Chart of the Day: Apple vs Microsoft

I jumped off the Apple bandwagon about a year ago when I bought my first Android (which was admittedly just an adequate phone) and started to get the impression that what was once an uncommon product (the iPhone) was now becoming a common one.

There was a time when the iPhone was unmatched.  That’s not to say that it’s a bad product these days.  It’s certainly not.  But the competition has more than closed the gap.  I’ve since purchased a Samsung Galaxy S3 (though I still use an iPad and iPod) and I can’t imagine ever switching back.  Especially since my digital life is now synced through a Google account.

Luckily for Apple shareholders, the company isn’t a one trick pony.  After all, it’s not like we’re starting at Blackberry here.

But I did find this corollary interesting – Apple versus Microsoft stock performance.  I hate to extrapolate out using such biased data, but the chart is thought provoking if nothing else.  I’ll let the readers form their own conclusions on this one, but I thought this chart via Bloomberg Briefs was pretty interesting:

 

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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Comments

  1. I don’t think you can compare the two. Microsoft had a monopoly on one product. Apple has a much more diverse product line. But I do think Samsung has finally encroached on the phone market and can put a serious dent in Apple’s 20%+ growth.

    • “Microsoft has a monopoly on one product.”

      I hope that was a joke. I’m no fan of either (Samsung/Linux for me) but Microsoft is leagues ahead of Apple and have way more products https://www.microsoft.com/en/us/sitemap.aspx they just don’t spend as much on flashy ads is all.

      Apple’s stock is in a bubble, if you own any I’d get out while you can.

      • Given that Frederick used the pluperfect “had”, I would assume he was referring to Microsoft’s Windows/Office juggernaut back in 2000, at the peak of the company’s market cap. If so, he’s not wrong; there really wasn’t much else then, no Xbox, no tablets, no phones…

  2. if apple can’t invent a brand new shiny gadget that everyone wants it’s mathematically impossible for its growth to continue as it did. however, it isn’t as expensive as microsoft was at the time.

  3. Have you tried the latest Nexus tablets by Google? If you are gmail based it might be a better option.

    • Haven’t tried it yet, but I’ve been looking into it. I’d love to hear opinions if anyone has used a Nexus. I know they just came out with the data optional Nexus.

      • I have a Nexus 7 and it’s incredible. Links with Google account, constantly updating, way more customizable than an iPad, and more than $100 cheaper than an iPad mini.

        • But how long will any company sell a product at cost? Google makes almost no profits on the tablets they sell. It’s all about getting devices out there that uses their search and apps. Apple makes all the profits in their business lines (Mac, iPhone, iPad), for the most part. Yes, Samsung makes money on the phones they sell. But Google is making nothing on the products they sell. How long will that continue?

  4. using linear instead of logarithmic scale gives the false impression that the price action of Microsoft was the same as that of Apple in both intensity and timeframe.

    • Hm, maybe, but I guess even if log scales are applied, the two graphs wouldn’t look that much different.

      • It’s quite different in fact.
        MSFT increased more than 600x from 1986 to 2000 whereas AAPL increased about 100x from 2003 to 2012.
        So one would reach the opposite conclusion than what the graph posted implied, i.e. instead of AAPL having peaked, it’s actually due for another 600% rise in the next 5 years before a parabolic top.
        For the avoidance of doubt, I don’t advocate this conclusion either, I think it’s stupid to try to draw analogies like that. I’m just pointing out that the whole premise of the chart is wrong because in charts with changes of such magnitude (several orders of magnitude over a LONG time), taking linear scale and re-scaling different graphs is misleading (you could have taken the graph of MSFT until 1995 for example and it would still look the same, so what would you say then?)

  5. You mean the S3 you are using will be pushing the envelope in the future and will solve world hunger.

    Whatever you mentioned may impact Apple in the future these factors will also affect the other phones as well.

    So the race to the bottom initiated by Google will mean there will be no winner but losers.

    Yes the bulk of Apple ‘s profits are from the iPhone but will it differentiate itself from the rest of the herd only time will tell.

    One more thing MS under Ballmer have come out with nothing disruptive for the past 10 years and if not for Halo the Xbox will still be a money loser. Even the Surface RT and Pro is nothing substantive, others called it innovative but I don’t see anything innovative. Just same old same old. I don’t believe I need to bring up an example of a disruptive product.

    • “Just same old same old”

      Not necessarily a bad thing for the most important persons: the customers.

  6. Microsoft had and still has to some extent a true monopoly on enterprise and networking software whereas Apple doesn’t on fickle consumer tastes.

    Nearly all businesses need to use Word, Excel, and Powerpoint. They don’t need iPhones or iPads.

  7. For me, Apple is an interesting case study.

    Firstly, it appears that Apple can do no wrong by a lot of people/analysts. I like David Eihorn, but when he says that it can be a trillion dollar company, then I start to think that some are drinking too much “Apple juice”. Going from 1 to 10 is easy, going from $600 billion to 1 trillion is another thing. I think there is a lot of the Halo effect around Apple.

    It is interesting to see what part of a company’s success is a direct result of the company’s efforts and what and what aspects are due to external factors. It is sort of like the skill versus luck debate.

    1. Porter/McGahan have done studies that show that what industry you are in is a major contributor to success. Apple is no doubt in a “hot” sector at the moment and has been for the past 5 or 10 years. So Apple being in High Tech sector is a partial reason for their success. Like being in Australian mining services over the past 5 years.

    2. Fama/French 1999 show that profits mean revert. As does Montier.

    3. Chan/Karceski/Lakonishok 2001 show that high growth rates dont persist.

    4. Wiggens 1997 finds that while some companies do exhibit superior economic performance, only a small minority do so and they are not sustainable over the long term.

    So does Apple have a moat? Bruce Greenwald says no. Now of course he maybe wrong…..

    The industry is highly competitive and for me it seems to be based on who has the latest technology. I think Apple may have had a first mover advantage but no longer does. Some one can tell me if I am wrong here, but I dont think Apple was the first one out with an Mini iPad? There are plenty of smartphones/iPad competitors now so I think Apple has lost that previous “wow” factor when it totally dominated markets. Just looking at Business Insider and they list the top 10 smartphones. Now I am not saying Business Insider are right but the point is there is plenty of competition out there.

    I think there are a couple of other things. One, the fight over patents to my mind does not play out that well because it shows that they may be relying more on past efforts than future efforts. I freely admit this is a very subjective comment.

    The maps fiasco was not a good show of strength and perhaps they rushed it a bit?

    Apple seems to be cheap on forward earnings and in my mind that makes it more like a growth stock than a value stock.

    But like Howard Marks says

    “What matters most is not what you invest in, but when and at what price”.

    So if you got in early good for you, but is Apple a great buy now?

  8. MSFT split 144:1 up to 2000 – aapl has split 2:1 – unsplit msft would be $9000 a share in 2000…also msft traded at 30x ev/ebitda in 2000 at the top aapl now at 6x…no to cheerlead aapl but just setting the facts

  9. Like comparing a Chevy Cruze to a BMW 3 Series.

    They will both get you there reliably and safely.

    Personal preference. But as Gary Shilling says – one of the best investments is the makers of small, high-end luxuries. Nearly everyone can afford those…not so with BMWs.

    And full cycle…the BMW turns out to be the far less expensive option. Same with Apple products. Just pulled a 1994 Apple Perfoma out of the basement to donate. Plugged it in, booted and ran perfectly.

  10. Wow Cullen I agree. Also I had no idea how hot you were till I saw your picture I thought you were an old guy.