2K or you're a MS fanboy. Which is it?

Also, you think Apple is not a monopoly? Apple makes the hardware, the OS, the apps, and Appstore, and APPROVES what apps consumers can purchase. No...that's not a monopoly. No, sir.

Sony makes Playstation 2, the Playstation 2 OS, the Playstation 2 network, and APPROVES what can or cannot be done on the Playstation 2 network and to some extent, APPROVES what games consumers can or cannot play on Playstation 2.

Therefore, based on your logic, Sony is a . . . MONOPOLY!

Let's do another one:

RIM makes the Playbook, the Playbook OS, the Playbook apps and Playbook app store, and APPROVES what apps consumer can purchase.

Therefore, based on your logic, RIM is a. . . .. MONOPOLY!

 

[JAT]

x-box wasn't a money loser for that long. on the financial statements i think they had bing/live whatever in the same category making it seem as though they were losing money. recently they took it out.

I would call more than half its life, counting today, to be "long".

http://www.engadget.com/2008/01/24/xbox-goes-profitable-almost-like-a-grown-up-business/
http://www.businessinsider.com/next-xbox-may-be-profitable-on-day-one-2011-4

The division sold its first unit in 2001, being started (and costing money) well before that, no doubt. It didn't hit "black" until 2008. In big business, that's basically a miracle story of survival. If Microsoft wasn't making money elsewhere, you can bet it would not have even made the 360.

 

[LagunaSol]

x-box wasn't a money loser for that long.

My bet is Xbox has yet to pay back the years of big losses.

 

[rdowns]

There is just so much wrong with 100% of your post. I can't even begin, nor will I spend time, contradicting every sentence.

In short, there is no war between Apple and Microsoft...nor has been for decades. Also, you think Apple is not a monopoly? Apple makes the hardware, the OS, the apps, and Appstore, and APPROVES what apps consumers can purchase. No...that's not a monopoly. No, sir.

That is wrong. Apple has no more of a monopoly on the iPhone as Samsung has one for the Galaxy. For Apple to have a monopoly, there would be few to no companies making smart phones. There are dozens of smart phone companies, 5 or so mobile OSs, many App Stores and all exert some control (that they decided on) over your device. So, no, that's not a monopoly.

 

[alent1234]

I would call more than half its life, counting today, to be "long".

http://www.engadget.com/2008/01/24/xbox-goes-profitable-almost-like-a-grown-up-business/
http://www.businessinsider.com/next-xbox-may-be-profitable-on-day-one-2011-4

The division sold its first unit in 2001, being started (and costing money) well before that, no doubt. It didn't hit "black" until 2008. In big business, that's basically a miracle story of survival. If Sony wasn't making money elsewhere, you can bet it would not have even made the 360.

both articles say the division/business unit that the x-box is in finally turned a profit. in 2010 this unit also included Office for Mac and Zune. the latest earnings release has no mention of Office for Mac in this unit but it still has windows phone and Microsoft's IP Television unit. ironically the big profit jump came after office for mac was kicked out of the unit

i'm bet x-box has been doing just fine and that windows phone and the IPTV units are the loss leaders

at some point apple is going to stop growing because the market penetration of smartphones will be at the point where you are just selling replacement phones. since AT&T opened the floodgates last year for early upgrades we'll see how things go this year

 

[JAT]

both articles say the division/business unit that the x-box is in finally turned a profit. in 2010 this unit also included Office for Mac and Zune. the latest earnings release has no mention of Office for Mac in this unit but it still has windows phone and Microsoft's IP Television unit. ironically the big profit jump came after office for mac was kicked out of the unit

i'm bet x-box has been doing just fine and that windows phone and the IPTV units are the loss leaders

at some point apple is going to stop growing because the market penetration of smartphones will be at the point where you are just selling replacement phones. since AT&T opened the floodgates last year for early upgrades we'll see how things go this year

http://www.gamespot.com/news/6140383.html
Microsoft itself claimed the Xbox was a loss leader. Back in 2001, back in 2005, etc. I guess you can argue that with them, too. Those other items are small potatoes in both cost and revenue in comparison. The Xbox IS that division when it comes to finance.

Office for Mac...it has almost zero cost. A few programmers.

 

[alent1234]

that was in 2005 when it first came out. by now they are on a revision that costs a lot less to make and they have sold a lot of games and XBL subs to make up for it. back when the 360 first came out it had an attach rate of 8 games, higher than Sony. figure at $10 licensing per game that's $80 per console on average plus XBL. so i don't know if the isuppli numbers are accurate.

a lot of companies in the console market have been doing it like this for years. take a loss the first year or two, sell break even or small profit later in the cycle and make it up on the games. except for nintendo which is doing the opposite. make money early in the cycle and start losing money at the end of the cycle.

2011 the division will probably turn a profit of $3 to $4 billion or so due to kinect. 2010 was also profitable. if the Nokia partnership works out 2012 will be even better.

 

[JAT]

that was in 2005 when it first came out. by now they are on a revision that costs a lot less to make and they have sold a lot of games and XBL subs to make up for it. back when the 360 first came out it had an attach rate of 8 games, higher than Sony. figure at $10 licensing per game that's $80 per console on average plus XBL. so i don't know if the isuppli numbers are accurate.

a lot of companies in the console market have been doing it like this for years. take a loss the first year or two, sell break even or small profit later in the cycle and make it up on the games. except for nintendo which is doing the opposite. make money early in the cycle and start losing money at the end of the cycle.

2011 the division will probably turn a profit of $3 to $4 billion or so due to kinect. 2010 was also profitable. if the Nokia partnership works out 2012 will be even better.

You do understand that 2008 minus 2001 plus development time is more than 1 or 2, right? That's 7, maybe 9 years of losses.

My original comment was that this is a poor way to do it, from a finance perspective. There was no guarantee, and if Sony and M$ didn't have profit elsewhere, these wouldn't even exist. Nintendo made money on the Wii almost immediately, as you've claimed M$ did. It sounds like you are talking about Nintendo.

 

[LagunaSol]

You do understand that 2008 minus 2001 plus development time is more than 1 or 2, right? That's 7, maybe 9 years of losses.

My original comment was that this is a poor way to do it, from a finance perspective. There was no guarantee, and if Sony and M$ didn't have profit elsewhere, these wouldn't even exist. Nintendo made money on the Wii almost immediately, as you've claimed M$ did. It sounds like you are talking about Nintendo.

And the beauty of this business model is Microsoft and Sony will start the bleeding all over again in a couple of years with the next console generation.

 

[Legion93]

Run, it's Gates!

 

[kanedavid]

Microsoft is still doing very well. They're making the best products they ever have done and as a customer I am very pleased with all of my Microsoft purchases.

All great products and deserve to be class leaders if they are not already. I can't think of another company (including Apple) that has put out such a fantastic range of very good products.

You forget one thing neiltc13.... not many people seem to share your views:

• Zune Desktop Software.... way more people prefer the iTunes ecosphere (which isn't perfect either mind you).

• Zune Hardware... This is clearly a product flop... just like M$ and it's PlaysForSure DRM. Apple's iPod after 10 years still blitzes the portable music device market.

• Windows Phone 7... Yes, Windows 7 is a significant improvement over any previous boost phone OS from M$... a shame that they had to really copy the whole "multi-touch" concept from someone else. But M$ has a long way to catch up with Apple and Google with their offerings and as yet, it would suggest that Apple and Google are still better than M$.

• Windows 7... It's a LOT better than anything M$ has released in the past. All credit to them on this one. But it's uptake hasn't really been all that good though and Microsoft continues to do the "value-add" model by charging more for greater feature sets across it various Windows editions... Too many choices for people that don't understand. Just make one version and price it at $99 and they'll get a much better uptake.

• Office 2010... Yes, it's WAY better than any offering from other companies (for Excel at least). Not sure that Office 2010 is necessarily better than Office 2007 though.

• Office 2001 for Mac - Yes, especially Outlook 2011 for Mac. There was never any reason why Microsoft could not have upgraded it's old Classic Mac version of Outlook 2001 all along rather than develop it's Entourage product which in my opinion was always Microsofts half-assed way of limiting Mac Support in an attempt to marginalise the Mac platform. Guess what? It hasn't really worked so now Microsoft have realised that the best approach is to try and embrace the fact that Apple's Mac OS isn't going away anytime soon so it might as well support it properly.

• Xbox 360 - It's a pretty good product, but compared to the other two 7th generation Game Consoles (PS3/Wii), XBOX trails in third place in all markets except the US where it is second behind Wii.

• Xbox Live - Still an immature product (along with Sony's and Wii's equivalent!). I don't think ANY of the current offerings are that good really but Microsoft has a LOT more experience in internet technologies so you'd expect that Microsoft should be able to come up with something that is better than it is.

Microsoft's problem is that it struggles to actually invent something that appeals to consumers in a way that allows them to command a higher price until the market matures. Technology is a tough market to be in because most technology products fall in value dramatically when a product matures, and margins become very thin and in many cases unsustainable. The only real way to make a lot of dosh in technology is to continually be innovative and invent something new that captivates people. Simply copying someone else all the time won't cut it.

Apple started it's revolution with the iPod well before most other MP3 players came out and so it commanded a higher price (therefore profits) than conventional music devices of the time (CD Discman, Minidisc etc) had. Then just as all the me-too players jumped on the bandwagon, Apple move onto it's next innovation... iTunes Store... then iPhone... then App Store... and now the iPad.

When Microsoft goes back to it's heyday and starts being innovative like Apple and Google are now, they'll again start making a lot more money again.

 

[cirus]

Apple's market share is growing but the fact that they supposedly (according to other posts) sell 90% of the computers that cost more than $1000 indicates that they are never going to really own the market. If they want to achieve true market dominance they need to lower their prices to attract the "I ain't paying over $800 for a fricking computer" crowd (the vast majority of people). Until they make their products affordable to the majority, they will never have a majority of the market share. Windows will always be around unless they make their products so that everyone can buy one.

They can still make record profits though.

However, if you exclude revenue that did not come from computers (ipods, itunes, etc.) and only look at products that are directly comparable (both companies sell a similar product) Microsoft has decidedly more revenue. For example there are two stores: Store 1 (pharmacy and other things including non perishable food) and Store 2 (food only). Only a small portion of store 1 's revenue comes from food. Store 1 is bigger than store 2 but it would be wrong to assume that store 1 is a bigger player in the food market as only a small portion of its revenue comes from food. It actually has less market penetration than store 2.

 

[AppleScruff1]

You forget one thing neiltc13.... not many people seem to share your views:

• Zune Desktop Software.... way more people prefer the iTunes ecosphere (which isn't perfect either mind you).

• Zune Hardware... This is clearly a product flop... just like M$ and it's PlaysForSure DRM. Apple's iPod after 10 years still blitzes the portable music device market.

• Windows Phone 7... Yes, Windows 7 is a significant improvement over any previous boost phone OS from M$... a shame that they had to really copy the whole "multi-touch" concept from someone else. But M$ has a long way to catch up with Apple and Google with their offerings and as yet, it would suggest that Apple and Google are still better than M$.

• Windows 7... It's a LOT better than anything M$ has released in the past. All credit to them on this one. But it's uptake hasn't really been all that good though and Microsoft continues to do the "value-add" model by charging more for greater feature sets across it various Windows editions... Too many choices for people that don't understand. Just make one version and price it at $99 and they'll get a much better uptake.

• Office 2010... Yes, it's WAY better than any offering from other companies (for Excel at least). Not sure that Office 2010 is necessarily better than Office 2007 though.

• Office 2001 for Mac - Yes, especially Outlook 2011 for Mac. There was never any reason why Microsoft could not have upgraded it's old Classic Mac version of Outlook 2001 all along rather than develop it's Entourage product which in my opinion was always Microsofts half-assed way of limiting Mac Support in an attempt to marginalise the Mac platform. Guess what? It hasn't really worked so now Microsoft have realised that the best approach is to try and embrace the fact that Apple's Mac OS isn't going away anytime soon so it might as well support it properly.

• Xbox 360 - It's a pretty good product, but compared to the other two 7th generation Game Consoles (PS3/Wii), XBOX trails in third place in all markets except the US where it is second behind Wii.

• Xbox Live - Still an immature product (along with Sony's and Wii's equivalent!). I don't think ANY of the current offerings are that good really but Microsoft has a LOT more experience in internet technologies so you'd expect that Microsoft should be able to come up with something that is better than it is.

Microsoft's problem is that it struggles to actually invent something that appeals to consumers in a way that allows them to command a higher price until the market matures. Technology is a tough market to be in because most technology products fall in value dramatically when a product matures, and margins become very thin and in many cases unsustainable. The only real way to make a lot of dosh in technology is to continually be innovative and invent something new that captivates people. Simply copying someone else all the time won't cut it.

Apple started it's revolution with the iPod well before most other MP3 players came out and so it commanded a higher price (therefore profits) than conventional music devices of the time (CD Discman, Minidisc etc) had. Then just as all the me-too players jumped on the bandwagon, Apple move onto it's next innovation... iTunes Store... then iPhone... then App Store... and now the iPad.

When Microsoft goes back to it's heyday and starts being innovative like Apple and Google are now, they'll again start making a lot more money again.

They just had a record quarter, but when they innovate like Apple and Google they start to make a lot more money again. Priceless.

 

[Dooger]

There are two groups of Apple consumers:

Group 1: The people who jumped on the Apple bandwagon in or after Y2K

Group 2: The people who have been loyal Apple consumers prior to Y2K. I belong to this group.


Prior to jumping on the bandwagon, many of the folks in Group 1 and the rest of the world made fun of the folks in Group 2. Group 2 people were often considered crazy cultists with a "sad fetish" for Apple (it took a certain type of individual to recognize the insane greatness of Apple products). Group 2 people were also considered stupid/misguided for sticking with Apple. Many of the people in Group 1 and the rest of the world most likely agreed with Michael Dell when he said Apple should close down.

Fast forward to today. Apple now generates more revenues AND profits than Microsoft. This is an important milestone for the Group 2 folks for the simple reason that Apple has finally won the technology war. It may have lost the PC battle but Apple is now indisputably the technology innovation champion. And it became the champion WITHOUT any benefit of a monopolistic position that Microsoft had over the PC operating system for decades.

When I hear comments from people dismissing the significance of Apple surpassing MSFT in profits, I know that these people belong to either Group 1 or are MSFT fanboys. They will never understand the blood, sweat, and tears that Apple and its cult members had to go through to reach this point.

Congratulations, Apple, for reaching the pinnacle. Thanks for doing what you do best: making insanely great consumer technology.

May 2010 join date complaining about bandwagon jumping. Go figure.

 

[*LTD*]

Apple's market share is growing but the fact that they supposedly (according to other posts) sell 90% of the computers that cost more than $1000 indicates that they are never going to really own the *********, lowest end of the market.

fixed.

All you need is the cream of the market. And everyone else tries to follow.

Apple's penalty for losing the market to cheap box assemblers hawking Windows:

The most profitable PC maker in the world, that is the Gold Standard of personal computing with Macs + OS X.

I don't see the problem. Seems SJ made the right choice from the very beginning by using a closed licensing model. Look at the amazing differentiation between Apple and Everyone Else. And others are trying that EXACT SAME differentiation (but without the guts to actually go all-in with it) and losing. Check out the failed Dell Adamo line. Dell *tried* to Apple-ify the experience. Except for the fact that they had nothing to do with the very company that actually makes the OS it's supposed to run, other than a licensing agreement. It doesn't work that way.

Now HP is trying it with WebOS. But Im not sure if they know how "to say 'no' to a thousand things and say 'yes' to that one special idea." It's all based on philosophy and attitude when you envision how everyday folks are supposed to interact with tech. Most tech companies out there don't have a grasp on it.

 

[rtheb]

Kind of makes you feel really sad for Steve and Bill...

$5,000,000,000.00