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.
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