The NY Times has an interesting picture of the stock-market value of M$ and Apple over time. Prominent features are obvious exponential growth of the capitalization of M$ under Gates up to ca 2000 and a level under Ballmer since. Apple is showing exponential growth still and has surpassed the market cap of M$.
One must wonder how M$ magically switched from exponential growth to level when they have a monopoly on x86 PCs which continued to have exponential growth in units shipped. The best answers I can see are:
- GNU/Linux began to be viable on the desktop around 2000 and was vastly more reliable at that time. GNU/Linux must be enjoying exponential growth for this to be so.
- Apple is taking share from M$, particularly in USA/Europe where folks have tons of money to spend and will pay a higher price to get more reliable results
- Ballmer may be a great cheerleader for salesmen but he lacks the expertise to drive a technology company
That oversimplifies things because M$ does give substantial return on investment in dividends. I would expect the market cap of M$ would decline if those dividends were not given.
The question remains, “Where does all that cash go?”. M$ claims $8 billion annually in “research” but it probably amounts to market research and some flailing of ideas in the back rooms. A lot of cash must be going to OEMs and retailers to promote/sustain the monopoly. They are buying off so many with so much that there is not enough left for investors to be excited. The latest 10Q shows $4 billion in income but only 13cents per share of dividend. The earnings per share was 46 cents. This shows how weak the monopoly is. If the cost of issuing licences is that high, the end is near.
Why Apple continues to grow with the products they sell is beyond my understanding. I shop based on price/performance and I do not see Apple’s products as superior in any way to a PC running GNU/Linux or a cell-phone running GNU/Linux. Apple does use ARM on some gadgets which is a technological plus but the rest of their empire is anal-retentive nonsense. Vertical integration may be efficient for Apple but it is not in the best interest of consumers/other businesses. I think a lot of Apple’s success is due to the technological failure that that other OS is. Consumers are being convinced that Apple has the answer. They are not seeing other possibilities.
This is the Year of Arm IMHO so the near-monopoly that Apple enjoys in Armed gadgets will be weakened. Similarly GNU/Linux is being seen as valid by many millions so I predict this will be the last year that Apple has exponential growth or at least growth at this level. Good products in gadgets and PCs can be produced for less with GNU/Linux and ARM. Both M$ and Apple will cling to their markets by slowly reducing prices. They can be in a holding pattern for years at this stage but there is light on the horizon for open solutions.
