Apple posts higher revenue than Microsoft

Apple earned more revenue this quarter than their ancient frenemy, Microsoft. Roughly $20 billion to $16 billion, or $4 billion more. Not too long ago they passed Microsoft in market cap as well, another impressive sounding, if not terribly meaningful measure. Microsoft still leads in revenue due to their software-centric business being much higher margin than Apple's hardware-heavy mix. But that too could and just might change as well.

Apple, thanks to the Apple II, got off to an impressive lead in the early days of command line personal computing. But things changed. Apple squandered the Mac's first mover advantage and Microsoft and Windows ended up ruling the graphical user interface world. Now things are changing again. And that's where it gets interesting.

60% of Apple's profits come from products they've only released in the last three years, notably iPhone, iPod touch, and iPad. Almost everything Apple has planned and launched recently has been an incredible success, either profitable in their own right (like hardware) or deliberately run at just above break-even to support those profitable products (like iTunes and the App Store). And they're still experimenting with new revenue models like iAds in the mobile advertising space.

By contrast, almost all of Microsoft's profits came from products that have been around a generation, famously Windows and Office. Very little Microsoft has done recently has been a financial success for the company. Even the popular Xbox platform, billion dollar warranty extensions aside, has been a drop in the bucket compared to Windows and Office. Zune HD, a delightfully integrated media player was ultimately ignored and while Windows Phone 7 may bring licensing and Bing-driven advertising revenue, it remains to be seen if it can grab the mindshare Zune never could.

Apple still makes money from Macs but the world is rapidly going mobile and computing is rapidly going mainstream, and with iOS and devices like the iPad, Apple is already a dominant player and has a good shot at remaining a dominant player in the next great phase of computing.

Microsoft doesn't really make money yet from mobile or internet services (they actually lose an almost incomprehensible amount overall). While they have some time left to turn that around -- and to their credit they're turning faster and better than most people imagined -- right now they're racing to keep up with Apple (and Google) in mobile.

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, Review, Vector, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Apple posts higher revenue than Microsoft

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As someone like many others, in these past 3 years I have shifted all the money I previously spent on Microsoft-related products (computers, PDA's, etc) to all Apple products. The only Microsoft product I have bought recently was the just released Office 2011 for Mac for my wife's job.
Microsoft, much like K-Mart, Sears, GM, Chrysler, Dell, and many others are typical American companies who got too fat and happy all while competitors blew past them. I really don't think Apple should fear Microsoft at present. It seems Google is more of the threat to Apple now. 10 years from now things could be much different too. Nobody saw Apple and Google being this big 10 years ago.

@Christinschu it's called a profit margin dumbass. Didn't even quote it correctly, Microsoft leads in profit. Profit margins and revenue are different. Maybe you didn't go to high school, not your fault.

Microsoft won't figure it out, except in a few limited. They are good at supporting products they've made for many years. The XBOX is the exception that has hope of big profits if they don't have to do more recalls

So...when comparing Apple to Nokia, it's profit that matters, but when comparing them to MS, it's revenue? Just want to make sure...

why waste so much time comparing Apple with Microsoft ? I dont see Apple making Office software and i dont see Microsoft making hardware..
its like my dad got me a better chocolate then your its a full 3 inches long.

The main thing that I get from this is that MS is making money on old products with a possibly limited life expectancy while Apple is making money on fresh new products! Who knows, maybe the pc may become a dinasuor in 5 years and pocket computing could be the replacement in out of office situations. Very possible IMO.

Another totally biased post from Rene Jobs.
Microsoft crushed Apple in terms of PROFIT.
Jimbo said it best.
I hope Rene at least gets a percentage of the revenue for his major a$$ ki$$ing ;) :twisted:
John, just keep an eye on the sales of new products such as Kinect next week ;)

"mindshare...." love it. To me it signifies a major shift that we've seen in the disparate ways these companies operate in the past few years. MS: behemoth, slow-moving, measured, sometimes stale; Apple: nimble/flexible, innovative (apologies), market-savvy, visionary--and a great marketing plan.

@Jimi: Don't be rude, Christinschu isn't stupid at all (or at least not his comment). The article was wrong at first and was corrected after he pointed it out.

@Dev I called it a non-meaningful measure right in the first paragraph, quit being such a hater :p. The interesting thing is the revenue trend and the relative "ages" of the product lines driving them.

@Jimbo
You are right. A post like this is ridiculous.
I own products from MS and Apple and I am happy with both of them. MS is learning pretty fast to make better consumer oriented products. Just look at the Xbox 360! This is only a 2nd generation product and it sold more than Sony did with the PS3. Just look at these figures and what was happening on the market with Xbox and PS2! MS did made the right move. And I think they are doing the right thing with Kinnect. It is way more interesting than Sonys Move. More of a risk, for sure.
WP7 will be the same. They made a lot of mistakes with WM 6.5. This crappy OS made be buy an iPhone, iPad and whatever. But WP7 looks really good and since it is not a copy of iOS it may be a risk, but it also shows a lot of promise.
But lately there is a little too much fabboyism here on the site. I read all of your articles and listen to every podcast, but it seems to me that only Georgia has the right balance between being a fan and being objective. And yes: I know this is tipb.com...

Of course this is a fanboy/fangirl site. The main purpose for this site's existence is to drive sales in their online store. Anyway, I've been buying Apple since 2003 -- I was a late adopter -- and I'm a little bit sad to see Apple take off into the statosphere because it COULD be just a matter of time before they suffer from stagnation.

"Apple squandered the Mac’s first mover advantage," as did Sony in portable music players, and Palm in smartphones, and Microsoft in pad computers. Apple has waded into these dysfunctional markets, shown the world how to do it right, and made billions doing it.
Any Windows apologists care to dispute that?

@ Art VanDeLick: "Another totally biased post from Rene Jobs."
Well, what do you expect? This is "The iPhone Blog." If you want to lick some pro-Windows blogger ballz, head on over to Windows Supersite. Make us all proud and run along now.

@ Art VanDeLick: "John, just keep an eye on the sales of new products such as Kinect next week"
LOL. Just L. O. L.
Maybe Kinect can help recoup just a teensy weensy little fraction of the billions of U.S. dollars Microsoft has lost on Xbox and Xbox 360. Sure, the Xbox gaming division made a profit of $382 million last quarter. But Xbox, all by itself, lost Microsoft $4 billion over its lifetime from 2001 to 2006. And the Xbox 360's world-renowned Red Ring of Death (Google that and "General Hardware Failure," Art, for full details) has cost Microsoft billions more ever since.
For an even deeper insight into how little Xbox gaming has helped Microsoft, look at Online Services. That division lost $560 million last quarter. Completely wiping out the tiny $382 million profit that the Xbox gaming division earned.
Nintendo doesn't think Microsoft is a threat any more. They consider Apple their #1 threat. Maybe Nintendo already knows much more about Kinect than you do.

Thanks parabel!
Jimi don't be so quick to judge others, I was pointing out an error in the story which has now been corrected.

SuckMyRollid,
I'm a fan of both Apple & Microsoft . I come here to read articles that are informative and give useful information without licking Jobs nuts every two minutes.
I suggest you keep your lips attached to Renes left cheek and don't worry about what I say, since your obviously blinded by the moon ;) :twisted:

SuckMyRollid
Nintendo sees apple as number one threat when it comes to HANDHELD gaming. And since MS doesn't really have a competitive product to match DS or PSP , that's the reason Nintendo doesn't see them as a big threat. Kinect is not portable ;)
Itd be nice if you has some valid arguments and a bit of knowledge , instead of just posting to be cool :roll:

My own preference is MS but I own an iphone4 (iph3, iph3G and iPot previously) only because of jailbreaking if that wasn't around I wouldn't have one.
Also I prefer Windows7 to OSX but I grew up with Windows, but using OSX in college I still don't like it I miss the little things windows do like a button to maximise a window, but all to there own I love my iPhone and love my PC.
oh and I love my 360 I'm a gamer at heart.