Over the last several years, Apple has probably been the most successful and written-about company in the world. For example, as we noted before, 24/7 Wall St. cited the Apple iPad as the best product of the 2010s. In contrast, for many years, Microsoft declined in stature from its hey days. With some observers believing it would not mount a comeback. Wow, have things changed. Microsoft has roared back.
Note: Like most firms, Microsoft and Apple have been dramatically affected by COVID-19. Nonetheless, as of March 27, 2020, the companies still had the two highest capitalizations among U.S. companies.
Apple Versus Microsoft
Apple and Microsoft are long-time competitors with regard to both software and hardware. At first, Microsoft was dominant, reaching a market capitalization of $500 billion in 2000. In contrast, Apple had a market capitalization of $5 billion in 2000. Yep, Microsoft was 100 times more valuable than Apple then.
However, after years of lower stock prices, it took Microsoft until 2017 to recapture its $500 billion market cap. Even then, both Apple and Google (Alphabet) had higher market caps.
Apple’s Second and Third Acts
When Steve Jobs returned to Apple in November 1997, Apple was performing poorly. He turned things around with a slew of industry-changing innovations that took Apple far from its computer base. When Jobs passed away in 2011 from pancreatic cancer, the transition to Tim Cook’s leadership was relatively seamless.
Look at these two charts, from Gigaom and Statista, respectively. They highlight Apple’s prowess through innovation. As a result, in mid-2018, Apple became the first firm to reach a $1 trillion market cap.
Microsoft Has Roared Back
For years in the 2000s, Microsoft struggled. As Kurt Eigenwald reported for Vanity Fair:
“Once upon a time, Microsoft dominated the tech industry. It was the wealthiest corporation in the world. But since 2000, Apple, Google, and Facebook whizzed by. It fell flat in every arena it entered: E-books, music, search, social networking, etc.c. Amid a dynamic, ever-changing marketplace, Microsoft became a high-tech equivalent of a Detroit car-maker, bringing flashier models of the same old thing off the assembly line even as its competitors upended the world. Most of its innovations were financial debacles or of little consequence to the bottom line.”
During 2009, Microsoft’s market cap dropped to $136 billion. Although this rose some in subsequent years, it lagged the market. Thus, in 2014, Satya Nadella was selected as the new CEO, succeeding Steve Ballmer. Previously, he was executive vice-president of Microsoft’s cloud and enterprise group.
Daniel Howley reports for Yahoo! Finance Microsoft’s accomplishments under Nadella’s leadership:
“Microsoft’s breakout 2019 was years in the making. It began when Satya Nadella took over as CEO from Steve Ballmer in February 2014. Nadella led an increased emphasis on cloud computing and support, pushing away from reliance on the sale of Windows enterprise and commercial products, in favor of recurrent revenue associated with subscription cloud services.”
“‘I think what really sums up what’s going on with Microsoft, and what differentiates the Nadella years from the [Steve] Ballmer years, is how Satya has taken Microsoft completely in the direction of cloud,”‘ said Forrester Research’s Glenn O’Donnell. Of course, Ballmer laid the groundwork for much of the company’s cloud ambitions including Office 365 and Azure, but it’s been Nadella who delivered on the execution.”
For a year-and-a-half, Microsoft and Apple have jockeyed for leadership. During the first part of February 2020, both reached all-time high market caps. Microsoft — $1.44 trillion. Apple — $1.42 trillion. As of March 27, 2020, Microsoft was at $1.14 trillion and Apple was at $1.08 trillion, due to COVID-19.