Apple takes a bite

Microsofts chief executive Steve Ballmer has gone on record saying that he does not have an iPod or iPad or iPhone at his palatial home. But no one can tell how long he will be able to resist Apples exciting devices. Its also difficult to say whether he is indeed hiding them,as Steve Jobss record-breaking products have made it to most households across the globe. As everyone knows by now,Apple has usurped the technology magic wand from Microsoft,with its market value rising to more than $222 billion,leaving Microsoft behind at $219 billion. Only oil giant Exxon Mobil is ahead at $282 billion.

The last time Apple had a higher market value than Microsoft was way back in December 1989. Apple was down in the dumps a decade ago,and critics and rivals had said that the company should be wound up; Steve Jobs left the company in controversial circumstances,leaving a huge technological void. For a good 12 years Apple was like a rudderless ship. But since his second coming to Apple,it has been a different entity altogether. It has since transformed the consumer electronic business,snatching the mantle from Sony Corp,with its easy to use products storming the global market.

Meanwhile Microsoft,whose operating system runs nine out of every 10 personal computers in the world,has seen its stock going down 20% from 10 years ago. Ironically,Apple had gained from a $150 million investment from Microsoft in 1997 when it was struggling to keep its neck above water. Not to forget,Microsofts market value was 500% more than that of Apple at that time. Today Apples shares are worth 10 times more than what they were a decade ago.

But even today,Microsoft leads Apple in sales. In the last quarter,Microsoft reported $14.5 billion in revenue compared with Apples $13.5 billion. Microsoft also enjoys a higher net profit than Apple. Its most recent annual net profit was $14.6 billion compared to $5.7 billion for Apple. But in the valuation game,Apple has upset the applecart and thats a great tribute to Steve Jobss ingenuity and persistence.

The iPod,which revolutionised music when it was launched in 2001,was what got Apple going again. Even though the iPod works with computers running on Microsofts Windows operating system,it gave a boost to Apples image in the personal computer space as well. All of a sudden Apple was a cool thing to hold on to and Jobs became a technology poster-boy once again.The iPhone,which was the next big launch from Apple in 2007,was an instant hit,confirming Apples comeback on the big stage. There were endless queues in front of Apple stores for months together. Now a new version of the iPhone is expected to be unveiled next month.

Apples iPad tablet computer is the next big excitement in the market. The product is now available in the US and the UK. It is already selling big in the US,and the UK launch had to be postponed for a week to support the US sales. But Microsoft wants the world to believe that is not looking over its shoulder. Its a long game,we have good competitors… we too are a very good competitor, Ballmer said recently. However,he was quick to announce some changes,revealing his concerns. He said that president Robbie Bach will retire this autumn and technology head J Allard will give up most of his administrative duties to help the CEO in key functions.

The restructuring comes even as Microsoft Xbox continues to dominate the gaming market but its other consumer electronics projects are falling behind.

Story continues below this ad

Zune,not a very popular music service,has not delivered results. Meanwhile,Googles Android has knocked the stuffing out of Windows OS Mobile. And with regard to hand-held devices only three brandsBlackberry,Google and Appleenjoy consumer mind space.

The truth is that companies have either reinvented themselves (as in the case of Apple) or invented (like Google) to stay ahead. Microsoft,on the other hand,has tried to dominate the world business through the enterprise channel using traditional methods. But that model is increasingly coming unstuck and it has to now come up with new winning ways. The ball is indeed in Ballmers court and his mettle will be tested now.

The fact of the matter is that Gates and Jobs come from different backgrounds and their methods are different,too. Gates is the son of a Seattle banker and Jobs is the adopted son of a California machinist. Gates is a dominating force in world business and although he has taken a backseat since the year 2000,he still looms large over the corporation that he founded. Jobs,on the other hand,had to fight battles with his health and had to prove his detractors wrong time and again. We build products we want to use ourselves, he once said.

There was a time when Jobs had sued Gates on Windows,which he claimed was a rip-off from one of his ideas. But a US court threw out that case after six years of court litigation. Jobs then had to leave the company as his powers waned and an executive who he hired from Pepsi ousted him. He then went on to build up Pixar and developed a new operating system called NeXT. Apple,meanwhile,kept putting out damp squibs as new products,even as Gates built on his fortunes. Apple later acquired NeXT and with it came Jobs as an advisor,in an extraordinary move. Jobs was made the temporary CEO. The technocrat was back at the helm of one of the worlds most exciting firms and things began to look up at Apple. The rest is history with a slew of products hitting the market like intermittent waves and Jobs hitting the front pages again. Apples rise and Microsofts stagnation is indeed a pointer towards the end of the PC era,and also the birth of an innovative age where personal gadgets rule. The new developments have placed Microsoft under intense scrutiny and its dominance in the world stage has been strongly challengednot just by Apple but also another fast-rising giant,Google. Ballmer may soon have to consider buying an iPod for his daughter after all.