How Soon Can Apple's Market Cap Surpass Microsoft's?

As recently as a little over 9 years ago Microsoft (MSFT) had a market cap of $586 billion, while Apple's (AAPL) was a mere $17 billion. MSFT investors have since lost $421 billion, while AAPL investors have gained $95 billion. In my first post on this subject last October, I suggested AAPL could surpass MSFT's market cap within a few years. One reader said it would happen in less than a year. He has a good chance of being right.

Almost 90% of the people who visit my site use Windows-based operating systems. 74% use Windows XP, 13% use Windows Vista, and 10% use Macs. Microsoft's only significant product introduction in recent years (Vista) will soon be eclipsed by the Mac OS, I predict. Given the relative failure of Vista, it's unlikely that many XP users will switch to the upcoming release of Vista 7 for at least a year or two. Macs will likely be the computer of choice for increasing numbers of people who want to switch from XP to a more modern operating system. Windows XP is almost 8 years old, while Apple's Mac OS X will see its sixth major upgrade this year, perhaps as early as June or July. If you haven't tried a Mac recently, you really should. And did I mention that there are no Mac viruses to worry about?

Full disclosure: I own several Macs and am long AAPL at the time of this writing.

Comments

[Ted Landry:]

@BobSmith - you are forgetting or not understanding that Macs are based on BSD Unix, so there won't be a virus or security issues on OSX. A lot of naive people somehow think it's related to "market share", but that is not the case. The main reason Mac users don't have to worry is the way "root" if fully separated from the "Admin" account. Windows had everything mix together, plus they had ActiveX and some auto run features. Macs were designed to be on networks from the start, so all this was figured out long before Windows was even around... that's why OSX is far more battle tested than any version of Windows could ever hope to be. You'll see a handful of trojans on Macs in the coming decade, but never a virus, Unix simply doesn't allow it.

Apr 24 11:37 PM

[Ted Landry:]

@jamesllegade -

actually, OSX is far more OPEN than Windows. OSX is over 90% open, you can download the source by googling: Darwin Open Source.

the strong security is because of the way Apple built and maintains OSX and the fact it's based on BSD Unix... which is the most secure OS is common use today.

so the "Mac ecosystem" is open which is why it's "secure", windows is "closed source" that's why it's full of holes.

Apr 24 11:43 PM

[James Katt:]

There are ZERO viruses for Mac OS X. ZERO, NADA, ZIP. PERIOD. THere have been ZERO viruses for over 10 years.

If you know any, point it out.

But then, you can't because there are NO viruses for Mac OS X.

Apr 25 01:06 AM

[GSlusher:]

On Apr 24 01:00 PM GaryZ10 wrote:

> Yes there are Mac viruses...suggesting that you don't truly understand
> the product you are writing about.

Name three Mac OS X viruses that exist in the wild, not "concepts."

As for the basic article, I agree with Foris, to wit, "So what?" Apple passed GM in market capitalization a long time ago, but that's not the only nor even the most important measure of a company's financial position.

Apr 25 04:41 AM

[nukldrager:]

Good point. Mac owners, myself included, assume they are safe from hackers. So far so good, it would seem. Anyone care to enlighten us as to why they have been so invulnerable to date?


On Apr 24 09:45 AM BobSmith wrote:

> There are Mac viruses to worry about. Based on cost of ownership,
> I would see macs being higher valued targets in the future for hackers.
> Especially, when this is combined with the typical owner attitude
> that Macs aren't vulnerable.
>
> www.foxnews.com/story/...

Apr 25 10:14 AM

[nukldrager:]

Thanks, I should have read further before posting my question


On Apr 24 11:37 PM Ted Landry wrote:

> @BobSmith - you are forgetting or not understanding that Macs are
> based on BSD Unix, so there won't be a virus or security issues on
> OSX. A lot of naive people somehow think it's related to "market
> share", but that is not the case. The main reason Mac users don't
> have to worry is the way "root" if fully separated from the "Admin"
> account. Windows had everything mix together, plus they had ActiveX
> and some auto run features. Macs were designed to be on networks
> from the start, so all this was figured out long before Windows was
> even around... that's why OSX is far more battle tested than any
> version of Windows could ever hope to be. You'll see a handful of
> trojans on Macs in the coming decade, but never a virus, Unix simply
> doesn't allow it.

Apr 25 10:18 AM

[-hh:]

> Being a cheapskate myself, I have always used Windows...

And yet here, I consider myself to be a real cheapskate, but I run Mac OS, because I'm valuing total lifecycle costs, not just merely the initial purchase price.

-hh

Apr 25 10:35 AM

[nukldrager:]

Excellent!


On Apr 24 09:58 AM beech_35 wrote:

> Apple is well positioned to capitalize on a sea change in the personal
> computing market. Young people entering the business world today
> in the future were brought up on the iPod and iPhone and can't imagine
> a world without these great products. They're much more amenable
> to embracing the Mac platform than their predecessors, and they'll
> be the ones making purchase decisions, managing IT departments, and
> allocating budgets. Not only has the Windows platform become associated
> with stodgy, crash-prone, virus-infested misery, the aggregate amount
> of capital businesses have thrown toward Microsoft's failed productivity
> promises must be staggering. Continuing to throw money down that
> cost center hole is irresponsible and can no longer be tolerated.
>
>
> Consider this simple question: do you know of anyone that migrated
> from a Microsoft platform to Apple who's regretted the decision?
>
>
> I don't think Microsoft is going to go away completely - it has far
> more business segments than its sinking Windows flagship - but it's
> become the 21st century equivalent of IBM in the 80's: big, bloated,
> and unable to adapt nimbly to to the constant challenges from innovative
> competitors.
>
> As far as market capitalization is concerned, when or if AAPL's exceeds
> MSFT's doesn't matter. Clearly one of these companies has far greater
> growth potential today than the other. So from an investor's standpoint,
> which presents a better investment decision?

Apr 25 11:27 AM

[mollytjm:]

Mac OS code is very tight and harder to break into and that will remain. It's not market share...it's code.
Macs don't cost more in the long run. They save you a lot of time...A LOT of time. Their programs run faster with almost no problems. Apple stores give you free learning programs and great tech support.
Businesses are figuring this out. Why pay to keep a big IT department because everyone uses glitchy pcs, when they could switch to Macs, get free tech support, easily, and not even need that much? Businesses lose a lot of money to inhouse tech support and to paying employees who are waiting for tech fixes, to retrieve files, to get their computer 'unstuck', while not being productive.
Switching isn't that hard since Macs run everything now. There's no way that Apple will not steadily gain market share. Apple has been underestimated for a decade. Happily, that isn't much of a deterrent to gaining market share and lots of $$$. Long APPL

Apr 25 11:42 AM

[winindthedust:]

You obviously don't use Macs, as they play better in the work place this Windows PC's do with each other! Most things on a Mac are zero configuration without the need for driver set up or IT support.

And there is no, in the wild, Mac viruses... 0 ... sorry to pop your balloon. Please tell us the ones you are thinking of... make sure its actually a VIRUS-

Computer Virus Definition:
A computer virus is a computer program that can copy itself and infect a computer without the permission or knowledge of the owner.

On Apr 24 01:00 PM GaryZ10 wrote:

> Yes there are Mac viruses...suggesting that you don't truly understand
> the product you are writing about. And as Macs gain market share,
> there will be many more viruses to contend with. For some reason,
> Mac users think their computers are invincible, and this will lead
> to carelessnes when real problems arise. Macs also do not play well
> in the work place, which is where Microsoft excells. While, Vista
> is a complete discrase to the modern computers, XP is an outstanding
> operating system and is used on 75% of the computers in the world.

Apr 25 03:40 PM

[winindthedust:]

Don't be duped, read the fox article. It's talking about a "trojan" which comes with an illegally downloaded fake copy of iWork. Further, to enable the trojan, the user has to allow it, by inputting their password. Even at that, the trojan has no access to root or the OS itself. Further, the trojan can not infect other users, without them knowing. The botnot would be very limited, as it would only encompass the very few users that were stupid enough to download pirated software, approve the download, approve the installation, etc. This is not a real security threat at all for anyone.


On Apr 25 10:14 AM nukldrager wrote:

> Good point. Mac owners, myself included, assume they are safe from
> hackers. So far so good, it would seem. Anyone care to enlighten
> us as to why they have been so invulnerable to date?

Apr 25 03:52 PM

[winindthedust:]

Bob,

You are naive on this subject. Please read the excellent comments posted, explaining the reality on OSX security. The fox article is sensationalized FUD.


On Apr 24 09:45 AM BobSmith wrote:

> There are Mac viruses to worry about. Based on cost of ownership,
> I would see macs being higher valued targets in the future for hackers.
> Especially, when this is combined with the typical owner attitude
> that Macs aren't vulnerable.
>
> www.foxnews.com/story/...

Apr 25 04:18 PM

[Neil Anderson:]

HEY! I HAVE A RARE MAC VIRUS! EVERYTHING I TYPE COMES OUT IN CAPITAL LETTERS ... oh, wait, sorry ... my caps lock was on.

Apr 25 05:05 PM

[PeterB:]

Au contraire; thank you for using a logarithmic scale, since the ratio between the values plotted is much better represented on such a scale (a constant distance is a constant ratio), especially on values that scan a factor of about 100. I rescued a logarithmic chart of the Dow Jones index from my stockbroker, because it was the first one I had seen. Anyone dealing with financial matters had better understand Napier's invention, just as physicists, engineers, sound experts, and many others do.


On Apr 24 04:06 PM User 401648 wrote:

> Why on earth would you make the graph Y-axis logarithmic? There is
> no logical reason to do so. People who did not notice or do not understand
> log scale will completely misinterpret the data. Perhaps that is
> what you intended?

Apr 26 07:01 PM

[PeterB:]

Additional note re the operating system: I think the original Mac operating system was quite different from the recent ones. I doubt if the interconnection of computers was much thought about when it was developed. I worked at NeXT Computer (during Steve Job's absence from Apple), though on hardware, not software, but that computer, one of the first to include Ethernet connections, originally 10Base-2 and later 10Base-T, ran a Unix version, which I believe became the basis for the later Mac software.

And my NeXT stock option is still around, making me long on Apple, and enjoying the major rise on that logarithmic chart!

Apr 26 07:19 PM

[holmesnmanny:]

Great article. I agree that if Microsoft wants to keep their market cap lead they need to snatch up Yahoo to give them an online presence and get into the game and song industries, more specifically the electronics business. They definitely have the engineers to make it work. They need to back off the OS industry. The XP is fine at the moment. Use their excess money to get into the industries that are booming right now.

Apr 27 02:47 AM

[Techtrader10:]

Good point, when people start to listen to reverse position reverse positions, cover your short in MSFT and short AAPL. Go long MSFT now sell at 26-28 level, short AAPL and cover between 90 and 100.

On Apr 24 11:20 AM RSD wrote:

> For several years I have told anyone who would listen to me:
>
> Short Microsloth....... go long AAPL.
>
> Few would listen... but they're listening now :)

Apr 27 02:54 PM

[Techtrader10:]

Well that didn't come out right. What I was attempting to say is the writer had a good point about when the "masses" start to listen, it may be time to reverse his positions. It may be time to go long MSFT and sell at around 26-28 and short AAPL and cover between 90-100. This would be a short term trade, but could be a profitable move. Sorry for the typo's.


On Apr 27 02:54 PM Techtrader10 wrote:

>
> Good point, when people start to listen to reverse position reverse
> positions, cover your short in MSFT and short AAPL. Go long MSFT
> now sell at 26-28 level, short AAPL and cover between 90 and 100.
>
>
> On Apr 24 11:20 AM RSD wrote:

Apr 27 03:04 PM

[Jkirk3279:]

Errr, are you away that the intro Macbook is $999? Even the highest MacBook Pro is $2700... the 17" model with 8GB RAM.

And you can get an iPhone for $99 now.


On Apr 24 09:57 AM jamesllegade wrote:

> Anyone that can spend 3K on a laptop must have some pretty good bank
> accounts to steal from.
>
> And that is to say NOTHING about how people use their $500 iphones
> to make insecure transactions.

Oct 21 07:45 PM

[Jkirk3279:]

Well, technically the first Mac shipped with Appletalk ability... it was years before PCs had networking.


On Apr 26 07:19 PM PeterB wrote:

> Additional note re the operating system: I think the original Mac
> operating system was quite different from the recent ones. I doubt
> if the interconnection of computers was much thought about when it
> was developed. I worked at NeXT Computer (during Steve Job's absence
> from Apple), though on hardware, not software, but that computer,
> one of the first to include Ethernet connections, originally 10Base-2
> and later 10Base-T, ran a Unix version, which I believe became the
> basis for the later Mac software.
>
> And my NeXT stock option is still around, making me long on Apple,
> and enjoying the major rise on that logarithmic chart!

Oct 21 11:13 PM